nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒03‒26
six papers chosen by

  1. The true art of the tax deal: Evidence on aid flows and bilateral double tax agreements By Julia Braun; Martin Zagler
  2. Exchange rate implications of Border Tax Adjustment neutrality By Buiter, Willem H.
  4. Інформаційна мережа сільськогосподарського бухгалтерського обліку як основа для оцінки політики By Koester, Ulrich; Loy, Jens-Peter
  5. The Treatment of Global Firms in National Accounts By Lane, Philip R.
  6. Exposing corruption: Can electoral competition discipline politicians? By Afridi, Farzana; Dhillon, Amrita; Solan, Eilon

  1. By: Julia Braun (Centre for European Economic Research (ZEW)); Martin Zagler (Department of Economics, Vienna University of Economics and Business)
    Abstract: Out of a total of 2,976 double tax agreements (DTAs), some 60% are signed between a developing and a developed economy. As DTAs shift taxing rights from capital importing to capital exporting countries, the prior would incur a loss. We demonstrate in a theoretical model that in a deal one country does not trump the other, but that the deal must be mutually beneficial. In the case of an asymmetric DTA, this requires compensation from the capital exporting country to the capital importing country. We provide empirical evidence that such compensation is indeed paid, for instance in the form of bilateral official development assistance, which increases on average by six million US$ in the year of the signature of a DTA.
    Keywords: developing countries, foreign aid, double taxation agreements
    JEL: K33 F53 H25 H87 D82
    Date: 2017–03
  2. By: Buiter, Willem H.
    Abstract: This paper investigates the implications for the nominal exchange rate of a Border Tax Adjustment (BTA) when there is BTA neutrality. A border tax adjustment is a change from an origin-based system of taxation, that taxes exports but exempts imports to a destination-based system that taxes imports but exempts exports. Both indirect taxes (e.g. a VAT) and direct taxes (e.g. a cash-flow corporate profit tax) can be subject to a BTA. In the US, a BTA for the corporate profit tax is under discussion. There is BTA neutrality when the real equilibrium, including measures of profitability and competitiveness, of an open economy is unchanged when it moves from an origin-based to a destination-based tax. The conventional wisdom on the exchange rate implications of a neutral BTA is that the currency of the country implementing the BTA will strengthen (appreciate) by a percentage equal to the VAT or CPT tax rate. The main insight of this note is that this 'appreciation presumption' is not robust, even when all conditions for full BTA neutrality are satisfied. Indeed, plausible alternative assumptions about constancy (or stickiness) of nominal prices support a weakening (depreciation) of the currency by the same percentage as the tax rate. On the basis on the very patchy available empirical information, it is not possible to take a view with any degree of confidence on the implications of a BTA for the nominal exchange rate, even if full BTA neutrality prevailed. Whether BTA neutrality itself is a feature of the real world is also a disputed empirical issue. Therefore, buyer (or seller) beware.
    Keywords: border tax adjustment,neutrality,equivalence,exchange rate appreciation,nominal price and wage rigidities
    JEL: E31 E62 F11 F13 F41 H25 H87
    Date: 2017
  3. By: KOC, Umit; SAHIN, Hasan
    Abstract: The investment behaviors of firms are affected mainly by financial climate and conditions of economic environment in which they operate. Besides macro variables such as real interest rates, firms carefully evaluate their balance sheet items in their investment decisions. Classic regression analysis provides the possible impact of explanatory variables on the mean value of investment. Although, in some cases, it is very important to know how the mean level of investment is affected by the variables, it could be much more important to know, especially for policy makers, how each quantile of investment is affected by the variables. Based on effects of the variables on quantiles, different policy options can be produced and advised. In this study, a panel quantile regression approach has been used to analyze the effect of real interest rates, currency rates, cash flows and sales on investments by using a data set from Turkey.
    Keywords: Cash-flow, investment, fixed-effect, panel quantile, correlated random effect
    JEL: C21 C23 D22
    Date: 2016–10
  4. By: Koester, Ulrich; Loy, Jens-Peter
    Abstract: Пункт 68 преамбули Регламенту (ЄС) № 1306/2013 містить вимогу: «Кожен захід Спільної аграрної політики (САП) має контролюватися й оцінюватися з метою покращення його якості та демонстрації його дієвості» (Verordnung (EU) Nr. 1306/2013). У даній аналітичній записці досліджується, чи може Інформаційна мережа сільськогосподарського бухгалтерського обліку (ІМСБ) (англ. Farm Accountancy Data Network (FADN) / нім. Informationsnetz Landwirtschaftlicher Buchführungen (INLB), яка згідно офіційного повідомлення має використовуватись в якості основи для оцінки політики, також застосовуватись для кількісної оцінки впливу прямих платежів на офіційні аграрнополітичні цілі. Дані ІМСБ внаслідок особливостей вибірки є непридатними для оцінки прямих платежів. По-перше, вибірка для відбору підприємств для ІМСБ здійснюється не з усієї сукупності підприємств, що отримують прямі платежі. Отже, за допомогою цих даних не може бути визначений вплив для однієї групи сільськогосподарських підприємств. По-друге, і, можливо, важливіше, за допомогою цих даних охоплюється так званий «сільськогосподарський дохід» (дохід від сільськогосподарської діяльності), а не дохід фермерів. По-третє, збір даних змінився з плином часу і наразі у визначенні існують значні розбіжності між державами-членами ЄС. Дана аналітична записка демонструє принципові проблеми і звертає увагу на показові проблеми з даними окремих країн. Даний аналіз веде до висновку, що сучасний масив даних ІМСБ є непридатним для оцінки впливу прямих платежів на доходи. Результат дослідження співпадає з аналізом, проведеним Європейською рахунковою палатою (European Court of Auditors, 2016).
    Date: 2016
  5. By: Lane, Philip R. (Central Bank of Ireland)
    Date: 2017–02
  6. By: Afridi, Farzana (Economics and Planning Unit, Indian Statistical Institute, Delhi and IZA, Bonn); Dhillon, Amrita (Department of Political Economy, Kings College, London, and CAGE, University of Warwick.); Solan, Eilon (School of Mathematical Sciences, Tel Aviv University)
    Abstract: In developing countries with weak institutions, there is implicitly a large reliance on elections to instil norms of accountability and reduce corruption. In this paper we show that electoral discipline may be ineffective in reducing corruption when political competition is too high or too low. We first build a simple game theoretic model to capture the effect of electoral competition on corruption. We show that in equilibrium, corruption has a U-shaped relationship with electoral competition. If the election is safe for the incumbent (low competition) or if it is extremely fragile (high competition) then corruption is higher, and for intermediate levels of competition, corruption is lower. We also predict that when there are different types of corruption, then incumbents increase corruption in the components that voters care less about regardless of competition. We test the model’s predictions using data gathered on audit findings of leakages from a large public program in Indian villages belonging to the state of Andhra Pradesh during 2006-10 and on elections to the village council headship in 2006. Our results largely confirm the theoretical results that competition has a non-linear effect on corruption, and that the impact of electoral competition varies by whether theft is from the public or private component of the service delivery. Overall, our results suggest that over-reliance on elections to discipline politicians is misplaced.
    Keywords: Corruption, Electoral Competition, Audit, Social Acountability. JEL Classification: D72, D82, H75, O43, C72
    Date: 2016

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