Can successful fiscal adjustments only be achieved by spending cuts?
Richard Jong-A-Pin () and
Jakob de Haan ()
European Journal of Political Economy, 2018, vol. 54, issue C, 145-166
We re-examine the conventional view that to be successful, fiscal adjustments should rely on spending cuts and not on tax increases. We apply the Bai-Perron structural break filter to identify fiscal adjustments and their successfulness in 20 OECD countries. Our results suggest that the composition of fiscal adjustments is not related to their success. Furthermore, we find that political-economy variables considered are not robustly related to successful fiscal adjustments with one exception: the probability of a successful fiscal adjustment increases if left-wing governments rely on spending cuts and right-wing governments rely on tax increases.
Keywords: Fiscal adjustments; Fiscal consolidation; Deficit reduction; Fiscal policy reforms; Taxes versus spending; Taxation; Government expenditure (search for similar items in EconPapers)
JEL-codes: H20 H30 H50 H62 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:54:y:2018:i:c:p:145-166
Access Statistics for this article
European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung
More articles in European Journal of Political Economy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().