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Fiscal Restructuring in the Group of Seven Major Industrial Countries in the 1990's: Macroeconomic Effects

Author

Listed:
  • Mr. Leonardo Bartolini
  • Mr. Steven A. Symansky
  • Assaf Razin

Abstract

This paper studies the fiscal restructuring of the first half of the 1990s in the major industrial countries. It presents and calibrates a simple model of the labor market and integrates it into a multi-country macroeconomic model that takes into account the effects of distortionary taxes. It then uses the resulting framework to simulate the effects of recent and prospective changes in fiscal policies in the group of seven major industrial countries. The analysis suggests that in the long run the impact on output is likely to be positive in those countries that relied relatively more on expenditure cuts or indirect tax increases (such as Canada, France, Japan, and the United Kingdom), while the effect of the fiscal restructuring on output is estimated to be negative in those countries that relied primarily on labor and capital taxes (Germany, Italy, and the United States).

Suggested Citation

  • Mr. Leonardo Bartolini & Mr. Steven A. Symansky & Assaf Razin, 1995. "Fiscal Restructuring in the Group of Seven Major Industrial Countries in the 1990's: Macroeconomic Effects," IMF Working Papers 1995/035, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/035
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    Citations

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    Cited by:

    1. Philippine Cour & Eric Dubois & Selma Mahfouz & Jean Pisani-Ferry, 1996. "The Cost of Fiscal Retrenchment Revisited: how Strong is the Evidence?," Working Papers 1996-16, CEPII research center.
    2. Laura Obreja Brasoveanu, 2011. "Composition and Determinants of Fiscal Adjustment’s Success in the EU27 Contex," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 3(2), pages 075-089, December.

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