The analysis of budget consolidations

Abstract

Fiscal adjustments have been examined from different perspectives in the literature. However, the conceptual approaches to the analysis of budget consolidations vary substantially. Therefore different approaches to the analysis of fiscal adjustments are discussed in a first step. It is shown that the choices regarding the underlying concepts lead to specific research designs and influence the appropriate empirical method. In a second step, the determinants of budget consolidations are examined empirically in four different research designs for 23 industrialised countries in the 1990s. The analysis shows that the results vary depending on the method applied. However, economic variables seem to play the most important role in explaining the consolidation performance.