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on Public Economics |
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Issue of 2005‒02‒06
twelve papers chosen by Joao Carlos Correia Leitao Universidade da Beira Interior |
| By: | Richard M. Bird (University of Toronto) |
| Abstract: | This paper discusses what the growth of e-commerce means for tax policy and administration, both within countries and between them. Although the fiscal implications of such commerce as yet remain limited, the future may be different and the issues are important. The issues are first discussed with respect to consumption taxes, noting some differences in the situations facing the United States (US) on one hand, the European Union (EU) on the other, and Canada, which in some ways combines characteristics of both. When it comes to income taxes, however, everybody seems to be in more or less the same boat, although the new technology may offer solutions as well as problems for those in the tax business. The paper concludes that, while of course the future remains unknown, when it comes to taking action to deal with the potential implications of e-commerce for taxation, we are by no means at the beginning of the end, but we may, perhaps, be at the end of the beginning. |
| Keywords: | taxation, electronic commerce, value-added tax, retail sales tax |
| JEL: | H20 H71 H87 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:ttp:itpwps:0502&r=pbe |
| By: | Beraldo, S.; Montolio, D.; Turati, G. (Universitat de Barcelona) |
| Abstract: | In this paper, we study how public and private expenditures in health and education affect economic growth by their influence on people’s health, abilities, skills and knowledge. We consider a growth accounting framework in order to test whether welfare expenditures more than offset the efficiency losses caused by distortionary taxation, and whether the effects of public expenditure on economic growth differ from those of private expenditure. Our empirical analysis is based on a panel of 19 OECD countries observed between 1971 and 1998. The results are consistent with the hypothesis that the contribution of welfare expenditures more than compensates for the distortions caused by the tax system; and the estimated positive impact is stronger for health than for education. We also find some evidence that public expenditure influences GDP growth more than private expenditure. |
| JEL: | H51 H52 I38 O47 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:bar:bedcje:2005127&r=pbe |
| By: | Alessandro Balestrino; Umberto Galmarini |
| Abstract: | Presumptive taxation, in which an income proxy is used as tax base, has been and is still used today in countries with very diverse situations - developing, transition and developed countries. Usually, this form of taxation is thought of as a revenue-raising device in presence of widespread imperfect tax compliance. We investigate the question of whether presumptive taxation can be used as a redistributive instrument. To this end, we employ an occupational choice model in which an individual can be either an entrepreneur or a worker. We allow for different abilities to dodge taxes across social classes, and consider both the case in which a conventional income tax is in place alongside presumptive taxation and the case in which only presumptive taxation is operating. We argue that a revenue-neutral reform introducing a lump-sum presumptive tax based on occupational choice can improve social welfare, and sometimes even lead to a Pareto-improvement. |
| Keywords: | tax avoidance, presumptive taxation, redistribution, occupational choice |
| JEL: | H21 H26 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1381&r=pbe |
| By: | Alfred Greiner; Uwe Koeller; Willi Semmler |
| Abstract: | In this paper we test whether German public debt has been sustainable by resorting to a test proposed by Bohn (1998). We apply non-parametric and semi-parametric regressions with time depending coefficients. This test shows that the mean of the coefficient relevant for sustainability has been significantly positive over the time period considered. However, there is a negative trend in that coefficient which seems to have ceased to decline only in the middle to late 1990s. Further, we find evidence that the response of the primary deficit is a U-shaped function of the debt ratio which first declines and then rises after a certain threshold of the debt ratio is exceeded. |
| Keywords: | public debt, intertemporal budget constraint, varying coefficient model, non-parametric estimation |
| JEL: | E62 H63 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1386&r=pbe |
| By: | Emanuele Bacchiocchi; Alessandro Missale |
