Publicação
The (non-)Keynesian effects of fiscal austerity
| Resumo: | We empirically assess whether the negative response of private consumption and private investment to fiscal consolidation usually expected is reversed. We focus on a sample of 174 countries between 1970 and 2018 to determine episodes of fiscal consolidations using three alternative measures of the cyclically adjusted primary balance: (1) an International Monetary Fund (IMF)-World Economic Outlook (WEO) based measure, (2) a Hodrick-Prescott–based measure, and (3) a measure based on Hamilton (2018). We find that, first, increases in government consumption have a Keynesian effect on real per capita private consumption; second, tax increases have a positive effect on private consumption when a fiscal consolidation occurs; and, third, fiscal contraction has a crowding-in effect on private investment. Moreover, expansionary fiscal consolidations occur in highly indebted advanced economies, in particular, after an increase in taxes. We conclude that the negative effects of taxation on private consumption are larger when developing economies are experiencing a financial crisis and are not consolidating. |
|---|---|
| Autores principais: | Afonso, António |
| Outros Autores: | Alves, José; Jalles, João Tovar |
| Assunto: | Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| Ano: | 2022 |
| País: | Portugal |
| Tipo de documento: | artigo |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade Nova de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório Institucional da UNL |
| _version_ | 1865920615694729216 |
|---|---|
| author | Afonso, António |
| author2 | Alves, José Jalles, João Tovar |
| author2_role | author author |
| author_facet | Afonso, António Afonso, António Alves, José Jalles, João Tovar Alves, José Jalles, João Tovar |
| author_role | author |
| contributor_name_str_mv | NOVA School of Business and Economics (NOVA SBE) Elsevier RUN |
| country_str | PT |
| creators_json_str | [{\"Person.name\":\"Afonso, António\"},{\"Person.name\":\"Alves, José\"},{\"Person.name\":\"Jalles, João Tovar\"}] |
| datacite.contributors.contributor.contributorName.fl_str_mv | NOVA School of Business and Economics (NOVA SBE) Elsevier RUN |
| datacite.creators.creator.creatorName.fl_str_mv | Afonso, António Alves, José Jalles, João Tovar |
| datacite.date.Accepted.fl_str_mv | 2022-06-01T00:00:00Z |
| datacite.date.available.fl_str_mv | 2025-09-25T21:29:28Z |
| datacite.date.embargoed.fl_str_mv | 2025-09-25T21:29:28Z |
| datacite.rights.fl_str_mv | http://purl.org/coar/access_right/c_abf2 |
| datacite.subjects.subject.fl_str_mv | Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| datacite.titles.title.fl_str_mv | The (non-)Keynesian effects of fiscal austerity New evidence from a large sample |
| dc.contributor.none.fl_str_mv | NOVA School of Business and Economics (NOVA SBE) Elsevier RUN |
| dc.creator.none.fl_str_mv | Afonso, António Alves, José Jalles, João Tovar |
| dc.date.Accepted.fl_str_mv | 2022-06-01T00:00:00Z |
| dc.date.available.fl_str_mv | 2025-09-25T21:29:28Z |
| dc.date.embargoed.fl_str_mv | 2025-09-25T21:29:28Z |
| dc.format.none.fl_str_mv | application/pdf |
| dc.identifier.none.fl_str_mv | http://hdl.handle.net/10362/188572 |
| dc.language.none.fl_str_mv | eng |
| dc.rights.none.fl_str_mv | http://purl.org/coar/access_right/c_abf2 |
| dc.subject.none.fl_str_mv | Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| dc.title.fl_str_mv | The (non-)Keynesian effects of fiscal austerity New evidence from a large sample |
| dc.type.none.fl_str_mv | http://purl.org/coar/resource_type/c_6501 |
| description | We empirically assess whether the negative response of private consumption and private investment to fiscal consolidation usually expected is reversed. We focus on a sample of 174 countries between 1970 and 2018 to determine episodes of fiscal consolidations using three alternative measures of the cyclically adjusted primary balance: (1) an International Monetary Fund (IMF)-World Economic Outlook (WEO) based measure, (2) a Hodrick-Prescott–based measure, and (3) a measure based on Hamilton (2018). We find that, first, increases in government consumption have a Keynesian effect on real per capita private consumption; second, tax increases have a positive effect on private consumption when a fiscal consolidation occurs; and, third, fiscal contraction has a crowding-in effect on private investment. Moreover, expansionary fiscal consolidations occur in highly indebted advanced economies, in particular, after an increase in taxes. We conclude that the negative effects of taxation on private consumption are larger when developing economies are experiencing a financial crisis and are not consolidating. |
