Public Choice

, Volume 109, Issue 3–4, pp 327–346 | Cite as

Fiscal Consolidations: Quality, Economic Conditions, and Success

  • Jürgen von Hagen
  • Rolf R. Strauch


Recent research has demonstrated theimportance of good quality of fiscaladjustments for the success of governmentbudget consolidations. We extend thisapproach to analyze the importance of theeconomic conditions in which fiscalconsolidations are started for theirsuccess. The cyclical positions of thedomestic and international economy, theinitial debt level and the stance of fiscalpolicy in the OECD are all importantdeterminants of the likelihood of fiscalconsolidations. They also affect thegovernment's choice of consolidationstrategy, making them importantdeterminants of the success of fiscalconsolidations. In contrast, the monetarypolicy stance plays only a negligible rolefor fiscal consolidations. We use theanalysis to test for any Maastricht effectson the performance of European governmentsduring the 1990s. Such effects are weak atbest and occurred only during the firsthalf of the decade.


Economic Condition International Economy Public Finance Debt Level Fiscal Consolidation 
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Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Jürgen von Hagen
    • 1
    • 2
    • 3
  • Rolf R. Strauch
    • 4
  1. 1.ZEIUniversity of BonnGermany
  2. 2.Indiana UniversityUSA
  3. 3.USA
  4. 4.ECB, ZEIUniversity of BonnBonn

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