The Political Economy of Delaying Fiscal Consolidation

Resource Information

The work The Political Economy of Delaying Fiscal Consolidation represents a distinct intellectual or artistic creation found in University of Missouri-St. Louis Libraries. This resource is a combination of several types including: Work, Language Material, Books.

Label

The Political Economy of Delaying Fiscal Consolidation

Statement of responsibility

Boris Cournède

Creator

• Cournede, Boris

Subject

• Economics

Language

eng

Summary

Over the next decades, many OECD countries are anticipating large increases in public spending as a result of population ageing and other long-term structural trends. The need to put public finances on a sustainable footing is widely recognised, but progress has been uneven and slow. Some policy makers may feel that action can be deferred for a few years at little cost because of the long-term nature of the problem. This paper questions this perception by proposing a model of the political costs of consolidating public finances. The main finding is that even a short delay increases political cost of consolidation quite markedly when ultimately policy makers are facing a deadline by which sustainability must be restored. The conclusion is very robust to changes in assumptions and specification. A variant of the model shows that with an infinite horizon the incentive to consolidate is weaker, which highlights the importance of setting a deadline. This paper relates to the 2007 Economic Survey of the Euro area (www.oecd.org/eco/surveys/euroarea)

Member of

• Working papers (Organisation for Economic Co-operation and Development. Economics Department), no. 548

Cataloging source

FR-PaOEC

Government publication

international or intergovernmental publication

Index

no index present

Literary form

non fiction

Nature of contents

dictionaries

Series statement

OECD Economics Department Working Papers,

Series volume

no.548