The bail-out plan makes unprecedented demands for fiscal adjustment to trim both the current-account deficit and inflation.
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Some analysts reckon that, once the fiscal adjustment is in place early next year, a modest devaluation will follow.
Implementing pro-growth reforms as part of the fiscal adjustment process can minimize any economic cost that budget cuts may have.
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Mr Hollande is not suggesting slower fiscal adjustment to smooth the path of reform: he is proposing not to reform at all.
But more modest Medicaid cuts will almost certainly be part of the fiscal adjustment that is coming in the next few years.
For the euro to survive, Europeans need to be prepared not just for painful fiscal adjustment but for profound structural reform as well.
But large and persistent surpluses in countries like China mean continued demand for American assets, reducing the need for fiscal adjustment by either country.
As for inflexibility, though true, it is not much of a problem if the short-term fiscal adjustment also makes sense on long-term structural grounds.
Good progress has been achieved in meeting the Toronto fiscal commitments, although the weaker-than-expected economic outcomes has affected the fiscal adjustment paths of some countries.
Despite the toughest fiscal adjustment by any rich country since 1945, Greece's debt burden will, on plausible assumptions, peak at 165% of GDP by 2014.
Indeed, Brazil's currency regime may have made much-needed fiscal adjustment harder: now that Brazilians have conquered inflation, they are loth to push through painful budgetary reforms.
But if oil prices stayed low for longer, there will have to be a fiscal adjustment, maybe cutting back on expenditures by as much as 3% of GDP.
The report merely repeats what it has said before - that "greater near-term flexibility in the path of fiscal adjustment should be considered in the light of lacklustre private demand".
The Goldilocks policy, as the IMF calls it, urges countries to embark on a gradual fiscal adjustment in the short term, if the markets allow it, coupled with a credible medium-term debt-reduction plan.
These purchases would in turn aim to improve sentiment in bond markets and buy some time to allow fiscal adjustment measures to work and the eurozone to demonstrate that the fiscal compact is meaningful.
The coalition will be relying on increased state revenue to account for about 80 per cent of the fiscal adjustment required in 2013 -- a reversal of the original bailout plan, in which consolidation was to be achieved mainly through spending cuts.
In truth, the Italian experience is consistent with the findings of a growing body of academic literature on the issue: fiscal adjustment dominated by tax increases typically is a recipe for failure: It fails to stabilize the debt and it is more likely to cause economic contractions.
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Automatic or independent fiscal-policy adjustment (on top of so-called automatic stabilisers that operate in any case) may be difficult to develop.
If the government tries to stave off that adjustment by massive fiscal means, it might delay the further interest-rate cuts that financial markets expect in coming months.
Outside of the U.S., growth prospects will also be limited by fiscal consolidation, business uncertainty and structural adjustment in Europe.
That will mean that the only adjustment mechanism they have to meet that with is fiscal and unemployment: pressure on wages, pressure on prices.
Those calling for immediate action may be right that losses should fall mainly on creditors in the form of higher inflation and fiscal transfers since the alternative of forcing citizens of indebted countries to bear the cost of adjustment is politically impossible and likely to lead to a collapse in the euro.
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