This paper develops a simple model of the effects of fiscal adjustments on poverty. Our theory suggests that in richer countries the effects of fiscal adjustment are stronger the more complex is the poverty measure. By examining a panel of 16 EU countries in the period 2005-2015, the paper finds that structural public balance adjustments may harm the welfare of poorer individuals. The empirical estimation hinges on a comprehensive index of poverty and social exclusion, the AROPE index. The results suggest that rigid fiscal rules require specific alternative policies to sustain the welfare of poorer individuals during downturns.

Fiscal rule compliance, poverty and social exclusion in the Eurozone

Mariangela Bonasia
Writing – Review & Editing
;
Rosaria Rita Canale
Writing – Review & Editing
;
Salvatore Capasso
Writing – Review & Editing
;
Marcella D’Uva
Writing – Review & Editing
2020-01-01

Abstract

This paper develops a simple model of the effects of fiscal adjustments on poverty. Our theory suggests that in richer countries the effects of fiscal adjustment are stronger the more complex is the poverty measure. By examining a panel of 16 EU countries in the period 2005-2015, the paper finds that structural public balance adjustments may harm the welfare of poorer individuals. The empirical estimation hinges on a comprehensive index of poverty and social exclusion, the AROPE index. The results suggest that rigid fiscal rules require specific alternative policies to sustain the welfare of poorer individuals during downturns.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11367/76766
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