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Front-loaded consolidations, in particular, have tended to increase public debt in the short- run, even as risk premiums fell. Empirically, fiscal effort has been more
Front-loaded consolidations, in particular, have tended to increase public debt in the short- run, even as risk premiums fell. Empirically, fiscal effort has been more likely to reduce public debt when growth has been stronger.
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Show how the debt-to-GDP ratio increases in the short- run when fiscal consolidations come at the cost of lower economic activity. Explain
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