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on Public Economics |
| By: | Gaetan Nicodeme (European Commission) |
| Abstract: | As any non-lump-sum tax, corporate income taxation creates distortions in economic choices, reducing its efficiency. This paper reviews some of these domestic and international distortions and their most recent estimates from the economic literature. Distortions originating from income shifting between capital and labour sources, profit shifting across jurisdictions, the effects of taxation on business location and foreign direct investment are the major sources of distortions. |
| Keywords: | European Union, Corporate taxation, distortions, tax efficiency. |
| JEL: | H25 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0015&r=pbe |
| By: | Christina Elschner (University of Mannheim, Germany); Werner Vanborren (European Commission) |
| Abstract: | This paper offers an assessment of European corporate tax regimes using forward-looking indicators for corporate investment based on the Devereux-Griffith methodology. It draws on time series of average effective tax rates (EATR) using a detailed set of tax parameters for 27 EU Member States as well as some important non-EU countries. The analysis shows that over time the reduction in the corporate effective average tax rates (EATR) was lower than for the corporate statutory rates and the figures suggest that simple corporate tax base broadening by means of less generous capital allowances is not a sufficient explanation for this phenomenon. Finally, it is shown that the tax gap between the old and new EU Member States has grown over time and even accelerated after accession. |
| Keywords: | European Union, effective tax rate, effective tax burden, corporate taxation, company taxation. |
| JEL: | H25 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0014&r=pbe |
| By: | António Afonso and Sebastian Hauptmeier |
| Abstract: | We assess the fiscal behaviour in the European Union countries for the period 1990- 2005 via the responsiveness of budget balances to several determinants. The results show that the existence of effective fiscal rules, the degree of public spending decentralization, and the electoral cycle can impinge on the country’s fiscal position. Furthermore, the results also support the responsiveness of primary balances to government indebtedness. Key words: fiscal regimes, fiscal rules, fiscal decentralization, European Union, panel data |
| JEL: | C23 E62 H62 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ise:isegwp:wp232009&r=pbe |
| By: | Nizar Allouch (Queen Mary, University of London) |
| Abstract: | This paper deals with a core-equilibrium equivalence in an economy with public goods where preferences of consumers display warm glow effects. We demonstrate that provided that each consumer becomes satiated to other consumers provision, it holds that, for a sufficiently large economy, the set of Edgeworth allocations is non-empty. Moreover, we show that an Edgeworth allocation could be decentralized as a warm glow equilibrium. |
| Keywords: | Competitive equilibrium, Warm glow, Public goods, Edgeworth, Core, Decentralization |
| JEL: | H41 C71 D64 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp642&r=pbe |
| By: | Gisle James Natvik (Norges Bank (Central Bank of Norway)) |
| Abstract: | This paper analyzes a framework where policymakers decide how to spend public resources on physical capital and labor in order to produce two public goods. Candidate policymakers disagree about which goods to produce, and may alternate in office due to elections. When capital and labor are complementary inputs to the production of public goods, the anticipation of political turnover reduces public savings in physical capital rather than finnancial assets. Political turnover renders the stock of physical capital for public production too low and ine¢ ciently combined with labor. |
| Keywords: | Political economics, budget deficits, public investment |
| JEL: | E6 H4 H54 H6 |
| Date: | 2009–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2009_07&r=pbe |
| By: | Nizar Allouch (Queen Mary, University of London) |
| Abstract: | Despite a widespread interest in the warm glow model [Andreoni (1989,1990)], surprisingly most attention focused on the voluntary contribution equilibrium of the model, and only very little attention has been devoted to the competitive equilibrium. In this paper, we introduce the notion of competitive equilibrium for a warm glow economy [Henceforth, warm glow equilibrium]. Then, we establish (and prove), in the contest of our model, the three fundamental theorems of general equilibrium: (i) warm glow equilibrium exists; (ii) a warm glow equilibrium is Pareto efficient; and (iii) a Pareto efficient allocation can be decentralized as a warm glow equilibrium). The concept of a warm glow equilibrium may prove to be very useful to the normative and positive theory of public goods provision. First, it is a price based mechanism achieving efficient outcomes. Secondly, not only the warm glow equilibrium outcomes could serve as a point of reference to measure free-riding and welfare loss, but also due to warm glow effects, unlike Lindahl allocations, they are more likely to be achieved. |
