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Fiscal Policy, Regional Disparity and Poverty in China: a General Equilibrium Approach

Author

Listed:
  • Li Wang
  • Xuesong Li
  • Wenbo Wang
  • Zhou Guangbao

Abstract

The main objective of this research is to analyze the effects of the fiscal dimension of China’s government transfer and preferential tax policy on regional income disparity and poverty reduction. Using a computable general equilibrium model with a three-region component, we find that the preferential tax policy on the eastern coastal region of China has a significant effect on household income, as well as on the FGT indicator. The simulation results suggest that tax policy is a more effective tool to counter against China’s regional disparity than government transfer.

Suggested Citation

  • Li Wang & Xuesong Li & Wenbo Wang & Zhou Guangbao, 2010. "Fiscal Policy, Regional Disparity and Poverty in China: a General Equilibrium Approach," Working Papers MPIA 2010-11, PEP-MPIA.
  • Handle: RePEc:lvl:mpiacr:2010-11
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    File URL: https://portal.pep-net.org/documents/download/id/16579
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    References listed on IDEAS

    as
    1. Gary Fields & Ravi Kanbur, 2007. "Minimum wages and poverty with income-sharing," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 135-147.
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    More about this item

    Keywords

    China; Regional Disparity; Fiscal Policy; Government Transfer; Preferential Policy; Poverty; CGE; FGT;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs

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