Pareto Efficiency, Inequality and Distribution Neutral Fiscal Policy - An Overview

Sugata Marjit, Anjan Mukherji and Sandip Sarkar (sandip.isi.08@gmail.com)

No 590, Discussion Papers Series from University of Queensland, School of Economics

Abstract: A structure of taxes and transfers that keep the income distribution unchanged even after positive or negative shocks to an economy, is referred as a Distribution Neutral Fiscal Policy. Marjit and Sarkar (2017) referred this as a Strong Pareto Superior (SPS) allocation which improves the standard Pareto criterion by keeping the degree of inequality, not the absolute level of income, intact. In this paper we show the existence of a SPS allocation in a general equilibrium framework, and we provide a brief survey of distribution neutral fiscal policies existing in the literature. We also provide an empirical illustration with Indian Human Development Survey data.

Keywords: Pareto Superiority; Strong Pareto Superiority; Inequality (search for similar items in EconPapers)
JEL-codes: D63 H20 H23 H30 (search for similar items in EconPapers)
Date: 2018-05-14
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:qld:uq2004:590

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