The Dynamics of Exclusion and Fiscal Conservatism

Gilles Saint-Paul

Research output: Contribution to journalArticlepeer-review

Abstract

This paper studies the impact of income inequality on fiscal conservatism when an increase in inequality essentially affects the bottom of the 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. Journal of Economic Literature Classification Numbers: E62, H2, H3, J24, J62, O15.

Original languageEnglish (US)
Pages (from-to)275-302
Number of pages28
JournalReview of Economic Dynamics
Volume4
Issue number2
DOIs
StatePublished - Apr 2001

Keywords

  • Exclusion
  • Human capital
  • Income distribution
  • Inequality
  • Path dependence
  • Political economy
  • Poverty

ASJC Scopus subject areas

  • Economics and Econometrics

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