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Human Development and Fiscal Policy: Comparing the Crises of 1982-85 and 2008-11

Author

Listed:
  • Bruno Martorano,

    (Unicef-IRC)

  • Giovanni Andrea Cornia

    (Dipartimento Scienze Economiche, Università degli studi di Firenze)

  • Frances Stewart

    (Queen Elizabeth House, University of Oxford)

Abstract

The paper juxtaposes the fiscal policies – and in particular the changes in social expenditures – adopted during the debt crisis of 1982-1985 and the financial crisis of 2008-2011. The paper shows that – contrary to the early 1980s - the governments’ responses in 2008-2009 were characterized by the adoption of Keynesian fiscal stimulus packages in which an increase in social spending represented one of the main components. Nonetheless, in 2010-11 fear of debt default and continuous pressures coming from the financial markets pushed many policy makers to introduce austerity packages and cut public social expenditure, offsetting in this way part the prior policy decisions, as already observed in the early 1980s. Econometric evidence included in the paper shows that the factors explaining the difference in policy approaches between the early 1980s and 2008-2009 include greater country autonomy compared with the past, the spread of democracy and the greater attention paid to human development by policy-makers designing fiscal adjustments.

Suggested Citation

  • Bruno Martorano, & Giovanni Andrea Cornia & Frances Stewart, 2012. "Human Development and Fiscal Policy: Comparing the Crises of 1982-85 and 2008-11," Working Papers - Economics wp2012_23.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2012_23.rdf
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    References listed on IDEAS

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    Cited by:

    1. Bruno Martorano, 2014. "The Consequences of the Recent Economic Crisis and Government Reactions for Children," Papers inwopa722, Innocenti Working Papers.
    2. Bruno Martorano, 2015. "Is It Possible to Adjust ‘With a Human Face’? Differences in Fiscal Consolidation Strategies between Hungary and Iceland," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(4), pages 623-654, December.
    3. Bruno Martorano, 2014. "Pre-crisis Conditions and Government Policy Responses: Chile and Mexico during the Great Recession," Papers inwopa729, Innocenti Working Papers.
    4. Bruno Martorano, 2013. "The Australian Household Stimulus Package: Lessons from the recent economic crisis," Papers inwopa697, Innocenti Working Papers.
    5. Giovanni Andrea Cornia, 2012. "The New Structuralist Macroeconomics and Income Inequality," Working Papers - Economics wp2012_25.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    6. Bruno Martorano & Luisa Natali & Chris De Neubourg & Jonathan Bradshaw, 2013. "Child Well-being in Economically Rich Countries: Changes in the first decade of the 21st century," Papers inwopa685, Innocenti Working Papers.
    7. Bruno Martorano, 2015. "Lessons from the recent economic crisis: the Australian household stimulus package," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 309-327, May.

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    More about this item

    Keywords

    financial crises; fiscal adjustment; public social expenditure; human development.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G01 - Financial Economics - - General - - - Financial Crises
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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