Income inequality, fiscal stimuli and political (in)stability

Luca Agnello (), Vitor Castro, Joao Jalles and Ricardo Sousa

International Tax and Public Finance, 2017, vol. 24, issue 3, No 6, 484-511

Abstract: Abstract Using data for a large panel of countries, this paper investigates the role played by income inequality and fiscal stimuli episodes in shaping the likelihood of political stability. By means of Tobit estimations, we show that a rise in inequality increases the probability of government crises. However, such adverse distributional effect is reduced when expansionary or increasingly expansionary fiscal stimuli episodes or successful fiscal stimuli programs are put in place.

Keywords: Income distribution; Fiscal stimuli; Expansionary policies; Political environment; Institutional quality; Tobit regression (search for similar items in EconPapers)
JEL-codes: G01 G15 H63 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s10797-016-9428-x

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