Summary of Shocks to the Purse

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The Great Recession, euro-zone crises and Brexit were exogenous shocks to sovereign economies and, by extension, to their finances. International Monetary Fund economists Benedict Clements, Xavier Debrun, Brian Olden and Amanda Sayegh explore the relationship between these “fiscal risks” and their effects on public sector finances. Governments, the authors contend, must put in place policy frameworks for forecasting the impacts of fiscal risk events, as well as a series of measures to manage and alleviate the outcomes. getAbstract recommends this enlightening overview to public officials, economists and financial professionals.

In this summary, you will learn

  • What “fiscal risks” and “fiscal shocks” entail;
  • How frequently these events occur; and
  • How policy makers can most effectively understand and craft responses to unexpected, financially catastrophic occurrences.

About the Authors

Benedict Clements et al. are economists with the International Monetary Fund.



Governments devote considerable resources to budget forecasts, reviews, and revisions to taxes and spending allocations. Then the unanticipated happens: “Fiscal shocks” are costly events. The perpetrators most often are “fiscal risks” in the form of economic downturns, bailouts of banks or state-owned...

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