Fiscal Consolidation Strategies

Kastrop, Christian; Cournède, Boris; Fall, Falilou; Mourougane, Annabelle

doi:10.1017/9781316675861.017

Cited by 2 publications

(2 citation statements)

References 17 publications

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“…Likewise, prioritisation in the allocation of expenditure and performancebased budgeting may improve the quality of public finances by raising cost-effectiveness of public spending across policy areas (Kastrop et al, 2016). Inclusive political and budget processes can also create more responsive and equitable polices and public services that are better suited for diverse needs (OECD, 2014).…”

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confidence: 99%

Public Finance, Economic Growth and Inequality

Johansson¹

2016

OECD Economics Department Working Papers

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JT03405922Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2016)70 Unclassified English -Or. English ECO/WKP(2016)70 2 OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s).Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.Comments on Working Papers are welcomed, and may be sent to OECD Economics Department, 2 rue André Pascal, 75775 Paris Cedex 16, France, or by e-mail to eco.contact@oecd.org. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.Latvia was not an OECD Member at the time of preparation of this publication. Accordingly, Latvia does not appear in the list of OECD Members and is not included in the zone aggregates. © OECD (2016)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org ECO/WKP(2016)70 3 ABSTRACT/RÉSUMÉPublic finance, economic growth and inequality: A survey of the evidence This paper reviews the key issues concerning the impact of public spending and taxation on long-run growth and inequality and takes stock of existing theoretical and empirical studies. Overall, the evidence highlights that the size of the government matters for long-term growth as a too large government may undermine growth through the cost of financing public spending. A reallocation of public spending towards infrastructure and education would raise income in the long run, whereas increasing social welfare spending can reduce inequality as such spending increases redistribution and risk sharing. Similarly, the available evidence also supports the hypothesis that some taxes are more distortionary than others, with income taxes found to be more harmful for growth than consumption and property taxes. However, a tax shift from income towards consumption taxes has equity implications, since income taxes are general...

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confidence: 99%

Public Finance, Economic Growth and Inequality

Johansson¹

2016

OECD Economics Department Working Papers

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“…4 Recent literature shows that even tax reforms including higher tax rates may have positive impacts on the economy (Bhattarai & Benjasak, 2021). Fiscal consolidation packages in the OECD consisted both of revenue increases and expenditure cuts in a country-specific mix (Kastrop et al, 2017). Regarding macroeconomic and distributive effects, Paulus et al (2017) also revealed mixed results for European countries, supporting tax increases as consolidation instruments.…”

Section: Policy Options For Fiscal Consolidationmentioning

confidence: 99%

Higher Taxes for Fiscal Consolidation? Expected and Unexpected Effects of Municipal Tax Policy

Hesse

2021

Int Adv Econ Res

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During episodes of fiscal consolidation in public budgets, there are different instruments to choose from. The literature shows broad consensus that expenditure cuts are preferred, whereas tax increases tend not to support the fiscal aim. The paper examines instruments for fiscal consolidation at the municipal level in Germany presenting theoretical and empirical findings in favor of revenue-based instruments, focusing on the case of municipalities in the Free State of Saxony. German municipalities can autonomously control several positions on both the expenditure side and the revenue side. Options for expenditure cuts are given both for voluntary and compulsory tasks. On the revenue side, municipalities have the opportunity to set assessment rates on both local trade taxes and property taxes. For this part of the consolidation process, the prevailing opinion is that higher taxes are offset by lower grants, which is not the case in reality. Nevertheless, there are cannibalization effects to consider that may induce primary effects in the short and medium term. Hence, the paper shows an updated view of the drawbacks and opportunities of revenue-based fiscal consolidation. The paper provides evidence for an economic and political discussion that predominantly focuses strongly on the harmful effects of tax increases on the economy.

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Fiscal Consolidation Strategies

Cited by 2 publications

References 17 publications

Public Finance, Economic Growth and Inequality

Public Finance, Economic Growth and Inequality

Higher Taxes for Fiscal Consolidation? Expected and Unexpected Effects of Municipal Tax Policy

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