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Interpreting Net Fiscal Incidence Calculations


  • Piggott, John
  • Whalley, John


This paper evaluates calculations of net fiscal incidence, using an applied general equilibrium model of Australia into which public goods are incorporated. Results indicate that it is inappropriate to regard the redistributive impacts of government policies as a zero sum game. For large reductions in public goods provision and taxes, the dominant effect is the foregone consumer surplus from suboptimal public goods provision. In addition, the redistributive pattern of small charges are quite different from large charges. Marginal and average net fiscal incidence, thus, need to be clearly separated, a point not emphasized in existing literature. Copyright 1987 by MIT Press.

Suggested Citation

  • Piggott, John & Whalley, John, 1987. "Interpreting Net Fiscal Incidence Calculations," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 685-694, November.
  • Handle: RePEc:tpr:restat:v:69:y:1987:i:4:p:685-94

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    References listed on IDEAS

    1. Robert J. Shiller, 1984. "Stock Prices and Social Dynamics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 15(2), pages 457-510.
    2. Arrow, Kenneth J, 1982. "Risk Perception in Psychology and Economics," Economic Inquiry, Western Economic Association International, vol. 20(1), pages 1-9, January.
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    Cited by:

    1. Kaplow, Louis, 2006. "Public goods and the distribution of income," European Economic Review, Elsevier, vol. 50(7), pages 1627-1660, October.
    2. Chao, Chi-Chur & Yu, Eden S.H. & Yu, Wusheng, 2009. "Government budget, public-sector wages and capital taxes in a small open economy: A Hong Kong case," China Economic Review, Elsevier, vol. 20(1), pages 54-64, March.
    3. Palda, Filip, 1997. "Fiscal Churning and Political Efficiency," Kyklos, Wiley Blackwell, vol. 50(2), pages 189-206.
    4. Filip Palda, 2005. "Why Do Voters Demand Universal Government Benefits?," Public Economics 0503009, EconWPA.
    5. Shah, Anwar & Whalley, John, 1990. "An alternative view of tax incidence analysis for developing countries," Policy Research Working Paper Series 462, The World Bank.
    6. Lanjouw, Peter & Ravallion, Martin, 1998. "Benefit incidence and the timing of program capture," Policy Research Working Paper Series 1956, The World Bank.
    7. John Ablett, 1996. "Generational Accounting and Intergenerational Balance," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 3(4), pages 407-418.
    8. Cormac O'Dea & Ian Preston, 2012. "The distributional impact of public spending in the UK," IFS Working Papers W12/06, Institute for Fiscal Studies.
    9. Barbora Slintáková, 2014. "Cost of Service Approach to the Measurement of Public Expenditure Incidence," Český finanční a účetní časopis, University of Economics, Prague, vol. 2014(2), pages 92-105.
    10. Haizhen Mou & Stanley L. Winer, 2012. "Fiscal Incidence when both Individual Welfare and Family Structure Matter: The Case of Subsidization of Home-Care for the Elderly," CESifo Working Paper Series 3731, CESifo Group Munich.
    11. Selden, Thomas M. & Wasylenko, Michael J., 1992. "Benefit incidence analysis in developing countries," Policy Research Working Paper Series 1015, The World Bank.

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