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This paper explores the link between default risk and fiscal procyclicality. We show that countries with higher sovereign risk have a more procyclical fiscal expenditure policy, which is driven mostly by transfers. We build a small open economy model with income inequality, social transfers, and...
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Korpi and Palme (1998) famously suggested the existence of a Paradox of Redistribution:although programs targeted to … harmonized by LIS. My results showthat the relationship between the redistribution obtained by social transfers and their pro … the rich are unable to reachdown the income ladder and remain stuck at very low levels of redistribution.This reflects how …
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of myopic individuals increases, there is less redistribution and more forced saving. Furthermore, as the number of …
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