We provide new evidence on the effects of fiscal consolidation measures on output, unemployment, income inequality and consumer price inflation. To identify causal impacts, we use a narrative-based instrumental variable strategy drawing on historical records of exogenous fiscal changes motivated...

A reform in the German state of Hesse selectively shifted the responsibility for overseeing and enforcing a balanced budget rule at the municipal level. Oversight was transferred from politically affiliated county administrators to non-political and potentially more impartial fiscal supervisors...

This paper introduces the first narrative-based dataset on fiscal consolidations for sub-Saharan Africa (SSA). Drawing on staff reports from the International Monetary Fund (IMF) during the period 1990-2024 and using an approach assisted by artificial intelligence (AI), the dataset...

Fiscal sustainability refers to a government's capacity to generate sufficient revenue to cover its expenses and repay its debts without accumulating excessive liabilities or creating new money. Recent observations indicate that Kenya's economic growth has slowed, prompting concerns about its...

This study examines the impact of key governance dimensions on public budget rationalization in Palestine from 2002 to 2023. Utilizing Legitimacy Theory, the research assesses how institutional quality affects fiscal outcomes, including revenues, expenditures, net lending, and budget balance....

This study examines public debt sustainability in the Eurozone by estimating fiscal reaction functions that assess how fiscal balances respond to rising public debt under heterogeneous macroeconomic conditions. Using annual panel data for 20 EU countries from 2000 to 2024, we employ fixed...

The central contention of this report is that the UK fiscal framework has some desirable features but is not delivering good outcomes. We are in a bad equilibrium. The UK's fiscal framework is based around a set of pass-fail, numerical fiscal rules. The fiscal debate is overly fixated on the...

This paper provides a comparative analysis of the economic crises in Argentina and Lebanon to derive policy-relevant lessons for the design of IMF-supported adjustment programs in fragile economies. Using a structured comparative case study approach, the study examines crisis dynamics, policy...

Several studies have investigated the fiscal sustainability of Latin American and Caribbean (LAC) countries. However, country-specific analyses fail to account for common factors and cross-dependence, while a single-panel approach is inadequate due to the region's economic diversity. Building on...

Argentina has struggled with persistently high inflation for the past two decades, surpassing 200% in 2023. While there is a broad consensus on the need for fiscal consolidation to curb inflation in the country, the path to disinflation is fraught with challenges. The objective of this paper is...

Using cross-country data for 167 countries with broad post-World War II coverage and historical extensions to earlier periods, we quantify how deficits, taxes, and civilian spending respond to increases and decreases in military spending. On average, deficit financing dominates: a 1 percent-age...

In der kommenden Legislaturperiode entsteht im Bundeshaushalt eine jährliche Finanzierungslücke von mindestens 120 Mrd. Euro, zumindest dann, wenn man die Bedarfe in Infrastruktur, Dekarbonisierung und Verteidigung ernst nimmt. Um Deutschland zu modernisieren, empfiehlt das Papier eine...

Sri Lanka's fiscal adjustment - nearly 8 percent of gross domestic product (GDP) since 2021 - has been exceptionally large by both historical and international standards. It has been critical in stabilizing the economy, reducing fiscal imbalances, and restoring macroeconomic stability. With...

The article reviews the latest version of the proposal for a new Stability and Growth Pact of the European Union, as accepted by the European Parliament in April 2024. After summarising the main changes, the macroeconomic evaluation attempts to gauge whether the main goal of the Pact –...

The Recovery and Resilience Facility (RRF), which was adopted to support economic recovery from the COVID-19 crisis, represents the first large-scale EU-wide investment initiative, including decarbonisation goals. Yet temporary RRF spending will not be sufficient to meet the climate targets in...

The reform of the European fiscal rules came into force on 30 April 2024. The new rules, like the former ones, impose a depressive bias on domestic fiscal policies, leaving Member States' no fiscal room for manoeuvre. At the same time, the European Pillar of Social Rights sets ambitious targets...

The objective of this study is to evaluate the fiscal sustainability of Local Government Units (LGUs) in the Visegrad Group economies (Czechia, Hungary, Poland, and Slovakia; the V4), focusing on three key hypotheses: (1) LGUs in the V4 are involved in so-called Ponzi games; (2) the adverse...

Public debt has increased steadily over the years, leaving many countries at risk of debt distress and even pushing some to default. This paper analyses the impact of sovereign default on post-default debtto-GDP ratios in 144 countries from 1980 to 2019. Applying the entropy balancing method, we...

This paper develops a world economy HANK model for the Euro Area (EA) Core and Periphery, which captures key features of EA cross‐ and within‐country heterogeneity, to study debt target reforms. We show that fiscal consolidation under the current EA institutional arrangements is quite costly...

Der Bundeshaushalt 2026 und der Finanzplan bis 2029 wurden im Kabinett verabschiedet. Zentral sind die darin vorgesehenen Kreditaufnahmen auf der Grundlage der im März 2025 erweiterten Schuldenregeln. Die Beschlüsse der Bundesregierung und die Ausweitung der Verschuldungsräume stehen in einem...

This study applied supervised machine learning algorithms to macro-fiscal panel data from 20 EU member states (2000-2024) to model and predict fiscal stress episodes in the Eurozone. Conventional frameworks for assessing public debt sustainability often rely on static thresholds and linear...