Documento de trabajo
Joint determinants of fiscal policy, income inequality and economic growth
Fecha
2012Registro en:
MUINELO-GALLO, L., ROCA-SAGALÉS, O. "Joint determinants of fiscal policy, income inequality and economic growth". Serie Documentos de Trabajo / FCEA-IE; DT04/12. UR.FCEA-IE, 2012.
1510-9305
1688-5090
Autor
Muinelo-Gallo, Leonel
Roca-Sagalés, Oriol
Institución
Resumen
This paper analyses the relationship between income inequality and economic growth through fiscal policy. To this end, we present and estimate two systems of structural equations with error components through which gross income inequality determines different fiscal policy outcomes, which subsequently affects the evolution of economic growth and net income inequality. The empirical results, obtained using an unbalanced panel data of 21 high-income OCDE countries during the period 1972-2006, suggest that gross income inequality is a significant determinant of fiscal policy outcomes. Additionally, the results show that distributive expenditures and direct taxes produce significant reductions in GDP growth and net income inequality reflecting the standard efficiency-equity trade-off associated to certain fiscal policy measures.