We start by considering the role of sovereign debt problems. Are the baseline results picking up greater-than-expected effects of sovereign debt problems rather than the effects of fiscal consolidation? As Table 2 reports, the results are robust to controlling for the initial (end- 2009) government-debt-to-GDP ratio, for the initial fiscal-balance-to-GDP ratio, and for the initial structural fiscal-balance-to-GDP ratio. To ensure that these variables were indeed in the forecasters’ information set, the source of the data is the same (from the April 2010 WEO—IMF, 2010c) as for the fiscal consolidation forecasts. However, since these (backward-looking) measures of the fiscal accounts do not.
