Inequality Aversion And The Optimal Composition Of Government Expenditure
This paper examines the choice of government expenditure on public goods and transfer payments, in the form of a pension, in an overlapping generations model. Government expenditure is tax-financed on a pay-asyou- go basis. A utilitarian judge chooses expenditures to maximize a social welfare function. The nonlinear solution is found to involve the ratio of a welfare-weighted average income, which depends on the inequality aversion of the judge, to arithmetic mean income. An approximation for this ratio is found which produces explicit solutions for the optimal composition. The result is used to obtain an indication of ‘implicit’ inequality aversion for a range of countries.
(This abstract was borrowed from another version of this item.)
Volume (Year): 14 (2010)
Issue (Month): S2 (November)
|Contact details of provider:|| Postal: Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK|
Web page: http://journals.cambridge.org/jid_MDY
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Xisco Oliver Rullán & Amedeo Spadaro, 2004. "Are Spanish governments really averse to inequality? a normative analysis using the 1999 Spanish tax reform," Investigaciones Economicas, Fundación SEPI, vol. 28(3), pages 551-566, September.
- David Madden, 1995. "An analysis of indirect tax reform in Ireland in the 1980s," Fiscal Studies, Institute for Fiscal Studies, vol. 16(1), pages 18-37, May.
- John Creedy & Solmaz Moslehi, 2007.
"Modelling the Composition of Government Expenditure in Democracies,"
Department of Economics - Working Papers Series
1007, The University of Melbourne.
- Creedy, John & Moslehi, Solmaz, 2009. "Modelling the composition of government expenditure in democracies," European Journal of Political Economy, Elsevier, vol. 25(1), pages 42-55, March.
- Ghiglino, C. & Tvede, M., 1999.
"Optimal Policy in OG Models,"
99-23, Carleton - School of Public Administration.
- Corneo, Giacomo & Grüner, Hans Peter, 2001.
"Individual Preferences for Political Redistribution,"
CEPR Discussion Papers
2694, C.E.P.R. Discussion Papers.
- Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
- Christiansen, Vidar & Jansen, Eilev S., 1978. "Implicit social preferences in the Norwegian system of indirect taxation," Journal of Public Economics, Elsevier, vol. 10(2), pages 217-245, October.
- Tridimas, George, 2001. "The Economics and Politics of the Structure of Public Expenditure," Public Choice, Springer, vol. 106(3-4), pages 299-316, March.
- Robert J. Brent, 1984. "Use of Distributional Weights in Cost-Benefit Analysis: a Survey of Schools," Public Finance Review, SAGE Publishing, vol. 12(2), pages 213-230, April.
- Koichi Mera, 1969. "Experimental Determination of Relative Marginal Utilities," The Quarterly Journal of Economics, Oxford University Press, vol. 83(3), pages 464-477.
- Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-27, October.
- Amiel, Yoram & Creedy, John & Hurn, Stan, 1999. " Measuring Attitudes towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
- Schwarze, Johannes & Harpfer, Marco, 2007. "Are people inequality averse, and do they prefer redistribution by the state?: Evidence from German longitudinal data on life satisfaction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 233-249, April.
- Lambert, Peter J. & Millimet, Daniel L. & Slottje, Daniel, 2003. "Inequality aversion and the natural rate of subjective inequality," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1061-1090, May.
When requesting a correction, please mention this item's handle: RePEc:cup:macdyn:v:14:y:2010:i:s2:p:290-306_00. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters)
If references are entirely missing, you can add them using this form.