nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒05‒07
six papers chosen by
Keunjae Lee
Pusan National University

  1. The Norwegian Shareholder Tax Reconsidered By Södersten, Jan; Lindhe, Tobias
  2. Multilevel Fiscal Governance in a Balanced Policy Environment By Sharma, Chanchal Kumar
  3. Taxes and the valuation of dividends: a study of dividend announcements in Germany By Haesner, Christian; Schanz, Deborah
  4. Negative Leakage By Don Fullerton; Daniel Karney; Kathy Baylis
  5. Does Government Investment in Local Public Goods Spur Gentrification? Evidence from Beijing By Siqi Zheng; Matthew E. Kahn
  6. Fiscal Policy Multipliers in a New Keynesian Model under Positive and Zero Nominal Interest Rate By Kaszab, Lorant

  1. By: Södersten, Jan (Department of Economics); Lindhe, Tobias (Uppsala Center for Fiscal Studies)
    Abstract: In an article in International Tax and Public Finance, Peter Birch Sørensen (2005) gives an in-depth account of the new Norwegian Shareholder Tax, which allows the shareholders a deduction for an imputed risk-free rate of return. Sørensen’s positive evaluation appears as reasonable for a closed economy where the deduction for the imputed return is capitalized into the market prices of corporate shares. We show that in a small open economy where no capitalization occurs, the Norwegian shareholder tax is likely to leave the distortions caused by the corporate income tax unaffected, and to add new distortions to shareholders’ portfolio decisions.
    Keywords: Tax neutrality; open economy; shareholder taxation; corporate-personal tax integration; small firms
    JEL: H24 H25
    Date: 2011–04–28
  2. By: Sharma, Chanchal Kumar
    Abstract: The most desirable system of allocations should avoid effi ciency losses, resulting from either fi nancial dependency, or subnational fi scal operations by striking a balance between fi scal autonomy and reliance on federal transfers of SNGs.
    Keywords: fiscal federalism; intergovernmental relations; tax policy; fiscal governance.
    JEL: H0 H7 H3
    Date: 2011–01
  3. By: Haesner, Christian; Schanz, Deborah
    Abstract: This paper investigates the impact of the 2001 tax reform in Germany on dividend announcement returns. With this major tax reform, the full imputation system was replaced by the half-income system, which had a significant impact on the relative taxation of dividends and capital gains for most investor classes. In an event study framework, we separate the tax effect of dividends from their positive signaling and agency cost effects to offer a more comprehensive picture of the valuation implications of dividends in Germany. Controlling for signaling and agency cost effects of dividends we find that the market response to positive dividend surprises is more pronounced under the full imputation system, where dividends are generally more favorable to investors from a tax perspective, than under the half-income system. Our results suggest that the observed decline in the dividend response coefficient is synchronized with the 2001 tax reform and hence attributable to the 2001 tax reform. --
    Keywords: Dividend Announcements,Taxation
    JEL: G35 G14 H3 G34
    Date: 2011
  4. By: Don Fullerton; Daniel Karney; Kathy Baylis
    Abstract: We build a simple analytical general equilibrium model and linearize it, to find a closed-from expression for the effect of a small change in carbon tax on leakage – the increase in emissions elsewhere. The model has two goods produced in two sectors or regions. Many identical consumers buy both goods using income from a fixed stock of capital that is mobile between sectors. An increase in one sector’s carbon tax raises the price of its output, so consumption shifts to the other good, causing positive carbon leakage. However, the taxed sector substitutes away from carbon into capital. It thus absorbs capital, which shrinks the other sector, causing negative leakage. This latter effect could swamp the former, reducing carbon emissions in both sectors.
    JEL: H2 H23 Q48 Q54
    Date: 2011–04
  5. By: Siqi Zheng; Matthew E. Kahn
    Abstract: In Beijing, the metropolitan government has made enormous place based investments to increase green space and to improve public transit. We examine the gentrification consequences of such public investments. Using unique geocoded real estate and restaurant data, we document that the construction of the Olympic Village and two recent major subway systems have led to increased new housing supply in the vicinity of these areas, higher local prices and an increased quantity of nearby private chain restaurants.
    JEL: H41 Q51 R41
    Date: 2011–04
  6. By: Kaszab, Lorant (Cardiff Business School)
    Abstract: This paper uses a simple new-Keynesian model (with and without capital) and calculates multipliers of four types. That is, we assume either an increase in government spending or a cut in sales/labor/capital tax that is financed by lump-sum taxes (Ricardian evidence holds). We argue that multipliers of a temporary fiscal stimulus for separable preferences and zero nominal interest rate results in lower values than what is obtained by Eggertsson (2010). Using Christiano et al. (2009) non-separable utility framework which they used to calculate spending multipliers we study tax cuts as well and find that sales tax cut multiplier can be well above one (joint with government spending) when zero lower bound on nominal interest binds. In case of a permanent stimulus we show in the model without capital and assuming non-separable preferences that it is the spending and wage tax cut which produce the highest multipliers with values lower than one. In the model with capital and assuming that the nominal rate is fixed for a one-year (or two-year) duration we present an impact multiplier of government spending that is very close to the one in Bernstein and Romer (2009) but later declines with horizon in contrast to their finding and in line with the one of Cogan et al. (2010). We also demonstrate that the long-run spending multiplier calculated similarly to Campolmi et al. (2010) implies roughly the same value for both types of preferences for particular calibrations. For comparison, we also provide long-run multipliers using the method proposed by Uhlig (2010).
    Keywords: New-Keynesian model; fiscal multipliers; zero lower bound; monetary policy; government spending; tax cut; permanent; transitory
    Date: 2011–04

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