Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations [E-Book] / Rossana Merola and Douglas Sutherland
Merola, Rossana.
Sutherland, Douglas.
Paris : OECD Publishing, 2012
42 p. ; 21 x 29.7cm.
englisch
10.1787/5k9h28p42pf1-en
OECD Economics Department Working Papers ; 934
Economics
Full Text
During the economic and financial crisis, fiscal positions across the OECD countries deteriorated sharply. This raises the question of what level of primary deficit would ensure long-term sustainability and what degree of consolidation is needed. The purpose of this paper is to gauge the scale of fiscal consolidation that will be needed to ensure long-term sustainability. The analysis uses so-called fiscal gaps to provide a simple metric for how much consolidation is needed under a series of different assumptions and scenarios. The aim is to highlight the scale of the problems, how they differ across countries and the uncertainties surrounding the estimates. A first set of results suggest that lower debt targets provide greater room for manoeuvre to react to shocks in the future. A second set of results shows that growth-enhancing structural reforms 