Okeke, AngelaAlexiou, Constantinos2025-03-032025-03-032025-12-31Okeke A, Alexiou C. (2025) Public debt and income inequality in times of austerity: dynamic panel evidence. Forum for Social Economics, Available online 24 February 20250736-0932https://doi.org/10.1080/07360932.2025.2464599https://dspace.lib.cranfield.ac.uk/handle/1826/23552This paper examines the relationship between public debt levels and income inequality during periods of fiscal consolidation (austerity). Specifically, it investigates two key questions: (a) whether high public debt during fiscal adjustments exacerbates income inequality, and (b) whether the composition of these adjustments influences the debt–inequality link. To address these issues, we apply a panel threshold methodology using annual data from 16 OECD countries over the period 1980–2019. Our findings reveal that public debt significantly affects income inequality, with the impact intensifying during fiscal adjustments, particularly at moderate debt thresholds (30–60%). Furthermore, when comparing the effects of tax-based versus spending-based adjustments, the evidence shows that tax-based consolidations tend to produce more persistent negative effects on income inequality.enAttribution 4.0 Internationalhttp://creativecommons.org/licenses/by/4.0/38 Economics3801 Applied Economics3802 Econometrics44 Human Society1.2 Psychological and socioeconomic processes10 Reduced Inequalities3801 Applied economics4404 Development studiesAusteritydynamic threshold modelincome inequalitypublic debtArticle1874-6381565258