nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2013‒11‒14
seven papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Public Education Spending, Sectoral Taxation and Growth By Marion Davin
  2. Successful Fiscal Adjustments: Does choice of fiscal instrument matter? By Holden, Steinar; Larsson Midthjell, Nina
  3. Intergenerational equity with individual impatience in a model of optimal and sustainable growth By Lee H. Endress; Sittidaj Pongkijvorasin; James Roumasset; Christopher Wada
  4. Reexamination of the Productivity of Public Capital (Japanese) By MIYAGAWA Tsutomu; KAWASAKI Kazuyasu; EAMURA Kazuma
  5. Federal Income Tax Revenue Volatility Since 1966 By Estelle P. Dauchy; Christopher Balding
  6. Governance Strategies and Welfare Effects: Vertical Integration and Contracts in the Catfish Sector in Vietnam By Neda Trifković
  7. A Comparison of GDP growth of European countries during 2008-2012 period from regional and other perspectives By Mazurek, Jiri

  1. By: Marion Davin (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales [EHESS] - Ecole Centrale Marseille (ECM))
    Abstract: This paper examines the interplay between public education expenditure and economic growth in a two-sector model. We reveal that agents' preferences for services, education and savings play a major role in the relationship between growth and public education expenditures, as long as production is taxed at a different rate in each sector.
    Keywords: public education; two-sector model; sectoral taxes; endogenous growth
    Date: 2013–10
  2. By: Holden, Steinar (Dept. of Economics, University of Oslo); Larsson Midthjell, Nina (Dept. of Economics, University of Oslo)
    Abstract: We examine fiscal adjustment episodes in 24 OECD countries in order to find how austerity affects debt and growth, and whether the choice of fiscal instrument matters for the results. Inuential existing studies argue that spending cuts are more likely to successfully reduce debt and enhance economic growth than tax increases. Our main innovations over these studies are to better account for initial conditions and to employ a novel and more precise measure of actual changes in fiscal policy. We find that whether a fiscal adjustment is successful in reducing debt depends on whether the adjustment was sufficiently large to remove the budget deficit. We find no indication that it matters whether the adjustment is achieved via spending cuts or tax increases, and this conclusion holds also for the effect on economic growth.
    Keywords: fiscal; policy
    JEL: H20 H30 H50 H62
    Date: 2013–11–04
  3. By: Lee H. Endress (University of Hawaii at Manoa); Sittidaj Pongkijvorasin (Chulalongkorn University); James Roumasset (University of Hawaii at Manoa); Christopher Wada (University of Hawaii Economic Research Organization)
    Abstract: Among the ethical objections to intergenerational impartiality is the violation of consumer sovereignty given that individuals are impatient. We accommodate that concern by distinguishing intra- and inter-generational discounting in an OLG model suitable for analyzing sustainability issues. Under the assumption of constant elasticity of marginal felicity, the optimum trajectory of aggregate consumption is guided, via the Ramsey condition, by the intergenerational discount rate but not the personal discount rate. In an economy with produced capital and a renewable resource, intergenerational neutrality results in a sustained growth path, without the necessity of a sustainability constraint, even in the presence of intragenerational impatience. We also find that green net national product remains constant along the optimal approach path to golden rule consumption.
    Keywords: Sustainability of optimal growth, intergenerational equity, intra-generational discounting, renewable resources, GNNP
    JEL: Q56 Q41 Q01
    Date: 2013–10
  4. By: MIYAGAWA Tsutomu; KAWASAKI Kazuyasu; EAMURA Kazuma
    Abstract: This paper reexamines the effects of public capital on productivity growth at the regional level by using the Regional-Level Japan Industrial Productivity Database (R-JIP). When we estimate a production function including public capital in total factor productivity (TFP), we find positive and significant effects of public capital on productivity growth after the collapse of the bubble economy. As total public expenditures have decreased since the mid 1990s, our results imply that public investment after 1991 was allocated more efficiently than prior to 1990. However, the dispersion of the estimated rate of return on public capital and its Tobin's Q have expanded since 1991. This implies that the government has allocated public capital to rural areas more heavily than to urban areas. We also examine the effects of public investment on business investment by using the Manufacturer's Survey and the R-JIP. The estimation results show the positive effect of public investment on business investment.
