[PDF] Distributional Effects Of Fiscal Consolidation eBook

Author : Laurence M. Ball
Publisher : International Monetary Fund
Page : 24 pages
File Size : 21,84 MB
Release : 2013-06-21
Category : Business & Economics
ISBN : 1475551940

GET BOOK

This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.

Author : Jaejoon Woo
Publisher : International Monetary Fund
Page : 37 pages
File Size : 45,41 MB
Release : 2013-09-17
Category : Business & Economics
ISBN : 1484390911

GET BOOK

The 2007-09 Great Recession has led to an unprecedented increase in public debt in many countries, triggering substantial fiscal adjustments. What are the distributional consequences of fiscal austerity measures? This is an important policy question. This paper analyzes the effects of fiscal policies on income inequality in a panel of advanced and emerging market economies over the last three decades, complemented by a case study of selected consolidation episodes. The paper shows that fiscal consolidations are likely to raise inequality through various channels including their effects on unemployment. Spending-based consolidations tend to worsen inequality more significantly, relative to tax-based consolidations. The composition of austerity measures also matters: progressive taxation and targeted social benefits and subsidies introduced in the context of a broader decline in spending can help offset some of the adverse distributional impact of consolidation. In addition, fiscal policy can favorably influence long-term trends in both inequality and growth by promoting education and training among low- and middle-income workers.

Author : Adrian Peralta-Alva
Publisher : International Monetary Fund
Page : 49 pages
File Size : 43,72 MB
Release : 2018-06-13
Category : Business & Economics
ISBN : 1484363035

GET BOOK

We quantitatively investigate the macroeconomic and distributional impacts of fiscal consolidations in low-income countries (LICs) through value added tax (VAT), personal income tax (PIT), and corporate income tax (CIT). We extend the standard heterogeneous agents incomplete markets model by including multiple sectors and rural-urban distinction to capture salient features of LICs. We find that overall, VAT has the least efficiency costs but is highly regressive, while PIT impacts the economy in the opposite way with CIT staying in between. Cash transfers targeting rural households mitigate the negative distributional impacts of VAT most effectively, while public investment leads to little redistribution.

Author :
Publisher :
Page : 1 pages
File Size : 12,51 MB
Release : 2013
Category :
ISBN :

GET BOOK

This paper examines the distributional effects of fiscal austerity. Using episodes of fiscal consolidation measures for a sample of 17 OECD countries over the period 1978-2009, we find that fiscal consolidation episodes have typically led to a significant and long-lasting increase in inequality. Tax-based consolidation episodes tend to have a larger and more persistent effect on inequality than spendingbased consolidations. The evidence also shows that while fiscal consolidations have typically led to a fall in wage income, they have not had a significant effect on profit and rent income.

Author : Vybhavi Balasundharam
Publisher : International Monetary Fund
Page : 39 pages
File Size : 27,61 MB
Release : 2023-03-17
Category :
ISBN :

GET BOOK

Fiscal Consolidation: Taking Stock of Success Factors, Impact, and Design

Author : Petros Varthalitis
Publisher :
Page : pages
File Size : 38,16 MB
Release : 2019
Category :
ISBN :

GET BOOK

We build a dynamic general equilibrium model with heterogeneous households, namely Rich and Poor, and capital skill complementarity structure in the production function, to study aggregate and distributional implications of fiscal consolidation policies when the government uses a rich set of spending and tax instruments. Fiscal policy is conducted through constrained optimized fiscal rules. Our results show that, in the long run, fiscal consolidation enhances both aggregate efficiency and equity; however, it may hurt Rich households depending on which fiscal instrument takes advantage of the fiscal space created. Along the transition, wage inequality significantly increases due to the capital skill complementarity structure of the production function. Specifically, this happens because debt consolidation crowds in capital and this favours Rich (skilled) households. On the other hand, the reduction in interest rates and government bonds lead to a decrease in Rich households income coming from capital and government bonds which eventually decrease income inequality. Finally, a rather novel finding is that the combination of asset and skill heterogeneity amplifies the increase in wage inequality in the early phase of fiscal consolidation.

Author : Laurence M. Ball
Publisher : International Monetary Fund
Page : 24 pages
File Size : 18,7 MB
Release : 2013-06-21
Category : Business & Economics
ISBN : 1475567200

GET BOOK

This paper examines the distributional effects of fiscal consolidation. Using episodes of fiscal consolidation for a sample of 17 OECD countries over the period 1978–2009, we find that fiscal consolidation has typically had significant distributional effects by raising inequality, decreasing wage income shares and increasing long-term unemployment. The evidence also suggests that spending-based adjustments have had, on average, larger distributional effects than tax-based adjustments.