Description

This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.

Taxonomy

Economic policy , Fiscal policy

More publications in this series: Working Papers

More publications by: Laurence M Ball ; Davide Furceri ; Daniel Leigh ; Prakash Loungani