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Government Expenditures and the Growth-Inequality Trade-Off: The Swedish Case

Author

Listed:
  • Hector Sala

    (Autonomous University of Barcelona;Institute for the Study of Labor (IZA))

  • Oriol Roca-Sagalés

    (Autonomous University of Barcelona)

Abstract

Sweden is one of the countries with the largest public fiscal intervention and narrowest income inequality in the world. This article investigates to what extent these two features are interconnected and whether economic growth affects and is affected by this relationship. Empirical results from vector auto-regression models reveal the existence of important long-run non-Keynesian effects (i.e., lessening fiscal expansions and, conversely, expansionary fiscal contractions) and significant downward effects of government expenditures on income inequality. The existence of a negative trade-off between growth and inequality is an important stylized fact which deserves close attention by policy makers.

Suggested Citation

  • Hector Sala & Oriol Roca-Sagalés, 2011. "Government Expenditures and the Growth-Inequality Trade-Off: The Swedish Case," Journal of Income Distribution, Ad libros publications inc., vol. 20(2), pages 38-54, June.
    • Handle: RePEc:jid:journl:y:2011:v:20:i:2:p:38-54
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/23829
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    Citations

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    Cited by:

    1. Karen Davtyan, 2016. "Interrelation among Economic Growth, Income Inequality, and Fiscal Performance: Evidence from Anglo-Saxon Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 217(2), pages 37-66, June.
    2. Kouassi YEBOUA, 2021. "Fiscal policy and growth-inequality tradeoffs: Bayesian evidence from Cote d’Ivoire," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(626), S), pages 297-310, Spring.
    3. Leonel Muinelo-Gallo & Oriol Roca-Sagalés, 2017. "Long-term effects of fiscal policy in Uruguay," Documentos de Trabajo (working papers) 17-02, Instituto de Economía - IECON.
    4. Muinelo-Gallo, Leonel & Roca-Sagalés, Oriol, 2013. "Joint determinants of fiscal policy, income inequality and economic growth," Economic Modelling, Elsevier, vol. 30(C), pages 814-824.
    5. Walter Cont & Alberto Porto, 2016. "Fiscal Policy and Income Distribution: Measurement for Argentina 1995 ¨C 2010," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 75-92, May.
    6. repec:ira:wpaper:201405 is not listed on IDEAS

    More about this item

    Keywords

    fiscal policy; economic growth; income inequality; VAR models; Sweden;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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