Dynamic effects of fiscal consolidations on income inequality in Sub-Saharan African countries

This study explores the short-to-medium-term effects of fiscal consolidation on income inequality in 40 Sub-Saharan African countries from 1990 to 2021 by applying the quantile local projection method at the median. The study finds that periods of fiscal consolidation reduce inequality in the short run, with spending-driven consolidation having a positive effect on income parity, while tax-driven consolidations have an insignificant impact. The study concludes that the distributional effects of fiscal consolidation in SSA countries are "progressive," implying that well-designed and targeted fiscal measures contribute to more equitable income distribution.