Distributional consequences of fiscal austerity, while being increasingly recognized in the policy debate, have received little attention in the existing formal work. Richard McManus proposes a medium-scale New Keynesian dynamic stochastic general equilibrium model incorporating an appropriate dimension of household heterogeneity and a well-specified fiscal structure, allowing for a comprehensive analysis of losers and winners from austerity.

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Faculti Audio Transcript – Fiscal consolidations and distributional effects

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Image courtesy of interviewee. March 10, 2020