The Distributional Effects Of Government Spending Shocks In Developing Economies

Author : Davide Furceri,Jun Ge,Mr.Prakash Loungani,Mr.Giovanni Melina
Publisher : International Monetary Fund
Page : 39 pages
File Size : 52,6 Mb
Release : 2018-03-14
Category : Business & Economics
ISBN : 9781484345412

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The Distributional Effects of Government Spending Shocks in Developing Economies by Davide Furceri,Jun Ge,Mr.Prakash Loungani,Mr.Giovanni Melina Pdf

We construct unanticipated government spending shocks for 103 developing countries from 1990 to 2015 and study their effects on income distribution. We find that unanticipated fiscal consolidations lead to a long-lasting increase in income inequality, while fiscal expansions lower inequality. The results are robust to several measures of income distribution and size of the fiscal shocks, to an alternative identification strategy, across expansions and recessions and across country groups (low-income countries versus emerging markets). An additional contribution of the paper is the computation of the medium-term inequality multiplier. This is on average about 1 in our sample, meaning that a cumulative decrease in government spending of 1 percent of GDP over 5 years is associated with a cumulative increase in the Gini coefficient over the same period of about 1 percentage point. The multiplier is larger for total government expenditure than for public investment and consumption (with the former having larger effect), likely due to the redistributive role of transfers. Finally, we find that (unanticipated) fiscal consolidations lead to an increase in poverty.

Author : Davide Furceri,Bin Grace Li
Publisher : International Monetary Fund
Page : 39 pages
File Size : 45,9 Mb
Release : 2017-10-20
Category : Business & Economics
ISBN : 9781484320709

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The Macroeconomic (and Distributional) Effects of Public Investment in Developing Economies by Davide Furceri,Bin Grace Li Pdf

This paper provides new empirical evidence of the macroeconomic effects of public investment in developing economies. Using public investment forecast errors to identify unanticipated changes in public investment, the paper finds that increased public investment raises output in the short and medium term, with an average short-term fiscal multiplier of about 0.2. We find some evidence that the effects are larger: (i) during periods of slack; (ii) in economies operating with fixed exchange rate regimes; (iii) in more closed economies; (iv) in countries with lower public debt; and (v) in countries with higher investment efficiency. Finally, we show that increases in public investment tend to lower income inequality.

Author : D. Papadimitriou
Publisher : Springer
Page : 310 pages
File Size : 45,5 Mb
Release : 2006-05-26
Category : Political Science
ISBN : 9780230378605

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The Distributional Effects of Government Spending and Taxation by D. Papadimitriou Pdf

This book focuses on the distributional consequences of the public sector and examines and documents, theoretically and empirically, the effects of government spending and taxation on personal distribution, and includes chapters investigating the relationship between the public sector and functional distribution of national income.

Author : Mr.Gerd Schwartz,Mrs.Teresa Ter-Minassian
Publisher : International Monetary Fund
Page : 29 pages
File Size : 49,5 Mb
Release : 1995-08-01
Category : Business & Economics
ISBN : 9781451850581

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The Distributional Effects of Public Expenditure by Mr.Gerd Schwartz,Mrs.Teresa Ter-Minassian Pdf

It is commonly agreed that economic policies, including budgetary policies, can have potentially strong distributional effects. Traditional economic analysis held that economic policies affected the income distribution primarily through their impact on the rate of growth. More recently, it has come to be recognized that qualitative aspects of economic growth are probably more important than the rate of growth itself. While recent research has confirmed the potential role of expenditure policies as a redistributive tool, it has also shown that redistribution does not necessarily have to come at the expense of economic growth and efficiency. Although there are substantial analytical and technical problems to be faced in the design of equitable and cost-effective public expenditure programs, unfavorable distributional outcomes of these programs can usually be traced more to political and institutional pressures than to purely technical factors.

Author : Laurence M. Ball,Davide Furceri,Mr.Daniel Leigh,Mr.Prakash Loungani
Publisher : International Monetary Fund
Page : 24 pages
File Size : 44,7 Mb
Release : 2013-06-21
Category : Business & Economics
ISBN : 9781475567205

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The Distributional Effects of Fiscal Consolidation by Laurence M. Ball,Davide Furceri,Mr.Daniel Leigh,Mr.Prakash Loungani Pdf

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 : Gabriela Inchauste,Nora Lustig
Publisher : Directions in Development
Page : 0 pages
File Size : 40,7 Mb
Release : 2017
Category : Business & Economics
ISBN : 1464810915

