FINANCIAL AND ECONOMIC REGULATION

BOHDAN Tetiana ¹, BOHDAN Ivan ²

¹NGO “Growford Institute”
OrcID ID : https://orcid.org/0000-0002-6133-5336
²National Bank of Ukraine
OrcID ID : https://orcid.org/0000-0002-1752-0198

Fiscal consolidation: lessons from international experience for Ukraine

The authors have identified the last trends of fiscal adjustments in the developed countries, as well the macroeconomic implications of fiscal consolidations as to their effects on employment and economic growth in short run and long run have been revealed. It is substantiated more significant restrictive impact of the fiscal consolidation being implemented at the downturn stage of economic cycle as compared to fiscal consolidation at the upturn stage. The authors suggest less detrimental impact on economic activity of those fiscal consolidations being implemented gradually with a focus on expenditure policy in the developed countries and with a focus on tax policy in the low- and middle- income countries. Dependency of the direction and degree of the fiscal consolidation’s influence on the fiscal consolidation’s instruments in force is posited. The authors have highlighted the following consolidation’s instruments having minimal adverse effect on economic growth in the short run and positive effect in the long run: reduction of the government subsidies to enterprises, increase (introduction) of the property taxes and environmental taxes, cut of spending on government consumption, reduction of pensions and social benefits (except benefits for children).

Keywords: fiscal consolidation, budget expenditures, public debt, budget deficit, fiscal multiplier, economic growth, employment.

JEL: E62, F30, H62

BOHDAN T. . Fiscal consolidation: lessons from international experience for Ukraine / T. . BOHDAN, I. . BOHDAN // Фінанси України. - 2014. - № 10. - C. 55-72.