nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒11‒30
fourteen papers chosen by

  1. Resource abundance and public finances in five peripheral economies, 1850-1939 By Peres-Cajías, José; Torregrosa-Hetland, Sara; Ducoing, Cristián
  2. Limited Tax Capacity and the Optimal Taxation of Firms By Marcelo Arbex; Enlinson Mattos
  3. Where Does Multinational Profit Go with Territorial Taxation? Evidence from the UK By Langenmayr, Dominika; Liu, Li
  4. A BALANCE SHEET ANALYSIS OF THE CFA FRANC ZONE By Abrohms, Spencer; Schuler, Kurt
  5. Income Tax Evasion: Tax Elasticity, Welfare, and Revenue By Max Gillman
  7. The Balance Sheets of the Bank of the United States By Baker, Zackary; Gulino, George; Javat, Adil; Schuler, Kurt
  8. Taxation Systems in the EU: The Role of Economic Integration and Global Financial Crisis By Kazim Okan Erol
  9. The Pass-Through of Temporary VAT Rate Cuts Evidence from German Retail Prices By Clemens Fuest; Florian Neumeier; Daniel Stöhlker
  10. Трудово и осигурително право - задачи, казуси, тестове By Andreeva, Andriyana; Yolova, Galina; Vladova-Ivanova, Violeta
  12. The Amortization Elasticity of Mortgage Demand By Claes Bäckman; Peter van Santen
  13. Forward Looking Loan Provisions : Credit Supply and Risk-Taking By Morais, Bernardo; Ormazabal, Gaizka; Peydro, J.L.; Roa, Monica; Sarmiento Paipilla, Miguel

  1. By: Peres-Cajías, José (Universitat de Barcelona, Departament d’Història Economica, Institucions, Política i Economia Mundial, Barcelona, Spain); Torregrosa-Hetland, Sara (Department of Economic History, Lund University); Ducoing, Cristián (Department of Economic History, Lund University)
    Abstract: The resource curse literature has established that the taxation of natural resources might limit the long-term development of fiscal capacity in resource-rich countries. This article explores if, and how, natural resource abundance generates fiscal dependence on natural resource revenues. We compare five peripheral economies of Latin America (Bolivia, Chile, Peru) and Scandinavia (Norway, Sweden) over a period of 90 years, between 1850 and 1939. Both groups were natural resource abundant, but in the latter natural resource dependence decreased over time. By using a novel database, we find that fiscal dependence was low in Norway and Sweden, while high and unstable in Bolivia, Chile and Peru. This suggests that natural resource abundance should not be mechanically linked to fiscal dependence. An accounting identity shows that sudden increases in fiscal dependence were related to both economic and political factors: countries’ economic diversification, and attitudes of the relevant political forces about how taxation affects the companies operating in the natural resource sector.
    Keywords: resourcecurse; taxation; Latin America; Scandinavia; rentier state; fiscal contract
    JEL: H20 N40 N50 O13 Q32
    Date: 2020–11–16
  2. By: Marcelo Arbex (Department of Economics, University of Windsor); Enlinson Mattos (São Paulo School of Economics, Getulio Vargas Foundation)
    Abstract: Limited tax capacity creates evasion opportunities that weakens the production efficiency argument. Motivated by the SIMPLES tax reform in Brazil that led to heterogeneous responses on revenues and production costs of upstream versus downstream informal firms, we characterize the optimal taxation of firms in a limited tax capacity economy to compare with the optimal value-added and turnover taxes. We show that the elasticities of misreported sales and purchase gaps to policy instruments are behavioral statistics that complement the traditional Diamond and Mirrlees (1971)’s mechanical effect of taxation. Numerical results suggest turnover taxes can be welfare enhancing vis-a-vis a value-added system.
    Keywords: Optimal firms taxation, limited tax capacity, tax reform.
    JEL: H21 H25 H26 D60
    Date: 2020–11
  3. By: Langenmayr, Dominika; Liu, Li
    Abstract: In 2009, the United Kingdom abolished the taxation of profits earned abroad and introduced a territorial tax system. Under the territorial system, firms have strong incentives to shift profits abroad. Using a difference-in-differences research design, we show that profits of UK subsidiaries in low-tax countries increased after the reform compared to subsidiaries of non-UK multinationals in the same countries, by an average of 2.1 percentage points. The increase in profit shifting also leads to increases in measured productivity of the foreign affiliates of UK multinationals of between 5 and 9 percent.
