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Fiscal Expenditure, Trade Openness and Income Distribution

【Authors】
HU Wenjun
【WorkUnit】
School of Economics, Xiamen University
【Abstract】

As a policy tool of income redistribution, fiscal expenditure cannot change the unfair of primary distribution caused by trade openness. Moreover, trade openness will affect the scale of fiscal expenditure and even its income redistribution effect. This empirical analysis shows that: (1)fiscal expenditure extends income gap on the whole, and trade openness worsens income distribution overall; (2)whatever budget structure and expenditure category, fiscal expenditure cannot affect the scale of trade openness, which means that fiscal expenditure cannot transform trade openness' income distribution effect; (3) trade openness can reduce the scale of public finance expenditure and most categories' fiscal expenditure, which means that trade openness can transform fiscal expenditure's income redistribution effect. Therefore, trade openness will limit and distort fiscal expenditure's income redistribution effect. We should recognize that the finiteness of fiscal expenditure's ability to adjust the unfair of income distribution.

JEL:F14, H50

【KeyWords】
Fiscal Expenditure, Trade Openness, Income Distribution, Budget Structure, Expenditure Category