Consolidation out of Crisis? -A Genuine Savings Perspective Público

Abstract

The global financial crisis and the subsequent government fiscal predicaments have greatly affected lives around the world. Together with deteriorating global environmental conditions, the three crises raise serious questions about the sustainability of the current mode of development. In an attempt to restore fiscal stability and pave way to long-term economic growth, governments in the developed world implemented large, expansive fiscal consolidation policies by cutting spending and raising taxes. However, the short-term and long-term ramifications of these policies have been heatedly debated. Using genuine savings as an indicator for sustainability, this study constructs a first-difference panel regression model for 17 OECD countries over the period of 1978-2009 to investigate the impact of fiscal consolidation policies on sustainable development. The findings suggest that while consolidation measures improve genuine savings, policymakers ought to exercise caution in balancing expenditure and tax-based measures so as to minimize potential externalities.

Table of Contents

Table of Contents

I. Introduction................................................................................................................ 1

II. Literature Review........................................................................................................ 4

III. Data........................................................................................................................... 11

IV. Econometric Models................................................................................................. 20

V. Empirical Results...................................................................................................... 22

VI. Conclusion................................................................................................................ 30

VII. Figures and Tables.................................................................................................... 37

a. Figure 1 & Figure 2............................................................................................. 37

b. Figure 3 & Figure 4............................................................................................. 38

c. Figure 5 & Figure 6............................................................................................. 39

d. Figure 7 & Figure 8............................................................................................. 40

e. Table 1................................................................................................................ 41

f. Table 2................................................................................................................ 42

g. Table 3................................................................................................................ 43

h. Table 4................................................................................................................ 44

i. Table 5................................................................................................................ 45

j. Table 6................................................................................................................ 46

k. Appendix 1......................................................................................................... 47

VIII. References................................................................................................................. 48

About this Honors Thesis

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School	Emory College
Department	Economics and Mathematics
Degree	BA
Submission	Honors Thesis
Language	English
Research Field	Economics, General Political Science, General Political Science, Public Administration
Palavra-chave	Sustainable Development Sovereign Debt Crisis Environment OECD Fiscal Consolidation Financial Crisis Genuine Savings
Committee Chair / Thesis Advisor	Francis, Andrew, Emory University
Committee Members	Reinhardt, Eric, Emory University Pesavento, Elena, Emory University Summet, Valerie H, Emory University

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