TY  - JOUR
AU  - de Mooij, Ruud
AU  - Keen, Michael
TI  - 'Fiscal Devaluation' and Fiscal Consolidation: The VAT in Troubled Times
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17913
PY  - 2012
Y2  - March 2012
DO  - 10.3386/w17913
UR  - http://www.nber.org/papers/w17913
L1  - http://www.nber.org/papers/w17913.pdf
N1  - Author contact info:
Ruud de Mooij
IMF
1900 Pennsylvania Avenue, NW
Washington, DC  20431
Tel: 202-623-8012
E-Mail: RDeMooij@imf.org

Michael Keen
Fiscal Affairs Department
International Monetary Fund
700 19th Street, NW
Washington, DC 20431
Tel: 202/623-7000
E-Mail: mkeen@imf.org
M1  - published as Ruud de Mooij, Michael Keen. ""Fiscal Devaluation" and Fiscal Consolidation: The VAT in Troubled Times," in Alberto Alesina and Francesco Giavazzi, editors, "Fiscal Policy after the Financial Crisis" University of Chicago Press (2013)

M3  - presented at "Fiscal Policy after the Financial Crisis", December 12-13, 2011
AB  - This paper focuses on two core tax design issues that arise in addressing current fiscal challenges It first explores the idea, prominent in troubled Eurozone countries, of a 'fiscal devaluation:' shifting from social contributions to the VAT as a way  to mimic a nominal devaluation. Empirical evidence is presented which suggests that in Eurozone countries this may indeed improve the trade balance quite sizably in the short-run, though, as theory predicts, the effects eventually disappear. The paper then assesses the wider scope for VAT reform in meeting fiscal consolidation needs, developing and beginning to apply a methodology for finding additional VAT revenue in ways less distortionary and fairer than further raising the standard rate.
ER  -