Long-term effects of fiscal policy in Uruguay

Leonel Muinelo-Gallo and Oriol Roca-Sagalés

No 17-02, Documentos de Trabajo (working papers) from Instituto de Economía - IECON

Abstract: Despite being one of the countries with lower levels of inequality in Latin America, Uruguay is characterized by persistent high inequality levels in relation to that upper-middle or high income countries with similar relative size of the public sector. This paper investigates to what extent these two features are interconnected and whether economic growth affects and is affected by this relationship. Empirical results from Vector Autoregression (VAR) models reveal the existence of important long-run Keynesian effects associated to public expenditure, and that the country's expenditure structure is, in part, responsible for increasing disposable household's income inequality, being the public investment the only fiscal policy that breaks this tendency.

Keywords: fiscal policy; economic growth; income inequality; VAR models; Uruguay (search for similar items in EconPapers)
JEL-codes: C5 E6 H3 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2017-02
New Economics Papers: this item is included in nep-lam and nep-mac
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https://hdl.handle.net/20.500.12008/9042

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Persistent link: https://EconPapers.repec.org/RePEc:ulr:wpaper:dt-02-17

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