On the redistributive efficiency of fiscal policy

Abstract

This article analyses the redistributive efficiency of public spending and taxation in a panel of both advanced and developing economies during the last three decades (1984-2012). In order to explore how redistribution is achieved through fiscal policies, a two-stage approach is applied. First, we evaluate the redistributive efficiency of public spending and taxes by using Data Envelopment Analysis (DEA) and obtain considerable variation in redistributive efficiency scores across countries. Second, we use panel truncated and OLS regression analysis to identify the determinants of these differences and reveal the crucial role of economic development, government quality and demographic factors