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Commitment to Equity Handbook

Estimating the Impact of Fiscal Policy on Inequality and Poverty, Second Edition

Nora Lustig
Release Date: May 1, 2023

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Edited by Nora Lustig, the Commitment to Equity Handbook: Estimating the Impact of Fiscal Policy on Inequality and Poverty (Brookings Institution Press and CEQ Institute-Tulane University, 2nd edition, 2022) is a unique manual on the theory and practical methods to estimate the impact of taxation and public spending on inequality and poverty. In addition, the second edition covers frontier topics such as alternative approaches to measure the redistributive effect of education, health, and infrastructure spending. Policymakers, social planners, and economists are provided with a step-by-step guide to applying fiscal incidence analysis, illustrated by country studies.

The 2nd edition of the Handbook has two volumes. Volume 1 is comprised of Part I, Methodology, describes what a CEQ Assessment© is and presents the theoretical underpinnings of fiscal incidence analysis and the indicators used to assess the distributive impact and effectiveness of fiscal policy. Part II, Implementation, presents the methodology on how taxes, subsidies, and social spending should be allocated. It includes a step-by step guide to completing the CEQ Master Workbook©, a multi-sheet Excel file that houses detailed information on the country’s fiscal system and the results used as inputs for policy discussions, academic papers, and policy reports. Part III, “Applications,” presents applications of the CEQ framework to low- and middle-income countries and includes simulations of policy reforms. In this 2nd edition, chapters 1, 6, and 8 have been significantly updated and two new country studies have been added to Part III. Parts IV (updated), V (new), and VI (new) are available online only. Part IV contains the CEQ Assessment’s main tools. Part V includes the databases housed in the CEQ Data Center on Fiscal Redistribution. Part VI contains the CEQ Institute’s microsimulation tools.

Volume 2 (new) includes a collection of chapters whose purpose is to expand the knowledge and methodological frontiers to sharpen even further the analysis of fiscal policy’s redistributive impact. Topics include: alternative approaches to value in-kind education and health services; alternative methods to evaluate spending on infrastructure; corporate taxes and taxation on capital incomes; inter-temporal fiscal incidence and the redistributive consequences of social insurance pensions; fiscal redistribution, macroeconomic stability and growth; and, the political economy of fiscal redistribution.

Reviews
The Commitment to Equity Handbook is unique in its conceptual clarity and methodological comprehensiveness. It is indispensable reading for anyone interested in how taxation and public expenditure affect poverty and inequality in developing countries.
Francisco H. G. Ferreira, Amartya Senior Professor of Inequality Studies, Director, International Inequalities Institute
This book is a very much needed and welcome effort in the systematization of techniques and an enormous contribution to the existing body of evidence and knowledge on fiscal incidence.
—Jorge Martinez-Vazquez, Director, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University
Until the work of the Commitment to Equity Institute, estimating the distributional impact of education, health and other transfers in kind was always thought important but almost never done empirically. These two volumes provide a theoretical and empirical guidebook of how to incorporate this key field in government routine work and practitioners’ decision-making.
Branko Milanovic, Graduate Center City University of New York
This two-volume Handbook from the Commitment to Equity Institute, edited by Nora Lustig, presents an excellent resource for evaluating the distributive effects of tax reforms and public policies. It is an invaluable source of analysis for both scholars and policy practitioners.
José Antonio Ocampo, Minister of Finance of Colombia and Professor (on leave) from Columbia University
The Commitment to Equity Handbook is an essential guide for all those interested in poverty reduction. This a key contribution to the much need discussion about democratic transparency, measurement methods and inequality. A must-read.
Thomas Piketty, Paris School of Economics

Author

Edited by

Nora Lustig
Nora Lustig Nonresident Senior Fellow - Global Economy and Development
Nora Lustig is Samuel Z. Stone Professor of Latin American Economics and founding Director of the Commitment to Equity Institute at Tulane University where she researches the impact of taxation and social spending on inequality and poverty, and the determinants of inequality. Her more recent work has focused on the short- and long-term impacts of COVID-19 on educational mobility, inequality, and poverty.
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