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on Public Economics |
| By: | Lehmann, Etienne (CRED, Université Panthéon Assas Paris 2); Simula, Laurent (Uppsala University); Trannoy, Alain (EHESS, Paris) |
| Abstract: | We investigate how potential tax-driven migrations modify the Mirrlees income tax schedule when two countries play Nash. The social objective is the maximin and preferences are quasilinear in income. Individuals differ both in skills and migration costs, which are continuously distributed. We derive the optimal marginal income tax rates at the equilibrium, extending the Diamond-Saez formula. The theory and numerical simulations on the US case show that the level and the slope of the semi-elasticity of migration on which we lack empirical evidence are crucial to derive the shape of optimal marginal income tax. Our simulations show that potential migrations result in a welfare drop between 0.4% and 5.3% for the worst-off and an average gain between 18.9% and 29.3% for the top 1%. |
| Keywords: | optimal income tax, income tax competition, migration, labor mobility, Nash-equilibrium tax schedules |
| JEL: | D82 H21 H87 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7646&r=pbe |
| By: | Gerald Carlino; Robert P. Inman |
| Abstract: | The American Recovery and Reinvestment Act (ARRA) was the US government’s fiscal response to the Great Recession. An important component of ARRA’s $796 billion proposed budget was $318 billion in fiscal assistance to state and local governments. We examine the historical experience of federal government transfers to state and local governments and their impact on aggregate GDP growth, recognizing that lower-tier governments are their own fiscal agents. The SVAR analysis explicitly incorporates federal intergovernmental transfers, disaggregated into project (e.g., infrastructure) aid and welfare aid, as separate fiscal policies in addition to federal government purchases and federal net taxes on household and firms. A narrative analysis provides an alternative identification strategy. To better understand the estimated aggregate effects of aid on the economy, we also estimate a behavioral model of state responses to such assistance. The analysis reaches three conclusions. First, aggregate federal transfers to state and local governments are less stimulative than are transfers to households and firms. It is important to evaluate the two policies separately. Second, within intergovernmental transfers, matching (price) transfers for welfare spending are more effective for stimulating GDP growth than are unconstrained (income) transfers for project spending. Matching aid is fully spent on welfare services or middle-class tax relief; half of project aid is saved and only slowly spent in future years. Third, simulations using the SVAR specification suggest ARRA assistance would have been 30 percent more effective in stimulating GDP growth had the share spent on government purchases and project aid been fully allocated to private sector tax relief and to matching aid to states for lower-income support. |
| JEL: | E62 H39 H77 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19559&r=pbe |
| By: | Mark A Roberts |
| Abstract: | We show that the size of the maximum sustainable public debt in the Diamond (1965) OLG model depends on the choice of fiscal instrument. If tax revenue is exogenous, there is a maximum at an interior or bifurcation point, as in Rankin and Roffia’s (2003) initial paper but at a generally higher level than for their case of an exogenous debt. Conversely, if income tax rates are exogenous, the technical maximum is at a corner-point of degeneracy, provided the first Inada condition holds. However, as this implies notional average taxes of 100%, a Laffer Curve becomes important, giving rise to another concept of the maximum debt. More generally, for this closed economy case, the form of the production function in conjunction with the fiscal rule will determine whether the maximum debt is reached at a technical point of bifurcation or at a more behavioural one where tax payers en masse deny further payments to bond holders. |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:13/07&r=pbe |
| By: | Boris Cournède; Antoine Goujard; Álvaro Pina |
