The Welfare Effects of Public Expenditure Programs Reconsidered
30 Pages Posted: 15 Feb 2006
Date Written: August 2, 1989
The paper proposes a new welfare-based measure to evaluate the distributive effects of public programs. The proposed measure differs from traditional approaches in two important ways: first, it is based on life-cycle considerations, since most public expenditure programs have an intertemporal objective (such as education, housing, or social security); second, it takes into account market imperfections (such as in capital, credit, or annuity markets), which themselves give rise to many governmental interventions. The measure and its numerical illustrations suggest that, in general, the welfare effects from public programs whose aim is to eliminate market constraints predominate those that can be achieved through interpersonal income distribution.
JEL Classification: 0243, 2312
Suggested Citation: Suggested Citation