| Abstract: | This paper presents a simple model in which debt management stabilizes the debt-to-GDP ratio in face of shocks to real returns and output growth and thus supports fiscal restraint in ensuring sustainability. The optimal composition of public debt is derived by looking at the relative impact of the risk and cost of alternative debt instruments on the cost of missing the stabilization target. The optimal debt structure is a function of the expected return differentials between debt instruments, of the conditional variance of their returns and of the conditional covariances of their returns with output growth and inflation. We then explore how the relevant covariances and thus the optimal choice of debt instruments depend on the monetary regime and on Central Bank preferences for output stabilization, inflation control and interest-rate smoothing. Finally, we estimate the composition of public debt that would have supported debt stabilization in OECD countries over the last two decades. The empirical evidence suggests that the public debt should have a long maturity and a large share of it should be indexed to the price level. |
| Keywords: | debt management, debt structure, debt stabilization, inflation indexation, interest rates |
| JEL: | E63 H63 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1388&r=pbe |
| By: | Assar Lindbeck; Dirk Niepelt |
| Abstract: | We analyze motivations for, and possible alternatives to, the Stability and Growth Pact (SGP). With regard to the former, we identify domestic policy failures and various cross-country spillover effects; with regard to the latter, we contrast an “economic-theory" perspective on optimal corrective measures with the “legalistic" perspective adopted in the SGP. We discuss the advantages of replacing the Pact's rigid rules backed by fines with corrective taxes (as far as spillover effects are concerned) and procedural rules and limited delegation of fiscal powers (as far as domestic policy failures are concerned). This would not only enhance the efficiency of the Pact, but also render it easier to enforce. |
| Keywords: | Stability and Growth Pact, spillover effects, policy failures, Pigouvian taxes, policy delegation |
| JEL: | E63 F33 F42 H60 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1389&r=pbe |
| By: | Emma Galli; Fabio Padovano |
| Abstract: | This paper has two goals. 1) To evaluate the sustainability of Italian public deficits according to the methodology developed by Trehan and Walsh (1988, 1991) and Bohn (2004); 2) To analyze how the determinants of debt creation evolved in the years following the Maastricht Treaty and how this evolution shaped the development of the Italian public finances. The analysis is carried out in three steps; first we estimate and compare the stochastic properties of the main indicators of the Italian budget performance to test for sustainability; second, we confront the results of a cointegration-vector error correction model on two sample periods: a “pre Maastricht” (1950-1991) and a “post Maastricht” (1950-2002), to identify the main determinants of public deficits, according to the theoretical literature and the dynamic relationship between each of them and the dependent variable; third, we use the results of these estimates to specify a dummy variable model that evaluates how Italian fiscal policy reacted to changes in these determinants in the 1950-2002 sample. We conclude that a) In this period Italian public finances failed the sustainability test; b) Debt creation is much more sensitive now than before 1991 to external constraints, chiefly the numerical rules imposed by the Maastricht Treaty itself, institutional factors, such as the budget approval rules and the relative political power of the Minister for the Economy. |
| Keywords: | public deficits, Maastricht Treaty, comparative test, cointegration |
| JEL: | E62 H62 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1391&r=pbe |
| By: | Juan C. Conesa; Carlos Garriga |
| Abstract: | We examine the optimal policy response to an exogenously given demographic shock. Such a shock affects negatively the financing of retirement pensions, and we use optimal fiscal policy in order to determine the optimal strategy of the social security administration. Our approach provides specific policy responses in an environment that guarantees the financial sustainability of existing retirement pensions. At the same time, pensions will be financed in a way that by construction generates no welfare losses for any of the cohorts in our economy. In contrast to existing literature we endogenously determine optimal policies rather than exploring implications of exogenously given policies. Our results show that the optimal strategy is based in the following ingredients: elimination of compulsory retirement, a change in the structure of labor income taxation and a temporary increase in the level of government debt. |
| JEL: | E60 H00 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1393&r=pbe |
| By: | Dahlberg, Matz (Department of Economics); Mörk, Eva (Institute for Labour Market Policy Evaluation) |
