TY  - JOUR
AU  - Alesina,Alberto
AU  - Perotti,Roberto
TI  - Fiscal Adjustments in OECD Countries: Composition and Macroeconomic Effects
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5730
PY  - 1996
Y2  - August 1996
UR  - http://www.nber.org/papers/w5730
L1  - http://www.nber.org/papers/w5730.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

Roberto Perotti
IGIER Universita' Bocconi
Via Roentgen 1
20136 Milano
ITALY
Tel: 39 02 58363073
Fax: 39 02 58363302
E-Mail: roberto.perotti@unibocconi.it
AB  - This ppaer studies how the composition of fiscal adjustments influences their likelihood of success,  defined as a long lasting deficit reduction, and their macroeconomic consequences. We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage bill have a better chance of being successful and are expansionary.  On the contrary fiscal adjustments which rely primarily on tax increases and cuts in public investment tend not to last and are contractionary.  We discuss alternate explanations for these findings by studying both a full sample of OECD countries and by focusing on three case studies:  Denmark, Ireland and Italy.
ER  -