Abdulaleem Isiaka – “Public Expenditure Shocks and the Inequality Multiplier: Evidence from a Sample of Middle-Income Countries” – PhD Seminar

Abstract:

This paper examines the impact of unexpected public expenditure shocks on income inequality within a sample of middle-income countries. Also, this study investigates how different percentiles are affected by the spending shocks. The fiscal shocks are captured with forecast errors in public spending. Likewise, the local projection method is used to estimate the response of income inequality to the shocks. Additionally, this paper presents the income inequality multiplier through cross-country and within-country dimensions. By relating the multipliers of each country to its fiscal policies, this research provides valuable policy recommendations as to how fiscal consolidations might be implemented with less disequalizing effects.