The Distributional Effects of Fiscal Consolidation

Laurence Ball, Davide Furceri, Daniel Leigh and Prakash Loungani

No 2013/151, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.

Keywords: WP; price boom; Fiscal consolidation; distributional effects; income inequality; income share; budget outcome; long-term unemployment; effects of fiscal consolidation; distributional effect; contractionary effect; Income; Unemployment; Income distribution; Global (search for similar items in EconPapers)
Pages: 24
Date: 2013-06-21
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Citations: View citations in EconPapers (84)

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