Fiscal consolidation and income inequality in Latin America and the Caribbean

Takuji Komatsuzaki

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper estimates the effects of past fiscal consolidations in Latin America and the Caribbean (LAC) on income inequality. For the 13 LAC countries with fiscal consolidation episodes identified by the narrative approach, one percent of GDP fiscal consolidation increases the disposable Gini coefficient by 0.12 percentage point on average in five years. The size of the effect tends to be larger for tax-based consolidations and for non-commodity exporters but broadly similar during booms and slumps.

Keywords: Latin America and the Caribbean; fiscal consolidation; income inequality (search for similar items in EconPapers)
JEL-codes: D30 E62 H20 H50 H60 O54 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2024-03-20
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Published in Economía, 20, March, 2024, 23(1), pp. 74 – 88. ISSN: 1529-7470

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