02243cas a2200253 a 4500 AALejournalIMF016147 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513525846 1018-5941 BD-DhAAL BD-DhAAL Eklou, Kodjovi. The (Subjective) Well-Being Cost of Fiscal Policy Shocks / Kodjovi Eklou, Mamour Fall. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (47 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Do discretionary spending cuts and tax increases hurt social well-being? To answer this question, we combine subjective well-being data covering over half a million of individuals across 13 European countries, with macroeconomic data on fiscal consolidations. We find that fiscal consolidations reduce individual well-being in the short run, especially when they are based on spending cuts. In addition, we show that accompanying monetary and exchange rate policies (disinflation, depreciations and the liberalization of capital flows) mitigate the well-being cost of fiscal consolidations. Finally, we investigate the well-being consequences of the two well-knowns expansionary fiscal consolidations episodes taking place in the 80s (in Denmark and Ireland). We find that even expansionary fiscal consolidations can have well-being costs. Our results may therefore shed some light on why some governments may choose to consolidate through taxes even at the cost of economic growth. Indeed, if spending cuts are to generate a large well-being loss, they can trigger an opposition and protest against a fiscal consolidation plan and hence making it politically costly. Mode of access: Internet Fall, Mamour. IMF Working Papers; Working Paper ; No. 2020/005 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/005/001.2020.issue-005-en.xml IMF e-Library