European Parliament Library

Fiscal Devaluation and Fiscal Consolidation :, The VAT in Troubled Times, Michael Keen, Ruud A. Mooij

This paper focuses on two core tax design issues that arise in addressing current fiscal challenges. It first explores the idea, prominent in troubled Eurozone countries, of a "fiscal devaluation": shifting from social contributions to the VAT as a way to mimic a nominal devaluation. Empirical evidence is presented which suggests that in Eurozone countries this may indeed improve the trade balance in the short-run, though, as theory predicts, the effects eventually disappear. The paper then assesses the wider scope for VAT reform in meeting fiscal consolidation needs, developing and beginning to apply a methodology for finding additional VAT revenue in ways less distortionary and fairer than further raising the standard rate
Table Of Contents
Cover; Abstract; Contents; I. Introduction; FIGURES; 1. Fiscal Consolidation in Advanced Economies; 2. Deficits and Unemployment in Advanced Economies; II. Fiscal Devaluation: Tax Shifts to Promote Employment and Competitiveness; A. Fiscal Devaluation: In Principle; B. Tax Effects on Net Exports: Empirics; TABLES; 1. Fiscal Devaluation and Net Exports; 2. Short-term Effects of a Wider Range of Taxes; C. Policy Implications; BOXES; 1. Should Social Contribution Cuts be Targeted on New Employment and Small Firms?; III. The Role of the Value-Added Tax in Fiscal Consolidation
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (49 p.)
Specific Material Designation
Form Of Item

Library Locations

  • EP Library Luxembourg

    Rue du Fort Thüngen, Luxembourg, L-1313, LU
  • EP Library Brussels

    60 rue Wiertz, Brussels, B-1047, BE
  • EP Library Strasbourg

    7 Place Adrien Zeller, Allée du Printemps, Strasbourg, F-67070, FR