Fiscal consolidations: Quality, economic conditions, and success

Recent research has demonstrated the importance of good quality of fiscal a djustments for the success of government budget consolidations. We extend t his approach to analyze the importance of the economic conditions in which fiscal consolidations are started for their success. The cyclical positions of the domestic and international economy, the initial debt level and the stance of fiscal policy in the OECD are all important determinants of the l ikelihood of fiscal consolidations. They also affect the government's choic e of consolidation strategy, making them important determinants of the succ ess of fiscal consolidations. In contrast, the monetary policy stance plays only a negligible role for fiscal consolidations. We use the analysis to t est for any Maastricht effects on the performance of European governments d uring the 1990s. Such effects are weak at best and occurred only during the first half of the decade.