Does fiscal adjustment affect income inequality? A new evidence of WAEMU countries

Mohamed Traoré and Zié Ballo
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Mohamed Traoré: CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique
Zié Ballo: UFHB - Université Félix Houphouët-Boigny [Abidjan, Côte d'Ivoire]

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Abstract: This paper examines the distributional effects of fiscal consolidation in WAEMU area, using Driscoll and Kraay fixed effects estimation method. Using a tighter fiscal stance, measured by changes in the cyclically-adjusted primary balance (CAPB), over the period 1990-2015, it shows income gap decreases after periods of fiscal adjustments in the region. These finding are contrary to the results of several works focusing on fiscal consolidation. Our results also suggest that when fiscal consolidation is achieved via revenue side, income inequality seems to be reduced further. However, reductions in primary expenditures do not seem to reduce the income gap.

Keywords: Fiscal consolidation; Income inequality; Panel data; WAEMU (search for similar items in EconPapers)
Date: 2018-11-30
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