The potential growth impact of fiscal consolidations

Purpose - This paper aims at analyzing the feasibility of fiscal consolidation implementation in case Indonesia. The main question to be investigated is whether will deteriorate economic growth or not. Methods  This research uses various probabilistic models assess successfulness adjustments. Probit and logit are used as a preliminary estimate. robustness checks conducted by binary extreme value Tobit models. Findings  The results indicate that magnitude government revenue less than spending. They seem increasing (taxes, for instance) harmful compared reducing expenditures, which denies empirically what Keynesian economists approve of. Implication highlight Indonesia’s authority should immediately reform economic, regulatory, institutional environments adopting austerity policies. reforms strongly required realize health well promote growth. Originality contributes literature on policy developing countries. Unlike other empirical studies, this compares actual output over potential output, instead past evaluate consolidations.