Income inequality, tax base and sovereign spreads

Joshua Aizenman and Yothin Jinjarak

No 18176, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates the association between greater income inequality, de-facto fiscal space, and sovereign spreads. Using data from 50 countries in 2007, 2009 and 2011, we find that higher income inequality is associated with a lower tax base, lower de-facto fiscal space, and higher sovereign spreads. The economic magnitude of these effects is large: at the margin, a one point of the Gini coefficient of inequality (in a scale of 0-100), is associated in 2011 with a lower tax base of 2 percent of the GDP, and with a higher sovereign spread of 45 basis points.

JEL-codes: F36 F41 H20 (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-pbe
Note: IFM
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Citations: View citations in EconPapers (28)

Published as Joshua Aizenman & Yothin Jinjarak, 2012. "Income Inequality, Tax Base and Sovereign Spreads," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 68(4), pages 431-444, December.

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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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