Impact Analysis of Fiscal Policies on Income Distribution

The inappropriate distribution of income and consequently poverty are economists’ obsessions. The purpose of this study is to examine the effect of fiscal policies on incomedistribution in developing countries during the period 1990 to 2015 by using vector auto regression model. The results show that the effect of tax revenues on Gini coefficient is positive and significant and the effect of government expenditures on Gini coefficient is negative and significant. Therefore, this suggests more attention on health and education. Moreover, the impact of inflation on the Gini coefficient is positive and significant. Inflation decreases the purchasing power of the money and also causes macroeconomic inequality

Keywords:

fiscal policy , income distribution , developing countries , vector auto regression model (VAR) , macroeconomic inequality