nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒08‒02
six papers chosen by
Keunjae Lee
Pusan National University

  1. To assemble to resemble? A study of tax disparities among French municipalities By Marie-Laure Breuillé; Pascale Duran-Vigneron; Anne-Laure Samson
  2. Changes in taxation and their impact on economic growth in the European Union. By Szarowska, Irena
  3. Taxation of nuclear rents: benfits, drawbacks and alternatives By Pieter HIMPENS; Joris MORBEE; Stef PROOST
  4. Estabilidad política y tributación By Estrada, Fernando; Mutascu, Mihai; Tiwari, Aviral
  5. Private Valuation of a Public Good in Three Auction Mechanisms. By Dragicevic, Arnaud; Ettinger, David
  6. Redistribution and the Multiplier By Tommaso Monacelli; Roberto Perotti

  1. By: Marie-Laure Breuillé (INRA); Pascale Duran-Vigneron (University of Exeter); Anne-Laure Samson (Université Paris Dauphine)
    Abstract: The purpose of this paper is to analyze the effect of inter-municipal cooperation on local taxation. Municipalities that join/create an inter-municipal jurisdiction choose between three tax regimes, which may induce both horizontal and vertical tax externalities. Using the differences in differences method with a quasi-exhaustive panel for French municipalities over the 1994-2010 period, we show a positive causal effect of cooperation on the level of cumulative tax rates (i.e. the sum of municipal and inter-municipal tax rates). Moreover, we show that cooperation leads to a convergence of tax rates within an inter-municipal structure, which thus reduces tax disparities among municipalities.
    Keywords: Inter-municipal cooperation, tax competition, fiscal disparities
    JEL: H23 H7
    Date: 2011
  2. By: Szarowska, Irena
    Abstract: The aim of the paper is to analyze changes in taxation and their impact on economic growth in the European Union. The analysis is performed on adjusted annual panel data of 24 European Union countries in a period 1995–2008. Panel regression with fixed effects is used as a basic method of research. The panel regression is based on analysis the effect of total tax quota changes on GDP growth in model 1, of changes in its components (social contribution, direct and indirect tax quotas) in model 2 and of personal and corporate income tax quota changes in model 3. Results of empirical tests verify statistically significant negative effect of tax burden on GDP growth. Total tax quota increased by 1% decreases the GDP growth rate by 0.29% in the same year. Estimations confirm a statistically significant negative effect of direct taxes on GDP growth as well. A cut in the direct tax quota by 1% raises the GDP growth rate by 0.43%. The model also presents a high negative impact of an increase in the corporate income tax quota on GDP growth (a value of the regression coefficient is minus 1.28%) expresses the high negative. The effect of social contribution quota on GDP growth is not statistically significant in any estimation.
    Keywords: taxation; tax burden; economic growth; panel regression
    JEL: E62 C23 H25
    Date: 2010–12–17
  3. By: Pieter HIMPENS; Joris MORBEE; Stef PROOST
    Abstract: The taxation of nuclear energy is studied using a stylized model of the electricity sector, with one dominant nuclear producer and a competitive fringe of fossil-fuel plants. We show that an unanticipated tax on nuclear production can generate significant government revenue in the short run without disturbing the market, but will harm investment incentives in the long run, especially if the government cannot credibly commit to a future tax rate. Even if the government is capable of credibly committing to an optimal long-run tax, government revenues from the long-run tax will be very low due to the market power of the incumbent. Lifetime extension agreements negotiated with multiple potential players, and competitive auctioning of new nuclear licenses are shown to be the most attractive policies. The analytical results are illustrated with a numerical simulation for the case of Belgium.
    Date: 2011–07
  4. By: Estrada, Fernando; Mutascu, Mihai; Tiwari, Aviral
    Abstract: The present study is, in particular, an attempt to test the relationship between tax level and political stability by using some economic control variables and to see the relationship among government effectiveness, corruption, and GDP. For the purpose, we used the Vector Autoregression (VAR) approach in the panel framework, using a country-level panel data from 59 countries for the period 2002 to 2008. The salient features of this model are: (a) simplicity is based on a limited number of variables (five) are categorical or continuous and not dependent on complex interactions or nonlinear effects. (b) accuracy: a low level of errors, the model achieves a high percentage of accuracy in distinguishing countries with inclination to political instability, compared to countries with political stability, (c) generality: the model allows to distinguish types of political instability, both resulting from acts of violence and failure of democracies to show, and (d) novelty: the model incorporates a tool that helps evaluate and exclude many variables used by the conventional literature. This approach is mainly based on the recognition of state structures and the relations between elites and parties.
    Keywords: Taxation; Political Stability; Connection; Effects; Panel VAR analysis
    JEL: E62 N10 B22 C93 D53 D70 E17 C02 C72 H20 O50 E63 C70 C33 C53 B23 A12 C23 D72 B41
    Date: 2011–07–25
  5. By: Dragicevic, Arnaud; Ettinger, David
    Abstract: We evaluate the impact of three auction mechanisms – the Becker–DeGroot–Marschak (BDM) mechanism, the second-price auction (SPA), and the random nth-price auction (NPA) – in the measurement of private willingness-to-pay and willingness-to-accept for a pure public good. Our results show that the endowment effect is lower with the BDM mechanism. In this market mechanism, the effect disappears after a few repetitions. Yet, on a logarithmic scale, the random nth-price auction yields the highest speed of convergence towards equality of welfare indices. We also observe that subjects value public goods in reference to their private subjective benefit derived from their public good funding.
    Keywords: auction mechanisms; WTP-WTA disparity; private provisions; public goods;
    JEL: Q53 C91 D44
    Date: 2011
  6. By: Tommaso Monacelli; Roberto Perotti
    Abstract: During a fiscal stimulus, does it matter, for the size of the government spending multiplier, which category of agents bears the brunt of the current and/or future adjustment in taxes? In an economy with heterogeneous agents and imperfect financial markets, the answer depends on whether or not New Keynesian features, such are price rigidity, are present. If prices are flexible, the tax-financing rule is either neutral or quasi-neutral. If prices are sticky, who bears the brunt of the adjustment, whether financially constrained borrowers as opposed to unconstrained savers, does matter. The differential effect on the multiplier, however, depends crucially on (i) the degree of persistence of the fiscal expansion, and (ii) on whether the expansion is balanced-budget as opposed to debt-financed.
    Date: 2011

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