| Abstract: | Despite sustained efforts made in recent years to rein in budget deficits, a majority of OECD countries still face substantial fiscal consolidation needs. The choices made about which spending areas to curtail and which taxes to hike will have implications for near-term activity and long-term growth as well as for equity and the current account. This paper proposes a method for choosing the instruments of consolidation so that they contribute to -- or minimise trade-offs with -- the goals of promoting near-term activity, longterm growth, equity, and global rebalancing. The proposed method is illustrated with detailed simulations for 31 OECD countries which are accompanied by an extensive range of alternative scenarios to confirm the robustness of the findings. The simulations highlight that half of OECD countries can reduce excess debt mainly through moderate adjustments to instruments (such as subsidies, pensions or property taxes) that have at most limited side-effects on other policy objectives. They also show that a smaller number of countries face more difficult choices, having to either make bigger adjustments in areas where spending cuts or tax hikes are least harmful or to rely significantly on consolidation instruments with substantial adverse side-effects. These trade-offs can to a large extent be alleviated through structural reforms in the delivery of public services and in taxation. Comment concilier assainissement budgétaire, croissance et équité ? : Une méthode proposée pour choisir les instruments d'assainissement accompagnée d'un exemple d'application aux pays de l'OCDE Malgré les efforts importants qu’ils ont fournis au cours des dernières années pour réduire les deficits, une majorité des pays de l’OCDE continue de faire face à de larges besoins d’assainissement budgétaire. Les choix effectués s’agissant de la nature des dépenses à réduire et des impôts à augmenter auront des conséquences pour l’activité à court terme, pour la croissance à long terme aussi bien que pour l’équité et le compte courant. Ce document propose une méthode permettant de choisir les instruments de l’assainissement de telles sorte qu’ils soient aussi compatibles que possible avec les objectifs de promouvoir l’activité à court terme, la croissa nce à long terme, l’équité et le rééquilibrage économique équilibres mondial. La méthode proposée est illustrée par une série de simulations détaillées couvrant 31 pays de l’OCDE qui sont accompagnées d’une vaste gamme de scénarios alternatifs afin de vérifier la robustesse des résultats. Les simulations soulignent que la moitié des pays de l’OCDE peuvent réduire leur excès de dette principalement au moyen d’instruments (tels que les subventions, les pensions ou les taxes foncières) qui ont au plus des effets secondaires limités sur les autres objectifs de politique publique. Elles montrent aussi qu’un plus petit nombre de pays de l’OCDE sont confrontés à un choix plus difficile, ayant soit à fournir des efforts plus importants dans les domaines où la réduction des dépenses ou la hausse des taxes sont les moins dommageables, soit à s’appuyer fortement sur les instruments d’assainissement entraînant de notables effets secondaires. Ces arbitrages difficiles peuvent être atténués au moyen de réformes structurelles permettant d’améliorer l’efficacité de la dépense publique et du système fiscal. |
| Keywords: | structural reforms, income distribution, equity, global imbalances, growth, fiscal consolidation, assainissement budgétaire, déséquilibres mondiaux, croissance, réforme structurelle, équité, répartition des revenus |
| JEL: | H62 H63 H68 |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1088-en&r=pbe |
| By: | Raghbendra Jha |
| Abstract: | This paper underscores the substantial spatial disparities across India and evaluates the case for putting together (various versions) of the Goods and Service Tax (GST) and also indicates the risks involved in the process. This paper argues that, on balance, there is a case for an appropriately constituted GST but that the federal transfer formula must be sensitive to any fallout from such a move. The paper also argues that there is an urgent need to review the totality of transfers from the central to state governments and local bodies. This review would include transfers through Finance Commission, Planning Commission and Centrally Sponsored Schemes. There is a compelling necessity to review and recalibrate the entire gamut (and not piecemeal) of federal relations – tax, expenditure and transfers. This is critical to ensure the stability and predictability needed to ensure that India’s state driven growth blossoms and attains full fruition. |
| Keywords: | Fiscal Federalism, GST, federal transfers, India |
| JEL: | H2 H5 H6 H7 O5 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2013-09&r=pbe |
| By: | Edmark, Karin (Research Institute of Industrial Economics (IFN)); Gordon, Roger (University of California) |
