IDEAS home Printed from https://ideas.repec.org/a/spr/qualqt/v51y2017i4d10.1007_s11135-016-0347-9.html
   My bibliography  Save this article

Can civilian disability pensions overcome the poverty issue? A DSGE analysis for Italian data

Author

Listed:
  • Massimiliano Agovino

    () (University of Naples “Parthenope”)

  • Maria Ferrara

    () (University of Naples “Parthenope”)

Abstract

Abstract In Italy, poverty and disability are two strictly related issues. Households with disabled members continuously face a poverty risk. We simulate a simple Real Business Cycle model to investigate the macroeconomic effects of a permanent increase of civilian disability pensions. We stress the effectiveness of such a policy to stimulate private consumptions. The exercise is implemented via the reduction—both temporary and permanent—of public spending. Results show both the long- and short-run trade-off the policy maker has to deal with when the disability-poverty dualism becomes a relevant issue. In the long-run, a minimum increase of civilian disability pensions allows households with a disabled member to consume more and to exit from poverty condition. However, while temporary decline of public consumption entails a larger decrease of income inequality between the two groups of households, permanent reduction dampens the unavoidable recessionary effect. In the short-run, a temporary reduction of public spending causes an immediate surge of the consumption of households with a disabled member at a cost of a deep recession. By the opposite, a permanent public spending reduction softens the unavoidable output slump but private consumptions only gradually increase.

Suggested Citation

  • Massimiliano Agovino & Maria Ferrara, 2017. "Can civilian disability pensions overcome the poverty issue? A DSGE analysis for Italian data," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1469-1491, July.
  • Handle: RePEc:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0347-9
    DOI: 10.1007/s11135-016-0347-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11135-016-0347-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bilbiie, Florin O., 2008. "Limited asset markets participation, monetary policy and (inverted) aggregate demand logic," Journal of Economic Theory, Elsevier, vol. 140(1), pages 162-196, May.
    2. Jordi Galí & J. David López-Salido & Javier Vallés, 2007. "Understanding the Effects of Government Spending on Consumption," Journal of the European Economic Association, MIT Press, vol. 5(1), pages 227-270, March.
    3. Dávila Quintana, C. Delia & Malo, Miguel A., 2012. "Poverty dynamics and disability: An empirical exercise using the European community household panel," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 350-359.
    4. Giuliana Parodi & Dario Sciulli, 2012. "Disability and low income persistence in Italian households," International Journal of Manpower, Emerald Group Publishing, vol. 33(1), pages 9-26, March.
    5. Parodi, Giuliana & Sciulli, Dario, 2012. "Disability and Social Exclusion Dynamics in Italian Households," MPRA Paper 42445, University Library of Munich, Germany.
    6. John Y. Campbell & N. Gregory Mankiw, 1989. "Consumption, Income and Interest Rates: Reinterpreting the Time Series Evidence," NBER Chapters,in: NBER Macroeconomics Annual 1989, Volume 4, pages 185-246 National Bureau of Economic Research, Inc.
    7. Iacoviello, Matteo & Pavan, Marina, 2013. "Housing and debt over the life cycle and over the business cycle," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 221-238.
    8. repec:wly:jmoncb:v:48:y:2016:i:8:p:1877-1888 is not listed on IDEAS
    9. repec:fth:harver:1435 is not listed on IDEAS
    10. Shanaka J Peiris & Magnus Saxegaard, 2007. "An Estimated DSGE Model for Monetary Policy Analysis in Low-Income Countries," IMF Working Papers 07/282, International Monetary Fund.
    11. Maria Ferrara & Patrizio Tirelli, 2014. "Fiscal Consolidations: Can We Reap the Gain and Escape the Pain?," Working Papers 283, University of Milano-Bicocca, Department of Economics, revised Oct 2014.
    12. Emily Anderson & Atsushi Inoue & Barbara Rossi, 2016. "Heterogeneous Consumers and Fiscal Policy Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 48(8), pages 1877-1888, December.
    13. Tarricone, Rosanna & Gerzeli, S. & Montanelli, R. & Frattura, Lucilla & Percudani, Mauro & Racagni, Giorgio, 2000. "Direct and indirect costs of schizophrenia in community psychiatric services in Italy: The GISIES study," Health Policy, Elsevier, vol. 51(1), pages 1-18, February.
    14. Morciano, Marcello & Hancock, Ruth & Pudney, Stephen, 2012. "Disability costs and equivalence scales in the older population," ISER Working Paper Series 2012-09, Institute for Social and Economic Research.
    15. Giuliana Parodi & Dario Sciulli, 2008. "Disability in Italian households: income, poverty and labour market participation," Applied Economics, Taylor & Francis Journals, vol. 40(20), pages 2615-2630.
    16. Massimiliano Agovino & Giuliana Parodi, 2012. "Civilian Disability Pensions as an Antipoverty Policy Instrument? A Spatial Analysis of Italian Provinces, 2003–2005," AIEL Series in Labour Economics,in: Giuliana Parodi & Dario Sciulli (ed.), Social Exclusion. Short and Long Term Causes and Consequences, edition 1, chapter 8, pages 149-167 AIEL - Associazione Italiana Economisti del Lavoro.
    17. Giuliana PARODI, 2004. "Problematiche inerenti all’inserimento lavorativo dei disabili, con particolare riferimento alla recente produzione legislativa," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 112(3), pages 339-351.
    18. Jeffrey C. Fuhrer, 2000. "Habit Formation in Consumption and Its Implications for Monetary-Policy Models," American Economic Review, American Economic Association, vol. 90(3), pages 367-390, June.
    19. Asghar Zaidi & Tania Burchardt, 2005. "Comparing Incomes When Needs Differ: Equivalization For The Extra Costs Of Disability In The U.K," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(1), pages 89-114, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Disability; Poverty; Fiscal policy;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0347-9. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.