2023-09-28 14:46:10 +00:00
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abstract: 'Distributional consequences of fiscal austerity, while being
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increasingly recognized in the policy debate, have received little
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attention in the existing formal work. This paper proposes a
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medium-scale New Keynesian dynamic stochastic general equilibrium model
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incorporating an appropriate dimension of household heterogeneity and a
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well-specified fiscal structure, allowing for a comprehensive analysis
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of losers and winners from austerity. We find, first, that cutting
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transfers and public employment, and raising labour income taxes are the
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most regressive forms of austerity, greatly raising income inequality.
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In contrast, raising capital income taxes is progressive-the only such
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policy in our analysis-and entails the smallest output losses in the
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short term. Second, the speed of austerity emerges as a potential tool
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in fiscal adjustment. Indeed, speedy austerity yields the worst
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distributive and output effects irrespective of its composition.
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Finally, fiscal consolidation is particularly damaging in downturns
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where distributional effects are substantially more unfavourable than in
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normal times.'
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affiliation: 'McManus, R (Corresponding Author), Canterbury Christ Church Univ, North
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Holmes Rd, Canterbury, Kent, England.
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McManus, Richard, Canterbury Christ Church Univ, North Holmes Rd, Canterbury, Kent,
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England.
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Ozkan, F. Gulcin, Kings Coll London, Bush House,30 Aldwych, London, England.
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Trzeciakiewicz, Dawid, Loughborough Univ, Epinal Way, Loughborough, Leics, England.'
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author: McManus, Richard and Ozkan, F. Gulcin and Trzeciakiewicz, Dawid
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author-email: 'richard.mcmanus@canterbury.ac.uk
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gulcin.ozkan@kcl.ac.uk
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d.g.trzeciakiewicz@lboro.ac.uk'
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author_list:
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- family: McManus
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given: Richard
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- family: Ozkan
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given: F. Gulcin
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- family: Trzeciakiewicz
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given: Dawid
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da: '2023-09-28'
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doi: 10.1093/oep/gpz065
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eissn: 1464-3812
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files: []
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issn: 0030-7653
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journal: OXFORD ECONOMIC PAPERS-NEW SERIES
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keywords-plus: 'MONETARY-POLICY; ECONOMIC-CONDITIONS; EURO AREA; CONSTRAINTS; QUALITY;
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PRICES; MODEL; DEBT'
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language: English
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month: JAN
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number: '1'
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number-of-cited-references: '45'
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pages: 317-349
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papis_id: db0a4cb97a9c2fdb8e2b89596cfecbe7
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ref: Mcmanus2021fiscalconsolidations
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times-cited: '2'
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title: 'Fiscal consolidations and distributional effects: which form of fiscal austerity
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is least harmful?'
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2023-10-01 08:15:07 +00:00
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type: article
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2023-09-28 14:46:10 +00:00
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unique-id: WOS:000649017300015
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usage-count-last-180-days: '0'
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usage-count-since-2013: '1'
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volume: '73'
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web-of-science-categories: Economics
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year: '2021'
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