Assessing welfare impacts of some debt-consolidation episodes in the European Union

Miguel Viegas () and Ana Ribeiro
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Miguel Viegas: GOVCOPP, DEGEI, Universidade de Aveiro

CEF.UP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: This paper aims at characterizing debt consolidation processes put forward by some European countries in order to assess welfare and, in particular, the inequality effects involved. For that we built a general equilibrium heterogeneous-agent model capable of exploring the relationship between fiscal policy variables and the endogenous crosssection distribution of income and wealth. Results show that, with the exception of the Belgian case, all consolidation strategies entail positive welfare gains. The transition costs affect all episodes and are determinant in sorting among the welfareenhancing strategies. Our results confirm the superiority of the adjustments based on unproductive expenditures over those based on tax increases or social transfer reductions. Finally, all strategies involve lower welfare inequality costs.

Keywords: fiscal consolidation dynamics; European Union; heterogeneous agent model; inequality; welfare. (search for similar items in EconPapers)
JEL-codes: E17 E60 H60 I30 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2011-10
New Economics Papers: this item is included in nep-mac and nep-pub
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: ASSESSING WELFARE IMPACTS OF SOME DEBT-CONSOLIDATION EPISODES IN THE EUROPEAN UNION (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:por:cetedp:1106

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