Alternative strategies to reduce public deficits: Taxes vs. spending
AbstractIn this paper, we examine the effects of several alternative measures intended to reduce government deficits, distinguishing between those acting through either taxes or spending, for the case of Spain. The empirical methodology is based on a computable general equilibrium model. All the simulated policies lead to a decrease in the levels of output and employment, and to a higher unemployment rate. Spending cuts show greater contractionary effects than tax increases, and are associated with a worsening in the distribution of income for labour. These effects are stronger in the case of spending cuts in Public education.
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Bibliographic InfoPaper provided by Asociación Española de Economía y Finanzas Internacionales in its series Working Papers with number 13-02.
Length: 30 pages
Date of creation: Feb 2013
Date of revision:
Computable general equilibrium; Government deficit; Taxes; Spending;
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-23 (All new papers)
- NEP-CMP-2013-03-23 (Computational Economics)
- NEP-PBE-2013-03-23 (Public Economics)
- NEP-PUB-2013-03-23 (Public Finance)
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