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on Accounting |
| By: | Vincent Koen; Paul van den Noord |
| Abstract: | Accounting conventions usually leave some room for judgment, which governments may be tempted to take advantage of, especially when fiscal rules bite or threaten to do so. The European experience over the past decade documented here in great detail illustrates that fiscal gimmicks come in many different guises, but also that some are less mischievous than others. Logit regression analysis confirms that when deficit rules or, to a lesser extent, debt thresholds tend to become more binding, recourse to gimmicks is more likely. It also suggests that more centralised budget systems are less prone to such gimmickry. The policy implications are clear as regards the virtues of transparent and consistent accounting practices, but more ambiguous regarding the merits or otherwise of one-off measures. <p> Astuces budgétaires en Europe: mesures non récurrentes et créativité comptable <p> En général, les conventions comptables sont sujettes à interprétation, et les gouvernements peuvent être tentés d'en profiter, notamment lorsqu'ils sont contraints, ou en voie de l'être, par des règles budgétaires. L'expérience européenne au cours de la décennie écoulée décrite ici avec force détails montre que les astuces budgétaires sont protéiformes, mais aussi que certaines posent moins de problèmes que d'autres. Des régressions logit confirment que lorsque les règles sur les déficits ou, dans une moindre mesure, les seuils d'endettement deviennent plus contraignants, la probabilité d'un recours à des astuces augmente. Elles corroborent également l'idée que les astuces tendent à être moins employées dans des systèmes budgétaires plus centralisés. Les implications de politique économique sont claires s'agissant des vertus de la transparence et de la cohérence des comptes, mais plus ambiguës concernant les mérites ou inconvénients des mesures non récurrentes. |
| Keywords: | Budgets; Economic and Monetary Union; fiscal deficit; fiscal rules; fiscal gimmicks; national accounts; political economy; public debt; Stability and Growth Pact |
| JEL: | D78 E61 H6 H27 H74 H81 H82 H87 |
| Date: | 2005–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:oed:oecdec:417&r=acc |
| By: | Fernandez, Pablo (IESE Business School) |
| Abstract: | I correct some expressions in Fernández (2004) and provide a more general expression for the value of tax shields. This expression is the difference between the present values of two different cash flows, each with its own risk: the present value of taxes for the unlevered company and the present value of taxes for the levered company. The value of tax shields in a world with no leverage cost is the tax rate times the current debt, plus the tax rate times the present value of the net increases of debt. The value of tax shields depends only on the nature of the stochastic process of the net increase of debt; it does not depend on the nature of the stochastic process of the free cash flow. |
| Keywords: | Value of tax shields; present value of the net increases of debt; required return to equity; |
| JEL: | G12 G31 G32 |
| Date: | 2005–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0581&r=acc |
| By: | Nordblom, Katarina (Department of Economics); Ohlsson, Henry (Department of Economics) |
| Abstract: | To what extent do people avoid taxes on intra-family transfers (bequests and gifts), and how would integration (unification) of the different transfers taxes affect tax avoidance? These issues are important for families and their welfare, as well as for governments and their possibilities of raising revenue from transfer taxes. In this paper we study the effects of transfer taxes on altruistic parents’ transfers to their children. Using a theoretical model we find that altruistic parents do not necessarily tax minimize. However, in some cases when they do, there is an infinitely large excess burden of a transfer tax. We also find that integration of transfer taxes reduces tax avoidance. All tax avoidance is eliminated with complete integration. |
| Keywords: | tax avoidance; bequests; inheritances; inter vivos gifts; altruism |
| JEL: | D10 D64 D91 |
| Date: | 2005–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2005_006&r=acc |
| By: | Roberts Waddle |
| Abstract: | This paper builds a theory of profit sharing between two firms in a duopoly market through which firms seek to increase their profits and, in turn, to limit the competition. We use a general model to show the direct (negative) and indirect (positive) effects of this strategy. We then focus on some oligopolistic models to analyze more deeply and more precisely these two opposite effects in search of the dominant one. We thus show that giving away profits is a rewarding strategy for firms in some (but not all) models of oligopolistic competition. |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we050801&r=acc |
| By: | Roberts Waddle |
| Abstract: | The present paper first considers two firms in a homogeneous market competing in a two-stage game. Using a particular strategy, it shows that firms may be able to set prices above the marginal costs and thus get positive profits. This remarkable result is robust to the number of firms and to cost asymmetries. Furthermore and more importantly, when firms' costs are different, firms obtain positive profits even though they set prices at the highest marginal cost. |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we050902&r=acc |
| By: | Roberts Waddle |
| Abstract: | Our companion article developed a clear conceptual framework of profit sharing between two rival firms and studied the effects of this strategy on each firm's profit under the assumption that each firm decides unilaterally to give away voluntarily a part of its profit to its rival. This article relaxes totally this assumption and allows firms to invest rather a fraction of their profits in a joint venture. As in the previous article, it shows how and when forming a joint venture may be a successful strategy. Furthermore and more importantly, it brings to light that joint venture may be used to conceal the profit-sharing (maybe forbidden) strategy. |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we051003&r=acc |
| By: | Roberts Waddle |
