This paper compares the likely macroeconomic consequences of achieving fiscal adjustment alternatively through reductions in public consumption or public investment or through increasing tax receipts. The most favorable medium-term growth and inflation outcome are associated with reduced public...

For almost twenty years, Pakistan's fiscal deficit, at about 7 percent of GNP, averaged nearly twice the level for Asian countries as a whole. This paper examines the causes of Pakistan's fiscal deficits. The authors examine why, despite these deficits, the country's macroeconomic performance...