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Fiscal Policy Tools of Compensating for Inflation

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  • Margit Schratzenstaller

    (WIFO)

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    Abstract

    Against the background of rising inflation, a number of proposals for fiscal policy measures to dampen the increase in consumer prices have been advanced in Austria. Generally speaking, fiscal policy cannot address the causes of inflation, but may contribute towards offsetting its redistributive effects. It has at its disposal measures influencing public revenues (changes in taxes, social security contributions or public charges) or expenditure (cash transfers or the provision of public services that may serve as substitutes for market goods and services showing abnormal price increases). They often put heavy claims on budgetary resources while mitigating only the impact of price hikes. Much more efficient is therefore policy action addressing the root causes of inflation.

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    Bibliographic Info

    Article provided by WIFO in its journal Quarterly.

    Volume (Year): 13 (2008)
    Issue (Month): 4 (December)
    Pages: 144-155

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    Handle: RePEc:wfo:wquart:y:2008:i:4:p:144-155

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    Keywords: Inflation; Fiscal policy; fiscal drag; Austria;

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    1. Projektgruppe Gemeinschaftsdiagnose, 2007. "Aufschwung legt Pause ein," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 60(20), pages 03-58, October.
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