| Abstract: | Our companion article developed a clear conceptual framework of profit sharing between two rival firms and studied the positive effects of this strategy on each firm's profit under the assumption that each firm decides unilaterally to give away voluntarily a part of its profit to its rival. This article relaxes partially this assumption by letting only one firm to share its profit whereas the other firm keeps its entire profit. Contrary to the previous article, we show that no firm wins by adopting such an opportunistic behavior. This suggests that profit sharing between firms is a win-win (dominant) strategy if both firms are involved and compete in prices. |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we051104&r=acc |
| By: | Fernandez, Pablo (IESE Business School) |
| Abstract: | The Comment is thought provoking and helps a lot in rethinking the value of tax shields. However, the conclusion of Fieten, Kruschwitz, Laitenberger, Löffler, Tham, Vélez-Pareja and Wonder (2005) is not correct because, as will be proven below, the main result of Fernández (2004) is correct for several situations. Equation (16a) shows that the value of tax shields depends only upon the nature of the stochastic process of the net increase of debt. |
| Keywords: | Value of tax shields; present value of the net increases of debt; |
| JEL: | G12 G31 G32 |
| Date: | 2005–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:iesewp:d-0579&r=acc |
| By: | Ann Bartel; Saul Lach; Nachum Sicherman |
| Abstract: | In this paper we argue that an important source of the recent increase in outsourcing is the computer and information technology revolution, characterized by increased rates of technological change. Our model shows that an increase in the pace of technological change increases outsourcing because it allows firms to use services based on leading edge technologies without incurring the sunk costs of adopting these new technologies. In addition, firms using more IT-intensive technologies face lower outsourcing costs of IT-based services generating a positive correlation between the IT level of the user and its outsourcing share of IT-based services. This implication is verified in the data. |
| JEL: | M55 O33 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11158&r=acc |
| By: | Rauf Gönenç; Willi Leibfritz; Erdal Yilmaz |
| Abstract: | Fiscal imbalances were a main cause for chronic high inflation and macroeconomic instability before the 2000/2001 crisis. Fiscal consolidation is the cornerstone of post-crisis stabilization. It has been quite successful over the past three years as sizeable primary surpluses have been sustained and the fall in interest rates has reduced the interest cost of public debt. Fiscal targets have been achieved chiefly by raising revenues which has increased the tax burden; greater emphasis should now be placed on the control of public expenditure. At the same time, core public services such as education, justice, infrastructure and rural development will need to be upgraded. Social security costs may also rise with the planned shift to universal health insurance, and the ambitious administrative decentralization project could cause upward pressure on local spending. Far-reaching rationalization of public expenditures is therefore required to meet the quantitative fiscal targets while achieving the intended improvement in public governance. Turkey has made important steps in this direction with new fiscal laws and regulations but an integrated strategy is necessary to harness their full benefits. This Working Paper relates to the 2004 OECD Economic Survey of Turkey (www.oecd.org/eco/surveys/turkey). <p> Réformer la gestion des dépenses budgétaires en Turquie <p> Les déséquilibres fiscaux ont été une cause majeure de l'inflation forte et de l'instabilité macroéconomique avant la crise de 2000-2001. La consolidation budgétaire a été au cœur de la stabilisation après la crise. Elle a été mise en œuvre depuis trois ans avec des excédents primaires larges, et la baisse des taux d'intérêt a réduit le coût du service de la dette publique. Les objectifs budgétaires ont été atteints principalement par une hausse des revenus, augmentant la pression fiscale, et plus d'attention devra être accordée à l'avenir au contrôle des dépenses. En même temps des services publics majeurs comme l'éducation, la justice, les infrastructures et le développement rural devront être améliorés. Les dépenses de sécurité sociale pourraient aussi augmenter avec le passage annoncé à la couverture médicale universelle, et l'ambitieux projet de décentralisation administrative pourrait accroître les dépenses locales. Une forte rationalisation des dépenses devient donc nécessaire pour atteindre les objectifs quantitatifs de la politique budgétaire tout en améliorant la qualité de la gouvernance publique. La Turquie a fait d'importants pas dans cette direction avec de nouvelles lois et réglementations budgétaires mais une stratégie intégrée est nécessaire pour recueillir pleinement leurs fruits. |
| Keywords: | Turkey; government expenditure; public sector efficiency; budget systems; intergovernmental relations; new public management |
| JEL: | E62 H1 H4 H5 H7 |
| Date: | 2005–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:oed:oecdec:418&r=acc |
| By: | Rowat, Colin. |
| Abstract: | We explore commons problems when agents have access to capital markets. The commons has a high intrinsic rate of return but its fruits cannot be secured by individual agents. Resources transferred to the capital market earn lower returns, but are secure. In a two period model, we assess the consequences of market access for the commons' survival and welfare; we compare strategic and competitive equilibria. Market access generally speeds extinction, with negative welfare consequences. Against this, it allows intertemporal smoothing, a positive effect. In societies in which the former effect dominates, market liberalisation may be harmful. We reproduce the multiple equilibria found in other models of competitive agents; when agents are strategic, extinction dates are unique. Strategic agents generally earn their surplus by delaying the commons' extinction; in unusual cases, strategic agents behave as competitive ones even when their numbers are small. |
| Keywords: | commons, capital markets, Washington Consensus, property rights |
| JEL: | C73 D91 O17 Q21 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:05-01&r=acc |