The Impact of Fiscal Consolidation on Human Development. (31st August 2017)

• Record Type: Journal Article
• Authors: Agnello, Luca; Castro, Vitor; Jalles, João Tovar; Sousa, Ricardo M.
• Is Part Of: Journal of international development. Volume 30:Number 3(2018:Apr.)
• Page Start: 399
• Page End: 429
• Publication Date: 2017-08-31
• Subjects: human development -- fiscal consolidation -- political -- economic and social determinants -- risk rating; Economic development projects -- Developing countries -- Periodicals; Developing countries -- Economic policy -- Periodicals; Developing countries -- Foreign economic relations -- Periodicals; Economic development -- Periodicals; 330.91724
• DOI: 10.1002/jid.3309
• Languages: English
• ISSNs: 0954-1748

Abstract

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. Copyright © 2017 John Wiley & Sons, Ltd.