Replication data for: Effects of Austerity: Expenditure- and Tax-Based Approaches

Principal Investigator(s): View help for Principal Investigator(s) Alberto Alesina; Carlo Favero; Francesco Giavazzi

Version: View help for Version V1

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Project Citation:

Alesina, Alberto, Favero, Carlo, and Giavazzi, Francesco. Replication data for: Effects of Austerity: Expenditure- and Tax-Based Approaches. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114028V1

Project Description

Summary: We review the debate surrounding the macroeconomic effects of deficit reduction policies (austerity). The discussion about "austerity" in general has distracted commentators and policymakers from a very important result, namely the enormous difference, on average, between expenditure- and tax-based austerity plans. Spending-based austerity plans are remarkably less costly than tax-based plans. The former have on average a close to zero effect on output and lead to a reduction of the debt/GDP ratio. Tax-based plans have the opposite effect and cause large and long-lasting recessions. These results also apply to the recent episodes of European austerity, which in this respect were not especially different from previous cases.

Scope of Project

JEL Classification:
      E23 Macroeconomics: Production
      E32 Business Fluctuations; Cycles
      E62 Fiscal Policy
      H20 Taxation, Subsidies, and Revenue: General
      H50 National Government Expenditures and Related Policies: General
      H62 National Deficit; Surplus

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V1 [2019-10-12]

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