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This paper explores the link between default risk and fiscal procyclicality. We show that countries with higher sovereign risk have a more procyclical fiscal expenditure policy, which is driven mostly by transfers. We build a small open economy model with income inequality, social transfers, and...
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The relationship between inequality and redistribution is usually studied under the assumption that the government …
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The last decade has seen a sharp increase in interest in the possible existence of a Paradox of Redistribution (PoR …
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redistribution. Estimating a DSGE model with microdata on the support for redistribution, I find that if voters disregarded their … ideological views on welfare policies, redistribution in the US would increase 117%. Because ideology is a more important … on redistribution. Among the drivers of ideology, I find that racial animosity and distrust of the government contributes …
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standards. The workhorse models of optimal income taxation call for more redistribution as inequality rises. By contrast, living …. Rising living standards dampen by at least 25% the desired increase in redistribution due to rising inequality. …
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