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Fiscal Incidence on the Island: Grenada's Fiscal System and Its Incidence

Author

Listed:
  • Canavire Bacarreza, Gustavo J.

    (World Bank)

  • Aliaga, Guillermo Gómez

    (World Bank)

  • Britton, Chevanne

    (Grenada’s Ministry of Finance)

  • Rios-Avila, Fernando

    (Levy Economics Institute)

  • Pozo, Wilson Jimenez

    (Fundacion Aru)

  • Ibarra, Silvia Granados

    (World Bank)

  • Li, Ran

    (World Bank)

Abstract

This paper examines the distributional effects of fiscal policy in Grenada. Using data from the 2017–2018 Living Conditions and Household Budgets Survey and following the Commitment to Equity (CEQ) analysis framework, we estimate the effects of fiscal policy interventions on inequality and poverty. Specifically, we analyze the distributional incidence of direct and indirect taxes, direct transfers provided by the social transfers and the school feeding programs, and in-kind transfers generated by public services in health and education. The results show that Grenada has a tax system that is neutral on the VAT side and progressive on the personal income tax side. Furthermore, direct transfers make a modest contribution to poverty reduction and are almost neutral in their distributive impact. The results contribute to the understanding of who bears the burden of taxation and benefits from transfers and of how Grenada's fiscal system can improve its redistributive effect.

Suggested Citation

  • Canavire Bacarreza, Gustavo J. & Aliaga, Guillermo Gómez & Britton, Chevanne & Rios-Avila, Fernando & Pozo, Wilson Jimenez & Ibarra, Silvia Granados & Li, Ran, 2024. "Fiscal Incidence on the Island: Grenada's Fiscal System and Its Incidence," IZA Discussion Papers 16795, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp16795
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    References listed on IDEAS

    as
    1. Nora Lustig, 2016. "Fiscal Policy, Inequality and the Poor in the Developing World - Working Paper 441," Working Papers 441, Center for Global Development.
    2. Horscroft, Virginia, 2014. "Public sectors in the pacific islands : are they'too big'and do they'crowd out'the private sector ?," Policy Research Working Paper Series 7102, The World Bank.
    3. Jaime Aristy-Escuder & Maynor Cabrera & Blanca Moreno-Dodson & Miguel Sánchez-Martín, 2016. "Fiscal Policy and Redistribution in the Dominican Republic," Commitment to Equity (CEQ) Working Paper Series 1347, Tulane University, Department of Economics.
    4. Deaton, A. & Zaidi, S., 1999. "Guidelines for Constructing Consumption Aggregates for Welfare Analysis," Papers 192, Princeton, Woodrow Wilson School - Development Studies.
    5. Jaime Aristy-Escuder & Maynor Cabrera & Blanca Moreno-Dodson & Miguel Sánchez-Martín, 2016. "Fiscal Policy and Redistribution in the Dominican Republic," Commitment to Equity (CEQ) Working Paper Series 47, Tulane University, Department of Economics.
    6. Lara Ibarra,Gabriel & Sinha,Nistha & Fayez,Rana Nayer Safwat & Jellema,Jon Robbert, 2019. "Impact of Fiscal Policy on Inequality and Poverty in the Arab Republic of Egypt," Policy Research Working Paper Series 8824, The World Bank.
    7. Stephen D. Younger & Eric Osei-Assibey & Felix Oppong, 2017. "Fiscal Incidence in Ghana," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 47-66, November.
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    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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