Fiscal Expansions and Fiscal Adjustments in OECD Countries

40 Pages Posted: 30 Aug 2000 Last revised: 2 Oct 2022

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Roberto Perotti

Bocconi University - Department of Economics; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Date Written: August 1995

Abstract

This paper considers budget expansions and adjustments in OECD countries in the last three decades. Our main results are: i) on average fiscal expansions are the results of increases in expenditures, particularly of transfer programs, while contractions are typically due to tax increases; ii) however successful (i.e. long lasting), a minority of the total rely primarily on reduction of government wages and employment and cuts in transfer programs; iii) even major successful fiscal adjustments do not seem to have recessionary consequences, on average; iv) different types of governments show different degrees of success at implementing successful fiscal adjustment, with coalition governments showing the worst performance.

Suggested Citation

Alesina, Alberto F. and Perotti, Roberto, Fiscal Expansions and Fiscal Adjustments in OECD Countries (August 1995). NBER Working Paper No. w5214, Available at SSRN: https://ssrn.com/abstract=225278

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

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Roberto Perotti

Bocconi University - Department of Economics ( email )

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United Kingdom

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