Do fiscal rules breed inequality? First evidence for the EU

Jochen Hartwig and Jan-Egbert Sturm

Economics Bulletin, 2019, vol. 39, issue 2, 1508-1515

Abstract: Research into the effects of fiscal rules has so far focused on their budgetary impact. Possible unwanted side effects of having fiscal rules have gone largely unexplored. This is unfortunate since such side effects are highly probable. For instance, governments attempting to abide by a fiscal rule might curb social expenditure; and this could lead to a higher level of income inequality. We test this hypothesis with data from the Standardized World Income Inequality Database (SWIID) and a new set of fiscal rules dummy variables for EU countries. We find that after 'hard' rules, i.e. rules that are reinforced by sanctions and/or automatic correction mechanisms, have been in place for several years, the amount of redistribution in a country declines, leading to an increase in inequality based on disposable income measures.

Keywords: Fiscal rules; Inequality; European Union (search for similar items in EconPapers)
JEL-codes: E6 H3 (search for similar items in EconPapers)
Date: 2019-06-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I2-P142.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-18-00693

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley (j.p.conley@vanderbilt.edu).