Economic uncertainty and the redistributive effect of taxes and transfers in the UK and the US since the 1980s

Oscar Claveria and Petar Sorić ()
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Petar Sorić: University of Zagreb

Economics Bulletin, 2025, vol. 45, issue 1, 130 - 137

Abstract: This study examines the relationship between economic uncertainty and the redistributive effect of taxes and government transfers in the UK and the US over the period 1980-2021. We find that the sign of the relationship between uncertainty and redistribution goes from being negative at the beginning of the 1980s to taking a positive and significant sign in recent years. In the US, economic uncertainty Granger-causes the redistributive effect of taxes and transfers in the short run, but the same does not hold for the UK. We also find an asymmetric adjustment, being the impact of decreases in economic uncertainty on redistribution greater than that of increases.

Keywords: economic uncertainty; redistributive policy; taxes; government transfers; income inequality; asymmetric adjustment (search for similar items in EconPapers)
JEL-codes: C5 D8 (search for similar items in EconPapers)
Date: 2025-03-30
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