This study wants to show the medium and short run consequences of diminishing Public Deficit in the Spanish Economy. Precisely, we show the effects from diminishing by one percent the Public Deficit over the Spanish national income, on the production levels of 16 economic sectors, the welfare level of 12 families and macroeconomic variables as unemployment rates, public expenditure and national income. The examined fiscal policy instruments are, from the expenditure point of view, reduction of general expenditure, social expenditure and public investment and from the public revenue point of view, social taxes, value added tax (VAT) and the income and property tax. Results, obtained with a disaggregated model of the Spanish Economy (Megaes-90), show that the fiscal policy applied by the Spanish Government during the last years, is not the most adequate to reduce Public Deficit.
|Publication status||Published - 1 Jun 2004|