IMF paper warns against frontloaded fiscal adjustment

IMF headquarters in Washington DC

A working paper, published by the International Monetary Fund (IMF) in July, estimates the effect of fiscal multipliers on the impact of fiscal consolidation, finding that frontloaded budget cuts are more likely to trigger recessions than gradual adjustments, and consolidation during a downturn is likely to damage growth without having a significant effect on the budget.

The authors, Nicoletta Batini, Giovanni Callegari and Giovanni Melina, use quarterly data from Japan, the US and Europe from

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