Fiscal Restructuring in the Group of Seven Major Industrial Countries in the 1990's: Macroeconomic Effects

By Leonardo Bartolini, Steven A. Symansky, Assaf Razin

March 1, 1995

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Leonardo Bartolini, Steven A. Symansky, and Assaf Razin. Fiscal Restructuring in the Group of Seven Major Industrial Countries in the 1990's: Macroeconomic Effects, (USA: International Monetary Fund, 1995) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper studies the fiscal restructuring of the first half of the 1990s in the major industrial countries. It presents and calibrates a simple model of the labor market and integrates it into a multi-country macroeconomic model that takes into account the effects of distortionary taxes. It then uses the resulting framework to simulate the effects of recent and prospective changes in fiscal policies in the group of seven major industrial countries. The analysis suggests that in the long run the impact on output is likely to be positive in those countries that relied relatively more on expenditure cuts or indirect tax increases (such as Canada, France, Japan, and the United Kingdom), while the effect of the fiscal restructuring on output is estimated to be negative in those countries that relied primarily on labor and capital taxes (Germany, Italy, and the United States).

Subject: Consumption, Consumption taxes, Expenditure, Labor taxes, National accounts, Revenue administration, Taxes

Keywords: Capital tax, Community charge, Consumption, Consumption taxes, Europe, Federal deficit, Fiscal policy, GDP deflator, GDP share, Labor tax wedge, Labor taxes, Market value, Natural rate of unemployment, Nominal capital, Personal income, Real product wage, Real wage, Replacement ratio, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1995/035
Stock No:

WPIEA0351995
ISBN:

9781451845303
ISSN:

1018-5941

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