Highly-indebted economies may benefit from front-loaded fiscal adjustments, study finds.
The article presents a way to analyze how a country's economy will be affected by making big changes to its budget over several years. By looking at different factors like how much money the government spends and how it borrows money, the framework helps decide when it's best to make these changes. The study shows that for a country with a lot of debt, it might be better to make the changes quickly, even if it means the economy will slow down. But if there are long-term effects from these changes, it might be better to do them more slowly. The research also suggests that after a crisis, some countries may have been too optimistic about how much their economy would grow, rather than underestimating how much the changes to their budget would affect them.