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Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations
Working paper

Fiscal Consolidation: Part 3. Long-Run Projections and Fiscal Gap Calculations

Rossana Merola and Douglas Sutherland
OECD Economics Department Working Papers, 934, OECD
2012

Abstract

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.
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https://www.oecd.org/content/dam/oecd/en/publications/reports/2012/01/fiscal-consolidation-part-3-long-run-projections-and-fiscal-gap-calculations_g17a20be/5k9h28p42pf1-en.pdfView

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