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dc.contributor.author Andrés, Javier
dc.contributor.author Arce, Óscar
dc.contributor.author Thomas, Carlos
dc.date.accessioned 2016-12-07T12:06:38Z
dc.date.available 2016-12-07T12:06:38Z
dc.date.issued 2016-09
dc.identifier.uri http://hdl.handle.net/10230/27711
dc.description.abstract We analyze the interaction between fiscal consolidations and private sector deleveraging in an economy inside a monetary union. Pre-existing long-term collateralized private debt - a core ingredient of the deleveraging process - plays a critical role in shaping fiscal multipliers. By buffering the short-run fall in debtors´ spending capacity, long-run private debt reduces the shortrun multipliers of aggressive (large and/or fast) consolidations. However, absent credibility concerns, aggressive consolidations raise the intensity and length of private deleveraging, causing higher output losses over the medium-run. In terms of discounted output losses and welfare, this latter effect dominates, so that larger and faster consolidations are relatively costlier than smaller and more gradual ones. Also, in this environment, alternative budgetary instruments generate sizable differences in terms of their incidence on private deleveraging dynamics and, hence, on their overall output costs of fiscal consolidations.
dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries ADEMU Working Paper Series;42
dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.rights.uri http://creativecommons.org/licenses/by/4.0/
dc.title When fiscal consolidation meets private deleveraging
dc.type info:eu-repo/semantics/workingPaper
dc.subject.keyword Fiscal conditions
dc.subject.keyword Long-term private debt
dc.subject.keyword Financial shock
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess


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