Authors:

  • Alberto Alesina

Excerpt

The output effect of fiscal consolidation plans. Alberto Alesina, May 2014, Paper. "We show that the correct experiment to evaluate the effects of a scale adjustment is the simulation of a multi-year fiscal plan rather than of individual scale shocks. Simulation of scale 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 out-put costs when they consist of permanent rather than stop and go..." Link verified September 8, 2014