Abstract
AbstractThis paper investigates the role of hysteresis in the long-term transmission of consolidations in a panel of 17 OECD countries. The evidence supports that the hysteresis of the labour market is the main driver of consolidations’ long-term effects: an increase in the rigidity of the labour market exacerbates and prolongs the contraction following tax-based consolidations, while it mutes the expansion following expenditure-based consolidations. In contrast, the response of productivity is irrelevant to the presence of the long-term scars.
Funder
Copenhagen Business School Library
Publisher
Springer Science and Business Media LLC
Subject
Economics and Econometrics,Social Sciences (miscellaneous),Mathematics (miscellaneous),Statistics and Probability
Reference44 articles.
1. Abbritti M, Weber S (2018) Reassessing the role of labor market institutions for the business cycle. Int J Cent Bank 14(1):1–34
2. Alesina A, Ardagna S (2013) The design of fiscal adjustments. Tax Policy Econ 27(1):19–68
3. Alesina A, Barbiero O, Favero C, Giavazzi F, Paradisi M (2015) Austerity in 2009–13. Econ Policy 30(83):383–437
4. Alesina A, Favero C, Giavazzi F (2015) The output effect of fiscal consolidation plans. J Int Econ 96:S19–S42
5. Alesina A, Azzalini G, Favero C, Giavazzi F, Miano A (2018) Is it the “how’’ or the “when’’ that matters in fiscal adjustments? IMF Econ Rev 66(1):144–188