TY  - JOUR
AU  - Alesina,Alberto
AU  - Favero,Carlo
AU  - Giavazzi,Francesco
TI  - The Output Effect of Fiscal Consolidations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18336
PY  - 2012
Y2  - August 2012
UR  - http://www.nber.org/papers/w18336
L1  - http://www.nber.org/papers/w18336.pdf
N1  - Author contact info:
Alberto F. Alesina
Department of Economics
Harvard University
Littauer Center 210
Cambridge, MA 02138
Tel: 617/495-8388
Fax: 617/495-7730
E-Mail: aalesina@harvard.edu

Carlo Favero
Department of Finance
Bocconi University and IGIER
Via Röntgen, 1
20136 Milano, ITALY
E-Mail: carlo.favero@unibocconi.it

Francesco Giavazzi
Universita' Bocconi and IGIER
Via Guglielmo Rontgen, 1
Milan 20136
ITALY
Tel: 0039-02-5836-3304
Fax: 0039-02-5836-3302
E-Mail: francesco.giavazzi@unibocconi.it
AB  - Fiscal consolidations achieved by means of spending cuts are much less costly in terms of output losses than tax-based ones. The difference cannot be explained by accompanying policies, including monetary policy, and it is mainly due to the different response of business confidence and private investment. We obtain these results by studying the effects of the adoption of fiscal consolidation plans (rather than isolated shocks), that is combinations of tax increases and spending cuts, some unanticipated, other anticipated, in a sample of 16 OECD economies. 
ER  -