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Government Fiscal Policies and Redistribution in Asian Countries

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  • Claus, Iris

    (Asian Development Bank)

  • Martinez-Vazquez, Jorge

    (Georgia State University)

  • Vulovic, Violeta

    (Georgia State University)

Abstract

This paper assesses the impact of government fiscal policies on income inequality in Asia. It discusses the role and effectiveness of redistributive fiscal policies and quantifies the effects of taxation and government expenditure on income distributions. Panel estimation for 150 countries with data between 1970 and 2009 confirms international empirical findings for Asia. Tax systems tend to be progressive but government expenditures are a more effective tool for redistributing income. Moreover, the results suggest some distinctive differential distributive effect for government expenditure on social protection in Asia. Social protection spending appears to increase income inequality, whereas it reduces it in the rest of the world. Also, adversely affecting the distribution of income in Asia is government expenditure on housing. Some options for improving the effectiveness of fiscal policies in Asia are discussed.

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Bibliographic Info

Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 310.

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Length: 47 pages
Date of creation: 31 Oct 2012
Date of revision:
Handle: RePEc:ris:adbewp:0310

Note: http://www.adb.org/sites/default/files/pub/2012/economics-wp310.pdf
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Cited by:
  1. Heshmati, Almas & Kim, Jungsuk, 2014. "A Survey of the Role of Fiscal Policy in Addressing Income Inequality, Poverty Reduction and Inclusive Growth," IZA Discussion Papers 8119, Institute for the Study of Labor (IZA).

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