There are, however, multiple reasons why these general results may vary from country to country. Bastagli, Coady, and Gupta (2012) show, for example, that taxes play different redistributive roles, from having strong redistributive effects in the United States, Belgium and Germany, to having relatively little influence in the United Kingdom and France, where means-tested benefits play a substantive redistributive role. Lustig et al. (2011) highlight marked differences among six Latin American countries. Argentina, for example, has a big government, as do Brazil and Bolivia. However, while Argentina has high redistribution levels, Bolivia’s redistributive achievements are low, and Brazil’s are lower than Mexico, a country with a smaller government. Peru, instead, has a small government, very low redistribution in absolute levels, and a moderate relative redistribution (in terms of the effectiveness by the amount spent). The reasons behind such differences include other economic and institutional factors, such as the degree of decentralization of public finance;<sup>4</sup> the extent of the underground or informal sector; the distributive effects of other public policies—such as price controls on goods and services; minimum wages; prohibition on export and import quotas; and interest rate controls on deposits, among others (Martinez-Vasquez 2008).<sup>5</sup> In addition, long-term factors and short-term crises may both affect the traditional impacts of fiscal policies. Individuals may have low current income simply because they are in a low-income period of their lives (of school age or in retirement), or because they are disproportionately vulnerable to—and/or affected by—a crisis. In general, patterns of lifetime incidence are often quite similar to, but less pronounced than, those based on an annual income perspective (Fullerton and Rogers 1991). Also, vulnerable groups may well vary country to country even in the face of a similar crisis (Habib et al. 2010). In fact, an important consideration from the dynamic nature of distribution in the context of crises is the emergence of a cadre of “new” poor or crisis-specific vulnerable groups, that is, groups that were not poor in off-crisis periods.<sup>6</sup> The obvious implication is that the design of compensatory fiscal policies needs to take these temporality issues into account because such interventions may contribute differently to short- and long-run vulnerabilities.

Decades of distributive analysis of fiscal policies show that these analyses still overlook important distributional effects of other public policies, long-term and transitory crisis-related effects, and

> 4 Typically, omitting subnational taxes and transfers from incidence analysis is likely to present a picture of incidence that is more progressive (or less regressive) than is actually the case because regional and local taxes tend to be more regressive than central taxes (Martinez-Vazquez 2008).

> 5 For example, price controls for farm products tend to hurt the rural poor and benefit the urban poor and the rich. Financial repression of interest paid on bank deposits tends to hurt the poor more than the rich because of poor people’s inability to seek alternative savings vehicles. Foreign exchange rationing and import quotas tend to be quite regressive, and export controls can hurt small traditional crop farmers. These factors may have a significant impact on the overall distribution of tax burdens and public spending, and they may even reverse the final fiscal incidence that would have been reached in the absence of those aspects.

> 6 The analysis of Habib et al. (2010) in the context of the recent financial crisis reveals differences between the “crisisvulnerable” or “newly poor” households and the permanently or structurally poor households. The newly poor households are smaller, have lower dependency, have higher skills, are more urban, and are employed in something other than agriculture. In terms of the distribution of income losses, those in the 70<sup>th</sup> percentile and above are expected to be less adversely affected in urban areas; the impact is more evenly distributed among rural households.

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