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This paper investigates the main determinants of income inequality in transition countries during the period 1990–2018. To this end, we address a major methodological challenge that lies at the core of the cross-country literature on income inequality: the potential endogeneity of income growth, which is largely ignored by most empirical studies. We adopt a two-pronged empirical strategy by (i) using trading partners’ weighted average real GDP as an instrumental variable (IV), and (ii) estimating the model via the two-stage least squares (2SLS) approach for static models and the Generalized Method of Moments (GMM) estimator for dynamic models. Our empirical findings are consistent with the Kuznets curve that illustrates a nonlinear relationship between income inequality and the level of economic development. We also find that the redistributive impact of fiscal policy is statistically insignificant and taxation and government spending appear to have the opposing effects on income inequality in transition economies.

Macroeconomics --- Public Finance --- Personal Income, Wealth, and Their Distributions --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Macroeconomic Analyses of Economic Development --- Economic Development: Human Resources --- Human Development --- Income Distribution --- Migration --- Aggregate Factor Income Distribution --- Fiscal Policy --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Income inequality --- Income distribution --- Personal income --- Fiscal policy --- Expenditure --- National accounts --- Income --- Expenditures, Public --- Russian Federation

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We estimate the effects on growth of nine fiscal reform episodes in seven high-income countries using the Synthetic Control Method. These episodes are selected using an indicator-based approach applied to the evaluation of growth-friendly fiscal reforms during 1975-2010. We find that in reform countries the annual growth rate of real GDP was on average about 1 percentage point above their synthetic units 10 years after each respective reform. Moreover, countries which were initially less developed seemed to experience a larger growth impact after their reforms. Results are broadly robust to controlling for structural reforms on business regulation, financial market, labor market, and legal and product markets, which may also affect growth. Our findings also suggest that inequality is not affected by the growth-friendly fiscal reforms analyzed in this paper.

Macroeconomics --- Public Finance --- Fiscal Policy --- Economic Growth and Aggregate Productivity: General --- Comparative Studies of Countries --- Institutions and the Macroeconomy --- Aggregate Factor Income Distribution --- Personal Income, Wealth, and Their Distributions --- Fiscal policy --- Structural reforms --- Personal income --- Income inequality --- Income distribution --- Macrostructural analysis --- National accounts --- Income --- Chile

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In this paper, we study the impact of fragmented politics on public debt—in particular, between two consecutive legislative elections. Using data for 92 advanced and developing countries during 1975-2015, we find a positive association between political fragmentation and public debt changes. Corruption magnifies the effects; with higher perceived corruption, political fragmentation has a bigger sway on debt increases. The influence of political fragmentation on debt dynamics is somewhat asymmetric, with larger and more significant effects during periods of debt reduction. Establishment of fiscal councils helps attenuate the negative impact of political fragmentation on public debt dynamics.

Debts, Public --- Econometric models. --- Exports and Imports --- Financial Risk Management --- Macroeconomics --- Public Finance --- Criminology --- Structure, Scope, and Performance of Government --- National Deficit Surplus --- Debt --- Debt Management --- Sovereign Debt --- International Lending and Debt Problems --- Bureaucracy --- Administrative Processes in Public Organizations --- Corruption --- Fiscal Policy --- Public finance & taxation --- International economics --- Corporate crime --- white-collar crime --- Finance --- Public debt --- Debt sustainability analysis --- Fiscal councils --- Debt reduction --- External debt --- Crime --- Fiscal policy --- Asset and liability management --- Debts, External --- United States

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Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis.

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