nep-pbe New Economics Papers
on Public Economics
Issue of 2014‒04‒05
29 papers chosen by
Keunjae Lee
Pusan National University

  1. Tax Reduction Policies of the Productive Sector and Its Impacts on Brazilian Economy By Costa Junior, Celso José; Sampaio, Armando Vaz
  2. Optimal Capital Taxation and Consumer Uncertainty By Ryan Chahrour; Justin Svec
  3. Discretionary fiscal policy and economic activity in Greece By Athanasios O. Tagkalakis
  4. The Behavioralist As Tax Collector: Using Natural Field Experiments to Enhance Tax Compliance By Michael Hallsworth; John A. List; Robert D. Metcalfe; Ivo Vlaev
  5. Assessing the variability of indirect tax elasticity in Greece By Athanasios O. Tagkalakis
  6. Time variation in the dynamic effects of unanticipated changes in tax policy By Joris de Wind
  7. Europe's social problem and its implications for economic growth By Zsolt Darvas; Guntram B. Wolff
  8. Testimony on Using the Chained CPI to Index Social Security, Other Federal Programs, and the Tax Code for Inflation By Jeffrey Kling
  9. Industrial Development, Polarisation, and Fiscal Policy in an Underemployment Economy By Nakajima, Tetsuya
  10. Assessing fiscal sustainability in some selected countries By Cruz-Rodríguez, Alexis
  11. Taxes on Income: Ireland in Comparative Perspective By Callan, Tim; Keane, Claire; Savage, Michael; Walsh, John R.
  12. Omega risk model with tax By Zhenyu Cui
  13. Inequality, poverty and social welfare in Greece: distributional effects of austerity By Theodore Mitrakos
  14. Dealing with a liquidity trap when government debt matters: optimal time-consistent monetary and fiscal policy By Burgert, Matthias; Schmidt, Sebastian
  15. Data and Model Cross-Validation to Improve Accuracy of Microsimulation Results: Estimates for the Polish Household Budget Survey By Michal Myck; Mateusz Najsztub
  16. Fiscal activism and the zero nominal interest rate bound By Schmidt, Sebastian
  17. GINI Policy Paper 2: A supplementary measure of income poverty including housing: advantages and risks, measurement challenges and policy implications By Virginia Maestri
  18. Debt, Taxes, and Liquidity By Patrick Bolton; Hui Chen; Neng Wang
  19. Credit markets, limited commitment, and government debt By Williamson, Stephen D.; Carapella, Francesca
  20. Determining the Impact of Cultural Diversity on Regional Economies in Europe By Dirk Dohse; Robert Gold
  21. Social Acceptance and Optimal Pollution: CCS or Tax ? By Jouvet, Pierre-André; Renner, Marie
  22. Is the Slovak Economy Doing Well? A Twin Deficit Growth Approach By Elias Soukiazis; Eva Muchova; Pedro A. Cerqueira
  23. The Distribution of wealth and the MPC: implications of new European data By Carroll, Christopher D.; Slacalek, Jiri; Tokuoka, Kiichi
  24. The distribution of wealth and the marginal propensity to consume By Carroll, Christopher D.; Slacalek, Jiri; Tokuoka, Kiichi
  25. Sociability, Altruism and Subjective Well-Being By Leonardo Becchetti; Nazaria Solferino; M. Elisabetta Tessitore
  26. How the Supply of Labor Responds to Changes in Fiscal Policy By Congressional Budget Office
  27. Chicken or Egg? The PVAR Econometrics of Transportation By Gabriel M. Ahlfeldt; Kristoffer Moeller; Nicolai Wendland
  28. Effects of Business Networks on Firm Growth in a Cluster of Microenterprises: Evidence from rural Ethiopia By ISHIWATA Ayako; Petr MATOUS; TODO Yasuyuki
  29. GINI Policy Paper 3: Time series and cross country variation of income inequalities in Europe on the medium run: are inequality structures converging in the past three decades? By TÓth (István György)

  1. By: Costa Junior, Celso José; Sampaio, Armando Vaz
    Abstract: There is a widespread feeling in Brazilian society that tax reform has become necessary. Analysts seek to mitigate the perverse impact of taxation on economic efficiency and competitiveness of the productive sector. In view of this, the objective of this work is to contribute to the discussion about tax reduction in the productive sector through a dynamic stochastic general equilibrium (DSGE) model. To achieve this purpose, two stochastic shocks will be analyzed in the tax rates changes on labor income and capital income. The results suggest that the tax reduction in the first tax is greater than the same effect in the second. In this first shock, there were increases in output, consumption and investment and decreases in public debt and government spending. In the second shock, the poor performance was related to low growth in the capital stock. The results of the tax revenues were similar for the two tax reductions. They showed alignment with the major tax reform proposals for Brazil, a decrease in direct taxes and an increase in indirect taxes.
