The Distributional Effects of Public Expenditure: Update and Overview

August 1, 1995

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

It is commonly agreed that economic policies, including budgetary policies, can have potentially strong distributional effects. Traditional economic analysis held that economic policies affected the income distribution primarily through their impact on the rate of growth. More recently, it has come to be recognized that qualitative aspects of economic growth are probably more important than the rate of growth itself. While recent research has confirmed the potential role of expenditure policies as a redistributive tool, it has also shown that redistribution does not necessarily have to come at the expense of economic growth and efficiency. Although there are substantial analytical and technical problems to be faced in the design of equitable and cost-effective public expenditure programs, unfavorable distributional outcomes of these programs can usually be traced more to political and institutional pressures than to purely technical factors.

Subject: Consumption, Expenditure, Income distribution, Income inequality, National accounts, Personal income, Poverty

Keywords: debated policy topic, distribution data, East Asia, economic growth, expenditure incidence, expenditure policy, expenditure program, expenditure reform, household expenditure data, household income, income, Income distribution, income distribution data, Income inequality, income transfer, Personal income, policy, public expenditure, public expenditure area, public expenditure program, WP

Pages:
28
Volume:
1995
DOI:
https://doi.org/10.5089/9781451850581.001
Issue:
084
Series:
Working Paper No. 1995/084
Stock No:
WPIEA0841995
ISBN:
9781451850581
ISSN:
1018-5941

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Notes

An earlier version of this paper was presented at the "VIIth Regional Seminar on Fiscal Policy" of the Economic Commission for Latin America and the Caribbean (CEPAL) in Santiago, Chile, January 23-26, 1995.

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