Publication: The Design of Fiscal Adjustments
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Date
2013
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Published Version
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Publisher
University of Chicago Press
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Citation
Alesina, Alberto, and Silvia Ardagna. 2013. “The Design of Fiscal Adjustments.” Tax Policy and the Economy 27 (1) (August): 19–68. doi:10.1086/671243.
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Abstract
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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Keywords
deficit reduction, policy reforms, taxes versus spending
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