Heterogeneity And Redistribution: By Monetary Or Fiscal Means?
AbstractIn models with heterogeneous agents, issues of distribution and redistribution jump to the fore, raising the question: Which policies-monetary or fiscal-work most effectively in transferring income between groups? From Townsend's turnpike model, two basic results emerge to help answer this question. First, the zero lower bound on nominal interest rates often appears as an obstacle to redistribution by monetary means. Second, assumptions about the government's ability to raise tax revenue without distortion and to discriminate between agents in distributing that tax revenue play a large role in determining whether agents prefer to redistribute income by fiscal means instead. Copyright 2005 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 46 (2005)
Issue (Month): 2 (05)
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Other versions of this item:
- Michael T. Belongia & Peter N. Ireland, 2004. "Heterogeneity and Redistribution: By Monetary or Fiscal Means?," Boston College Working Papers in Economics 595, Boston College Department of Economics.
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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