International Tax and Public Finance

, Volume 24, Issue 3, pp 484–511 | Cite as

Income inequality, fiscal stimuli and political (in)stability

  • Luca Agnello
  • Vitor Castro
  • João Tovar Jalles
  • Ricardo M. Sousa
Article

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.

Keywords

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

JEL Classification

H63 G01 G15 

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Luca Agnello
    • 1
  • Vitor Castro
    • 2
    • 3
  • João Tovar Jalles
    • 4
  • Ricardo M. Sousa
    • 5
    • 6
  1. 1.Department of Economics, Business and Statistics (SEAS)University of PalermoPalermoItaly
  2. 2.Faculty of EconomicsUniversity of CoimbraCoimbraPortugal
  3. 3.Economic Policies Research Unit (NIPE)University of MinhoBragaPortugal
  4. 4.Nova School of Business and EconomicsCentre for Globalization and GovernanceLisbonPortugal
  5. 5.Department of Economics and Economic Policies Research Unit (NIPE)University of MinhoBragaPortugal
  6. 6.LSE Alumni AssociationLondon School of Economics and Political ScienceLondonUK

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