An evaluation of alternative fiscal adjustment plans: The case of Italy |
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| Institution: | 1. Department MEMOTEF, Sapienza University of Rome, Italy;2. Department of Economics and Law, Sapienza University of Rome, Italy;3. Council of Experts, Ministry of Economy and Finance, Italy;4. School of European Political Economy, Luiss, Rome, Italy;5. Department of Treasury, Ministry of Economy and Finance, Italy;1. Department of Economics, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria;2. Department of Economics, University of Lagos, Lagos, Nigeria;1. University of Roma Tre, Department of Economics, Rome, Italy;2. Sapienza University of Rome, Department of Economics and Law, Via del Castro Laurenziano 9, 00161, Rome, Italy;1. Arkansas State University, P.O. Box 1080, Jonesboro, AR 72467, United States;2. St. Lawrence University, Hepburn 204, Canton, NY 13617, United States;3. Korea Rural Economic Institute, 601, Bitgaram-ro, Naju-si, Jeollanam-do 58321, Republic of Korea;1. Department of Management, Monash Business School, Monash University, Menzies Building, Level 11, Clayton Campus, Victoria 3800, Australia;2. Department of Public Administration, University of Sri Jayewardenepura, Gangodawila-Nugegoda, Sri Lanka;3. Department of Management, Monash Business School, Monash University, Caulfield Campus, Caulfield East, Victoria 3145, Australia;1. Tekirdag Namik Kemal University, Tekirdag, Turkey;2. University of Sharjah, Sharjah, United Arab Emirates |
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| Abstract: | What advice can be given to the policymaker to reduce the burden of public debt after a crisis? In this situation, the debt consolidation calls for fiscal surplus based on increases in taxes and/or reductions in public spending. This paper aims at answering to the above question. Specifically, it evaluates different policy options on the table using the estimated model of the Italian dynamic General Equilibrium Model (IGEM). Our main message is that plans aimed at reducing the public debt based on tax increases rather than expenditure reductions are more effective. Therefore, consolidation should be designed on the former. |
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| Keywords: | Austerity Public debt Output Fiscal adjustment plans |
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