| Abstract: | This paper estimates the role of both tax and non-tax determinants in the choice in Sweden to be a closely-held corporation vs. a proprietorship, using individual data for 2004 to 2008 on owners of closely-held businesses. While lower-income individuals face relatively neutral incentives, higher income individuals face strong tax incentives to be corporate. The data suggest a relatively strong correlation between these tax incentives and the likelihood that a firm is corporate. Many conventional non-tax determinants are confirmed in the data as well. |
| Keywords: | Self-employment; Entrepreneurship; Taxation of closely-held businesses; Business organizational form |
| JEL: | G32 G38 H25 |
| Date: | 2013–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0982&r=pbe |
| By: | Kodila-Tedika, Oasis; Mutascu, Mihai |
| Abstract: | The paper explores the effects of shadow economy on tax revenues, in the case of several African countries, based on a panel-model approach. The data-set covers the period 1999-2007. The main results reveal that the shadow economy has a significant and negative impact on tax revenues. In other word, when the shadow economy tends to extend, the level of tax revenues decreases. These outputs show that the African governments, in order to maximise the collected tax revenues, should better “control” the shadow economy phenomenon. |
| Keywords: | Shadow economy, Tax revenues, Effects, Implications, Africa |
| JEL: | H11 H20 H26 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50812&r=pbe |
| By: | Eugenia Vella; Evangelos Dioikitopoulos (Brunel University); Sarantis Kalyvitis (DIEES, AUEB) |
| Abstract: | This paper studies optimal fiscal policy, in the form of taxation and the allocation of tax revenues between infrastructure and environmental investment, in a general-equilibrium growth model with endogenous subjective discounting. A green spending reform, defined as a reallocation of government expenditures towards the environment, can procure a double dividend by raising growth and improving environmental conditions, although the environment does not impact the production technology. Also, endogenous Ramsey fiscal policy eliminates the possibility of an `environmental and economic poverty trap'. Contrary to the case of exogenous discounting, green spending reforms are the optimal response of the Ramsey government to a rise in the agents' environmental concerns. |
| Keywords: | endogenous time preference, growth, environmental quality, second-best fiscal policy |
| JEL: | D90 E21 E62 H31 |
| URL: | http://d.repec.org/n?u=RePEc:aue:wpaper:1335&r=pbe |
| By: | Alexander W. Richter; Nathaniel A. Throckmorton |
| Abstract: | Recent proposals to reduce U.S. debt reveal large differences in their implied targets. These differences demonstrate the uncertainty surrounding future tax rates and long-run debt targets. We use a standard real business cycle model in which a Bayesian household learns about the state-dependent debt target in an endogenous tax rule. The household extracts the debt target state from a noisy tax process and jointly estimates the transition probabilities. We compare the household's ability to learn and the consequences of the uncertainty across different limited information sets. The information set influences the household's behavior but also impose two-sided risk. Despite the popular viewpoint that fiscal uncertainty has negative effects, limited information can result in welfare gains or losses, depending on whether the household's expectations are consistent with the realization of future states. Although the welfare distribution includes gains, we stress that the uncertainty created by the recent fiscal policy debate slowed the recovery and led to welfare losses. When Congress provides clarity about future policy, output and welfare increase and the economy quickly recovers. |
| Keywords: | Bayesian learning; Limited information; Fiscal uncertainty; Welfare |
| JEL: | D83 E32 E62 H68 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2013-18&r=pbe |
| By: | Schlicht, Ekkehart |
| Abstract: | This note identifies a severe mistake in my article “Unexpected Consequences of Ricardian Expectations” that appeard in this journal in the July 2013 issue. |
| Keywords: | Barro-Ricardo equivalence; Ricardian equivalence; fiscal policy; debt; taxation; rational expectations; Ricardian expectations; Barro expectations; tax neutrality |
| JEL: | E2 E12 E6 H6 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:17249&r=pbe |
| By: | Claus Thustrup Kreiner; David Dreyer Lassen; Søren Leth-Petersen |
