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on Public Economics |
| By: | Franciscos Koutentakis (University of Crete) |
| Abstract: | The paper introduces public education fi��nanced by linear taxation into a standard model of persistent inequality. It obtains the straightforward conclusion that agents with income above the average will prefer a positive tax rate. This implies a majority of agents supporting the introduction of public education suggesting that democracy is necessary and sufficient condition for redistribution. |
| Keywords: | Public education, persistent inequality, democracy |
| JEL: | H4 |
| Date: | 2012–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:crt:wpaper:1204&r=pbe |
| By: | Fischer, Carolyn (Resources for the Future); Fox, Alan K. |
| Abstract: | Climate policymaking faces twin challenges of carbon leakage and public sector revenue requirements. A large literature advocates the use of carbon dioxide (CO2) pricing and recycling the revenues to lower distorting taxes as a way to minimize costs. In this paper, we explore the implications of labor tax interactions for the cost-effectiveness of border adjustments and other measures to cope with leakage. We find that, for plausible values of labor supply elasticities, the cost savings from revenue recycling are significant—from 15 to 25 percent. The cost savings from anti-leakage measures are generally smaller, but also significant, particularly for small coalitions or more binding reduction targets. Tax interactions further enhance the cost savings from border adjustments, but make other measures like rebates or exemptions less attractive. |
| Keywords: | climate policy, carbon leakage, tax interactions, border adjustments |
| JEL: | Q5 H21 |
| Date: | 2012–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-12-19&r=pbe |
| By: | Ramaele Moshoeshoe |
| Abstract: | In this paper, we estimate income elasticities and investigate the determinants of alcohol and tobacco consumption in Lesotho using a Double-Hurdle model on the 2002/03 Lesotho HBS data. The results reveal that both alcohol and tobacco are income inelastic with estimated elasticities of 0.6553 and 0.3561, respectively. Given this, therefore, we argue that differentiated tax hikes, with a relatively higher rate on tobacco, can be more e¤ective both as a consumption deterrent and revenue increasing policy, without much compromise on employment and poverty. Further, we fi…nd evidence that alcoholic beverages and tobacco are complementaries, suggesting the need for a more holistic social policy aimed at curbing consumption of these two goods. |
| Keywords: | Elasticity, Excise Tax, Double-Hurdle, Lesotho |
| JEL: | C31 C34 C54 D12 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:315&r=pbe |
| By: | Goodness C. Aye (Department of Economics, University of Pretoria); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria); Charl Jooste (Department of Economics, University of Pretoria); Stephen M. Miller (College of Business, University of Las Vegas, Nevada); Zeynel A. Ozdemir (Department of Economics, Gazi University, Besevler, 06500 Ankara, Turkey) |
| Abstract: | This study assesses how fiscal policy affects the dynamics of asset markets, using Bayesian vector autoregressive models. We use sign restrictions to identify government revenue and government spending shocks, while controlling for generic business cycle and monetary policy shocks. In addition to examining the effects of anticipated and unanticipated revenue and spending shocks, we also analyse three types of fiscal policy scenarios: a deficit-financed spending increase, a balanced budget spending increase (financed with higher taxes), and a deficit-financed tax cut (revenue decreases but government spending stays unchanged). Using South African quarterly data from 1966:Q1 to 2011:Q2, we show that a deficit spending shock does not affect house prices, but temporarily exerts a positive effect on stock prices. With a deficit-financed tax cut shock, house prices increase persistently while stock prices increase quickly, but only temporarily. A balanced budget shock permanently decreases house prices and temporarily reduces stock prices. |
| Keywords: | Bayesian Sign-Restricted VAR, fiscal policy, housing prices, stock prices |
| JEL: | C32 E62 G10 H62 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201228&r=pbe |
| By: | Emmanuel Farhi; Iván Werning |
| Abstract: | We provide explicit solutions for government spending multipliers during a liquidity trap and within a fixed exchange regime using standard closed and open-economy models. We confirm the potential for large multipliers during liquidity traps. For a currency union, we show that self-financed multipliers are small, always below unity. However, outside transfers or windfalls can generate larger responses in out- put, whether or not they are spent by the government. Our solutions are relevant for local and national multipliers, providing insight into the economic mechanisms at work as well as the testable implications of these models. |
| JEL: | E52 E62 F41 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18381&r=pbe |
| By: | Wolfgang Buchholz; Richard Cornes; Dirk Rübbelke |
| Abstract: | Recent international climate negotiations suggest that complete agreements are unlikely to materialize. Instead, partial cooperation between like-minded countries appears a more likely outcome. In this paper we analyze the effects of such partial cooperation between like-minded countries. In doing so, we link the literature on partial cooperation with so-called matching approaches. Matching schemes are regarded as providing a promising approach to overcome undersupply of public goods like climate protection. The functioning of matching mechanisms in a setting with an incomplete agreement, i.e. a contract where only a subset of the players participates, has however not been investigated yet. This paper fills this research gap by analyzing incomplete matching agreements in the context of international climate protection. We analyse their effect on both welfare and the global climate protection level. We show that matching coalitions may bring about a decline in global public good provision and a reduction in the welfare of outsiders. |
| JEL: | C78 H41 Q54 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2012-584&r=pbe |
| By: | Steef Baeten (Institute for Health Policy and Management, Erasmus University Rotterdam); Tom Van Ourti (Erasmus School of Economics (EUR)); Eddy Van Doorslaer (Erasmus School of Economics (EUR)) |
| Abstract: | During the last decades, China has experienced double-digit economic growth rates and rising inequality. This paper implements a new decomposition on the China Health and Nutrition panel Survey (1991-2006) to examine the extent to which changes in level and distribution of incomes and in income mobility are related to health disparities between rich and poor. We find that health disparities in China relate to rising income inequality and in particular to the adverse health and income experience of older (wo)men, but not to the growth rate of average incomes over the last decades. These findings suggest that replacement incomes and pensions at older ages may be one of the most important policy levers in combating health disparities between rich and poor Chinese. |
| Keywords: | China; income growth; income inequality; income mobility; health inequality |
| JEL: | C00 D30 D63 I14 I15 |
| Date: | 2012–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20120091&r=pbe |
| By: | Lee, Sang Yoon Tim |
| Abstract: | Since the 1980s, the U.S. income distribution has become considerably more concentrated toward the top while the wealth distribution has not. I argue that this can be accounted for by occupational shifts caused by the decline in tax progressivity. To show this, I construct a dynamic general equilibrium model of occupational choice which distinguishes between entrepreneurs, who run their own firms, and managers, who run publicly owned firms. Collateral constraints induce entrepreneurs to hold more wealth, while managers earn higher wages as a result of competitive assignments to firms. Feeding observed tax policy changes from 1970 to 2000 into the model, I find that (i) less progressive taxation increases the relative mass of managers in equilibrium, and explains approximately 30% of the observed increase in the concentrations of earnings and income without increasing that of wealth, and (ii) reverting to historical tax policies has only a negligible impact on consumption equivalent welfare. |
| JEL: | C68 E21 E62 J3 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:mnh:wpaper:32435&r=pbe |