Is the Fiscal Policy Increasing Income Inequality in Uruguay?

Josep Oriol Roca Sagales, Leonel Muinelo-Gallo

Research output: Contribution to journalArticleResearchpeer-review


Despite being one of the countries with lower levels of inequality in Latin America, Uruguay is characterized by persistent high inequality levels in relation to that upper-middle or high income countries with similar relative size of the public sector. This paper investigates to what extent these two features are interconnected and whether economic growth affects and is affected by this relationship. Empirical results from Vector Autoregression (VAR) models reveal the existence of important long-run Keynesian effects associated to public expenditure, and that the country’s expenditure structure is, in part, responsible for increasing disposable household’s income inequality, being the public investment the only fiscal policy that breaks this tendency.
Original languageEnglish
Pages (from-to)137-156
JournalJournal of Economics and Development Studies
Issue number3
Publication statusPublished - Sept 2014


  • Fiscal policy
  • Economic growth
  • Income inequality
  • VAR models
  • Uruguay


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