| Abstract: | This paper shows how Danish administrative register data can be combined with survey data at the person level and be used to validate information collected in the survey. Register data are collected by automatic third party reporting and the potential errors associated with the two data sources are therefore plausibly orthogonal. Two examples are given to illustrate the potential of combining survey and register data. In the first example expenditure survey records with information about total expenditure are merged with income tax records holding information about income and wealth. Income and wealth data are used to impute total expenditure which is then compared to the survey measure. Results suggest that the two measures match each other well on average. In the second example we compare responses to a one-shot recall question about total gross personal income (collected in another survey) with tax records. Tax records hold detailed information about different types of income and this makes it possible to test if errors in the survey response are related to the reporting of particular types of income. Results show bias in the mean and that the survey error has substantial variance. Results also show that the errors are correlated with conventional covariates suggesting that the errors are not of the classical type. The latter example illustrates how Denmark can be used as a “laboratory” for future validation studies. Tax records with detailed information about different types of income are available for the entire Danish population and can be readily merged to survey data. This makes it possible to test the ability of respondents to accurately report different types of income using different interviewing techniques and questions. The examples presented in this paper are based on cross section data. However, the possibility to issue surveys repeatedly to the same persons and linking up to longitudinal tax records provides an opportunity to learn more about the time series properties of measurement errors, a subject about which little evidence exist, in the future. |
| JEL: | C42 D31 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19539&r=pbe |
| By: | Frank J. Convery; Louise Dunne; Deirdre Joyce |
| Abstract: | Beginning in late 2008, Ireland experienced a fiscal crisis. This resulted in November 2010 in agreement between the Irish government and the European Central Bank, the European Commission and the International Monetary Fund (IMF) – known collectively as ‘the Troika’ – whereby the latter provided substantial financial support, on condition that a number of revenue raising and expenditure reduction targets were met. Also in 2010, a carbon tax at a rate of EUR 15 per tonne of CO2 was introduced, covering most CO2 emissions from the non-traded sectors (mainly transport, heat in buildings and heat and process emissions by small enterprises). This paper describes the features of the tax, recounts the story of its interplay between fiscal adjustment and helping meet the obligations to raise taxes, and implications for competitiveness and carbon leakage, environmental effectiveness and equity issues, and draws some conclusions regarding why it happened, and provides some tentative insights for other countries in a similar situation. The circumstances that resulted in a carbon tax being proposed and subsequently introduced in Ireland include: Leadership by the Green Party; limited public opposition; Government need for the income; supports the Green Economy; support from the academic and wider policy population; exemptions for large emitters (many in EU ETS) and agriculture; effective engagement and good planning... L’Irlande a connu fin 2008 une crise budgétaire qui a conduit son gouvernement à conclure, en novembre 2010, un accord avec la Banque centrale européenne, la Commission européenne et le Fonds monétaire international (FMI) – collectivement dénommés la « Troïka » – dans lequel ce dernier s’engage à lui apporter une aide financière conséquente, sous réserve qu’elle remplisse un certain nombre d’objectifs en matière de prélèvements fiscaux et de réduction des dépenses. En 2010 a été également mise en place une taxe carbone de 15 EUR par tonne de CO2, couvrant la plupart des émissions de CO2 des secteurs hors SCEQE (transport, chauffage des bâtiments et chauffage et procédés des petites entreprises, principalement). Ce rapport décrit les caractéristiques de cette taxe, relate ses interactions avec le rééquilibrage budgétaire et les obligations de prélèvements fiscaux, examine ses conséquences pour la compétitivité et le transfert d’émissions de carbone, son efficacité environnementale et les questions d’équité, et tire certaines conclusions sur les raisons qui ont poussé l’Irlande à faire ce choix, en proposant plusieurs enseignements qui pourraient se révéler utiles aux pays confrontés à une situation analogue. La taxe carbone a été proposée puis mise en oeuvre en Irlande dans un contexte bien particulier caractérisé par : le rôle moteur du Green Party ; la faible opposition du public ; un État en quête de recettes ; la promotion de l’Économie verte ; le soutien des milieux universitaires et des responsables publics en général ; l’exonération des grands émetteurs (inclus pour beaucoup dans le SCEQE) et de l’agriculture ; un réel engagement et une bonne planification... |
