Series: Working Papers. 1515.
Author: Iván Kataryniuk and Javier Vallés.
Published in: Oxford Economic Papers, Vol. 70, Issue 2, 1 April 2018, Pages 563–585
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Abstract
We have examined the fiscal consolidation episodes in a group of OECD countries from 2009 to 2014. The range of the estimated short-term fiscal multiplier runs from 1.2% to 2% of GDP, larger than those obtained in more “normal times”, implying that the contractionary effect has been greater in depressed environments. Nevertheless, we have also found that revenue measures have a higher and more persistent real impact than expenditure measures, which is more consistent with the literature and suggests that expenditure cuts are less harmful for the economy than tax hikes.