NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Social Implications of Fiscal Policy Responses During Crises

Carlos A. Vegh, Guillermo Vuletin

NBER Working Paper No. 19828
Issued in January 2014
NBER Program(s):   IFM

This paper studies the social implications of fiscal policy responses to crises in Latin America over the last 40 years and in the Eurozone during the aftermath of the global financial crisis. We focus on the behavior of four social indicators: the poverty rate, income inequality, unemployment rate, and domestic conflict. We find a causal link from counteryclical (procyclical) fiscal policy responses to reductions (increases) in all four social indicators. These results call into question recent claims on "expansionary fiscal austerity."

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Document Object Identifier (DOI): 10.3386/w19828

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