Title Tax smoothing in a financially repressed economy : evidence from India / prepared by Paul Cashin, Nilss Olekalns, and Ratna Sahay

Published [Washington, D.C.] : International Monetary Fund, Fiscal Affairs Department, ©1998

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Description 1 online resource (43 pages) : illustrations Series IMF working paper, 2227-8885 ; WP/98/122 IMF working paper ; WP/98/122. Summary Why do governments run fiscal deficits? One rationale for the existence of fiscal imbalances is to minimize the distortionary effects of levying nonlump-sum taxes (for a given present value of tax collections), by spreading the burden of these taxes over time. That is, if taxes are distorting decisions to work or consume, then the timing of taxes will matter. This concept of tax smoothing, first introduced by Barro (1979), is now well established in the literature on fiscal policy. 2 Tax smoothing has the normative implication that budget imbalances can be optimal fiscal policy responses to anticipated future events. In particular, a government anticipating an increase in its own expenditure can minimize the distortionary effects of raising the finance for that expenditure if it brings forward some of the associated tax increase and runs a budget surplus (or a smaller deficit) in the current period. Similarly, a budget deficit (or a smaller surplus) is optimal if the government anticipates future falls in its expenditure Bibliography Includes bibliographical references (pages 38-43) Notes Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL English digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL Print version record Subject Budget deficits -- India -- Mathematical models Debts, Public -- India -- Mathematical models Fiscal policy -- India -- Mathematical models Taxation -- India -- Mathematical models Budget deficits -- Mathematical models Debts, Public -- Mathematical models Fiscal policy -- Mathematical models Taxation -- Mathematical models India Form Electronic book Author Olekalns, Nilss Sahay, Ratna International Monetary Fund. Fiscal Affairs Department. ISBN 1282004395 9781282004399 1451899807 9781451899801 1462300472 9781462300471 1452712891 9781452712895 9786613795694 6613795690 9781451854466 1451854463

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