We are all aware of the many negative consequences of the COVID 19 virus epidemic. Considering the fiscal aspect, the negative effects of COVID 19 inevitably disrupt macroeconomic stability, increase the budget deficit and prevent the maintenance of public debt at a satisfactory level. A significant number of countries are facing the negative consequences of the pandemic and striving to restore macroeconomic stability. They find a solution in adequate fiscal consolidation management. The advantage of applying a fiscal consolidation program is the ability to formulate country-specific measures based on its macroeconomic indicators. The aim of this paper is to explore and explain how fiscal consolidation helps to establish macroeconomic stability. A large number of empirical papers have explored this fiscal tool that aims to overcome the negative effects of the crisis. Therefore, the paper will analyze and review the empirical literature in order to formulate conclusions related to those aspects of fiscal consolidation that contribute to the recovery of public finances and macroeconomic stability. It is important to mention that there is no consensus when it comes to fiscal consolidation measures. There are numerous examples of positive and negative fiscal consolidation results that have been oriented to the side of tax revenues or to the side of tax expenditures. In this regard, the paper will highlight the most important aspects of fiscal consolidation, taking into account both aspects.

Read online

Download this PDF file

Alesina, A., & Ardagna, S. (2012). The design of fiscal adjustments. NBER Working Paper Series National Bureau of Economic Research, Cambridge, 53. https://doi.org/10.1017/CBO9781107415324.004

Alesina, A., Barbiero, O., Favero, C., Giavazzi, F., & Paradisi, M. (2017). The Effects of Fiscal Consolidations: Theory and Evidence. 66. http://www.nber.org/papers/w23385

Arsić, M. (2021). Globalne ekonomske posledice pandemije COVID-19. Jahorina Bussines Forum 2021., 57–66.

Auerbach, A. J., & Gorodnichenko, Y. (2011). Fiscal Multipliers in Recession and Expansion. NBER Working Paper Series National Bureau of Economic Research, Cambridge, 17447.

Batini, N., Eyraud, L., Forni, L., & Weber, A. (2014). Fiscal Multipliers: Size, Determinants, and Use in Macroeconomic Projection. IMF Fiscal Affairs Department, 33.

Glavaški, O., & Beker Pucar, E. (2020). Fiskalne konsolidacije u EU-28: višegodišnje epizode VESUS hladan tuš. Ekonomski Horizonti, Ekonomski Fakultet Univerziteta u Kragujevcu, April, 17–30. https://doi.org/10.5937/ekonhor2001017G

Grdović Gnip, A. (2014). Essays in fiscal policy.

Heylen, F., & Everaert, G. (2015). Success and Failure of Fiscal Consolidation in the OECD : A Multivariate Analysis multivariate analysis. Public Choise, Social Eonomics Research Group, University of Ghent, Belgium, February 2000. https://doi.org/10.1023/A

Hoeller, D. S. P., & Merola, R. (2012). Fiscal consolidation: How much, how fast and by what means? OECD Economic Policy Papers, 01, 31.

Jevđović, G. (2018). Održivost fiskalne politike i fiskalna konsolidacija u odabranim emergentnim ekonomijama. Univerzitet u Novom Sadu.

Mooij de, R., Fenochietto, R., Hebous, S., Leduc, S., & Osorio-Buitron, C. (2020). Tax Policy for Inclusive Growth after the Pandemic. Fiscal Affairs, IMF, 1–14.

WB. (2020). The Fiscal Impact and Policy Response to COVID-19. Fiscal Policy and Sustainable Development Unit MTI.

WB. (2021). Global Economic Prospects (Issue June).

www.oecd.org

www.worldbank.org