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An Evaluation of the Revenue side as a source of fiscal consolidation in high debt economies

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  • Banerjee, Ritwik

Abstract

Unsustainable levels of debt for some European economies is causing enormous strain in the Euro area. How to tide over the debt crisis seems to be the most important objective the European policy makers are currently facing. We use a dynamic general equilibrium closed economy model to compute the dynamic Laffer Curves for Portugal, Ireland, Greece and Spain for different class of taxes. We conclude that there exists scope for considerable revenue generation by raising certain class of taxes. Thus revenue generation, along with fiscal consolidation holds key for debt reduction.

Suggested Citation

  • Banerjee, Ritwik, 2012. "An Evaluation of the Revenue side as a source of fiscal consolidation in high debt economies," MPRA Paper 37956, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37956
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    References listed on IDEAS

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    1. Nickel, Christiane & Rother, Philipp & Zimmermann, Lilli, 2010. "Major public debt reductions: Lessons from the past, lessons for the future," Working Paper Series 1241, European Central Bank.
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    7. Gianluca Cafiso, 2012. "Debt developments and fiscal adjustment in the EU," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 47(1), pages 61-72, January.
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    More about this item

    Keywords

    fiscal consolidation; dynamic laffer curve; tax revenue; fiscal policy;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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