    Keywords: profit shifting,territorial tax system,multinational firms
    JEL: H25 H87 F23
    Date: 2020
  4. By: Abrohms, Spencer (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Schuler, Kurt (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: The CFA franc zone was established in 1945 and linked France’s African colonies to the French franc while at the same time allowing for some degree of separation. Reflecting a cleavage that had developed during World War II, the zone consisted of a West African and a Central African component, represented today by two regional central banks, BCEAO and BEAC, respectively. Despite the technical distinction between the currencies, their parities with the French franc and later the euro have remained identical for over 70 years; thus, the currencies can be treated together. This paper reviews the history of the CFA franc zone and highlights the major shifts it has undergone. Next, it analyzes the various components of the two central banks’ balance sheets, with a focus on each bank’s composition of assets and liabilities and how these have evolved over time. Subsequently, it applies statistical approaches to the balance sheets to assess to what extent the CFA franc zone resembles a currency board. An accompanying spreadsheet workbook digitizes certain balance sheet data for the first time.
    Keywords: central bank; balance sheet; French Equatorial Africa; French West Africa
    JEL: E58 N17
    Date: 2019–12
  5. By: Max Gillman
    Abstract: This paper provides a general equilibrium model of income tax evasion. As functions of the share of income reported, the paper contributes an analytic derivation of the tax elasticity of taxable income, the welfare cost of the tax, and government revenue as a percent of output. It shows how an increase in the tax rate causes the tax elasticity and welfare cost to increase in magnitude by more than with zero evasion. Keeping constant the ratio of income tax revenue to output, as shown to be consistent with certain US evidence, a rising productivity of the goods sector induces less evasion and thereby allows tax rate reduction. The paper derives conditions for a stable share of income tax revenue in output with dependence upon the tax elasticity of reporting income. Examples are provided with less and more productive economies in terms of the tax elasticity of reported income, the welfare cost of taxation and the tax revenue as a percent of output, with sensitivity analysis with respect to leisure preference and goods productivity. Discussion focuses on how the tax evasion analysis may help explain such Öscal tax policy as the postwar US income tax rate reductions with discussion of tax acts and government Öscal multipliers. Fiscal policy with tax evasion included shows how tax rate reduction induces less tax evasion, a lower welfare cost of taxation, and makes for a stable income tax share of output.
    Keywords: optimal evasion; tax law; welfare; tax elasticity; revenue; productivity; development;
    JEL: E13 H21 H26 H30 H68 K34 K42 O11
    Date: 2020–10
  6. By: Wang, Ivy (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: The Banque de Syrie et du Liban was established through the French mandate of Syria and Lebanon. The institution was a combination of a commercial and central bank for the region and provided economic stability. By studying the bank’s balance sheets, this paper provides an analysis of its assets and liabilities. An accompanying spreadsheet workbook provides all the balance sheet data from the bank’s annual reports as most of this data has never been digitized or analyzed in English. Using historical analysis of the financial situations of Syria and Lebanon at the time, several observations are made about the bank’s influence from 1919 to 1963, as well as about how it evolved into Lebanon’s central bank.
    Keywords: Syria; Lebanon; banking; colonialism; French mandate; Bank of Syria and Lebanon
    JEL: E58 N15
    Date: 2020–02
  7. By: Baker, Zackary (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Gulino, George (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Javat, Adil (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise); Schuler, Kurt (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: The Bank of the United States was the closest the United States came to having a central bank before establishing the Federal Reserve System. What was later called the First Bank of the United States operated from 1791 until its charter lapsed in 1811. After bad experience without a national bank during the War of 1812, the federal government chartered what was termed the Second Bank of the United States in 1816. When its charter lapsed in 1836, the bank continued as the United States Bank of Pennsylvania, which failed in 1841 following recessions and financial panics. We present digitized balance sheet data for all three institutions.
    Keywords: First Bank of the United States; Second Bank of the United States; United States Bank of Pennsylvania; Pennsylvania Bank of the United States; balance sheet; assets; liabilities; central banking
    JEL: E50 N11
    Date: 2019–01
  8. By: Kazim Okan Erol
    Abstract: This study aims to scrutinize the change of public revenue systems of the EU-15 between 1980 and 2016. The share of consumption taxes in total tax revenues increases and this process have triggered higher tax burden on labor in most of the EU countries via indirect taxation. In this study I use panel data analysis, in order to analyze the impact of global financial crisis on depreciated tax revenues in most of the member states. Political integration and global financial crisis reduce national tax revenues and this revenue loss differs due to tax system asymmetries among member states. Although indirect taxation is an easy way of compensating revenue loss for indebted countries, this type of public finance damages stability of tax revenues in long run.
    Keywords: taxation, panel data models, economic integration, fiscal policy
    JEL: F15 H20 H30 H71 C23
    Date: 2020
  9. By: Clemens Fuest; Florian Neumeier; Daniel Stöhlker
    Abstract: On 1 July 2020, value added tax (VAT) rates were reduced in Germany to fight the economic consequences of the Corona pandemic. The VAT rate reduction is temporary as rates will return to their previous level on 1 January 2021. We study the effects of the temporary VAT rate cut on German supermarket retail prices using an extensive webscrapped data set covering the daily prices of roughly 190,000 products. To identify the causal price effects, we compare the development of prices in Germany to those in Austria. Our findings indicate a nearly full pass-through of the VAT rate reduction on prices. On average, prices in German supermarket retail decreased by 2% after the implementation of the VAT rate reduction. We also provide evidence that prices in more competitive product markets decreased to a larger extent.
