Composition and Determinants of Fiscal Adjustment's Success in the EU27 Context

The current context brings new challenges posed by the decrease of public revenues,through lowering the tax base and the capacity to collect taxes, and by the inabilityto adjust the public expenditures. All countries face the challenges of fiscal adjustment.The aim of this paper is to identify the determinant factors of success for fiscal adjustmentepisodes in the UE 27 context. The considered factors are the need, the size and the compositionof the fiscal adjustment. The result of the logit models concluded that significant fiscaladjustments lead to sustainable deficit reduction, while the composition of fiscal adjustmentsthrough policies based on public expenditure or revenues does not significantly influence theprobability of success.1