Abstract
Sound public finances are essential to support sustainable growth. They enable both the private and public sector to engage in long-term planning and to pursue better policies. Some people claim that we are in a period where austerity is predominant, but data confirm that this is not the case. In many advanced economies, the size of government measured as a share of GDP is very large, and population aging creates further expenditure pressures. We are in a period where fiscal policies are broadly neutral. There are good reasons to pursue growth-friendly consolidation in order to rebuild healthy public balance sheets and to prepare for the challenges of the future.
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Sources: IMF Historical Debt Database; own calculations.
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Based on a presentation delivered at the session “The Global Debate: Austerity vs. Stimulus,” at the NABE Economic Policy Conference, March 8, 2016.
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Schuknecht, L. Why We Need Sound Public Finances. Bus Econ 51, 155–157 (2016). https://doi.org/10.1057/s11369-016-0005-1
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DOI: https://doi.org/10.1057/s11369-016-0005-1