Tesis para optar al grado de MAGÍSTER EN ANÁLISIS ECONÓMICO / Governments spend a signi cant share of non-traded goods, which
become disproportionally more expensive as economies grow (e.g. Balassa-
Samuelson e ect). In fact, government in
ation increased twice above
average in
ation in countries like Finland and US. This paper shows a
novel and simple model of how economic growth impacts scal sustainability.
Also, we empirically explore the potential magnitudes behind
this phenomenon. The main result is that governments should save for
the future mismatch. As in standard models of hedging, the size of
this provision depends on the product of the di erential price (in
ation)
times the net exposure, measured as the di erence of elasticities
of scal revenue and expenditures respect to price. Besides, while tax
systems focused on tradable goods make more e orts to maintain scal
sustainability through of high tax rate, non-tradable good sector
tend to display higher saving for this \government price risk" when
the objective is to maximize welfare. From an empirical perspective,
with a panel of 28 high-middle income countries, we show a mismatch
at least for the last 20 years with an increasing trend over time. In
general, an increase in 1% in GDP growth implies a 0.21% - 0.36% in
mismatch on average. Besides, consumption taxes would be more mismatched.
Instead, corporate taxes would not have problems to nance
spending giving importance of how this e ect should be incorporated
in the practical analysis, either in the discussion of tax or scal policy.
| Identifer | oai:union.ndltd.org:UCHILE/oai:repositorio.uchile.cl:2250/144314 |
| Date | 04 1900 |
| Creators | Pino Magna, Fernando |
| Contributors | Wagner Brizzi, Rodrigo Andrés |
| Publisher | Universidad de Chile |
| Source Sets | Universidad de Chile |
| Language | English |
| Detected Language | English |
| Type | Tesis |
| Rights | Attribution-NonCommercial-NoDerivs 3.0 Chile, http://creativecommons.org/licenses/by-nc-nd/3.0/cl/ |
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