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Does fiscal adjustment affect income inequality? A new evidence of WAEMU countries

Author

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  • Mohamed Traoré

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Zié Ballo

    (UFHB - Université Félix Houphouët-Boigny [Abidjan, Côte d'Ivoire])

Abstract

This paper examines the distributional effects of fiscal consolidation in WAEMU area, using Driscoll and Kraay fixed effects estimation method. Using a tighter fiscal stance, measured by changes in the cyclically-adjusted primary balance (CAPB), over the period 1990-2015, it shows income gap decreases after periods of fiscal adjustments in the region. These finding are contrary to the results of several works focusing on fiscal consolidation. Our results also suggest that when fiscal consolidation is achieved via revenue side, income inequality seems to be reduced further. However, reductions in primary expenditures do not seem to reduce the income gap.

Suggested Citation

  • Mohamed Traoré & Zié Ballo, 2018. "Does fiscal adjustment affect income inequality? A new evidence of WAEMU countries," Working Papers hal-01940523, HAL.
    • Handle: RePEc:hal:wpaper:hal-01940523
    Note: View the original document on HAL open archive server: https://hal.science/hal-01940523
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