Financing Fiscal Support under Alternative Policy Frameworks

Zico Dasgupta
Azim Premji University

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This paper perceives fiscal support as a policy instrument and examines alternative policy frameworks that can simultaneously stabilize labour income, output and debt-GDP ratio. The need to stabilize labour income over and above output follows from the possibility of income growth rate of labour falling below output growth rate. This paper points out the limitations of sound finance regime in meeting these targets and proposes an alternative policy framework which is termed as Debt-Neutral Functional Finance with Fiscal Support (DNFS). The DNFS framework highlights the role of development financial institutions and the need for a floor level of corporate tax-GDP ratio.

Keywords: fiscal policy, debt

Suggested citation:

Dasgupta Zico. 2021. “Financing Fiscal Support under Alternative Policy Frameworks” Centre for Sustainable Employment Working Paper #44, Azim Premji University, Bangalore.