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Fiscal consolidation and income inequality in Latin America and the Caribbean

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  • Komatsuzaki, Takuji

Abstract

This paper estimates the effects of past fiscal consolidations in Latin America and the Caribbean (LAC) on income inequality. For the 13 LAC countries with fiscal consolidation episodes identified by the narrative approach, one percent of GDP fiscal consolidation increases the disposable Gini coefficient by 0.12 percentage point on average in five years. The size of the effect tends to be larger for tax-based consolidations and for non-commodity exporters but broadly similar during booms and slumps.

Suggested Citation

  • Komatsuzaki, Takuji, 2024. "Fiscal consolidation and income inequality in Latin America and the Caribbean," LSE Research Online Documents on Economics 122537, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:122537
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    File URL: http://eprints.lse.ac.uk/122537/
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    References listed on IDEAS

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    1. Mr. Andrea Pescatori & Mr. Daniel Leigh & Mr. Jaime Guajardo & Mr. Pete Devries, 2011. "A New Action-Based Dataset of Fiscal Consolidation," IMF Working Papers 2011/128, International Monetary Fund.
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    More about this item

    Keywords

    Latin America and the Caribbean; fiscal consolidation; income inequality;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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