Cross-Country Evidence on the Distributional Impact of Fiscal Policy

38 Pages Posted: 16 Jan 2014 Last revised: 4 May 2018

See all articles by Simone Salotti

Simone Salotti

Oxford Brookes University

Carmine Trecroci

University of Brescia

Date Written: April 26, 2018

Abstract

This paper provides new evidence on the distributional effects of fiscal policy using data on a panel of OECD economies over the last four decades. We study how four measures of income inequality and poverty respond to several stock and flow variables accounting for fiscal actions. We find that increases in government debt and expenditure promote a less unequal distribution of income. We detect a significant distributional impact of education and social spending, as well as of government consumption expenditure. We also investigate potential redistributive implications of large fiscal expansion and consolidation episodes, finding no evidence of additional effects beyond those associated with conventional fiscal variables.

Keywords: Fiscal policy, income inequality, poverty, distributional effects

JEL Classification: E62, D63, D31

Suggested Citation

Salotti, Simone and Trecroci, Carmine, Cross-Country Evidence on the Distributional Impact of Fiscal Policy (April 26, 2018). Available at SSRN: https://ssrn.com/abstract=2379441 or http://dx.doi.org/10.2139/ssrn.2379441

Simone Salotti

Oxford Brookes University ( email )

United Kingdom

HOME PAGE: http://simonesalotti.wordpress.com

Carmine Trecroci (Contact Author)

University of Brescia ( email )

Via San Faustino 74B
Brescia, 25122
Italy

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