The Composition of Fiscal Adjustments: Economic and Social Implications

Authors

David Vilalta, University of WarwickFollow

Abstract

We examine episodes of fiscal adjustments in OECD countries from 2000 to 2014 and analyse its short- and long-run impact on economic growth and inequality. This paper offers two results. First, in line with previous literature, we find that in the short run, spending-based adjustments are more expansionary than tax-based adjustments, although they are associated with higher inequality. Second, we find that in the long run, spending-based adjustments are still more expansionary, and their impact on inequality is smaller than that of tax-based adjustments.

Recommended Citation

Vilalta, David (2015) "The Composition of Fiscal Adjustments: Economic and Social Implications," Undergraduate Economic Review: Vol. 12: Iss. 1, Article 18.
Available at: https://digitalcommons.iwu.edu/uer/vol12/iss1/18