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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
Note: POL
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  1. 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.
  2. Romer, Christina D. & Romer, David H., 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," Department of Economics, Working Paper Series qt5h07k8vf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Francesco Daveri & Guido Tabellini, . "Unemployment, Growth and Taxation in Industrial Countries," Working Papers 122, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. repec:aei:rpaper:26118 is not listed on IDEAS
  5. Giavazzi, Francesco & Pagano, Marco, 1990. "Can Severe Fiscal Contractions Be Expansionary? Tales of Two Small European Countries," CEPR Discussion Papers 417, C.E.P.R. Discussion Papers.
  6. Kevin A. Hassett & Andrew G. Biggs & Matthew H. Jensen, 2010. "A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked," Working Papers 16693, American Enterprise Institute.
  7. Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2000. "Fiscal Policy, Profits, and Investment," Boston College Working Papers in Economics 504, Boston College Department of Economics.
  8. Alesina, Alberto F & Favero, Carlo A. & Giavazzi, Francesco, 2012. "The output effect of fiscal consolidations," CEPR Discussion Papers 9105, C.E.P.R. Discussion Papers.
  9. Ardagna, Silvia, 2007. "Fiscal policy in unionized labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1498-1534, May.
  10. Robert F. Westcott & C. John McDermott, 1996. "An Empirical Analysis of Fiscal Adjustments," IMF Working Papers 96/59, International Monetary Fund.
  11. repec:hrv:faseco:3353756 is not listed on IDEAS
  12. 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.
  13. Ardagna, Silvia, 2007. "Fiscal Policy in Unionized Labor Markets," Scholarly Articles 2580048, Harvard University Department of Economics.
  14. Ardagna, Silvia, 2004. "Fiscal Stabilizations: When Do They Work and Why," Scholarly Articles 2580047, Harvard University Department of Economics.
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