| Keywords: | carbon tax, policy lessons, fiscal adjustment, taxe carbone, enseignements pour l’action, ajustement budgétaire |
| JEL: | P48 Q38 Q48 Q58 |
| Date: | 2013–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:59-en&r=pbe |
| By: | Isabell Koske |
| Abstract: | The recent crisis has revealed large differences in external competitiveness between euro area member countries. Since nominal exchange rate devaluation is not an option for members of a currency area, governments in troubled member countries have been considering so-called fiscal devaluation, i.e. a shift from employers’ social security contribution to value added tax, as an alternative means to restore competitiveness. This paper discusses the potential benefits and drawbacks of such a reform and investigates under which circumstances it would have the intended effects. It argues that a fiscal devaluation can have transitory effects, but that any permanent real effects are likely to be small in size. The policy tool can thus not be a substitute for deeper structural reforms of labour, product and financial markets. However, it may be helpful as part of a broader package of reforms. Dévaluation fiscale - peut-elle aider à stimuler la compétitivité ? La crise récente a révélé de grandes différences de compétitivité externe entre les pays membres de la zone euro. Comme la dévaluation du taux de change nominal n'est pas une option pour les membres d'une zone monétaire, les gouvernements des pays membres en difficulté ont examiné la dévaluation fiscale, c'est à dire substitution de la taxe à la valeur ajoutée aux cotisations sociales des employeurs, comme un autre moyen de rétablir la compétitivité. Ce document examine les avantages et les inconvénients d'une telle réforme et analyse les circonstances dans lesquelles il aurait les effets escomptés. Il soutient que la dévaluation fiscale peut avoir des effets transitoires, mais que les effets réels permanents sont susceptibles d'être faibles. Cet outil de politique ne peut donc pas se substituer à des réformes structurelles plus profondes des marchés du travail, des produits et financiers. Toutefois, il peut être utile dans le cadre d'un ensemble plus large de réformes. |
| Keywords: | value added tax, fiscal devaluation, social security contributions, competitiveness, compétitivité, Dévaluation fiscale, cotisations sociales, taxe à la valeur ajoutée |
| JEL: | E62 F13 H23 |
| Date: | 2013–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1089-en&r=pbe |
| By: | Granlund, David (Department of Economics, Umeå School of Business and Economics, Umeå University); Wikström, Magnus (Department of Economics, Umeå School of Business and Economics, Umeå University) |
| Abstract: | We study how the optimal public provision of health care depends on whether or not individuals have an option to seek publicly financed treatment in other regions. We find that, relative to the first-best solution, the government has an incentive to over-provide health care to low-income individuals. When cross-border health care takes place, this incentive is solely explained by that over-provision facilitates redistribution. The reason why more health care facilitates redistribution is that high-ability individuals mimicking low-ability individuals benefit the least from health care when health and labor supply are complements. Without cross-border health care, higher demand for health care among high-income individuals also contributes to the over-provision given that high-income individuals do not work considerably less than low-income individuals and that the government cannot discriminate between the income groups by giving them different access to health care. |
| Keywords: | Health expenditure; Income redistribution; Patient mobility; Public Provision; Waiting time |
| JEL: | H42 H51 I11 I18 |
| Date: | 2013–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0867&r=pbe |
| By: | Marie-Laure Nauleau (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR56 - CNRS : UMR8568 - École des Hautes Études en Sciences Sociales [EHESS] - École des Ponts ParisTech (ENPC) - AgroParisTech) |