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The Distributional Impact of Taxes and Transfers by Gabriela Inchauste,Nora Lustig Pdf

The World Bank has partnered with the Commitment to Equity Institute at Tulane University to implement their diagnostic tool--the Commitment to Equity (CEQ) Assessment--designed to assess how taxation and public expenditures affect income inequality, poverty, and different economic groups. The approach relies on comprehensive fiscal incidence analysis, which measures the contribution of each individual intervention to poverty and inequality reduction as well as the combined impact of taxes and social spending. The CEQ Assessment provide an evidence base upon which alternative reform options can be analyzed. The use of a common methodology makes the results comparable across countries. This volume presents eight country studies that examine the distributional effects of individual programs and policy measures--and the net effect of each country's mix of policies and programs. These case studies were produced in the context of Bank policy dialogue and have since been used to propose alternative reform options.

Author : Davide Furceri,Mr.Prakash Loungani,Ms.Aleksandra Zdzienicka
Publisher : International Monetary Fund
Page : 43 pages
File Size : 42,5 Mb
Release : 2017-01-18
Category : Business & Economics
ISBN : 9781475568356

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The Effects of Monetary Policy Shocks on Inequality by Davide Furceri,Mr.Prakash Loungani,Ms.Aleksandra Zdzienicka Pdf

This paper provides new evidence of the effect of monetary policy shocks on income inequality. Using a measure of unanticipated changes in policy rates for a panel of 32 advanced and emerging market countries over the period 1990-2013, the paper finds that contractionary (expansionary) monetary actions increase (reduce) income inequality. The effect, however, varies over time, depending on the type of the shocks (tightening versus expansionary monetary policy) and the state of the business cycle, and across countries depending on the share of labor income and redistribution policies. In particular, we find that the effect is larger for positive monetary policy shocks, especially during expansions. Looking across countries, we find that the effect is larger in countries with higher labor share of income and smaller redistribution policies. Finally, while an unexpected increase in policy rates increases inequality, changes in policy rates driven by an increase in growth are associated with lower inequality.

Author : Davide Furceri,Ms.Aleksandra Zdzienicka
Publisher : International Monetary Fund
Page : 41 pages
File Size : 50,8 Mb
Release : 2018-07-27
Category : Business & Economics
ISBN : 9781484364000

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Twin Deficits in Developing Economies by Davide Furceri,Ms.Aleksandra Zdzienicka Pdf

This paper provides new evidence on the existence and magnitude of the “twin deficits” in developing economies. It finds that a one percent of GDP unanticipated increase in the government budget balance improves, on average, the current account balance by 0.8 percentage point of GDP. This effect is substantially larger than that obtained using standard measures of fiscal impulse, such as the cyclically-adjusted budget balance. The results point to heterogeneity across countries and over time. The effect tends to be larger: (i) during recessions; in countries (ii) that are more open to trade; (iii) that have less flexible exchange rate regimes; and (iv) with lower initial public debt-to-GDP ratios.

Author : Ke-young Chu,Hamid Reza Davoodi,Sanjeev Gupta
Publisher : Unknown
Page : 70 pages
File Size : 49,5 Mb
Release : 2000
Category : Developing countries
ISBN : STANFORD:36105112847517

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Income Distribution and Tax, and Government Social Spending Policies in Developing Countries by Ke-young Chu,Hamid Reza Davoodi,Sanjeev Gupta Pdf

Author : Djeneba Doumbia,Mr.Tidiane Kinda
Publisher : International Monetary Fund
Page : 51 pages
File Size : 48,9 Mb
Release : 2019-09-06
Category : Business & Economics
ISBN : 9781513511863

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Reallocating Public Spending to Reduce Income Inequality: Can It Work? by Djeneba Doumbia,Mr.Tidiane Kinda Pdf

Can a government reduce income inequality by changing the composition of public spending while keeping the total level of expenditure fixed? Using newly assembled data on spending composition for 83 countries across all income groups, this paper shows that reallocating spending toward social protection and infrastructure is associated with reduced income inequality, particularly when it is financed through cuts in defense spending. However, the political and security situation matters. The analysis does not find evidence that lowering defense spending to finance infrastructure and social outlays improves income distribution in countries with weak institutions and at higher risk of conflict. Reallocating social protection and infrastructure spending towards other types of spending tends to increase income inequality. Accounting for the long-term impact of health spending, and particularly education spending, helps to better capture the equalizing effects of these expenditures. The paper includes a discussion of the implications of the findings for Indonesia, a major emerging market where income inequality is at the center of policy issues.

