Document details

The role of income inequality on fiscal multipliers

Author(s): Franco, Bruno Daniel Quintais

Date: 2015

Persistent ID: http://hdl.handle.net/10362/15081

Origin: Repositório Institucional da UNL

Subject(s): Fiscal policy; Forecasting; Income inequality; Government expenditure; Output fluctuations


Description

This paper investigates the role of income inequality on the size of fiscal multipliers during the recent crisis. Using various measures of income inequality, the empirical strategy developed suggests a positive and statistically significant impact of inequality on the size of fiscal multipliers of European economies during 2010-11. The results are robust after controlling for the role of outliers, by adding controls that could be driving the results, testing for different forecast vintages, and using a different source of standardized income inequality data. Theoretical arguments that may explain the results are presented. Namely the existence of credit constraints to relatively poor households, and the lower propensity to consume of relatively wealthier households.

A Work Project, presented as part of the requirements for the Award of a Masters Double Degree in Economics from the Nova School of Business and Economics and University of Maastricht

Document Type Master thesis
Language English
Advisor(s) Franco, Francesco; Veen, Tom
Contributor(s) Franco, Bruno Daniel Quintais
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