The Dynamics of Exclusion and Fiscal Conservatism

Gilles Saint-Paul

No 998, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies the impact of income inequality on fiscal conservatism when an increase in inequality affects the bottom portion of income distribution. It is argued that, contrary to what is generally assumed in the economic literature, inequality will then be associated with less, rather than more, redistributive taxation. Furthermore, if the poor are liquidity constrained then the positive association between inequality and fiscal conservatism will increase the persistence in the dynamics of income distribution and possibly lead to multiple steady states. The existence, under some conditions, of a dynamic voting equilibrium is shown and some of its properties are studied.

Keywords: Exclusion; Human Capital; Income Distribution; Inequality; Path Dependence; Political Economy; Poverty (search for similar items in EconPapers)
JEL-codes: E62 H2 H3 J24 J62 O15 (search for similar items in EconPapers)
Date: 1994-07
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: The Dynamics of Exclusion and Fiscal Conservatism (2001)
Working Paper: The Dynamics of Exclusion and Fiscal Conservatism (1994)
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