TY  - UNPD
A1  - Alesina, Alberto
A1  - Favero, Carlo
A1  - Giavazzi, Francesco
T1  - The output effect of fiscal consolidation plans
T2  - SAFE working paper series ; No. 76
N2  - We show that the correct experiment to evaluate the effects of a fiscal adjustment is the simulation of a multi year fiscal plan rather than of individual fiscal shocks. Simulation of fiscal plans adopted by 16 OECD countries over a 30-year period supports the hypothesis that the effects of consolidations depend on their design. Fiscal adjustments based upon spending cuts are much less costly, in terms of output losses, than tax-based ones and have especially low output costs when they consist of permanent rather than stop and go changes in taxes and spending. The difference between tax-based and spending-based adjustments appears not to be explained by accompanying policies, including monetary policy. It is mainly due to the different response of business confidence and private investment.
T3  - SAFE working paper - 76 
KW  - fiscal adjustment
KW  - confidence
KW  - investment
Y1  - 2014
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/36134
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-361347
UR  - http://safe-frankfurt.de/fileadmin/user_upload/editor_common/Research/Working_Paper/SAFE_WP_76.pdf
IS  - This version: October 2014
PB  - SAFE
CY  - Frankfurt am Main
ER  -