Abstract
Rising international interest rates, falling terms of trade, and the foreclosing of commercial credit, forced the majority of developing countries to pursue drastic adjustment policies. In spite of differences in initial conditions and in ideological predilections, common adjustment patterns were observed across many countries. Initially the focus was on short-run stabilization, in particular on restoring a viable balance of payments and on servicing the external debt. Soon it became apparent that short-run measures alone would be insufficient to restore sustainable long-run growth. Short-run measures were thus complemented by structural reforms aimed at increasing the efficiency of resource use. Yet, for many observers, the success of adjustment has been limited to containing the debt crisis. Growth has only resumed in a handful of countries. Severe macroeconomic imbalances subsist in the remainder.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Ahmad, E. and N. Stern (1989): “Taxation and Devélopment”, in H. Chenery and T.N. Srinivasan, eds., Handbook of Development Economics. Amsterdam: North-Holland, vol. 2.
Alesina, A. and G. Tabellini (1989): “External Debt, Capital Flight and Political Risk”, Journal of International Economics, 27, pp. 199–220.
Barro, R. (1989): “A Cross-Country Study of Growth, Saving and Government”, NBER Working Paper No. 2855.
Barro, R. (1990): “Government Spending in a Simple Model of Endogenous Growth”, Journal of Political Economy, 98, pp. S103–105.
Blanchard, O. (1985): “Debt, Deficits, and Finite Horizons”, Journal of Political Economy, 93, pp. 223–247.
Blejer, M. and K. Chu, eds. (1989): Fiscal Policy, Stabilization, and Growth in Developing Countries. Washington, D.C.: International Monetary Fund.
Butter, W. (1985): “A Guide to Public Sector Debt and Deficits”, Economy Policy, 1, pp. 14–79.
Buiter, W. (1988): “Some Thoughts on the Role of Fiscal Policy in Stabilization and Structural Adjustment in Developing Countries”, NBER Working Paper No. 2603.
Cukierman, A., S. Edwards and G. Tabellini (1990): “Seignorage and Political Instability”, NBER Working Paper No. 3199.
Easterly, W. (1990): “Endogenous Growth in Developing Countries with Government-Induced Distortions”, mimeo, The World Bank.
Faini, R. and J. de Melo (1990): “Adjustment, Investment and the Real Exchange Rate”, Economic Policy 11 (in press).
Galli, G. (1985): “Tasso reale, crescita e sostenibilità del debito pubblico”, Contributi all’analisi economica, Banca d’Italia.
Haque, N. (1988): “Fiscal Policy and Private Sector Behavior in Developing Countries”, Staff Papers, International Monetary Fund, 35, pp. 316–335.
Haque, N. and P. Montiel (1989): “Consumption in Developing Countries: Tests for Liquidity Constraints and Finite Horizons”, Review of Economics and Statistics, 71, pp. 408–415.
Killick, T., ed. (1984): The Quest for Economic Stabilization: The IMF and the Third World. London: Heineman Educational Books, in association with the Overseas Development Institute.
King, M. and M. Robson (1989): “Endogenous Growth and the Role of History”, LSE Financial Market Group Discussion Paper No. 63.
Krugman, P. and L. Taylor (1978): “Contractionary Effects of Devaluation”, Journal of International Economics, 8 pp. 445–456.
Rodriguez, C. (1989): “The External Effects of Public Sector Deficits”, PRE Working Paper No. 299, The World Bank.
Rossi, N. (1988): “Government Spending, the Real Interest Rate, and Liquidity-Constrained Consumers’ Behaviour in Developing Countries”, Staff Papers, International Monetary Fund, 35, pp. 104–140.
Sargent, T. and N. Wallace (1981): “Some Unpleasant Monetary Arithmetic”, Federal Reserve Board of Minneapolis Quarterly Review, 9, pp. 15–31.
Tanzt, V. (1989): “Fiscal Policy, Growth, and the Design of Stabilization Programs”, in M. Blejer and K. Chu, eds., Fiscal Policy, Stabilization, and Growth in Developing Countries. Washington, D.C.: International Monetary Fund.
Thomas, V., A. Chhibber, M. Dailami and J. de Melo, eds. (1990): Restructuring Economies in Distress: Policy Reform and the World Bank. New York: Oxford University Press.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 1993 Riccardo Faini and Jaime de Melo
About this chapter
Cite this chapter
Faini, R., de Melo, J. (1993). Fiscal Issues in Adjustment: An Introduction. In: Faini, R., de Melo, J. (eds) Fiscal Issues in Adjustment in Developing Countries. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-22790-7_1
Download citation
DOI: https://doi.org/10.1007/978-1-349-22790-7_1
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-22792-1
Online ISBN: 978-1-349-22790-7
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)