FISCAL CONSOLIDATION PROGRAMS AND INCOME INEQUALITY

• 成果类型: Article
• 署名作者: Brinca, Pedro; Ferreira, Miguel H.; Franco, Francesco; Holter, Hans A.; Malafry, Laurence
• 署名单位: Universidade Nova de Lisboa; University of Cambridge; University of Oslo; Potsdam Institut fur Klimafolgenforschung
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12482
• 发表日期: 2021
• 页码: 405-460
• 关键词: tax progressivity; Heterogeneity; GROWTH; WEALTH; POLICY; multipliers; elasticity; austerity

摘要

We document a strong empirical relationship between higher income inequality and stronger recessive impacts of fiscal consolidation episodes across time and space. To explain this finding, we develop a life-cycle economy with uninsurable income risk. We calibrate our model to match key characteristics of several European economies, including inequality and fiscal structures, and study the effects of fiscal consolidation programs. In our model, higher income risk induces precautionary savings behavior, which decreases the proportion of credit-constrained agents in the economy. These agents have less elastic labor supply responses to fiscal consolidations, which explain the correlation with inequality in the data.