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:
“The terror of the atom age is not the violence of the new power but the speed of man’s adjustment to it—the speed of his acceptance.”
—E.B. (Elwyn Brooks)