- Description
- 17 p.; 21 x 29.7cm.
- Summary
- The recent crisis has revealed large differences in external competitiveness between euro area member countries. Since nominal exchange rate devaluation is not an option for members of a currency area, governments in troubled member countries have been considering so-called fiscal devaluation, i.e. a shift from employers' social security contribution to value added tax, as an alternative means to restore competitiveness. This paper discusses the potential benefits and drawbacks of such a reform and investigates under which circumstances it would have the intended effects. It argues that a fiscal devaluation can have transitory effects, but that any permanent real effects are likely to be small in size. The policy tool can thus not be a substitute for deeper structural reforms of labour, product and financial markets. However, it may be helpful as part of a broader package of reforms.
- Series Statement
- OECD Economics Department Working Papers, 1815-1973 ; no.1089
- Uniform Title
- OECD Economics Department Working Papers, no.1089.
- Subject
- Economics
- LCCN
- 10.1787/5k3z2dckn2bw-en
- OCLC
- oecd-lib-000967
- Author
Koske, Isabell.
- Title
Fiscal Devaluation – Can it Help to Boost Competitiveness? [electronic resource] / Isabell Koske
- Imprint
Paris : OECD Publishing, 2013.
- Series
OECD Economics Department Working Papers, 1815-1973 ; no.1089
OECD Economics Department Working Papers, 1815-1973 ; no.1089.
- Connect to:
- Indexed Term
Economics
- Other Standard Identifier
10.1787/5k3z2dckn2bw-en doi