IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
There has been a rising academic debate on the sustainability of deficit spending and accumulated debt in governments across the globe. This correlates with a growing concern that excessive government deficits and accumulated debt will lead to unstable financial environments and a devalued quality of life for future generations. Varying economies with varying fiscal behavior have increased incentives to work toward more responsible fiscal behavior through reining in deficit spending and debt accumulation. The authors of this report seek to understand the process these economies undertook, the procedures they used, and the resulting effectiveness of those procedures on achieving fiscal stability. This paper takes a broad, case-study view of 26 countries and some of the plausible factors and motivations that have led them to aim for fiscal prudence. While case studies like this cannot be definitive on causation, they are certainly suggestive. The report is looking for for policy reforms that may cause better long-run fiscal performance.