Please use this identifier to cite or link to this item: http://hdl.handle.net/1822/14588

TitleFiscal consolidation and income inequality
Author(s)Agnello, Luca
Sousa, Ricardo M.
KeywordsFiscal consolidation
Income inequality
Kuznets curve
Issue date2011
PublisherUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
Abstract(s)In this paper, we assess the impact of fiscal consolidation on income inequality. Using a panel of 18 industrialized countries from 1970 to 2010, we find that income inequality significantly rises both during periods of fiscal consolidation and in the aftermath of such adjustments. In addition, fiscal authority that is driven by spending cuts seems to be more detrimental for income distribution than in the case of tax hikes. Considering the linkages between banking crises and fiscal consolidation, we show that the impact on the income gap is amplified when fiscal adjustments take place after the resolution of such financial turmoils. Our results also provide support for the Kuznets relationship and corroborate the idea that trade can lead to a more unequal distribution of income.
TypeWorking paper
URIhttp://hdl.handle.net/1822/14588
Publisher versionhttp://www.eeg.uminho.pt/economia/nipe
Peer-Reviewedno
AccessOpen access
Appears in Collections:NIPE - Documentos de Trabalho

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