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Fiscal redistribution in developing countries: policy issues and options

Book/book chapter

Written by Francesca Bastagli

Book/book chapter

​The sizeable increase in income inequality experienced in many parts of the world since the 1990s and the severe consequences of the global economic and financial crisis have brought distributional issues to the top of the policy agenda. The challenge for many governments is to address concerns over rising inequality while simultaneously promoting economic efficiency and more robust economic growth.

The book delves into this discussion by analysing fiscal policy and its link with inequality. Fiscal policy is the government's most powerful tool for addressing inequality. It affects households' consumption directly (through taxes and transfers) and indirectly (via incentives for work and production and the provision of public goods and individual services such as education and health).

An important message of the book is that growth and equity are not necessarily at odds; with the appropriate mix of policy instruments and careful policy design, countries can achieve better distributional outcomes and improve economic efficiency.

Francesca Bastagli, David Coady and Sanjeev Gupta