Guichard, Stéphanie; Kennedy, Mike; Wurzel, Echkard; André, Christophe
May 2007
OECD Papers;2007, Vol. 7 Issue 5, p1
Academic Journal
The article presents evidence on macroeconomic condition and policy settings that have been effective in sustaining and triggering fiscal consolidation. It observes that the large initial deficits and high interest rates have been significant in prompting fiscal adjustment and enhancing the overall size and duration of consolidation. The emphasis on cutting current expenditures has been linked with overall larger consolidation. It indicates that design features, such as transparency, flexibility to face shocks and effective implementation mechanisms, are important for the effectiveness of fiscal rules as observed in several countries with experience in fiscal consolidation.


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