Income inequality, tax base and sovereign spreads

Joshua Aizenman and Yothin Jinjarak

Santa Cruz Department of Economics, Working Paper Series from Department of Economics, UC Santa Cruz

Abstract: This paper investigates the association between greater income inequality, de-facto fiscalspace, and sovereign spreads. Using data from 50 countries in 2007, in 2009 and in 2011, wefind that higher income inequality is associated with a lower tax base, lower de-facto fiscalspace, and higher sovereign spreads. The economic magnitude of these effects is rather large: anincrease in the Gini coefficient of inequality by 1 (in a scale of 0-100), is associated in 2011 witha lower tax base of 2 percent of the GDP, and with a higher sovereign spread of 45 basis points

Keywords: Social and Behavioral Sciences; Income inequality; tax-base; Fiscal space; sovereign spreads (search for similar items in EconPapers)
Date: 2012-06-01
New Economics Papers: this item is included in nep-acc, nep-pbe and nep-pub
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Citations: View citations in EconPapers (27)

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Related works:
Journal Article: Income Inequality, Tax Base and Sovereign Spreads (2012)
Working Paper: Income inequality, tax base and sovereign spreads (2012)
Working Paper: Income inequality, tax base and sovereign spreads (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucscec:qt4fc5p36t

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