    Keywords: Value added tax, tax incidence, price effects, decoy, political alignment, competition
    JEL: E31 H22 H25
    Date: 2020
  10. By: Andreeva, Andriyana; Yolova, Galina; Vladova-Ivanova, Violeta
    Abstract: The collection of tests, tasks and case studies is intended for students in the bachelor's degree of the University of Economics - Varna. It is consistent with the curriculum in the discipline "Labor and Social Security Law", studied in the specialties "Judicial Administration", "Accounting and Auditing" and "Accounting and Finance". The content complies with the regulations of the Labor Code, the Social Security Code and other laws and regulations in the relevant legal branches. The authors have set themselves the task with the materials included in the collection to help students in the process of mastering the basic principles, concepts and institutes of labor and social security law.
    Keywords: labor law, social security law.
    JEL: K31
    Date: 2020
  11. By: Flood, John (The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise)
    Abstract: This paper presents a rendition of Madagascar’s history as seen through the eyes of the balance sheets of the Banque de Madagascar (later the Banque de Madagascar et des Comores). The banque was formed with a dual charter that gave it the ability to function as both a bank of issue (central bank) and a commercial bank. Like other French Colonial banks, the Banque initially functioned primarily as a bank of issue, helping to monetize Madagascar’s fledgling economy. As the Malagasy economy grew, the Banque issued increasing amounts of credit to the Malagasy private sector. At the end of the Banque’s lifespan, a separate central bank was formed, removing the Banque’s note-issuing privilege. From that point until its closure in 1977, the Banque solely functioned as a commercial enterprise. The evolution of the Banque is traced via an analysis of its balance sheets.
    Keywords: Comoros; Madagascar; central bank; balance sheet
    JEL: E58 N27
    Date: 2020–03
  12. By: Claes Bäckman (Department of Economics and Business Economics, Aarhus University, and Knut Wiksell Center for Financial Studies, Lund University); Peter van Santen (Faculty of Economics and Business, University of Groningen)
    Abstract: We study how amortization payments affect household borrowing exploiting notches in the Swedish amortization requirement. We argue that amortization payments are costly for borrowers under a number of scenarios, and that they therefore affect credit demand. We provide causal evidence that a percentage point increase in amortization payments reduce LTV ratios by 2-3 percentage points, implying a sizable amortization elasticity of mortgage demand. Borrowers who seek to avoid making payments generally have higher debt, higher income and higher debt-to-income ratios. On the aggregate level, credit growth falls sharply after the introduction of the amortization requirement.
    Keywords: Amortization requirements, Macroprudential policy, Household debt
    JEL: G21 E21 E6
    Date: 2020–11–16
  13. By: Morais, Bernardo; Ormazabal, Gaizka; Peydro, J.L.; Roa, Monica; Sarmiento Paipilla, Miguel (Tilburg University, Center For Economic Research)
    Keywords: Loan provisions; IFRS9; ECL; corporate real and credit supply effects of accounting; bank risk-taking
    Date: 2020
  14. By: Majida Jrad; Yamina Tadjeddine
    Abstract: This paper examines the factors that affect the collateralizing of a loan specifically for SMEs in Lebanon that is a country with a small open emerging-market economy. Collateral should guarantee the bank loan but in practice it is adjusted according to other socio-economic criteria of companies. This is particularly true for SME's and even more so for emerging countries. We propose in this article to illustrate the signals mobilized by banks when providing collateralized loans. Data on these variables have been derived from the Lebanese Central Band and the World Bank. It contains observations for two samples – 532 firms for 2020 and 561 firms for 2014. Three sets of factors influence the level of collateral required: those related to firm characteristics (relevant variables: age, size, auditing financial statements, developing the qualification of workforce, export orientation, the sector of manufacturing, located in capital city, female manager, export orientation), to loan characteristics (no relevant variable), and to credit market specifics (interest rate). Regression estimates suggest the age and size of a firm contributed to more collateral required in 2019. Smaller collateral is required by firms with bigger size, auditing financial statements, developing the qualification of workforce, export orientation, belonging to the sector of manufacturing, located in capital city in 2013. Female manager, export orientation, and location in capital city contribute to smaller collateral required in 2019. Loan value does not seem to tighten collateral requirements. In opposite perspective, the increases in the interest rate entail stricter collateralizing the loans.
    Keywords: Financing, SMEs, collateral, credit risk, regression analysis, Lebanon.
    JEL: G32 O16 O53
    Date: 2020

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