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Title:Income inequality, tax base and sovereign spreads PDF Logo
Authors:Aizenman, Joshua
Jinjarak, Yothin
Issue Date:2012
Series/Report no.:Working Papers, UC Santa Cruz Economics Department 700
Abstract:This paper investigates the association between greater income inequality, de-facto fiscal space, and sovereign spreads. Using data from 50 countries in 2007, in 2009 and in 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 rather large: an increase in the Gini coefficient of inequality by 1 (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.
Subjects:income inequality
tax-base
fiscal space
sovereign spreads
JEL:H20
D63
F41
Document Type:Working Paper
Appears in Collections:Working Papers, Economics Department, UC Santa Cruz

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