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A competing risks tale on successful and unsuccessful fiscal consolidations

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journal contribution
posted on 19.11.2019, 10:19 authored by Luca Agnello, Vitor CastroVitor Castro, Ricardo Sousa
This paper analyses the transitions out of fiscal consolidations using annual data for 17 industrial countries over the period 1975-2013 and applying a discrete-time competing risks duration model. More specifically, we rely on a multinomial logit model to distinguish the factors behind a successful or an unsuccessful end of fiscal consolidation episodes. The results show that economic growth, fiscal stance, money market conditions, political orientation and government support, trade openness, the size and typology of fiscal consolidation measures and the occurrence of crises explain the differences in the length and the success/failure of fiscal consolidations. Moreover, while fiscal adjustment programmes that end successfully display positive duration dependence, i.e. they are more likely to end as time goes by, those that end in an unsuccessful manner are not duration dependent.

History

School

  • Business and Economics

Department

  • Economics

Published in

Journal of International Financial Markets, Institutions and Money

Volume

63

Publisher

Elsevier

Version

AM (Accepted Manuscript)

Rights holder

© Elsevier B.V.

Publisher statement

This paper was accepted for publication in the journal Journal of International Financial Markets, Institutions and Money and the definitive published version is available at https://doi.org/10.1016/j.intfin.2019.101148.

Acceptance date

18/11/2019

Publication date

2019-11-20

Copyright date

2019

ISSN

1042-4431

Language

en

Depositor

Dr Vitor Castro Deposit date: 18 November 2019

Article number

101148