Redistributive Effects of Fiscal Policy across the Income Groups      in the Urban-Rural Areas of Pakistan

Shirazi, Nasim Shah; Ilyas, Muhammad; Ahmed, Mehboob

doi:10.30541/v40i4iipp.519-533

Cited by 3 publications

(3 citation statements)

References 4 publications

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“…Bayraktar and Moreno-Dodson (2015), Moreno-Dodson (2008), and Afonso et al (2006) examine the growth impact of public spending and determine that economic growth is negatively affected by public spending that successively distresses the distribution of income. Shirazi et al (2001) examine the impact of fiscal policy on income distribution in Pakistan. They use microdata from the Household Integrated Economic Survey (HIES).…”

Section: Literature Reviewmentioning

confidence: 99%

Fiscal Implications for Rural-Urban Income Inequality: The Case of Pakistan

Ahmad¹,

Ali²,

Haider³

et al. 2021

IJEBA

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Purpose: This study investigates the fiscal implications through taxes and total expenditures for rural-urban income inequality in Pakistan. Fiscal policy plays a significant role in stabilizing the macroeconomics variables and equal distribution of income among society. Pakistan is a good case study because there is a dual rural-urban sector that emerges with industrial development and other traditional rural agriculture-based regions. Design/Methodology/Approach: We use time series data with autoregressive distributed lag models (ARDL) for long-run and error correction models (ECM) for short span dynamic co-integration. The above models try to capture the practical effect of fiscal progress on income distribution among modern urban and traditional rural regions. Findings: The findings show that tax side fiscal measures are more harmful to rural-urban income distribution. On the expenditure side, fiscal policy has a significant impact on all disburse income distribution. The most surprising results belong to trade liberalization, it has significantly improved income distribution in urban areas but not in the rurals. Financial development has also verified the accumulation of wealth among rural-urban areas because of the emergence of private profiteering groups in Pakistan. Practical Implications: For policy purposes the government of Pakistan should spend on improving the quality of life of the households by investing in social goods like health, education, and foundation inequality situation may be better off. The nature of public spending and who gains the benefits from this spending decide the nature of inequality. On the supply side, the government should reduce the tax burden for rural households. Originality/Value: The results of the study may improve the rural income distribution if they used properly.

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Section: Literature Reviewmentioning

confidence: 99%

Fiscal Implications for Rural-Urban Income Inequality: The Case of Pakistan

Ahmad¹,

Ali²,

Haider³

et al. 2021

IJEBA

View full text Add to dashboard Cite

show abstract

“…A variety of literature exists on fiscal policy and its impact on poverty and income inequality. Shirazi et al (2001) used the micro data from Household Integrated Economic Survey to see the redistributive effect of fiscal policy in Pakistan. Fiscal policy was incorporated in the analytical model in the form of public expenditures and taxes.…”

Section: Literature Reviewmentioning

confidence: 99%

Fiscal Policy and Income Inequality in Pakistan: An ARDL Approach

Khan¹,

Hashmi²

2015

European Journal of Economic Studies

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This study is an attempt to capture the impact of fiscal policy on income inequality in Pakistan. It employed Autoregressive Distributed Lag (ARDL) model on annual time series data from 1980 to 2012. The stationarity of data is checked by Augmented Dickey Fuller unit root test. Short-run dynamics are tested by error correction model. Model reliability is tested with the help of the diagnostic tests. Chow test is applied to detect structural breaks and Gregory-Hansen technique is employed as a remedial measure of the structural breaks. Results indicate that development expenditures and financial development has diminishing effect on income inequality. On the other hand fiscal deficit and urbanization are affecting the income inequality positively. The current expenditures and indirect tax has no influence on Gini-coefficient. The study recommends that fiscal deficit should be diminished by reducing current expenditures. The development expenditures require an increase to decrease income inequality. For the financing revenue from indirect taxes may be increased, it will not hurt the income inequality. The financial development as a tool for decreasing inequality is also proposed.

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“…It had a positive impact on income inequality, while on the other hand, there was a negative relationship between income inequality and fiscal policy multiplier. Shirazi et al (2001) found the impact of public expenditures and public taxes on income distribution in rural and urban areas of Pakistan. The data had been taken from HIES 1992-93.…”

Section: Introductionmentioning

confidence: 99%

Fiscal Consolidation and Income Inequality Nexus: Evidence from Pakistan

Sarwar,

Khan,

Saeed

et al. 2023

J. Econ. Impact

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The distribution of income provides a succinct overview of the economy, revealing how individuals or groups receive specific shares of the national income. Consequently, achieving a fair income distribution has become a central goal for most global economies. The study examines the effect of fiscal consolidation on income inequality in Pakistan. Time series data from 1988 to 2022 is used to estimate the relationship of variables. The ARDL method is used to test the existence of cointegration and to estimate the coefficients of fiscal consolidation and other independent variables. Other variables include minimum wage and trade union density. Per capita GDP and square of per capita GDP are also included in the model to verify the Kuznet hypothesis. The estimates show that fiscal consolidation has a positive impact on income inequality. It implies that if the difference between government expenditures and revenues (i.e., fiscal consolidation) increases, it will enhance income inequality. It may possibly happen by minimizing expenditures or increasing revenues. The empirical results of the study show the existence of an “inverted U-shaped” Kuznet’s curve in Pakistan. Additionally, minimum wage significantly affects income inequality, whereas trade union density is negatively related to income inequality.

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Redistributive Effects of Fiscal Policy across the Income Groups in the Urban-Rural Areas of Pakistan

Cited by 3 publications

References 4 publications

Fiscal Implications for Rural-Urban Income Inequality: The Case of Pakistan

Fiscal Implications for Rural-Urban Income Inequality: The Case of Pakistan

Fiscal Policy and Income Inequality in Pakistan: An ARDL Approach

Fiscal Consolidation and Income Inequality Nexus: Evidence from Pakistan

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