Author : Gerd Schwartz
Publisher : Unknown
Page : 28 pages
File Size : 47,9 Mb
Release : 2006
Category : Electronic
ISBN : OCLC:1291213952

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The Distributional Effects of Public Expenditure by Gerd Schwartz Pdf

It is commonly agreed that economic policies, including budgetary policies, can have potentially strong distributional effects. Traditional economic analysis held that economic policies affected the income distribution primarily through their impact on the rate of growth. More recently, it has come to be recognized that qualitative aspects of economic growth are probably more important than the rate of growth itself. While recent research has confirmed the potential role of expenditure policies as a redistributive tool, it has also shown that redistribution does not necessarily have to come at the expense of economic growth and efficiency. Although there are substantial analytical and technical problems to be faced in the design of equitable and cost-effective public expenditure programs, unfavorable distributional outcomes of these programs can usually be traced more to political and institutional pressures than to purely technical factors.

Author : Davide Furceri,Mr. Prakash Loungani,Mr. Jonathan David Ostry,Pietro Pizzuto
Publisher : International Monetary Fund
Page : 26 pages
File Size : 51,7 Mb
Release : 2021-04-30
Category : Business & Economics
ISBN : 9781513582405

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The Rise in Inequality After Pandemics: Can Fiscal Support Play a Mitigating Role? by Davide Furceri,Mr. Prakash Loungani,Mr. Jonathan David Ostry,Pietro Pizzuto Pdf

Major epidemics of the last two decades (SARS, H1N1, MERS, Ebola and Zika) have been followed by increases in inequality (Furceri, Loungani, Ostry and Pizzuto, 2020). In this paper, we show that the extent of fiscal consolidation in the years following the onset of these pandemics has played an important role in determining the extent of the increase in inequality. Episodes marked by extreme austerity—measured using either the government’s fiscal balance, health expenditures or redistribution—have been associated with an increase in the Gini measure of inequality three times as large as in episodes where fiscal policy has been more supportive. We survey the evidence thus far on the distributional impacts of the COVID-19 pandemic, which suggests that inequality is likely to increase in the absence of strong policy actions. We review the case made by many observers (IMF 2020; Stiglitz 2020; Sandbu 2020b) that fiscal support should not be withdrawn prematurely despite understandable concerns about high public debt-to-GDP ratios.

Author : Mr. Abdul Abiad,Davide Furceri,Petia Topalova
Publisher : International Monetary Fund
Page : 26 pages
File Size : 44,5 Mb
Release : 2015-05-04
Category : Business & Economics
ISBN : 9781484361559

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The Macroeconomic Effects of Public Investment by Mr. Abdul Abiad,Davide Furceri,Petia Topalova Pdf

This paper provides new evidence of the macroeconomic effects of public investment in advanced economies. Using public investment forecast errors to identify the causal effect of government investment in a sample of 17 OECD economies since 1985 and model simulations, the paper finds that increased public investment raises output, both in the short term and in the long term, crowds in private investment, and reduces unemployment. Several factors shape the macroeconomic effects of public investment. When there is economic slack and monetary accommodation, demand effects are stronger, and the public-debt-to-GDP ratio may actually decline. Public investment is also more effective in boosting output in countries with higher public investment efficiency and when it is financed by issuing debt.

Author : Ms. Era Dabla-Norris,Ms. Kalpana Kochhar,Mrs. Nujin Suphaphiphat,Mr. Frantisek Ricka,Evridiki Tsounta
Publisher : International Monetary Fund
Page : 33 pages
File Size : 52,5 Mb
Release : 2015-06-15
Category : Business & Economics
ISBN : 9781513547435

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Causes and Consequences of Income Inequality by Ms. Era Dabla-Norris,Ms. Kalpana Kochhar,Mrs. Nujin Suphaphiphat,Mr. Frantisek Ricka,Evridiki Tsounta Pdf

This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.

Author : Richard Hemming,Selma Mahfouz,Michael Kell
Publisher : International Monetary Fund
Page : 60 pages
File Size : 49,7 Mb
Release : 2002-12
Category : Business & Economics
ISBN : UCSD:31822032179210

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The Effectiveness of Fiscal Policy in Stimulating Economic Activity by Richard Hemming,Selma Mahfouz,Michael Kell Pdf

This paper reviews the theoretical and empirical literature on the effectiveness of fiscal policy. The focus is on the size of fiscal multipliers, and on the possibility that multipliers can turn negative (i.e., that fiscal contractions can be expansionary). The paper concludes that fiscal multipliers are overwhelmingly positive but small. However, there is some evidence of negative fiscal multipliers.