The impact of fiscal consolidation on human development

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

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

We find that fiscal austerity is associated with a reduction of human development standards, with the negative effect being particularly severe in the case of spending-driven consolidation episodes. Fiscal adjustments are especially damaging for human development in developing countries (namely, African and Latin American countries). Additionally, the empirical evidence shows that (i) government stability is a crucial institutional determinant of human development, and (ii) while investment in physical capital can boost human development, government consumption and inflation are detrimental to it.

Original languageEnglish
Pages (from-to)399-429
JournalJournal of International Development
Volume30
Issue number3
DOIs
Publication statusPublished - Apr 2018

Keywords

  • Economic and social determinants
  • Fiscal consolidation
  • Human development
  • Political
  • Risk rating

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