Advancing Inclusive Growth in Cambodia

September 6, 2019

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Niels-Jakob H Hansen, and Albe Gjonbalaj. Advancing Inclusive Growth in Cambodia, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

We evaluate the impact of fiscal reforms on growth and inequality in Cambodia using a calibrated general equilibrium model with heterogeneous agents (Peralta-Alva et al., 2018). Over the last two decades, Cambodia’s consumption inequality and poverty have declined. However, income inequality is higher, and large gaps remain between urban and rural residents. At the same time, domestic revenue mobilization has improved substantially, but collection of tax revenue is biased towards non-progressive sources. We use the model to evaluate the growth and inequality impact of reforms that increase infrastructure spending by raising (i) VAT, (ii) property tax, or (iii) personal income tax. We find that using property taxes delivers the largest increase in GDP and reduction in inequality. Reaping the gains from property taxation will however require additional investments in tax administration.

Subject: Consumption, Income, Income distribution, Income inequality, National accounts, Personal income

Keywords: Consumption, Equality trade-off, GDP, GDP growth, GDP share, Gini coefficient, Income, Income boost, Income distribution, Income from self-employment, Income inequality, Personal income, Property income, Property taxation, Southeast Asia, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/187
Stock No:

WPIEA2019187
ISBN:

9781513510552
ISSN:

1018-5941

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