"Fiscal Devaluation" and Fiscal Consolidation: The VAT in Troubled Times
Chapter in NBER book Fiscal Policy after the Financial Crisis (2013), Alberto Alesina and Francesco Giavazzi, editors (p. 443 - 485)
This chapter discusses the tax side of fiscal adjustments. It first explores the idea, prominent in troubled Euro area countries, of a "fiscal devaluation"--that is, shifting from social contributions to the value added tax (VAT) as a way to mimic a nominal devaluation. The chapter then assesses the wider scope for using a VAT to achieve a fiscal consolidation.
This paper was revised on January 6, 2015'Fiscal Devaluation' and Fiscal Consolidation: The VAT in Troubled Times, Ruud de Mooij, Michael Keen
Commentary on this chapter: Comment, James M. Poterba
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