What Do We Know about the Effects of Austerity?

Alberto Alesina, Carlo Favero () and Francesco Giavazzi

AEA Papers and Proceedings, 2018, vol. 108, 524-30

Abstract: The literature on fiscal multipliers is far from having reached an agreed upon conclusion. One result, however, seems very robust: in OECD economies, fiscal consolidations based upon expenditure cuts are much less costly than those performed on the tax side. The purpose of this paper is twofold. First, we review recent evidence which considers multi-year fiscal plans. Analyzing multi-year plans is a better way of studying the effects of fiscal policy because governments typically adopt multi-year budget laws. Second, we illustrate alternative theoretical explanations for our findings and we discuss which ones seem more appropriate in different cases.

JEL-codes: E62 H20 H61 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/pandp.20181062
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Citations: View citations in EconPapers (53)

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Related works:
Working Paper: What do we know about the effects of austerity? (2018)
Working Paper: What do we know about the effects of Austerity? (2018)
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