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Fiscal adjustment and income inequality : sub-national evidence from Brazil, Volume 1
Author:Azevedo, Joao Pedro; David, Antonio C.; Bastos, Fabiano Rodrigues; Pineda, Emilio; Country:Brazil;
Date Stored:2014/06/25Document Date:2014/06/01
Document Type:Policy Research Working PaperSubTopics:Economic Theory & Research; Debt Markets; Subnational Economic Development; Inequality; Poverty Impact Evaluation
Language:EnglishRegion:Latin America & Caribbean
Report Number:WPS6945Collection Title:Policy Research working paper ; no. WPS 6945
Volume No:1  

Summary: The paper combines state-level fiscal data with household survey data to assess the links between sub-national fiscal policy and income inequality in Brazil over the period 1995-2011. The results indicate that a tighter fiscal stance at the sub-national level is not associated with a deterioration in inequality measures. This finding contrasts with the conclusions of several papers in the burgeoning literature on the effects of fiscal consolidation on inequality using national data for OECD economies. In addition, the authors find that a tighter stance is typically positively associated with a measure of "shared prosperity". Hence, the results caution against extrapolating policy implications of the literature focusing on advanced economies to other settings.

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