| Abstract: | This econometric study assesses the efficiency of the tax credit implemented in France in 2005 on dwelling retrofitting investments. A before-after estimation is performed at the extensive and intensive margins on micro data over 2001-2011, focusing on insulation measures (windows, walls, roofs, floor, ceilings). After 2-years of latency with no significant effect, the tax credit has had an increasing significant positive effect at both margins between 2007 and 2010, with a decrease in 2011, in line with the tax credit rate evolutions. Focusing on opaque surfaces insulation, the positive effect only started in 2009, when a reform included labor cost in the tax credit base for these retrofitting measures. The percentage of subsidized households that would have invested even in the absence of the subsidy decreases from 79% in 2007 to 43% in 2010. The annual additional private investment in retrofitting generated by 1€ of public expenses was estimated at 3.4€ on average (standard deviation : 2.4) between 2007 and 2010. |
| Keywords: | Energy conservation; residential sector; thermal insulation; tax credit; free-ridership; before/after estimation; France |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:ciredw:hal-00866445&r=pbe |
| By: | Kathryn Harrison |
| Abstract: | In July 2008, the Canadian province of British Columbia (BC) launched North America’s first revenue-neutral carbon tax reform. The tax, which applied to all combustion sources of all fossil fuels, was introduced at a rate of CAD 10 per tonne of CO2, with a schedule for annual increases of CAD 5 per tonne of CO2 until the tax reached CAD 30 per tonne of CO2 in 2012. Tax revenues were fully recycled via a combination of corporate and income tax cuts, phased in over time. This paper reviews the political economy of the BC tax in three distinct periods – its origins, its survival in the face of political backlash, and its longer-term prospects... En juillet 2008, la province canadienne de Colombie-Britannique a été la première collectivité d’Amérique du Nord à procéder à une réforme fiscale sans incidence sur les recettes impliquant la mise en place d’une taxe carbone. Le montant de cette taxe frappant l’ensemble des sources de combustion et des énergies fossiles a été fixé dans un premier temps à 10 CAD par tonne de CO2, mais il était prévu dès le départ qu’il augmenterait chaque année de 5 CAD pour atteindre 30 CAD par tonne de CO2 en 2012. Le produit de la taxe carbone a été intégralement recyclé sous forme de baisses progressives de l’impôt sur les sociétés et de l’impôt sur le revenu. Le présent document examine l’économie politique de la taxe instaurée par la Colombie-Britannique en distinguant trois phases : les origines de la taxe, son maintien sur fond de réactions politiques négatives et ses perspectives à plus long terme... |
| Keywords: | political economy, carbon tax, policy lessons, économie politique, taxe carbone |
| JEL: | F18 H23 P48 Q38 Q48 Q5 Q58 |
| Date: | 2013–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:envaaa:63-en&r=pbe |
| By: | Thor O. Thoresen; Trine E. Vattø (Statistics Norway) |
| Abstract: | Given that structural labor supply models continue to play a key role in the process of policy design, it is important to validate their capacity to provide reasonable predictions of alternative hypothetical policy options. Comparing outcomes before and after a realized policy change (such as a tax reform) provides a source of information about behavioral response that can be used to certify the structural labor supply model. The elasticity of taxable income (ETI) measures the response in taxable income to a change in the net-of-tax rate and is a key concept in the quasi-experimental approach. The present paper shows how the ETI methodology can be used to validate predictions from a discrete choice structural labor supply model. Practical guidance is given on how such comparisons can be carried out, and results of these two main methods of obtaining empirical response estimates are contrasted and interpreted. |
| Keywords: | Model validation; Response to tax change; Discrete choice structural labor supply model; Elasticity of taxable income |
| JEL: | H21 H24 H31 J22 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:738&r=pbe |
| By: | Kang, Lili; Peng, Fei |
| Abstract: | This paper examines effects of the formation of physical and human capital on the growth of labour productivity, Total Factor Productivity (TFP) and wages in China, incorporating the market reform factors such as ownership shifts, population policy, openness and fiscal expenditures on education. We find that Chinese economic miracle is mainly pushed by the (physical) capital service rather than formation of human capital. The physical capital inputs contribute even more after 1994 as the returns to education decrease with the education expansion and increasing tuition fees. The traditional four economic regions of China show different growth patterns. The capital inputs mostly help the labour productivity growth in the West region and the wages growth in the Interior region, while human capital formation contributes to the TFP in all four regions. Moreover, provinces within each region present strong evidence of convergence of economic growth. The convergence is most prominent in the provinces within the Northeast and Coastal regions for labour productivity and TFP growth, suggesting fast technology spill-over within these regions. |
