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Some unpleasant fiscal-adjustment arithmetic

Author

Listed:
  • Grigoli, Francesco

    (International Monetary Fund, 700 19th Street NW, Washington DC, 20431, USA)

  • Ley, Eduardo

    (World Bank, 1800 H Street NW, Washington DC, 20433, USA)

Abstract

We document the immediate and permanent impoverishment effect derived from the pure accounting of cutting government expenditure. We calculate the size of this effect for European countries during the fiscal consolidation occurred in 2008-11 and for the next 20 years. The results suggest that the corrected fiscal adjustment may be larger than the programmed one.

Suggested Citation

  • Grigoli, Francesco & Ley, Eduardo, 2014. "Some unpleasant fiscal-adjustment arithmetic," European Economic Letters, European Economics Letters Group, vol. 3(1), pages 18-21.
    • Handle: RePEc:ris:eueclt:0022
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    More about this item

    Keywords

    Accounting; Fiscal adjustment; Government’s output; Impoverishment;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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