| Keywords: | Warm glow, Altruism, Competitive equilibrium, Free riding, Public goods provision |
| JEL: | H41 D64 C62 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp641&r=pbe |
| By: | Salvador Barrios (European Commission); Luc Laeven (International Monetary Fund); Harry Huizinga (Tilburg University); Gaetan Nicodeme (European Commission) |
| Abstract: | Using a large international firm-level data set, we estimate separate effects of host and parent country taxation on the location decisions of multinational firms. Both types of taxation are estimated to have a negative impact on the location of new foreign subsidiaries. In fact, the impact of parent country taxation is estimated to be relatively large, possibly reflecting its international discriminatory nature. For the cross-section of multinational firms, we find that parent firms tend to be located in countries with a relatively low taxation of foreign-source income. Overall, our results show that parent-country taxation ? despite the general possibility of deferral of taxation until income repatriation ? is instrumental in shaping the structure of multinational enterprise. |
| Keywords: | European Union, corporate taxation, dividend withholding taxation, location decisions. |
| JEL: | H25 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0016&r=pbe |
| By: | M. Vittoria Levati (Max Planck Institute of Economics, Jena); Ro'i Zultan (The Center for Rationality, The Hebrew University of Jerusalem) |
| Abstract: | This paper provides a new way to identify conditional cooperation in a real-time version of the standard voluntary contribution mechanism. Our approach avoids most drawbacks of the traditional procedures because it relies on endogenous cycle lengths, which are defined by the number of contributors a player waits before committing to a further contribution. Based on hypothetical distributions of randomly generated contribution sequences, we provide strong evidence for conditionally cooperative behavior. Moreover, notwithstanding a decline in contributions, conditional cooperation is found to be stable over time. |
| Keywords: | Public goods game, Real-time protocol, Information feedback, Conditional cooperation, Simulations |
| JEL: | C72 C92 H41 |
| Date: | 2009–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2009-029&r=pbe |
| By: | Martin Hellwig (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | This paper studies the design of optimal utilitarian mechanisms for an excludable public good. Excludability provides a basis for making people pay for admissions; the payments can be used for redistribution and/or funding. Whereas previous work assumed that admissions are governed by the payment or nonpayment of a price, this paper allows for arbitrary admission rules. With sufficient inequality aversion, nondegenerate randomization in admissions is shown to be desirable for certain model specifications, with and without participation constraints. The paper also gives a sufficient condition on the distribution of preferences under which randomization is undesirable. |
| Keywords: | Utilitarian welfare maximization, Admission rules for excludable public goods, Randomization in optimal mechanisms |
| JEL: | D61 D63 H21 H41 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2009_12&r=pbe |
| By: | Francesca Bortolami |
| Abstract: | This experiment is a preliminary test to explain the participation effect observed in Bortolami and Mittone (2009). The aim of this new version is to test whether the contributory gap is more properly justifiable in terms of pure environmental choices, or, on the contrary, whether the gap is more strictly related to behavioural dynamics. To verify the former hypothesis, an environmental change regarding communication is introduced. To test the latter, empirical and normative expectations are explicitly considered. |
| Keywords: | public goods, participation effect, computer mediated communication, empirical and normative expectations. |
| JEL: | C92 H41 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:trn:utwpce:0904&r=pbe |
| By: | Gonzalez Alegre, Juan (European University Institute); Kappeler, Andreas (European Investment Bank, Economic and Financial Studies); Kolev, Atanas (European Investment Bank, Economic and Financial Studies); Valila, Timo (European Investment Bank, Economic and Financial Studies) |
| Abstract: | We set out to decompose government investment, seeking especially to estimate how much governments in Europe invest in infrastructure in general and transport infrastructure in particular. It is concluded that infrastructure accounts for about one-third of overall government investment in the EU on average, with the share of transport investment as high as 80 percent in government infrastructure investment. These shares have remained quite stable in the past decades, so government transport investment has not suffered from excessive swings, slides or sudden stops - at least relative to other types of government investment. Whether that has been economically optimal is an altogether different issue, to be addressed elsewhere. |
| Keywords: | Government investment; infrastructure investment; fiscal federalism; transport infrastructure; fiscal position |
| JEL: | H54 H62 H77 |
| Date: | 2008–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:eibpap:2008_002&r=pbe |