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on Public Economics |
| By: | Franto Ricka (EBRD) |
| Abstract: | This paper investigates the political implications of tax competition between countries of different sizes. We show that smaller countries competing for internationally mobile capital would set lower tax rates than their larger counterparts when run by similar governments. Moreover, small-country governments are actually politically to the right of those in larger countries, adding a second reason for lower tax rates in the former. Then a higher number of small countries competing for capital with large countries not only decreases the large-country tax rates on capital, but also results in more right-wing governments being elected. Small countries thus have ”right-wing power”. |
| Keywords: | tax competition, government, elections |
| JEL: | D72 F5 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:ebd:wpaper:153&r=pbe |
| By: | Lisa Grazzini (DISEI, Università degli studi di Firenze); Alessandro Petretto (DISEI, Università degli studi di Firenze) |
| Abstract: | We analyse horizontal and vertical fiscal externalities in a federal country with a bicameral national system. We show under which conditions, at equilibrium, the two chambers agree or disagree on the choice of a national tax rate. |
| Keywords: | Fiscal federalism, Median voter, Bicameralism. |
| JEL: | H71 H77 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2013_01.rdf&r=pbe |
| By: | Ignacio Lozano; María Adelaida Martínez |
| Abstract: | This paper provides empirical evidence of the impact of fiscal decentralization on Colombia’s public basic education. Based on the social and economic data available for 1,003 municipalities and 13,670 public schools, for the last decade, we confirmed that decentralization has had a positive and non-monotone effect on education enrollment. Likewise, our results suggest that it has had a positive impact on quality, once several variables, commonly used to explain performance differences, were controlled. Assuming that the effects of decentralization might have been uneven between regions and within them, we specified panel data and cross section econometric models for all municipalities as a whole, for size-based municipal categories, and for the towns which receive education funding directly from the central government or not. |
| Keywords: | Public Goods, Local Taxation, Intergovernmental Relations, Education Expenditures, Government Programs. Classification JEL: H41, H71, H77, I22, I38 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:747&r=pbe |
| By: | Aladejare, Samson Adeniyi |
| Abstract: | This study examines the relationships and dynamic interactions between government capital and recurrent expenditures and economic growth in Nigeria over the period 1961 to 2010. Real Gross Domestic Product (RGDP) was used as a proxy for economic growth in the study.The analytical technique of Vector Error Correction Model and Granger Causality were exploited. Based on the result findings, it is evident that the Wagnerian and Rostow-Musgrave hypothesis were applicable to the relationship between the fiscal variables used in this study in Nigeria. The study therefore recommended among others that: there should be effective channeling of public funds to productive activities, which will have a significant impact on economic growth; there should be joint partnership between the government and the private sector in providing essential infrastructural services that will promote economic growth and development, etc. |
| Keywords: | Economic growth; Capital expenditure; Recurrent expenditure; Vector Error Correction; Causality |
| JEL: | E62 |
| Date: | 2013–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43916&r=pbe |
| By: | Carlos E.J.M. Zarazaga |
| Abstract: | Labor input growth during the recovery of the U.S. economy from the Great Recession of 2008–2009 has been considerably lower than expected. A number of scholars have attributed this disappointing outcome to the prospect of higher taxes, induced by the fiscal imbalances that will materialize in coming decades under current policies. The paper examines this fiscal sentiment hypothesis from the perspective of a neoclassical growth model, under the assumption that the typical household's preferences can be represented by a utility function that implies a constant intertemporal (Frisch) elasticity of substitution for aggregate hours of work, and for a hypothetical tax regime that incorporates the Congressional Budget Office' s assessment of the U.S. fiscal situation. The paper finds that the empirical relevance of the fiscal sentiment hypothesis depends on whether this Frisch elasticity of labor supply is closer to the relatively large values needed to account for the observed volatility of labor input at business cycle frequencies, than to the lower values estimated by microeconomic and quasi-experimental studies. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:1302&r=pbe |
| By: | Paul Eckerstorfer (University of Linz); Ronald Wendner (Karl-Franzens University of Graz) |
