Income inequality, fiscal stimuli and political (in)stability

Luca Agnello; Vitor Castro; João Tovar Jalles; Ricardo M. Sousa

doi:10.1007/s10797-016-9428-x

Income inequality, fiscal stimuli and political (in)stability

Luca Agnello, Vitor Castro, João Tovar Jalles, Ricardo M. Sousa

NOVA School of Business and Economics (NOVA SBE)

Research output: Contribution to journal › Article

1 Citation (Scopus)

Abstract

Using data for a large panel of countries, this paper investigates the role played by income inequality and fiscal stimuli episodes in shaping the likelihood of political stability. By means of Tobit estimations, we show that a rise in inequality increases the probability of government crises. However, such adverse distributional effect is reduced when expansionary or increasingly expansionary fiscal stimuli episodes or successful fiscal stimuli programs are put in place.

Original language	English
Pages (from-to)	484-511
Number of pages	28
Journal	International Tax and Public Finance
Volume	24
Issue number	3
DOIs	https://doi.org/10.1007/s10797-016-9428-x
Publication status	Published - 2017

Keywords

Expansionary policies
Fiscal stimuli
Income distribution
Institutional quality
Political environment
Tobit regression

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10.1007/s10797-016-9428-x

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abstract = "Using data for a large panel of countries, this paper investigates the role played by income inequality and fiscal stimuli episodes in shaping the likelihood of political stability. By means of Tobit estimations, we show that a rise in inequality increases the probability of government crises. However, such adverse distributional effect is reduced when expansionary or increasingly expansionary fiscal stimuli episodes or successful fiscal stimuli programs are put in place.",

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note = "Funding: Operational Programme for Competitiveness Factors-COMPETE, FCOMP-01-0124-FEDER-037268 (PEst-C/EGE/UI3182/2013), FCT-Portuguese Foundation for Science and Technology, SFRH/BSAB/113588/2015, QREN and FEDER",

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AU - Castro, Vitor

AU - Jalles, João Tovar

AU - Sousa, Ricardo M.

N1 - Funding: Operational Programme for Competitiveness Factors-COMPETE, FCOMP-01-0124-FEDER-037268 (PEst-C/EGE/UI3182/2013), FCT-Portuguese Foundation for Science and Technology, SFRH/BSAB/113588/2015, QREN and FEDER

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KW - Fiscal stimuli

KW - Income distribution

KW - Institutional quality

KW - Political environment

KW - Tobit regression

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