| dirty | 0 |
| eu_rights_str_mv | openAccess |
| format | article |
| fulltext.url.fl_str_mv | https://run.unl.pt/bitstreams/2e694500-a9ce-4bf2-8d83-7ff34fa5fd3a/download |
| id | run_6841ded8fe5d4dc2c79be261d3facd3e |
| identifier.url.fl_str_mv | http://hdl.handle.net/10362/188572 |
| instacron_str | unl |
| institution | Universidade Nova de Lisboa |
| instname_str | Universidade Nova de Lisboa |
| language | eng |
| network_acronym_str | run |
| network_name_str | Repositório Institucional da UNL |
| oai_identifier_str | oai:run.unl.pt:10362/188572 |
| organization_str_mv | urn:organizationAcronym:unl |
| person_str_mv | Afonso, António Alves, José Jalles, João Tovar |
| publishDate | 2022 |
| reponame_str | Repositório Institucional da UNL |
| repository_id_str | urn:repositoryAcronym:run |
| service_str_mv | urn:repositoryAcronym:run |
| spelling | engenWe empirically assess whether the negative response of private consumption and private investment to fiscal consolidation usually expected is reversed. We focus on a sample of 174 countries between 1970 and 2018 to determine episodes of fiscal consolidations using three alternative measures of the cyclically adjusted primary balance: (1) an International Monetary Fund (IMF)-World Economic Outlook (WEO) based measure, (2) a Hodrick-Prescott–based measure, and (3) a measure based on Hamilton (2018). We find that, first, increases in government consumption have a Keynesian effect on real per capita private consumption; second, tax increases have a positive effect on private consumption when a fiscal consolidation occurs; and, third, fiscal contraction has a crowding-in effect on private investment. Moreover, expansionary fiscal consolidations occur in highly indebted advanced economies, in particular, after an increase in taxes. We conclude that the negative effects of taxation on private consumption are larger when developing economies are experiencing a financial crisis and are not consolidating.application/pdfenThe (non-)Keynesian effects of fiscal austeritySubtitleenNew evidence from a large sampleAfonso, AntónioAlves, JoséJalles, João TovarNOVA School of Business and Economics (NOVA SBE)ElsevierHostingInstitutionOrganizationalRUNe-mailmailto:run@unl.ptrun@unl.ptISSNIsPartOf0939-3625URNIsPartOfPURE: 81716235URNIsPartOfPURE UUID: 8de0345a-8b91-40fa-b53a-1e55f72d7d74URNIsPartOfScopus: 85129978232DOIIsPartOf10.1016/j.ecosys.2022.1009812025-09-25T21:29:28Z2022-062022-06-01T00:00:00ZHandlehttp://hdl.handle.net/10362/188572http://purl.org/coar/access_right/c_abf2open accessConsumptionEndogeneityFilteringFinancial crisesFiscal consolidationInvestmentNon-Keynesian effectsPanel dataEconomics and Econometrics404650 bytesliteraturehttp://purl.org/coar/resource_type/c_6501journal articlehttp://purl.org/coar/access_right/c_abf2application/pdffulltexthttps://run.unl.pt/bitstreams/2e694500-a9ce-4bf2-8d83-7ff34fa5fd3a/download |
| spellingShingle | The (non-)Keynesian effects of fiscal austerity The (non-)Keynesian effects of fiscal austerity Afonso, António Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics Afonso, António Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| status | NEW |
| subject.fl_str_mv | Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| title | The (non-)Keynesian effects of fiscal austerity |
| title_full | The (non-)Keynesian effects of fiscal austerity |
| title_fullStr | The (non-)Keynesian effects of fiscal austerity The (non-)Keynesian effects of fiscal austerity |
| title_full_unstemmed | The (non-)Keynesian effects of fiscal austerity The (non-)Keynesian effects of fiscal austerity |
| title_short | The (non-)Keynesian effects of fiscal austerity |
| title_sort | The (non-)Keynesian effects of fiscal austerity |
| topic | Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| topic_facet | Consumption Endogeneity Filtering Financial crises Fiscal consolidation Investment Non-Keynesian effects Panel data Economics and Econometrics |
| url | http://hdl.handle.net/10362/188572 |
| visible | 1 |