Optimal fiscal policy in open economies with labour market distortions

Article Abstract:

Fiscal policies in open economies as characterized by distortions in the labor market are analyzed based on a model that allows the integration of macroeconomic concerns. Results showed that a rise in public consumption may result in an increase in employment and may be welfare improving, despite public consumption being pure waste. However, since some of the gain from fiscal expansion is granted at the expense of welfare in other nations, non-cooperative policies have the tendency to be too expansionary.

Europe, Demographic aspects, Unemployment

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Price and income distortions under separate spending and taxing decisions

Article Abstract:

Discrepancies between voter's actual and perceived budget constraints arising from intergovernmental grants are analyzed. The model not only introduces grant illusions caused by income misperceptions but also differentiates illusions which result from income distortions and illusions due to price distortions. In addition, the magnitude of these illusions are also tested separately. Empirical analysis indicates that voter behavior is significantly influenced by income and price misperceptions.

Budget, Budgeting, Budgets, Prices, Income

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Tax and non-tax distortions

Article Abstract:

Browning's work involving non-tax distortions proved to be highly complicated and problematic. Browning's proposed interventions, such as pollution controls and international trade restrictions, were found to ineffective in generating direct impact on labor income taxation's marginal distortionary cost. The primary group of distortions identified by Browning failed in making the private and social values of labor highly influential in the marginal welfare cost of increasing taxes on labor.

Tax Ideology (Business), Research, Analysis, Tax research, Tax policy, Income tax

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