National fiscal consolidations and regional inequality in Europe

Luca Agnello (), Giorgio Fazio and Ricardo Sousa

Cambridge Journal of Regions, Economy and Society, 2016, vol. 9, issue 1, 59-80

Abstract: Using annual data for 13 European countries over the period 1980–2008, we assess the impact of national fiscal consolidations on the income inequality of European regions. Regional dispersion increases in the outcome of consolidation episodes, particularly, when packages are more severe and implemented through spending cuts rather than tax rises. From a policy perspective, these findings suggest that fiscal consolidations driven by reductions in government spending can exacerbate regional disparities and may ultimately counteract the European policy efforts to promote territorial cohesion. Our results are robust to alternative inequality measures, the occurrence of crisis episodes and the exclusion of fiscal outliers.

Date: 2016
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Cambridge Journal of Regions, Economy and Society is currently edited by Judith Clifton, Anna Davies, Betsy Donald, Emil Evenhuis, Stefania Fiorentino (Associate Editor), Harry Garretsen, Meric Gertler, Amy Glasmeier, Mia Gray, Robert Hassink, Dieter Kogler, Michael Kitson, Linda Lobao, Charles van Marrewijk, Ron Martin, Peter Sunley, Peter Tyler and Chun Yang

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