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Author Reconciliation, A. ♦ Dalgaard, Carl-Johan ♦ Hansen, Henrik ♦ Larsen, Theo
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Subject Keyword Epru Economic Policy Research Unit ♦ Income Skewness ♦ Redistributive Taxation ♦ Cross-country Study ♦ Positive Relationship ♦ Stipulated Chain ♦ Puzzling Correlation ♦ Puzzling Finding ♦ So-called Fiscal Policy Approach ♦ Negative Associa-tion ♦ Poor Middle Class ♦ Redistributive Effort ♦ Long-run Productivity ♦ Empirical Support
Abstract The so-called “fiscal policy approach " predicts that increases in income skewness should be associated with an intensification of redistributive efforts, at least in democracies. If redistribution is detrimental to growth, then this implies that a poor middle class is bad for long-run productivity; a prediction which has found empirical support. However, cross-country studies tend to find a negative associa-tion between income skewness and the amount of redistribution taking place, and, a positive relationship between redistributive taxation and growth. This paper of-fers a reconciliation of the existing theory and these puzzling findings. Specifically, the model predicts that the traditionally stipulated chains of causality holds within countries, whereas the puzzling correlations mentioned above may arise across coun-tries. We provide a test of our explanation and find support for our approach using
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article
Publisher Date 2003-01-01