IWS Documented News INTERNATIONAL

IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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International Monetary Fund (IMF)

World Economic and Financial Surveys

Fiscal Monitor

November 2010

Fiscal Exit: From Strategy to Implementation [4 November 2010]

http://www.imf.org/external/pubs/ft/fm/2010/02/fmindex.htm

or

http://www.imf.org/external/pubs/ft/fm/2010/fm1002.pdf

[full-text, 153 pages]

This edition of the Fiscal Monitor continues to survey and analyze the latest

public finance developments, updates reporting on fiscal implications of the

crisis and medium-term fiscal projections, and assesses policies to put public

finances on a stronger footing. Beginning with this issue, the Monitor will be

available in print, as well as online.

Contents

Preface ix

Main Themes xi

1 Fiscal Developments and Near-Term Outlook 1

Fiscal Developments in 2010: The Beginning of the Fiscal Exit 1

Outlook for 2011: Broader Fiscal Adjustment 9

The Pace of Fiscal Consolidation: What Explains the Differences Across Advanced Economies? 14

Public Debt Still Rising, with Some Central Bank Support 16

Financial Sector Support and Recovery to Date 20

2 Sovereign Financing and Government Debt Markets 23

Sovereign Gross Financing Needs: Continuing at High Levels 23

Government Bond Yields and Spreads: A More Polarized Market 30

3 Fiscal Adjustment Plans and Medium-Term Fiscal Outlook 38

Adjustment Plans: Time Frame and Commitment 39

Size and Speed of Adjustment: Authorities’ Plans and IMF Staff Projections 40

Composition of Adjustment 47

Medium-Term Adjustment Needs and Structural Reforms 53

Reform of Fiscal Institutions 55

Medium-Term Fiscal Trends in Low-Income Countries 59

4 Assessing Fiscal Risks 63

Rollover Problems 64

Risks of High Long-Term Public Indebtedness 67

5 Selected Spending and Tax Issues 68

The Effect of Pension Reforms on Growth 68

Financial Sector Taxation: A Summary of the IMF Report 73

Carbon Pricing: Issues in the Run Up to Cancun 77

The VAT: Tapping Its Full Potential, not Only in the United States and Japan 79

Appendices

1 Interest Rate-Growth Differential 85

2 Are Sovereign Spreads Linked to Fundamentals? 91

3 Fiscal Adjustment and Income Distribution in Advanced and Emerging Economies 94

4. Risks to Medium-Term Public Debt Trajectories 99

Methodological and Statistical Appendix 104

Glossary 125

References 131

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       
E-mail: smb6@cornell.edu                  
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