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An Evaluation of the Revenue side as a source of fiscal consolidation in high debt economies

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  • Banerjee, Ritwik

Abstract

Unsustainable levels of debt for some European economies is causing enormous strain in the Euro area. How to tide over the debt crisis seems to be the most important objective the European policy makers are currently facing. We use a dynamic general equilibrium closed economy model to compute the dynamic Laffer Curves for Portugal, Ireland, Greece and Spain for different class of taxes. We conclude that there exists scope for considerable revenue generation by raising certain class of taxes. Thus revenue generation, along with fiscal consolidation holds key for debt reduction.

Suggested Citation

  • Banerjee, Ritwik, 2012. "An Evaluation of the Revenue side as a source of fiscal consolidation in high debt economies," MPRA Paper 37956, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:37956
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    File URL: https://mpra.ub.uni-muenchen.de/37956/1/MPRA_paper_37956.pdf
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    References listed on IDEAS

    as
    1. Mathias Trabandt & Harald Uhlig, 2006. "How Far Are We From The Slippery Slope? The Laffer Curve Revisited," SFB 649 Discussion Papers SFB649DP2006-023, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Trimborn, Timo & Koch, Karl-Josef & Steger, Thomas M., 2008. "Multidimensional Transitional Dynamics: A Simple Numerical Procedure," Macroeconomic Dynamics, Cambridge University Press, vol. 12(03), pages 301-319, June.
    3. Gianluca Cafiso, 2012. "Debt developments and fiscal adjustment in the EU," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 47(1), pages 61-72, January.
    4. Trabandt, Mathias & Uhlig, Harald, 2011. "The Laffer curve revisited," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 305-327.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    fiscal consolidation; dynamic laffer curve; tax revenue; fiscal policy;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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