Mr. Alberto Alesina, Gabriele Ciminelli, Davide Furceri, and Giorgio Saponaro
announced during the governmentterm, still distinguishing between tax- and expenditure-based plans. 15
To sum up, our two main austerity variables measure the current and expected future budgetary impact of all new tax- and expenditure-based consolidation plans decided during the government’s term. Therefore, we also consider measures that are announced and not yet implemented when voters head to the poll, which are likely to influence their preferences as much as the plans that are already implemented.
In contrast, we assume that the implementation of austerity
soft drinks will be expanded as of 1 January 2011. Further, energy taxes will be increased from the beginning of 2011. The government has also respected the expenditure ceilings for the central government set in the beginning of the governmentterm. Despite these measures, the budget proposal ends up with a borrowing requirement of around 8.5 billion euro.
12. The authorities note that due to the measures included in the budget proposal, the fiscal stance is turning from expansionary to restrictive next year. Given the improving cyclical situation and sizable
their implementation is long overdue.
The government is committed to making decisions to cover the entire sustainability gap of 10 billion Euros. The consolidation of public finances will firstly halt by the end of the Governmentterm and then reverse the increase in the debt-to-GDP ratio in 2021. In the short run, the authorities are pursuing a balancing act with necessary consolidation efforts while trying to induce economic recovery. The authorities are determined to preserve the confidence in fiscal stability in Finland and to comply with fiscal rules of the EU
Ernesto Crivelli, Mr. Sanjeev Gupta, Mr. Carlos Mulas-Granados, and Carolina Correa-Caro
In this paper, we study the impact of fragmented politics on public debt—in particular, between two consecutive legislative elections. Using data for 92 advanced and developing countries during 1975-2015, we find a positive association between political fragmentation and public debt changes. Corruption magnifies the effects; with higher perceived corruption, political fragmentation has a bigger sway on debt increases. The influence of political fragmentation on debt dynamics is somewhat asymmetric, with larger and more significant effects during periods of debt reduction. Establishment of fiscal councils helps attenuate the negative impact of political fragmentation on public debt dynamics.