A fiscal adjustment is a reduction in the government primary budget deficit, and it can result from a reduction in government expenditures, an increase in tax revenues, or both simultaneously.
There is no a clear consensus about the definition of fiscal adjustment, but it is commonly understood as a process, instead of as a status: governments run fiscal deficits, fiscal surpluses or balanced budgets, and the process from a budget deficit to a sustained period of balanced budget is a fiscal adjustment.
There are two significant features in any fiscal adjustment: the duration of the process, usually measured in years, that defines the intensity of the effort; and the composition of the adjustment, measured as the proportion of the adjustment obtained from expenditure cuts compared to the proportion gained from tax increases.
Read more about Fiscal Adjustment: Fiscal Adjustments in Europe, Fiscal Adjustments in The United States, Fiscal Adjustments in Latin America, Additional Evidence
Famous quotes containing the word adjustment:
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—“Jennie June” Croly 1829–1901, U.S. founder of the woman’s club movement, journalist, author, editor. Demorest’s Illustrated Monthly and Mirror of Fashions, p. 204 (August 1866)