Report
Patrick Artus

How to support the purchasing power of low-income households?

The sharp rise in energy and food prices is leading governments to support the purchasing power of low-income households. But how can this be done efficiently? By targeting transfer payments to low-income households, and not simply distributing payments to all households, in order to limit the cost to the government. By transferring lump sums instead of targeting payments to purchase s of certain products, in order to prevent sellers of these products from taking advantage of the government support to increase their prices. Not by modifying the prices of the goods concerned. For example, the government should avoid freezing prices in order to enable price signals to be visible and the saving s effort (less energy consumption, etc.) that they bring about. By financing this support with tax revenues and not public debt, as there is no justification in transferring the burden of supporting current consumption to future generations, especially if higher energy and food prices are permanent.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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