| Keywords: | labour productivity, convergence, regional inequality |
| JEL: | D24 D63 J24 O47 |
| Date: | 2013–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:50810&r=pbe |
| By: | Markus Eberhardt |
| Abstract: | This paper employs novel time series methods to investigate the presence of nonlinearities in the long-run relationship between public debt and growth, analysing annual series for the United States, Great Britain, Japan and Sweden from the 1800s to 2008. We find only limited evidence for a nonlinear long-run relationship in these countries and further cannot support the notion that the equilibrium debt-growth relationship is identical across countries. Both results weaken the case for a common 90% or indeed any common debt/GDP threshold recently popularised by the work of Reinhart and Rogoff (2010) and others. |
| Keywords: | economic growth; public debt; nonlinearity; summability, balance and co-summability |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:13/06&r=pbe |
| By: | Michele Manna (Bank of Italy); Emmanuela Bernardini (Bank of Italy); Mauro Bufano (Bank of Italy); Davide Dottori (Bank of Italy) |
| Abstract: | This paper puts forward a comprehensive framework to model medium-to-long term public debt refinancing strategies. Essentially the framework has two main building blocks. First, a large number of strategies are generated so as to determine a wide range of potential financing plans, regardless of whether they look conventional (close to current actual choices) or odd, provided they meet the Treasury’s financing needs and legal constraints. Second, the performance of these viable strategies is measured in terms of current and future costs as well as various types of risk. As an add-on, through a panel model the framework accounts for the premium over current market rates that investors may demand in order to subscribe unusually large issues by the Treasury. All in all, this framework yields a frontier of efficient cost-risk outcomes. Moreover, it assesses how strategies perform when the interest rate forecasts relied on turn out to be wrong. Finally, it encompasses both a long-term perspective in debt management and a more tactical approach, allowing for time variant choices. |
| Keywords: | refinancing strategy, public debt, government auctions |
| JEL: | D44 G11 H63 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_199_13&r=pbe |
| By: | Kanhaiya Singh |
| Abstract: | India suffered humiliations in terms of balance of payments crises in 1991 but since then it has weathered all crises, which have hit the world economies despite the fact that subsequent periods have seen even larger current account and fiscal deficits. It is in this context that an analysis of fiscal and debt problems of India is timely and assumes importance. The paper delves upon fiscal exuberance and debt management practices in India, the budgetary allocations, changing structure of the deficit and debt, and the sustainability. The external and internal balances highlight its dependence on external borrowing and the vulnerability of the economy and the important role played by the foreign exchange accumulation in avoiding crises. India’s deficit and debt dynamics is characterised as adverse on following grounds: (1) while deficit is increasing, the share of capital formation out of budget is decreasing. Therefore, income multiplier to government expenditure may not be enough to cover the debt liability in long run. (2) Government debt dynamics is unstable with large variability and therefore, it lacks credible predictability of future path. (3) Exposure of the economy to nonâ€government external debt is increasing and therefore, there is a case to conduct analysis about the economic returns to such borrowings in terms of long term sustainability. More flows in capital account is sought for than that required by current account, which is essential to meet its fiscal deficits. There are indications that acceleration in fiscal deficit causes current account deficit, which would make the debt dynamics more unstable. With debt to GDP ratio being very high and unstable, India faces potential risk of sovereign default. Increasing globalization has increased the external vulnerability as short term component of total external debt is sharply increasing. The external debt being driven by the private sector, the corporate governance issues have become more critical. The relevance of high foreign exchange reserves has increased further for sustaining growth and avoiding crises situations. |
