This article provides an overview of the main tax changes introduced by the Portuguese State Budget for 2012.The Portuguese State Budget for 2012 (the budget) is, most likely, the most ruthless piece of legislation approved in the roughly 40 years of Portugal's democracy. Nevertheless, the...

This paper analyzes the Final Report of the President's National Commission on Fiscal Responsibility and Reform and compares the recommendations to those of The Debt Reduction Task Force of the Bipartisan Policy Center

This paper studies the Swedish fiscal consolidation episode of the 1990s through the lens of a small open economy model with distortionary taxation and unemployment. We argue that the simultaneous reduction in the fiscal deficit and unemployment rate in this episode stems from two factors: (i)...

Time-series data for Argentina suggest that action to support propoor social spending is warranted at times of fiscal contraction. Social spending in general - and social spending targeted to the poor in particular - took a heavy hit at times of fiscal austerity. Adjustment programs often...

Macroeconomic adjustment programs often emphasize the need to protect social spending from cuts, and to protect pro-poor spending in particular. But does this happen in practice during fiscal contractions? The paper presents evidence for Argentina. Using aggregate time series data the paper...

We examine how the cost of corporate credit varies around fiscal consolidations aimed at reducing government debt. Using a new dataset on fiscal consolidations and syndicated corporate loan data, we find that loan spreads increase with fiscal consolidations, especially for small firms, domestic...

Using loan-level data covering 15 advanced economies over 1990–2014, we show that the cost of credit increases with fiscal consolidations. This increase is observed with both tax hikes and spending cuts, and is smaller when the consolidation is large. The cost of credit goes up with tax hikes...

Using a firm-bank panel of more than 1m German firms over 2010-2016, we document that local public bank lending to municipalities crowds out private investment. Our results show how crowding out can happen in a developed economy characterized by low interest rates and fiscal austerity. Our...

We study the response of corporate investment in Emerging Markets to unexpected fiscal shocks. We find that, although firm-level investment decreases on impact following unexpected public expenditure adjustments (classical Keynesian multiplier effect), it quickly rises above pre-shock levels....

This paper offers a formal analysis of the relationship between changes in government primary balance and debt-to-GDP ratio. it establishes the conditions under which a fiscal consolidation increases - instead of decreasing - the stock of government liabilities relative to aggregate output. A...