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Some unpleasant fiscal-adjustment arithmetic

Francesco Grigoli () and Eduardo Ley

European Economic Letters, 2014, vol. 3, issue 1, 18-21

Abstract: We document the immediate and permanent impoverishment effect derived from the pure accounting of cutting government expenditure. We calculate the size of this effect for European countries during the fiscal consolidation occurred in 2008-11 and for the next 20 years. The results suggest that the corrected fiscal adjustment may be larger than the programmed one.

Keywords: Accounting; Fiscal adjustment; Government’s output; Impoverishment (search for similar items in EconPapers)
JEL-codes: E01 E62 H83 (search for similar items in EconPapers)
Date: 2014
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