The Distributional Effects of Fiscal Consolidation
25 Pages Posted: 11 Jul 2013
Date Written: June 2013
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: Fiscal consolidation, OECD, Developed countries, Income distribution, Cross country analysis, fiscal consolidation, distributional effects, income inequality, fiscal consolidation episodes, fiscal consolidations, fiscal adjustments, public debt, fiscal policy, fiscal adjustment, fiscal measures, tax revenue, spending cuts, fiscal actions, fiscal balances, fiscal positions, fiscal variables, fiscal plans, fiscal tightening, government spending, tax revenues, taxation, tax policy, budget deficit, public expenditures, fiscal expansions, fiscal stimulus, tax rates
JEL Classification: E62, E64, D63
Suggested Citation: Suggested Citation