Fiscal Adjustment and Income Inequality: Sub-National Evidence from Brazil

32 Pages Posted: 20 Apr 2016

See all articles by João Pedro Azevedo

João Pedro Azevedo

World Bank

Antonio C. David

World Bank - Policy Research Department; International Monetary Fund (IMF)

Fabiano Rodrigues Bastos

World Bank - Africa

Emilio Pineda

International Monetary Fund (IMF)

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Date Written: June 1, 2014

Abstract

The paper combines state-level fiscal data with household survey data to assess the links between sub-national fiscal policy and income inequality in Brazil over the period 1995-2011. The results indicate that a tighter fiscal stance at the sub-national level is not associated with a deterioration in inequality measures. This finding contrasts with the conclusions of several papers in the burgeoning literature on the effects of fiscal consolidation on inequality using national data for OECD economies. In addition, the authors find that a tighter stance is typically positively associated with a measure of "shared prosperity" . Hence, the results caution against extrapolating policy implications of the literature focusing on advanced economies to other settings.

Keywords: Subnational Economic Development, Debt Markets, Inequality, Economic Theory & Research, Poverty Impact Evaluation

Suggested Citation

Wagner de Azevedo, João Pedro and David, Antonio C. and Bastos, Fabiano and Pineda, Emilio, Fiscal Adjustment and Income Inequality: Sub-National Evidence from Brazil (June 1, 2014). World Bank Policy Research Working Paper No. 6945, Available at SSRN: https://ssrn.com/abstract=2459217

João Pedro Wagner de Azevedo (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Antonio C. David

World Bank - Policy Research Department ( email )

1818 H Street
Washington, DC 20433
United States

International Monetary Fund (IMF) ( email )

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

Fabiano Bastos

World Bank - Africa ( email )

1818 H Street
Washington, DC 20433
United States

Emilio Pineda

International Monetary Fund (IMF) ( email )

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

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