NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

"Fiscal Devaluation" and Fiscal Consolidation: The VAT in Troubled Times

Ruud de Mooij, Michael Keen

Chapter in NBER book Fiscal Policy after the Financial Crisis (2013), Alberto Alesina and Francesco Giavazzi, editors (p. 443 - 485)
Conference held December 12-13, 2011
Published in June 2013 by University of Chicago Press
© 2013 by the National Bureau of Economic Research

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.

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This paper was revised on March 14, 2012

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This chapter first appeared as NBER working paper w17913, 'Fiscal Devaluation' and Fiscal Consolidation: The VAT in Troubled Times, Ruud de Mooij, Michael Keen
Commentary on this chapter: Comment, James Poterba
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