First, as the paper notes, expenditure adjustments are relatively rare. While the paper argues that expenditure adjustments are clearly preferable in the sense of producing better growth outcomes, it identifies almost three times as many tax adjustments as expenditure adjustments. With just 11 spending adjustments in more than 600 country/year observations, expenditure adjustments are clearly not very common. The paper argues that expenditure adjustments have essentially only come about when driven by crises of confidence in which the financial markets were no longer willing to lend to these countries. The second point is that the.
