the need to defend the pegs. B. Analyzing Design Options for the Fiscal Adjustment in BLNS In order the analyze options for BLNS fiscal adjustment, a dynamic stochastic general equilibrium (DGSE) model is used (see Basdevant and others, 2011 , as well as Appendix I ). The general-equilibrium structure provides a coherent framework to trace the macroeconomic effects of fiscal consolidations from the original steady state (i.e., the state before a SACU transfer reduction) to a new steady state (i.e., the state reached years after such a reduction). Policy
Front Matter Page African and Research Departments Authorized for distribution by Andy Berg and Calvin A. Mc Donald Contents I. Introduction II. Designs for a Successful Fiscal Consolidation A. Fiscal Consolidation and Multipliers B. Factors of a Successful Fiscal Consolidation III. A Dynamic Model with Demand and Supply Effects A. Overview of the Model B. Fiscal Consolidation Strategies IV. Economics of Single-Instrument Fiscal Consolidations to SACU Transfer Reductions V. Analyzing Fiscal Policy Options VI. Conclusion
coherent framework to trace the macroeconomic effects of fiscal consolidations from the original steady state (i.e., the state before a permanent SACU transfer reduction) to a new steady state (i.e., the state reached years after such a reduction). Appendixes I and II contain model specification and calibration. 16. Policy choices are predicated on the assumption that the government does not engage in additional borrowing as a way to make up for the financing gap . Thus, the only option is to adjust the fiscal stance, either by increasing revenue, decreasing
to defend the pegs. Analyzing Design Options for the Fiscal Adjustment in BLNS A dynamic stochastic general equilibrium model is used to analyze options for BLNS fiscal adjustment (see Basdevant and others, 2011 ). The general equilibrium structure provides a coherent framework for tracing the macroeconomic effects of fiscal consolidation from the original steady state (the state before a permanent SACU transfer reduction) to a new steady state (the state reached years after such a reduction). Policy choices are predicated on the assumption that the