Fiscal Adjustments in OECD Countries - Composition and Macroeconomic Effects
AbstractThis ppaer studies how the composition of fiscal adjustments influences their likelihood of success, defined as a long lasting deficit reduction, and their macroeconomic consequences. We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary. On the contrary fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary. We discuss alternate explanations for these findings by studying both a full sample of OECD countries and by focusing on three case studies: Denmark, Ireland and Italy.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 96/70.
Date of creation: 01 Jul 1996
Date of revision:
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Postal: International Monetary Fund, Washington, DC USA
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Other versions of this item:
- Alberto Alesina & Roberto Perotti, 1996. "Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects," NBER Working Papers 5730, National Bureau of Economic Research, Inc.
- H1 - Public Economics - - Structure and Scope of Government
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
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- The Impact of Spending Cuts on the Economy
by Veronique de Rugy in The Corner on 2011-02-25 14:55:00
- The case for Mr Osborne's austerity
by ? in BBC NEWS | Stephanomics on 2010-09-07 09:45:25
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