Year: 1996
Type: report
Abstract: This paper studies how the composition of fiscal adjustments influences their likelihood of "success," defined as a long lasting deficit reduction, and their macroeconomic consequences.We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary.On the contrary fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary.We discuss alternate explanations for these findings by studying both a full sample of OECD countries and by focusing on three case studies: Denmark, Ireland and Italy.
DOI: 10.3386/w5730
Authors: Alberto Alesina, Roberto Perotti
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Funder: National Science Foundation
OpenAlex ID: W2155164605