| Abstract: | Bureaucrats in the government sector have a double role since they are both suppliers and demanders of public employment; they are publicly employed (supply labor) and they have an important say in deciding the size of the municipal employment (demand labor). In this paper we present and estimate a theoretical model that focuses on this double role of bureaucrats. The predictions from the theoretical model are supported by our empirical results: The estimates, based on data from Swedish municipalities 1990–2002, show that wages have smaller effects on the demand for bureaucrats than on the demand for other types of public employees. Actually, wages have no significant effect on the number of bureaucrats the municipality employs. |
| Keywords: | Public employment; bureaucrats; dynamic model |
| JEL: | H71 H73 J45 |
| Date: | 2005–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2005_003&r=pbe |
| By: | Claudio Agostini (ILADES-Georgetown University, Universidad Alberto Hurtado) |
| Abstract: | In this paper I explore the relationship between the sales tax rate and the tax treatment of food in American states. One of the main difficulties in the empirical estimation of this relationship is that state governments set the two tax policy variables. This produces a potential endogeneity problem that would bias the estimates if not considered. I use instrumental variables to solve the problem and to identify the effect of the sales tax rate on the probability of having a food exemption. The empirical results show that, on average, a one percentual point increase in the sales tax rate increases by 20% the probability of having a food exemption. |
| Keywords: | Food Exemption, Sales Tax, Instrumental Variables |
| JEL: | H71 H73 |
| Date: | 2004–11 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv155&r=pbe |
| By: | Eduardo Saavedra (ILADES-Georgetown University, Universidad Alberto Hurtado); Raimundo Soto (Departamento de Economía, Pontificia Universidad Católica de Chile) |
| Abstract: | Chile, as most Latin American countries, inherited the language, religion, and the institutions from 16th century Spanish conquerors. Most institutions have not changed since. This paper examines the institutional and economic structure of the State in Chile. It concludes that in several dimensions the current structure is incompatible with an adequate functioning of market economies, as those intended by the economic reforms implemented during the last three decades of the last century. The country needs to implement reforms in the administration of the State, the working of the Judiciary system, and the incentives and operation of regulatory agencies. Their combined negative effects imply that the benefits of reforms, privatization and market liberalization are partially dissipated in the form of inefficiency and rent seeking behaviour. In turn, this suggest that it is unlikely that the Chilean economy will reach the high growth rates necessary to overcome under development. Our main conclusion is that, in order to implement a framework in which the State acts mainly as regulator and competition supporter, it is necessary to undertake profound changes in the structure of incentives in which it currently operates. Five elements are at the center of this far-reaching evolution away from centralism, stagnation, and inefficiency: (1) the divestiture of state-owned enterprises, (2) the upgrade and update of regulatory agencies and the institutional framework in which they operate, (3) the improve of competition policy institutions, (4) the improvement of consumer rights protection, and (5) a substantial improvement in the working of the Judiciary system. |
| Keywords: | Modernization, Institutions, Regulation, Governance |
| JEL: | H11 K21 K23 L51 L97 |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:ila:ilades:inv157&r=pbe |
| By: | Ahmed Mushfiq Mobarak; Andrew Sunil Rajkumar; Maureen L. Cropper |
| Abstract: | Mobarak, Rajkumar, and Cropper examine the impact of local politics and government structure on the allocation of publicly subsidized (SUS) health services across municipios (counties) in Brazil, and on the probability that uninsured individuals who require medical attention actually receive access to those health services. Using data from the 1998 PNAD survey they demonstrate that higher per capita levels of SUS doctors, nurses, and clinic rooms increase the probability that an uninsured individual gains access to health services when he or she seeks it. The authors find that an increase in income inequality, an increase in the percentage of the population that votes, and an increase in the percentage of votes going to left-leaning candidates are each associated with higher levels of public health services. The per capita provision of doctors, nurses, and clinics is also greater in counties with a popular local leader and in counties where the county mayor and state governor are politically aligned. Administrative decentralization of health services to the county decreases provision levels and reduces access to services by the uninsured unless it is accompanied by good local governance. This paper is a product of the Infrastructure and Environment Team, Development Research Group. |
| Keywords: | Health & Population; Public Sector Management |
| Date: | 2005–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3508&r=pbe |