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Assessing Fiscal Episodes

ISEG Working Paper No. 15/2011/DE/UECE

41 Pages Posted: 17 Sep 2011  

Antonio Afonso

University of Lisbon - School of Economics and Management; UECE (Research Unit on Complexity and Economics); University of Lisbon - ISEG School of Economics and Management; University of Lisbon - ISEG (School of Economics and Management)

João Tovar Jalles

International Monetary Fund (IMF); Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Date Written: September 16, 2011

Abstract

In an OCDE panel, for the period 1970-2010, we assess the effects of fiscal consolidation episodes, with four different definitions. Our results reveal that lower final government consumption would increase private consumption in three out of the four approaches, when there is a fiscal consolidation, and the debt ratio is above the cross-country average. The change in the cyclically adjusted primary balance and the duration of the consolidation episode contribute for the success of the consolidation, and the opposite applies if the latter is more based on the revenue side. Finally, the effects of social transfers on private investment tend to be negative.

Keywords: fiscal consolidation, non-Keynesian effects, panel data, logit

JEL Classification: C23, E21, E62, H5, H62

Suggested Citation

Afonso, Antonio and Jalles, João Tovar, Assessing Fiscal Episodes (September 16, 2011). ISEG Working Paper No. 15/2011/DE/UECE. Available at SSRN: https://ssrn.com/abstract=1928972 or http://dx.doi.org/10.2139/ssrn.1928972

Antonio Afonso (Contact Author)

University of Lisbon - ISEG (School of Economics and Management) ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal
+351 21 392 5985 (Phone)
+351 21 396 6407 (Fax)

HOME PAGE: http://www.iseg.utl.pt/~aafonso/AAWeb.html

University of Lisbon - School of Economics and Management ( email )

Rua do Quelhas, n.º 6
Lisbon, 1200-781
Portugal

UECE (Research Unit on Complexity and Economics)

Rua Miguel Lupi 20
Lisbon, 1249-078
Portugal
+351-213 925 912 (Phone)
+351-213 971 196 (Fax)

HOME PAGE: http://www.iseg.utl.pt/~uece/

University of Lisbon - ISEG School of Economics and Management ( email )

Rua do Quelhas 6
Lisboa, 1200-781
Portugal

João Tovar Jalles

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE)

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

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