# **Table A0: Literature review (continuation)**

|**Paper**<br>Barrios et al|**Fiscal Adjustment**<br> <br>Imrovement of at least 15%|**Succesful fiscal adjustment**<br>If it brins down the ublic debt level b at least 5% of|**Multivariate analysis?**<br>Two-stae robit|**Sample**<br>27 (EU) lus 8|
|---|---|---|---|---|
|.<br>(2010)|<br>p .<br>taking place in one single year or<br>taking place over three years if<br>each and every year the CAPB<br>does not deteriorate by more<br>than 0.5% of GDP.|g p y<br>GDP in the three years following the attempt.|g p.|p<br>(OECD), 1970-<br>08|
|Arin et al.<br>(2011)|Attempts are episods where the<br>Blanchard fiscal impulse (BFI) is<br>above 1.5%. BFI measures the<br>difference between a year CAPB<br>and the unadjusted primary<br>balance of the year before.|If at least one of the two criteria holds: 1) in the three<br>years after the attempt, the ratio of cyclically adjusted<br>primary deficit to GDP is on average at least 2% of GDP<br>below the attempt year and 2) three years after the<br>attempt, the ratio of debt to GDP is at least 5% of GDP<br>below the level of the attempt year, as suggested by<br>Ali d Ptti 1997|Probit model and IV<br>regression with an<br>instrument that varies<br>only across countries.|28 (OECD),<br>1978-07|
|Lavigne<br>(2011)|Need when cumulative total of<br>central government deficits over<br>the past five years is greater than<br>or equal to 20% of GDP. An<br>adjustment is defined as a<br>continuous positive change in the<br>primary balance amounting to at<br>least 1.5% of GDP over a period of<br>|esna an ero .<br>NA.|Logit model.|60 advanced<br>and<br>developing,<br>1985-02|
|Molnar<br>(2012)|5 years.<br>5 def. using underlying CAPB 1)<br>continuous improvement in<br>budget balance, 2) 1% fall in<br>budget balance/GDP in a single<br>year or in two years with at<br>minumum 0.5 in the first year, 3)<br>1.5 fall in one or two year with at<br>minimum 1.25 in each, 4) 1.5 fall<br>in a single year or three with less<br>than 0.5 deterioration in any year,<br>5) 2% fall in a single year or in two|Three definitions are used: debt stabilises 1) the year<br>after 2) two years after 3) three years after the episode<br>ends.|Probit, duration,<br>truncated regression<br>and bivariate Heckman<br>selection models.|28 (OECD),<br>1960-09|
||with a minimum of 15 in each||||
|Baldacci et<br>al. (2012)|. .<br>Authors do not provide definition<br>of fiscal adjustments as their<br>analysis focuses on public debt<br>reduction, defined as periods of at<br>least two consecutive years of<br>continuos reduction in the ratio of<br>public debt to GDP.|The length of succesful debt consolidation spell is the<br>time interval between periods in which the ratio of debt<br>to GDP declined from a high level to reach the prudent<br>threshold. This threshold is 60% of GDP for advanced<br>economies and 40% of GDP for emerging economies.|<br>Survival analysis of the<br>length of the succesful<br>period.|120, 1980-10|
|Hernandez|A fiscal consolidation episode in a|NA.|OLS and IV regressions|20 (OECD),|
|de Cos and<br>Moral-<br>|given year if the CAPB improves<br>by at least 1.5% of GDP.<br>||concerning<br>expansionary<br>|1994-06|
|Benito<br>(2012)|Alternatively, we also consider the<br>narrative aroach||adjustments.||
|Alfonso and|pp.<br>Four different definitions,|Improvement in the CAPB for two consecutive years is|Logit model.|18 (OECD),|
|Jalles (2012)|including those of Devries et al.<br>(2011)|at least 1 standard deviation of the CAPB in the full<br>panel.||1970-10|
|Alesina and<br>Ardagna<br>(2013)|Either (1): a 2-year period in<br>which the CAPB improves in each<br>year and the cumulative<br>improvement is at least two<br>points of the balance/GDP ratio or<br>(2): a 3-year or more period in<br>wich the CAPB improves in each<br>year and the cumulative<br>improvement is at least 3%|If the debt to GDP ratio is 2 years after the end of a<br>fiscal adjustment is lower than the debt to GDP ratio in<br>the last year of the adjustment.|A growth regression on<br>whether fiscal shocks<br>impact growth (not<br>fiscal adj.). All years are<br>included, not only<br>adjustment years.|21 (OECD),<br>1970-10|
|Holden and<br>Larsson<br>Midthjell<br>(2013)|.<br>A period of fiscal adjustment<br>(stimulus) is a year in which the<br>CAPB improves (deteriorates) by<br>at least 1.5% of GDP.|If the cumulative change in the debt/GDP ratio from the<br>year of adjustment and two years forward is smaller<br>than the 25th percentile of the same variable's density<br>in all episodes of fiscal adjustments. Variables are<br>measured as ratio to GDP for the two years prior to the<br>adjustment, and as ratio to trend GDP for the<br>adjustment year and the two years after the<br>adjustment.|<br>No.|24 (OECD),<br>1970-07|

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