    Keywords: DSGE Models; Tax Reduction; Simulation
    JEL: C63 E37 E62
    Date: 2014–04
  2. By: Ryan Chahrour (Boston College); Justin Svec (College of the Holy Cross)
    Abstract: This paper analyzes the impact of consumer uncertainty on optimal fiscal policy in a model with capital. The consumers lack confidence about the probability model that characterizes the stochastic environment and so apply a max-min operator to their optimization problem. An altruistic fiscal authority does not face this Knightian uncertainty. We show analytically that, in responding to consumer uncertainty, the government no longer sets the expected capital tax rate exactly equal to zero, as is the case in the full-confidence benchmark model. Rather, our numerical results indicate that the government chooses to subsidize capital income, albeit at a modest rate. We also show that the government responds to consumer uncertainty by smoothing the labor tax across states and by making the labor tax persistent.
    Keywords: Model uncertainty, capital income tax, public debt
    JEL: E62 H21
    Date: 2014–04–01
  3. By: Athanasios O. Tagkalakis (Bank of Greece)
    Abstract: This paper investigates the effects of discretionary fiscal policy changes on economic activity and its subcomponents in Greece in the period 2000-2011. Changes in government spending and net taxes have Keynesian effects. An increase in government consumption has the most pronounced positive effects on output growth, private consumption and non-residential investment, while it reduces residential investment. Cuts in the public investment programme crowd in private investment, but are associated negatively with the net exports ratio. Both indirect and direct tax hikes lower private consumption, private investment and output growth. Additionally, higher direct taxes, by lowering disposable income, reduce import demand, thus, improving the trade balance.
    Keywords: : Discretionary fiscal policy; economic growth; consumption; investment; net exports
    JEL: E62 O52 H30
    Date: 2013–12
  4. By: Michael Hallsworth; John A. List; Robert D. Metcalfe; Ivo Vlaev
    Abstract: Tax collection problems date back to the earliest recorded history of mankind. This paper begins with a simple theoretical construct of paying (rather than declaring) taxes, which we argue has been an overlooked aspect of tax compliance. This construct is then tested in two large natural field experiments. Using administrative data from more than 200,000 individuals in the UK, we show that including social norms and public goods messages in standard tax payment reminder letters considerably enhances tax compliance. The field experiments increased taxes collected by the Government in the sample period and were cost-free to implement, demonstrating the potential importance of such interventions in increasing tax compliance.
    JEL: C93 H2 H26
    Date: 2014–03
  5. By: Athanasios O. Tagkalakis (Bank of Greece)
    Abstract: This paper shows that the variability of indirect tax elasticity relative to GDP has increased significantly in recent years in Greece. Based on this finding we show that the budgetary sensitivity of indirect taxes following a 1% change in real GDP has increased dramatically since 2010. This finding has substantial policy implications; failure to account for these higher elasticities will lead to recurrent revenue shortfalls requiring new policy measure to meet previously set fiscal targets. This could lead to a downward spiral of continuously declining economic activity, new revenue shortfalls and additional fiscal measures and so on.
