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Article

Ritwik Banerjee

Unsustainable levels of debt in some European economies are causing enormous strain in the Euro area. Successful debt consolidation in high-debt economies is the single…

Abstract

Purpose

Unsustainable levels of debt in some European economies are causing enormous strain in the Euro area. Successful debt consolidation in high-debt economies is the single most important objective for the European policy makers. The paper aims to discuss these issues.

Design/methodology/approach

The author uses a dynamic general equilibrium closed economy model to compute the dynamic Laffer curves for Portugal, Ireland, Greece and Spain for different class of taxes. The general equilibrium effects of the interaction of labor tax, consumption tax and capital tax is demonstrated.

Findings

Location of each economy on its Laffer curve suggests that there exists a scope for considerable revenue generation by raising consumption and labor tax rates but no such possibilities exist for capital tax rate. Thus revenue generation with certain tax rates as instruments, holds key to successful and sustained debt reduction.

Originality/value

This to the best of knowledge is one of the first papers which looks closely at the tax revenue – tax rate panel for the major deeply indebted European economies.

Details

Journal of Economic Studies, vol. 41 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

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Article

Ritwik Sasmal and Joydeb Sasmal

The purpose of this paper is to examine the impact of public expenditure on economic growth and poverty alleviation in developing countries like India. If poverty and…

Abstract

Purpose

The purpose of this paper is to examine the impact of public expenditure on economic growth and poverty alleviation in developing countries like India. If poverty and inequality are high, the government may resort to distributive policies at the cost of long-term growth. The distributive policies and poverty alleviation measures fail to achieve success due to lack of good governance, lack of proper targeting and problems in the implementation of such schemes. On the other hand, if the nature of public expenditure is such that it enhances per capita income, it will help reduce poverty.

Design/methodology/approach

After analytical digression and construction of hypotheses panel regression has been done using state-level data in the Indian context to empirically verify the above propositions. Both Fixed effects and Random effects models have been used for this purpose.

Findings

The results show that in states where ratio of public expenditure on the development of infrastructure such as road, irrigation, power, transport and communication is higher, per capita income is also higher and incidence of poverty is lower indicating that economic growth is important for poverty alleviation and development of infrastructure is necessary for growth.

Originality/value

This study demonstrates how public policy and public finance can be used as instruments for removal of poverty.

Details

International Journal of Social Economics, vol. 43 no. 6
Type: Research Article
ISSN: 0306-8293

Keywords

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