Fiscal consolidation and Inequality

Resumo/Abstract: During the most recent financial crisis, several different countries have been through fiscal consolidations with mixed results. Here we show that income inequality is one of the factors explaining the heterogeneous results of fiscal consolidations. Replicating Blanchard and Leigh (2014) we found empirical evidence that IMF GDP forecast errors are explained by countries' income inequality. We assess this result using an overlapping generation model similar to Brinca et al (2016), which allow us to show that inequality boosts the fiscal multiplier of a fiscal consolidation

Outros seminários / Other seminars: Programa completo / Full programme.