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A key objective of fiscal policy is to maintain the sustainability of public finances and avoid crises. Remarkably, there is very limited analysis on fiscal crises. This paper presents a new database of fiscal crises covering different country groups, including low-income developing countries (LIDCs) that have been mostly ignored in the past. Countries faced on average two crises since 1970, with the highest frequency in LIDCs and lowest in advanced economies. The data sheds some light on policies and economic dynamics around crises. LIDCs, which are usually seen as more vulnerable to shocks, appear to suffer the least in crisis periods. Surprisingly, advanced economies face greater turbulence (growth declines sharply in the first two years of the crisis), with half of them experiencing economic contractions. Fiscal policy is usually procyclical as countries curtail expenditure growth when economic activity weakens. We also find that the decline in economic growth is magnified if accompanied by a financial crisis.

Fiscal policy. --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Government policy --- Exports and Imports --- Financial Risk Management --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- National Deficit Surplus --- Debt --- Debt Management --- Sovereign Debt --- Fiscal Policy --- Studies of Particular Policy Episodes --- General Outlook and Conditions --- Financial Crises --- International Lending and Debt Problems --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Public finance & taxation --- Economic & financial crises & disasters --- International economics --- Monetary economics --- Public debt --- Financial crises --- Debt default --- Fiscal consolidation --- Credit --- External debt --- Fiscal policy --- Money --- Debts, Public --- Debts, External --- Indonesia