Advancing Inclusive Growth in Cambodia

Niels-Jakob Hansen and Albe Gjonbalaj

No 2019/187, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; GDP; Gini coefficient; property taxation; GDP share; income boost; equality trade-off; GDP growth; income from self-employment; property income; Income; Personal income; Income inequality; Consumption; Income distribution; Southeast Asia (search for similar items in EconPapers)
Pages: 25
Date: 2019-09-06
New Economics Papers: this item is included in nep-dge and nep-sea
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