Theoretically, then, contractionary spending may increase demand, and expansionary spending may decrease demand. But is there any evidence to suggest such outcomes might occur in practice? The answer, it turns out, is yes. Alesina, Perotti, and Tavares (1998) find that deficit reductions are more likely to be expansionary if they involve cuts in government spending on government wages and transfers. Such cuts may signal a decline in permanent government spending and therefore create expectations of lower future taxes. In contrast, deficit reductions achieved through tax increases do seem to be contractionary.