1. Is fiscal fatigue a threat to consolidation programmes?
- Author
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Agnello, Luca, Castro, Vítor, and Sousa, Ricardo M.
- Subjects
- *
FISCAL policy , *WEIBULL distribution , *BUSINESS success , *AUSTERITY - Abstract
Building on a narrative approach to identify episodes of fiscal consolidation, data for a group of seventeen industrial countries over the period 1978–2009, and continuous-time duration models, we find evidence suggesting that the likelihood of a fiscal consolidation ending increases over time, but only for programmes that last fewer than six years. Additionally, fiscal consolidations tend to last longer in non-European than in European countries. Our results emphasize that chronic fiscal imbalances might lead to a vicious austerity cycle, while discipline in the behaviour of fiscal authorities is a means of achieving credible and shorter adjustment measures. Therefore, fiscal fatigue is likely to compromise the implementation and successfulness of fiscal consolidation programmes. [ABSTRACT FROM AUTHOR]
- Published
- 2015
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