Yose Rizal Damuri () (Department of Economics, Centre for Strategic and International Studies) Ari A. Perdana () (Department of Economics, Centre for Strategic and International Studies)
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The paper seeks to quantitatively measure the impact of fiscal policy on income distribution and poverty in Indonesia using WAYANG, the CGE model for Indonesian economy. We find that scenarios for fiscal expansion significantly influence income distribution and poverty. Fiscal expansion mainly benefits urban households and non-labour rural households – basically, the wealthiest segments of the society. We have are several explanations. First, factors of production owned by these segments allowed them to reap the most benefits from fiscal expansions. Second, these households are least affected by price increases due to their consumption structure. Finally, we find that, in real terms, the Indonesia’s taxation system burdens poorer households more than richer ones.
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Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number
58.
Length: 39 pages Date of creation: May 2003 Date of revision: Handle: RePEc:eab:macroe:58
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Find related papers by JEL classification: O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
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