Comment on R. Perotti, "The Political Economy of Fiscal Consolidations."

Article Abstract:

Robert Perotti's paper has exhibited a perfect survey of the literature on the political economy of fiscal consolidation. However, it does not tackle clarifications on the development and persistence of budget deficits, but rather with alternative methods for abolishing them and the degree to which the achievement of such policies relies on alternative institutional arrangements. The most striking outcome of the empirical research is that budget consolidations appear to be more sustainable in countries which reduce spendings than in countries which increase taxes.

Economics, Research and Development in the Social Sciences and Humanities, Analysis

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The political economy of fiscal consolidations

Article Abstract:

Macroeconomic effects, institutional setups and selecting the best among alternative strategies are compounding issues affecting implementation of fiscal consolidation. On the macroeconomic side, a consolidation that will guarantee minimal political costs and optimal political conveyances are imperative. A review of certain institutional setups may warrant bargaining and negotiations among parties to ascertain amenability to consolidation. Finally, a comprehensive procedure to budget reduction must take place.

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Comment on R. Perotti, "The political economy of fiscal consolidations."

Article Abstract:

Fiscal consolidation requires modelling of the economic effects of deficit spending. Likewise, it must recognize availability of other alternative policy frameworks. The configuration earlier viewed fails to consider that it is actually a problem in the composition of government spending and not in the deficit itself. Further, other avenues for budget reforms are neglected, because of restrictions to certain configurations.

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