| Abstract: | We analyze the effects of a generalized class of negative consumption externalities (asymmetric and non-atmospheric) on the structure of efficient commodity tax programs. Households are not only concerned about consumption reference levels - that is, they gain utility from "keeping up with the Joneses" - they also exhibit altruism. Two sets of efficient tax regimes are compared, based, on a welfarist- and a non-welfarist optimality criterion, respectively. Altruism turns out not to be at odds with the consumption externalities. Rather, altruism implicates a bound on efficient utility allocations. A non-welfarist government tolerates less inequality than a welfarist one. In the welfarist (non-welfarist) case, first-best personalized commodity tax rates respond highly sensitively (barely) to whether or not a consumption externality is asymmetric or non-atmospheric. If personalized commodity tax rates are not available (second-best case), the tax rate on a non-positional good is typically different from zero for corrective reasons. For plausible functional forms and parameter values, numerical simulations suggest that second-best tax rates are rather insensitive with respect to both the optimality criterion and the "nature" of the consumption externality. |
| Keywords: | Consumption externality, Keeping up with the Joneses, Optimal (commodity) taxation, Genuine altruism, non-welfarist government |
| JEL: | D62 H21 H23 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpaper:2013-01&r=pbe |
| By: | J. Stephen Ferris (Department of Economics, Carleton University) |
| Abstract: | This paper argues that the ambiguous relationship found between government size and economic growth in the empirical growth literature can be attributed at least in part to the different time series characteristics of the two series. For most countries economic growth is stationary while government size has almost always been non-stationary, implying that the finding of a negative correlation between the two series is likely to be spurious. From a time series perspective, economic performance and government size should be approached by first looking for evidence of cointegration between the two non-stationary series: government size and per capita real output. Then, should evidence of cointegration exist, the analysis can be extended to look for evidence of short run movement about the implied long run model through an error correction model. When this approach is applied to New Zealand, evidence of a long run, inverted U-shaped relationship between government size and private per capita output is revealed. The corresponding error-correction models reveal that while transitory short run increases in government expenditure size are generally ineffective in increasing real output, increases in government spending relative to taxation are. On the other hand, the concomitant increase in national debt is found to decrease real output in both the long and the short run. Since the net effect of fiscal expenditures will be the sum of the latter three (and conditional on its initial position), it is not surprising to find that conclusions on fiscal effectiveness will be highly problematic. |
| Date: | 2012–10–31 |
| URL: | http://d.repec.org/n?u=RePEc:car:carecp:12-06&r=pbe |
| By: | Foellmi, Reto; Martinez, Isabel |
| Abstract: | We study the recent evolution of top incomes in Switzerland. We close the data gap between 1993 and 2003 exploiting the fact that cantons changed their tax system at different points in time which allows us to use the non-changing cantons as control group. The results show that the share of top incomes has risen, the top 0.01% share even doubled in the last 20 years. However, top incomes exhibited large variation in the business cycle. We compare the results with social security data on top labor incomes for which the top shares can be measured precisely over the whole time span. The comparison confirms our initial findings and suggests that labor incomes have become more important among top income earners. |
| Keywords: | Income inequality, wealth inequality, labor incomes, distribution and volatility |
| JEL: | O15 D31 O52 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2012:27&r=pbe |
| By: | Laurence jacquet (THEMA, Universite de Cergy-Pontoise and THEMA) |
| Abstract: | This paper studies the optimal income redistribution and optimal monitoring when disabil- ity bene?ts are intended for disabled people but some of the disabled do not claim disability bene?ts and enter the labor force. Classi?cation errors also occur. Some able applicants with high distaste for work are falsely granted disability bene?ts (type II errors) and some disabled applicants are denied disability bene?ts (type I errors). The accuracy of monitoring depends on the resources devoted to it. Labor supply responses are at the extensive margin. The paper derives the optimal income tax-transfer schedule that incorporates welfare and disability ben- e?ts and takes into account monitoring costs. The cost of monitoring and the co-existence of welfare and disability bene?ts play in favor of Earned Income Tax Credits for disabled workers who forgo disability bene?ts as well as for disabled workers who forgo welfare assistance. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2013-01&r=pbe |
| By: | Paola Giuliano; Nathan Nunn |
| Abstract: | We provide evidence that a history of democracy at the local level is associated with contemporary democracy at the national level. Auxiliary estimates show that a tradition of local democracy is also associated with attitudes that favor democracy, with better quality institutions, and higher level of economic development. |
| JEL: | N30 P0 Z1 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18722&r=pbe |