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Fiscal Policy Tools of Compensating for Inflation

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  • Margit Schratzenstaller

    (WIFO)

Abstract

Against the background of rising inflation, a number of proposals for fiscal policy measures to dampen the increase in consumer prices have been advanced in Austria. Generally speaking, fiscal policy cannot address the causes of inflation, but may contribute towards offsetting its redistributive effects. It has at its disposal measures influencing public revenues (changes in taxes, social security contributions or public charges) or expenditure (cash transfers or the provision of public services that may serve as substitutes for market goods and services showing abnormal price increases). They often put heavy claims on budgetary resources while mitigating only the impact of price hikes. Much more efficient is therefore policy action addressing the root causes of inflation.

Suggested Citation

  • Margit Schratzenstaller, 2008. "Fiscal Policy Tools of Compensating for Inflation," Austrian Economic Quarterly, WIFO, vol. 13(4), pages 144-155, December.
  • Handle: RePEc:wfo:wquart:y:2008:i:4:p:144-155
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    File URL: http://www.wifo.ac.at/wwa/pubid/34559
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    References listed on IDEAS

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    1. Projektgruppe Gemeinschaftsdiagnose, 2007. "Aufschwung legt Pause ein," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 60(20), pages 03-58, October.
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    Keywords

    Inflation; Fiscal policy; fiscal drag; Austria;

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