Large Changes in Fiscal Policy: Taxes versus Spending

Alesina, Alberto; Ardagna, Silvia

doi:10.1086/649828

Cited by 580 publications

(533 citation statements)

References 25 publications

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“…Contrary to recommendations by Alesina and Ardagna (2010) that spending cuts are more appropriate for stabilising the sovereign debt than tax increases, our results suggest the feasibility of revenue-based fiscal consolidation in Ukraine, as better tax collection as the main source of government revenue may contribute to economic growth even in the short run. At the same time, Ukraine would be better off if the government increased investments in infrastructure, health and education.…”

Section: Resultscontrasting

confidence: 99%

“…Although it is common in empirical studies to prefer government expenditure cuts over revenue-based consolidations (Alesina & Ardagna 2010, Alesina, Favero & Giavazzi 2015, including the experience of fiscal consolidations in the CEE countries for the 1991-2003 period (Afonso, Nickel & Rother 2006), there is evidence is that higher taxes could stimulate private consumption (Giavazzi et al 2005). Even though it is customary to consider tax multipliers for the CEE countries to be small and short--lived, as implied by contradictory results from VAR models with different identification techniques (Karagyozova-Markova, Deyanov & Iliev 2013), it is not confirmed that a positive revenue shock could be expansionary.…”

Section: Introductionmentioning

confidence: 99%

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Fiscal Policy Effects in Ukraine

Shevchuk

Kopych

2018

AOC

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This paper empirically analyses fiscal policy effects in Ukraine using different identification strategies within the framework of a vector error correction model (VECM). For quarterly data from 2001 to 2016, we find a robust positive impact of both government expenditure and net revenue upon output in Ukraine, which closely corresponds with the predictions of the Mankiw-Summers model in the case of high demand for money in relation to consumption expenditure combined with significant investment elasticity in relation to the interest rate. In other respects, the fiscal policy transmission mechanism exhibits several standard features (such as an increase in government expenditure after a positive shock to revenue or a widening of the budget deficit following an interest rate hike). The results suggest the feasibility of revenue--based fiscal consolidation policies in Ukraine, as better tax collection may contribute to economic growth even in the short run. Since there is a robust conventional inverse relationship between interest rate and output, one of the puzzling results is that government expenditure puts downward pressure on the former, with net revenues being neutral in this respect. Real exchange rate (RER) depreciation is behind the decrease in output in the baseline model, but alternative identification schemes suggest that it is likely to be contractionary in the short run while turning expansionary in the long run.

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Section: Resultscontrasting

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Fiscal Policy Effects in Ukraine

Shevchuk

Kopych

2018

AOC

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“…En effet, à plusieurs reprises le taux de croissance nominal des dépenses publiques dépasse celui du PIB (1998, 2001, 2002 et 2003), Alesina et Ardagna (2010) faisant d'ailleurs référence à une politique de relance budgétaire. Afin de saisir les sources de la croissance, nous calculons dans le tableau 5 les contributions de chaque composante de la demande à la croissance du PIB.…”

Section: Analyse Des Circonstances D'un Prétendu Succès Macroéconomiqueunclassified

“…Ce dernier cas s'est vu attribuer le doux sobriquet d'austérité expansionniste (cf. Giavazzi et Pagano, 1990;Alesina et Perotti, 1995;Alesina et Ardagna, 2010). Selon Perotti (2013), les explications en faveur de la consolidation budgétaire expansionniste peuvent être variées.…”

Section: Introductionunclassified

Le Canada et l’austérité expansionniste dans les années quatre-vingt-dix : un « succès » macroéconomique à revisiter ?

