Jose Alvarado
Jose Alvarado
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Macroeconomics
The Dynamics of The Distributional Impact of Fiscal Policy: a Macro-political Economy Approach
Why does the redistributing power of fiscal policy differ from country to country? I provide evidence that, although pre-tax and transfer income inequality tends to be similar across nations, post-fiscal intervention inequality varies significantly. I develop a general equilibrium model with heterogeneous agents, in which the degree of redistribution is determined endogenously. The findings reveal that the extent of redistribution is influenced by: (i) the size of economic shocks affecting the economy and (ii) the institutional rules under which fiscal policy is chosen. My model explains cross-country differences in fiscal policy’s distributional power.
Last updated on Nov 4, 2024
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