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The design of fiscal adjustments

  • Alberto F. Alesina
  • Silvia Ardagna

This paper offers three results. First, in line with the previous literature, we confirm that fiscal adjustments based mostly on the spending side are less likely to be reversed. Second, spending based fiscal adjustments have caused smaller recessions than tax based fiscal adjustments. Finally, certain combinations of policies have made it possible for spending based fiscal adjustments to be associated with growth in the economy even on impact rather than with a recession. Thus, expansionary fiscal adjustments are possible.

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File URL: http://www.nber.org/papers/w18423.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18423.

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Date of creation: Sep 2012
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Publication status: published as The Design of Fiscal Adjustments , Alberto Alesina, Silvia Ardagna. in Tax Policy and the Economy, Volume 27 , Brown. 2013
Handle: RePEc:nbr:nberwo:18423
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  1. Kevin A. Hassett & Andrew G. Biggs & Matt Jensen, 2010. "A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked," AEI Economics Working Papers 16693, American Enterprise Institute.
  2. Francesco Giavazzi & Marco Pagano, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries," NBER Chapters, in: NBER Macroeconomics Annual 1990, Volume 5, pages 75-122 National Bureau of Economic Research, Inc.
  3. repec:hrv:faseco:3353756 is not listed on IDEAS
  4. Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2002. "Fiscal Policy, Profits, and Investment," American Economic Review, American Economic Association, vol. 92(3), pages 571-589, June.
  5. Christina D. Romer & David H. Romer, 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," NBER Working Papers 2966, National Bureau of Economic Research, Inc.
  6. Robert F. Westcott & C. John McDermott, 1996. "An Empirical Analysis of Fiscal Adjustments," IMF Working Papers 96/59, International Monetary Fund.
  7. Alesina, Alberto Francesco & Ardagna, Silvia, 2010. "Large Changes in Fiscal Policy: Taxes versus Spending," Scholarly Articles 22801844, Harvard University Department of Economics.
  8. Daveri, Francesco & Tabellini, Guido, 1997. "Unemployment, Growth and Taxation in Industrial Countries," CEPR Discussion Papers 1681, C.E.P.R. Discussion Papers.
  9. Alberto Alesina & Carlo Favero & Francesco Giavazzi, 2012. "The Output Effect of Fiscal Consolidations," NBER Working Papers 18336, National Bureau of Economic Research, Inc.
  10. von Hagen, Jurgen & Strauch, Rolf R, 2001. "Fiscal Consolidations: Quality, Economic Conditions, and Success," Public Choice, Springer, vol. 109(3-4), pages 327-46, December.
  11. Andrea Pescatori & Daniel Leigh & Jaime Guajardo & Pete Devries, 2011. "A New Action-Based Dataset of Fiscal Consolidation," IMF Working Papers 11/128, International Monetary Fund.
  12. Ardagna, Silvia, 2007. "Fiscal policy in unionized labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1498-1534, May.
  13. Ardagna, Silvia, 2004. "Fiscal Stabilizations: When Do They Work and Why," Scholarly Articles 2580047, Harvard University Department of Economics.
  14. Ardagna, Silvia, 2007. "Fiscal Policy in Unionized Labor Markets," Scholarly Articles 2580048, Harvard University Department of Economics.
  15. repec:aei:rpaper:26118 is not listed on IDEAS
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