nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒04‒16
six papers chosen by
Keunjae Lee
Pusan National University

  1. Tax Evasion, Welfare Fraud, and “the Broken Windows” Effect: An Experiment in Belgium, France and the Netherlands By Lefebvre Mathieu; Pestieau Pierre; Riedl Arno; Villeval Marie Claire
  2. Fiscal Zoning and Sales Taxes: Do Higher Sales Taxes Lead to More Retailing and Less Manufacturing? By Daria Burnes; David Neumark; Michelle J. White
  3. Tax Evasion, Technology Shocks, and the Cyclicality of Government Revenues By Jordi Caballé; Judith Panadés
  4. Mafia and Public Spending: Evidence on the Fiscal Multiplier from a Quasi-experiment By Antonio Acconcia; Giancarlo Corsetti; Saverio Simonelli
  5. The productivity of public capital: A meta-analysis. By Ligthart, J.E.; Martin Suarez, R.M.
  6. Fiscal disciplining effect of central bank opacity: Stackelberg versus Nash equilibrium By Dai, Meixing; Sidiropoulos, Moïse

  1. By: Lefebvre Mathieu; Pestieau Pierre; Riedl Arno; Villeval Marie Claire (METEOR)
    Abstract: In a series of experiments conducted in Belgium (Wallonia and Flanders), France and theNetherlands, we compare behavior regarding tax evasion and welfare dodging, with and without information about others’ behavior. Subjects have to decide between a ‘registered’ income, the realization of which will be known to the tax authority for sure, and an ‘unregistered’ income that will only be known with some probability. This unregistered income comes from self-employment in the Tax treatment and from black labor supplementing some unemployment compensation in the Welfare treatment. Subjects have then to decide on whether reporting their income or not, knowing the risk of detection. The results show that (i) individuals evade more in the Welfare treatment than in the Taxtreatment; (ii) many subjects choose an option that allows for tax evasion or welfare fraud but report their income honestly anyway; (iii) examples of low compliance tend to increase tax evasion while examples of high compliance exert no influence; (iv) tax evasion is more frequent in France and the Netherlands; Walloons evade taxes less than the Flemish. There is no cross-country difference in welfare dodging.
    Keywords: public economics ;
    Date: 2011
  2. By: Daria Burnes; David Neumark; Michelle J. White
    Abstract: We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to encourage retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is higher significantly in jurisdictions with higher sales tax rates. This suggests that local officials in jurisdictions with higher sales taxes concentrate on attracting large stores and shopping centers. We also find that the effect of local sales taxes on big box and anchor store retail employment is larger in county interiors, where residents tend to be captive to local retailers. Finally, fiscal zoning has the opposite effect on manufacturing employment, suggesting that local officials’ efforts to attract shopping centers and large stores crowd out manufacturing.
    JEL: H71 J2 R52
    Date: 2011–04
  3. By: Jordi Caballé; Judith Panadés
    Abstract: This paper analyzes the behavior of the tax revenue to output ratio over the busi- ness cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding fine. Under the empiri- cally plausible assumptions that the intertemporal elasticity of substitution exhibits a sufficiently small value and that productivity shocks are serially correlated, we show that the elasticity of government revenue with respect to output is larger than one, which agrees with the empirical evidence. This result holds even if the tax system displays flat tax rates. We extend the previous setup to generate larger fiscal deficits when the economy experiences a recession.
    Keywords: Tax evasion, Technology shocks, Growth
    JEL: H23 H26 O41
    Date: 2011–04–06
  4. By: Antonio Acconcia (Università di Napoli Federico II and CSEF); Giancarlo Corsetti (Cambridge University, EUI, Rome III and CEPR.); Saverio Simonelli (University of Naples "Federico II" and CSEF)
    Abstract: We estimate the multiplier by relying on differences in spending in infrastructure across Italian provinces and an instrument identifying investment changes that are large and exogenous to local cyclical conditions. We derive our instrument from the Italia law mandating the interruption of public work on evidence of mafia infiltration of city councils. Our IV estimates on cross sectional data allow us to address common problems in time series analysis, such as the risk of estimating spuriously high multipliers because of endogeneity and reverse causation, or the risk of confounding the e¤ects of fiscal and monetary measures. While accounting for contemporaneous and lagged effects, and controlling for the direct impact of anti-ma.a measures on output, our results suggest a multiplier as high as 1.4 on impact, and 2 including dynamic effects.
    Keywords: Government Spending, Multiplier, Instrumental Variables
    Date: 2011–04–05
  5. By: Ligthart, J.E. (Tilburg University); Martin Suarez, R.M.
    Date: 2011
  6. By: Dai, Meixing; Sidiropoulos, Moïse
    Abstract: In a Stackelberg equilibrium, central bank opacity has a fiscal disciplining effect in the sense that it induces the government to reduce taxes and public expenditures, leading hence to lower inflation and output distortions. This effect could disappear or be dominated by the direct effect of opacity when the fiscal and monetary authorities play a Nash game.
    Keywords: Distortionary taxes; output distortions; central bank transparency (opacity); fiscal disciplining effect.
    JEL: E62 E58 E52 H30 E63
    Date: 2011

This nep-pbe issue is ©2011 by Keunjae Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.