    Date: 2013–11
  5. By: Estelle P. Dauchy (New Economic School); Christopher Balding (Peking University HSBC Business School)
    Abstract: Over the past two decades, the United States federal income tax revenue has shown periods of increased volatility. Throughout the 1990s the growth rate of individual income taxes was between 5 and 10 percent, it has swung between H12 and +12 percent from 2000 to 2006. Meanwhile wage income has been relatively stable during this period while capital income annual growth has swung from H20 to +50 percent between 2000 and 2006. Looking deeper into the income composition of taxable sources, we find that tax revenue has increased its dependence on volatile capital gains income, due in part to an increasing dependence on highHincome taxpayers. In the decade ending 1976, capital and business income represented about 17.1 percent of gross income, including about 3.1 percent for capital gains and losses. While the share of capital and business incomes have been relatively stable over time, the share of net capital gains or losses has increased to about 5.8 percent of gross income, on average the decade ending 2006, an almost twofold compared to four decades ago. Using a database on individual tax files from 1966 to 2006 from the Internal Revenue Service Public Use Files, we estimate the sources of tax revenue volatility over time and by income groups. We find strong evidence that since 1966, the growth rate of tax revenue has become increasingly dependent on the growth rate of capital income, while its dependence on wage income has decreased. Before 1986, both capital income growth and wage income growth were negatively related with income tax growth, suggesting a smoothing effect of taxation. However, after 1986, capital income growth has been positively related to income tax revenue growth, and this positive relationship has increased more than tenfold in 20 years. We also find that this increased dependence of tax revenue growth on capital income is essentially related to top income earners. The results show evidence that capital income growth and tax revenue growth almost continuously increased from the bottom to the top quintile.
    Keywords: Tax, Tax Volatility, Public Revenue, Income Sources, Tax Policy, Inequality, Wage Income, Capital Markets, Built-in Flexibility
    JEL: H2 H21 H24
    Date: 2013–02
  6. By: Neda Trifković (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: Using an original dataset from the Vietnamese catfish sector, we study the impact of vertical coordination options on household welfare and the implications of different stages of vertical coordination for the success of the whole sector. The welfare gain from contract farming and employment on processor-owned estate farms is estimated using a maximum simulated likelihood estimator. Our results show positive welfare effects from participating in contract farming, but not from employment on processor-owned estate farms. The results imply that contract farming presents opportunities for economic growth, but additional effort is required to make the contracts more accessible to smallholders.
    Keywords: vertical coordination, catfish, maximum simulated likelihood, agri-food transformation, Vietnam
    JEL: D02 D31 O17 L14 L24
    Date: 2013–10
  7. By: Mazurek, Jiri
    Abstract: The aim of the article is to compare total real GDP growth of European countries from the 3rd quarter of 2008 to the 3rd quarter of 2012, that is the period from the start of the Great recession in European Union to the present day. This period is characterized by a predominant economic stagnation or an economic recession, which occurred in the majority of examined European countries. Countries were divided into groups based on the following grounds: whether they are geographically close the economic center (Germany) or periphery, whether they are in Eurozone or not, whether they are (new) EU members or not, etc. The main findings from the comparisons are as follows: 1. European countries close to the economic center (Germany and its neighbours) experienced positive economic growth during examined period on average, while countries from European periphery experienced negative economic growth on average during the same period. This difference was found statistically significant at α = 0.01 level. 2. Differences between Eurozone and non-Eurozone and differences between old and new EU members were found statistically insignificant. 3. Among European regions with the most negative real total GDP growth were countries from Baltics, Balkans, Southern Europe (Italy, Portugal) and Iceland. The most successfull countries with the most positive real total GDP growth were countries of central Europe (Poland, Slovakia, Germany, Switzerland, Austria) and Northern Europe (Sweden and Norway).
    Keywords: economic growth, European union, international economics, European regions.
    JEL: F43 F44 O47 O57 R11
    Date: 2013–11–03

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