Budget Policy Approaches to Compensate for Inflation

Margit Schratzenstaller ()

WIFO Monatsberichte (monthly reports), 2008, vol. 81, issue 9, pages 665-676

Abstract: Given the above-average price increases experienced in Austria since the end of 2007, anti-inflationary measures are at the centre of the ongoing economic-policy debate, with a strong focus on budget policy. The current price surge also needs to be looked at from the viewpoint of distribution policy: on the one hand, transfer payments by the state to private households are subject to devaluation in real terms; on the other hand, the inflation-related real loss of purchasing power of both earned income and transfer payments particularly affects low income earners, who spend much or all of their disposable income on consumption. All budget policy can do is (partially) neutralise the effect of price increases on income distribution; it is not able to contribute towards eliminating the causes of inflation.

Keywords: Inflation; Fiskalpolitik; Budgetpolitik; budgetpolitische; Maßnahme (search for similar items in EconPapers)
Date: 2008

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