Economic growth and inequality: The role of fiscal policies

Leonel Muinelo-Gallo, Oriol Roca-Sagalés

Research output: Contribution to journalArticleResearchpeer-review

31 Citations (Scopus)

Abstract

This paper examines the impact of different instruments of fiscal policy on economic growth and income inequality. We use an unbalanced panel of 43 upper-middle and high income countries for the period 1972-2006 to assess the incidence of different fiscal policies. The empirical results show that larger current expenditures and direct taxes diminish economic growth and reduce inequality, while increases on public investment reduces inequality without harming output. This suggests that the trade-off between efficiency and equity facing governments when designing their fiscal policies may be avoided. © 2011 The Authors. Australian Economic Papers© 2011 Blackwell Publishing Ltd/University of Adelaide and Flinders University.
Original languageEnglish
Pages (from-to)74-97
JournalAustralian Economic Papers
Volume50
Issue number2-3
DOIs
Publication statusPublished - 1 Sep 2011

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