Charles

Dallery

2014

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Dans cet article nous étudions l’évolution et la soutenabilité de l’endettement public au Canada à l’aide de la méthodologie comptable proposée par Pasinetti (1998). Nous montrons dans quelle mesure la politique d’austérité décidée par le gouvernement canadien lors de la première moitié des années quatre-vingt-dix a pu faire croire à ce que certains économistes nomment l’austérité expansionniste. Ainsi, nous dévoilons un large faisceau de circonstances « bienheureuses » ayant empêché une récession économique. Au regard de ces différents éléments, nous précisons pourquoi le Canada ne devrait pas constituer un exemple à suivre aveuglément en matière de consolidation budgétaire.This paper studies the evolution and sustainability of public debt in Canada thanks to the accounting methodology put forward by Pasinetti (1998). We show to what extent the austerity policies, which have been applied in the first half of the 1990s by the Canadian government, led to believe to what has been called by some economists the expansionist austerity. Thus, we unveil a large body of “happy” circumstances that prevented the surge of economic recession. When looking at these different elements, we precise the reasons why the Canadian experience should not constitute a role model to be blindly followed as far as fiscal consolidation is concerned

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“…pueden ser expansivas (Alesina & Perotti, 1995;Alesina & Ardagna, 2010). En contraste, Guajardo, leigh & Pescatori (2014) argumentan que el método que usualmente se usa en esta literatura está sesgado para validar la hipótesis de austeridad expansiva; y muestran que la consolidación fiscal reduce la demanda privada y el nivel de producción.…”

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Impuestos y deuda pública: una relación paradójica

Orihuela

Gómez

2016

Rev. fac. cien. econ.

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ResumenEn este trabajo se muestra que un incremento en los impuestos orientado a disminuir la deuda puede es incrementarla en el largo plazo. Esto ocurre siempre que un aumento en los impuestos reduzca la expectativa de ahorro en un mayor monto de lo que disminuyó la deuda pública inicialmente. la causa por la cual la deuda crece es porque el incremento en el impuesto reduce la inversión y esto tiene dos efectos: (i) disminuye el nivel de producción, lo que provoca una disminución en la base gravable, es decir, en el ingreso del gobierno; (ii) aumenta la tasa de interés y con ello el costo de la deuda pasada. Ante este panorama el gobierno se ve forzado a incrementar la deuda pública para mantener el gasto constante. En este trabajo se ofrece evidencia estadística para cinco países europeos, que muestra que la deuda pública está explicada por la inversión, tal como resulta en el modelo teórico; lo cual sugiere que las políticas de austeridad implementadas en estos países para reducir la deuda, pueden ser contraproducentes. Palabras clave: Inversión; Política fiscal; Impuestos; Deuda; Crisis; Demanda efectiva. tAXes And PUBLic deBt: A PARAdoXicAL ReLAtionsHiP AbstractThis paper shows that an increase in debt aimed at reducing taxes may increase it in the long run. This occurs whenever a tax increase reduces the expectation of savings in an amount greater than public debt decreased initially. The reason why the debt grows is because the tax increase reduces investment and this has two effects: (i) decreases the production level, which causes a decrease in the tax base, i.e., meaning the government income; (ii) the interest rate increases and thus the cost of past debt. Against this background, the government is forced to increase public debt to maintain constant spending. In this paper, statistical evidence is offered for five European countries that shows that public debt is explained by the investment, as it results in the theoretical model; this suggests that the austerity policies implemented in these countries in order to reduce debt, may be counterproductive. Neste trabalho mostra-se que um incremento nos impostos orientados a diminuir a dívida pode incrementá-la a longo prazo. Isto ocorre sempre que um aumento nos impostos reduza a expectativa de poupança em um maior montante do que diminuiu a dívida pública inicialmente. A causa pela qual a dívida cresce é porque o incremento no imposto reduz o investimento e isto tem dois efeitos: (i) diminui o nível de produção, o que provoca uma diminuição na base tributável , isto é, na receita do governo; (ii) aumenta a taxa de juros e com isso o custo da dívida passada. Frente a este panorama o governo se vê forçado a incrementar a dívida pública para manter a despesa constante. Neste trabalho oferece-se evidência estatística para cinco países europeus que mostra que a dívida pública está explicada pelo investimento, tal como resulta no modelo teórico, o que sugere que as políticas de austeridade implementadas nestes países para reduzir a dívida, podem ser contraprod...

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Large Changes in Fiscal Policy: Taxes versus Spending

Cited by 580 publications

References 25 publications

Fiscal Policy Effects in Ukraine

Fiscal Policy Effects in Ukraine

Le Canada et l’austérité expansionniste dans les années quatre-vingt-dix : un « succès » macroéconomique à revisiter ?

Impuestos y deuda pública: una relación paradójica

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