Fiscal Policy and Redistribution in the Dominican Republic

Jaime Aristy-Escuder (), Maynor Cabrera (), Blanca Moreno-Dodson () and Miguel Sánchez-Martín ()
Additional contact information
Jaime Aristy-Escuder: INTEC Santo Domingo
Maynor Cabrera: FEDES
Blanca Moreno-Dodson: World Bank
Miguel Sánchez-Martín: World Bank

No 47, Commitment to Equity (CEQ) Working Paper Series from Tulane University, Department of Economics

Abstract: This paper assesses whether limited redistributive effect of fiscal policy in the Dominican Republic has slowed improvements in poverty and inequality during a period of strong economic growth. Departing from the Commitment to Equity methodology for fiscal incidence analysis (Lustig and Higgins, 2013) this paper introduces new methodological considerations and addresses the time gap between the current fiscal structure (2013) and the latest available household survey (2007) by deflating public revenue and spending data to 2007 prices. Results show that fiscal policy in the Dominican Republic is overall progressive given that, compared to other countries, the fiscal system achieves intermediate levels of inequality reduction (5 Gini points) through direct and indirect taxes, transfers and subsidies, and it generates very little horizontal inequality. At the same time, the impact of direct transfers on poverty reduction is modest, due to the limited cash amounts granted, and there seems to be scope to boosting revenue and enhancing progressivity by revising tax exemptions and indirect electricity subsidies.

Pages: 48 pages
Date: 2016-06
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (12)

Published in Commitment to Equity Institute, June 2016, pages 1-48

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http://repec.tulane.edu/RePEc/ceq/ceq47.pdf Revised version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tul:ceqwps:47

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