| Keywords: | India, Budget Deficit, Debt Sustainability, Internal and External Balance |
| JEL: | H0 H6 H7 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2013-08&r=pbe |
| By: | Sambit Bhattacharyya; Budy R. Resosudarmo |
| Abstract: | We study the impact of growth and growth accelerations on poverty and inequality in Indonesia using a new panel dataset covering 26 provinces over the period 1977-2010. This dataset allows us to distinguish between mining and non-mining sectors of the economy. We find that growth in non-mining significantly reduces poverty and inequality. In contrast, overall growth and growth in mining appears to have no effect on poverty and inequality. We also identify growth acceleration episodes defined by at least four consecutive years of positive growth in GDP per capita. Growth acceleration in non-mining reduces poverty and inequality whereas growth acceleration in mining increases poverty. We expect that the degree of forward and backward linkages of mining and non-mining sectors explain the asymmetric result. Our results are robust to state and year fixed effects, state specific trends, and instrumental variable estimation with rainfall and humidity as instruments. |
| Keywords: | Indonesia, growth; growth accelerations; mining, poverty; inequality |
| JEL: | I32 N15 O11 O13 O49 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2013-15&r=pbe |
| By: | Peterson, George E.; Thawakar, Vasudha |
| Abstract: | Government entities in India hold large amounts of public land. Their landholdings include some of the most valuable property in the country. Parts of this patrimony lie vacant or underutilized. Public sector bodies also own large blocs of land that sometimes stand in the way of efficient completion of urban infrastructure networks. At the same time, urban India is deficient in basic infrastructure -- both network infrastructure needed to support economic growth and urban service infrastructure needed to meet basic household needs like water supply, waste removal, and transportation. This condition raises fundamental questions. Are some of government landholdings"surplus"or not needed for service provision? If so, can their economic value be captured to help finance infrastructure investment? This report aims to document evolving government policies toward pubic land management. It examines how active public entities are in identifying"surplus"lands and attempting to monetize them. Public bodies in India have proved reluctant to surrender landholdings. The report therefore considers practical alternatives that have emerged, such as land trading among public institutions. Land exchange can clear the way for completion of important urban infrastructure projects, without requiring public landowners to declare their property"surplus"and suitable for market disposition. |
| Keywords: | Public Sector Economics,Municipal Housing and Land,Land and Real Estate Development,Real Estate Development,Public Sector Management and Reform |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6665&r=pbe |
| By: | Ådne Cappelen; Arvid Raknerud; Marina Rybalka (Statistics Norway) |
| Abstract: | We address the question of whether the returns to R&D differ between R&D projects funded by public grants and R&D in general. To answer this question, we use a flexible production function that distinguishes between different types of R&D by source of finance. Our approach requires no adjustment of the sample or data in order to include firms that never invest in R&D, in contrast to the standard Cobb-Douglas production specification. We investigate the productivity and profitability effects of R&D using a comprehensive panel of Norwegian firms over the period 2001-2009. The results suggest that the returns to R&D projects subsidized by the Research Council of Norway do not differ significantly from R&D spending in general. Our estimate of the average rate of return to R&D is about 10 percent. This estimate is robust with respect to whether firms with zero R&D are included in the estimation sample or not. In contrast, using a standard Cobb-Douglas specification and restricting the sample of firms to those with positive R&D, leads to implausibly high estimates of the rate of returns. |
| Keywords: | Returns to R&D; Public grants; Public subsidies; Productivity |
| JEL: | C33 C52 D24 O38 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:740&r=pbe |