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The Impact of Fiscal Consolidation on Inequality:The Case of V4 Countries

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  • Peter Mandzak

Abstract

The aim of this paper is to provide the first empirical evidence ofthe impact of fiscal consolidation on income inequality in V4 countries.Although the literature on income inequality and its various determinantsis wide, there are still some areas in this topic, where the research islacking.Different specifications of models imply that fiscal consolidation in V4countries leads to an increase in income inequality. Results of our analy-sis suggest, that fiscal consolidation larger than 2 % of GDP has negativeimpact on equality in V4 countries, while this effect is stronger than theeffects of our control variables – GDP growth, change in total factor pro-ductivity (TFP), change in trade openness, mean years of schooling andunemployment. Change in structural balance seems to have no effect onincome inequality in the given countries. However, structural balance havesurprisingly negative effect. We believe it is due to the structure of ourdata set, which contains only three observations with positive structuralbalance.

Suggested Citation

  • Peter Mandzak, "undated". "The Impact of Fiscal Consolidation on Inequality:The Case of V4 Countries," Department of Economic Policy Working Paper Series 015, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    • Handle: RePEc:brt:depwps:015
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    References listed on IDEAS

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    More about this item

    Keywords

    income inequality; fiscal consolidation; V4 countries;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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