Walking Hand in Hand: Fiscal Policy and Growth in Advanced Economies

Author/Editor:

Laura Jaramillo ; Carlo Cottarelli

Publication Date:

May 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Implementation of fiscal consolidation by advanced economies in coming years needs to take into account the short and long-run interactions between economic growth and fiscal policy. Many countries must reduce high public debt to GDP ratios that penalize longterm growth. However, fiscal adjustment is likely to hurt growth in the short run, delaying improvements in fiscal indicators, including deficits, debt, and financing costs. Revenue and expenditure policies are also critical in affecting productivity and employment growth. This paper discusses the complex relationships between fiscal policy and growth both in the short and in the long run.

Series:

Working Paper No. 2012/137

Subject:

English

Publication Date:

May 1, 2012

ISBN/ISSN:

9781475503913/1018-5941

Stock No:

WPIEA2012137

Pages:

29

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