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on Accounting and Auditing |
| By: | Paradisi, Matteo; Sartori, Elia |
| Abstract: | We study tax audit policies when the Tax Authority predicts true income using an inference model. When taxpayers are aware of model-based audit rules, using an inference model shapes both declaration incentives and the targeting of tax audits. The Tax Authority can achieve arbitrarily high tax collection rates if the model’s precision is sufficiently high. However, the targeting of audits yields minimal revenues as optimal reliance on the model focuses on enhancing the incentives to declare income in the first place. Prediction power is used to shape incentives rather than to direct audits. At the optimum, the predictions from the statistical model are used to screen larger true income taxpayers, tolerating evasion from taxpayers with lower incomes and high propensity to evade. We corroborate and extend our theoretical findings with numerical simulations calibrated on aggregate moments from administrative audit data. Enhanced model precision reduces tax evasion, particularly among higher incomes, thereby alleviating the inequality in effective tax rates induced by optimal enforcement. While plausible enhancements in model precision yield modest revenue gains, these gains are substantial compared to the audit budget increase required to achieve similar tax revenues without an inference model. |
| Keywords: | Tax evasion; Tax enforcement; Tax audits |
| JEL: | H21 H26 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19213 |
| By: | Laura Blow; Ian Crawford |
| Abstract: | We derive necessary and sufficient nonparametric conditions for several models of mental accounting. The paper characterises pure mental accounting, separable accounts, and labelled income, and compares these boundedly rational models with two rational multi-stage budgeting benchmarks. The resulting Afriat-style conditions make the observable implications of mental accounting explicit and refutable. In this sense, mental accounting is treated not as a loose description of behaviour, but as a formally refutable hypothesis about the organisation of consumption. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.17741 |
| By: | Anouk Levels |
| Abstract: | The EU has introduced an extensive ESG disclosure regime aimed at redirecting private capital to support the transition to a sustainable economy. Yet, it remains unclear whether these disclosure obligations lead to measurable shifts in the allocation and cost of capital to green firms or investments. This review aims to address this gap by developing a conceptual framework that identifies the mechanisms through which both voluntary and mandatory disclosures may influence the allocation and cost of private capital, and by systematically mapping the emerging empirical evidence against these channels. It draws on 99 publications from three academic databases (Scopus, Web of Science, EconLit) and EU institutions, published between 2010 and 2025. The review shows that the evidence base remains emerging and fragmented, but generally points to a positive association between ESG disclosure or performance and access to finance and more favourable funding conditions. At the same time, capital markets seem to anticipate regulatory compliance costs and risks, which can increase uncertainty, and in some settings, adversely affect firms with potential implications for market functioning and capital allocation and pricing. The review further highlights implications for academics and regulators. For academics, it identifies several gaps and limitations suggests avenues for future research. For regulators, it provides cautious support for disclosure regulation, while underscoring the need for credible, usable and proportionate requirements. |
| Keywords: | Regulation; Disclosure; Environmental; social and governance (ESG); capital allocation; cost of capital; Review |
| JEL: | G11 G12 G14 G38 M14 M48 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:dnb:dnbwpp:867 |
| By: | O'Mahony, Mary; Weale, Martin |
| Abstract: | We show how to decompose the contribution made by capital services to eco nomic growth into two components, depreciation services and net capital services. We apply this to examine the contributions to economic growth by depreciation and net capital services of both tangible and intangible investment. Looking at France, Germany, the UK and the US from 1997 to 2019, we find that while overall capital services contributed between 0.6 (Germany) and 1.4 (US) percentage points to growth in GVA, net of depreciation the contributions ranged from 0.1 (Germany) to 0.5 (US) percentage points. Looking only at intangibles we find gross contributions of 0.3 (Germany) to 0.7 (US) percentage points while net of depreciation the contributions of intangibles were 0.1 (Germany) to 0.2 (US) percentage points. We conclude that a focus on gross output overstates the importance of intangible capital in these economies. |
| Keywords: | Intangible Capital; Depreciation; Capital Services; Economic Growth; Growth Accounting |
| JEL: | C43 D24 E22 O34 O47 |
| Date: | 2026–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:eoe:escoed:escoe-dp-2026-06 |
| By: | Lee, Woongki (Yonsei University) |
| Abstract: | This study develops a macroeconomic framework that integrates the household, business, government, and foreign sectors. At the center of the analysis is the circulation of value and funds across the economy through cash flows associated with issuer-holder financing. The framework clarifies the relations among major macroeconomic aggregates. In particular, by treating money creation as part of value supply, it provides a systematic basis for analyzing how monetary operations affect transactions across sectors. |
| Date: | 2026–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:cq5t3_v1 |