Budget Deficits under Alternative Tax Systems: International Effects

Jacob A. Frenkel and Assaf Razin
Additional contact information
Jacob A. Frenkel: International Monetary Fund

IMF Staff Papers, 1988, vol. 35, issue 2, 297-315

Abstract: Traditional analyses of budget deficits arising from tax cuts have focused on the size of the deficit and disregarded the underlying tax system. This paper examines the international effects of budget deficits under alternative tax systems. The key finding is that the consequences of tax policies and the characteristics of the international transmission mechanism depend critically on the composition of taxes. Under a value-added tax system, a budget deficit worsens the trade balance and raises the world interest rate; under an income-tax system, the same deficit improves the trade balance and lowers the world interest rate.

Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.jstor.org/stable/3867082?origin=pubexport main text (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:imfstp:v:35:y:1988:i:2:p:297-315

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).