tag:blogger.com,1999:blog-3120478448417742445.post8976817086782118079..comments2024-03-24T06:35:14.281+00:00Comments on The Portuguese Economy: Consolidation tactics for the European integration strategyEditorhttp://www.blogger.com/profile/16779405217168307855noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3120478448417742445.post-64286899766927968532013-06-21T17:07:15.252+01:002013-06-21T17:07:15.252+01:00Can you share with us the evidence that there is f...Can you share with us the evidence that there is focusing on the relation between fiscal consolidations and taming inequality?<br /><br />There some some recent papers, one of which by IMF 2012, that clearly state that fiscal multipliers are higher for expenditure cuts rather than for tax hikes. Particularly in recession periods.<br /><br />Furthermore, most state expenditures recipients are in the lower quintiles of the income distribution. Given the low usage of public services from high income families, service fees do not seem like a feasible solution. Expenditures cuts will unavoidably hit strongly the poorer.<br /><br />This consolidation approach is clearly compromising fiscal sustainability by assuming that a smaller state will automatically yield a bigger outcome. <br /><br />The problem is, as Martin Wolf wrote recently: "the reaction of policy makers has not been to admit the mistakes, but to redefine acceptable performance at a new, lower level"Rui Rodrigueshttps://www.blogger.com/profile/00730084147575357338noreply@blogger.com