    Keywords: indirect taxes; elasticity; GDP; Greece
    JEL: C32 E32 H20 O52
    Date: 2014–01
  6. By: Joris de Wind
    Abstract: Using a structural vector autoregression with time-varying parameters, I analyze to what extent the dynamic effects of unanticipated changes in tax policy have changed structurally over the post World War II period in the United States. Read also: CPB Discussion Paper 270 ' Reduced-rank time-varying vector autoregressions '. The estimated time variation points to a permanent decline in the tax multiplier as well as a faster response of the economy. Despite the permanent decline, the estimated tax multiplier is still at the higher end of the range of existing empirical estimates, which is consistent with Mertens and Ravn (2013b), whose identification strategy I follow. Furthermore, the estimated time variation also suggests that fiscal policy has become more countercyclical over time. In particular, spending policy used to be procyclical and has become countercyclical after the beginning of the 1990s, whereas tax policy already used to be countercyclical and has become even more countercyclical over time.
    JEL: C52 C53 E37
    Date: 2014–03
  7. By: Zsolt Darvas; Guntram B. Wolff
    Abstract: See also comment 'Interactive map: Europeâ??s social polarisation and the generational struggle' The European Union faces major social problems. More than six million jobs were lost from 2008-13 and poverty has increased. Fiscal consolidation has generally attempted to spare social protection from spending cuts, but the distribution of adjustment costs between the young and old has been uneven; a growing generational divide is evident, disadvantaging the young. The efficiency of the social security systems of EU countries varies widely. Countries with greater inequality tended to have higher household borrowing prior to the crisis resulting in more subdued consumption growth during the crisis. The resulting high private debt, high unemployment, poverty and more limited access to education undermine long-term growth and social and political stability. Policymakers face three main challenges. First, addressing unemployment and poverty should remain a high priority not only for its own sake, but because these problems undermine public debt sustainability and growth. Second, bold policies in various areas are required. Most labour, social and fiscal policies are the responsibility of member states, requiring national reforms. But better coordination of demand management at European level is also necessary in order to create jobs. Third, tax/benefit systems should be reviewed for improved efficiency, inter- generational equity and fair burden sharing between the wealthy and poor.
    Date: 2014–04
  8. By: Jeffrey Kling
    Abstract: How does the chained consumer price index (CPI) differ from the traditional CPI and what would be the budgetary effects of using the chained CPI to make automatic adjustments in Social Security, other federal programs, and the tax code?
    Date: 2013–04–18
  9. By: Nakajima, Tetsuya
    Abstract: Industrial development is often accompanied by massive migration from agricultural to industrial areas. This paper compares two steady states, the first and the second, which emerge before and after the termination of such migration, respectively. The paper shows that 1) the employment rate must be lower in the second steady state, and that 2) while every household increases individual assets in the first steady state, households may polarise into the poor and the rich in the second steady state. By examining the effects of fiscal policy, the paper also shows that the balanced budget multiplier exceeds unity, and accordingly, fiscal policy raises households’ disposable income and consumption.
    Keywords: industrial development, migration, underemployment, wealth distribution, polarisation
    JEL: E21 E24 E62 O11
    Date: 2013–10–12
  10. By: Cruz-Rodríguez, Alexis
    Abstract: The aim of this article is to assess the sustainability of fiscal policy in 18 developing and emerging countries, using the recursive algorithm developed by Croce and Juan-Ramón (2003). In general, the results suggest that most countries were identified as presenting large unsustainable fiscal positions in the period considered, explained basically by primary fiscal deficits. Interestingly, results for Panama suggest no evidence that officially dollarized countries run more prudent fiscal policies than non-officially dollarized countries.
    Keywords: Debt, deficit, fiscal sustainability
    JEL: E62 E63 H62
    Date: 2014–03–18
  11. By: Callan, Tim; Keane, Claire; Savage, Michael; Walsh, John R.
    Date: 2013–06
  12. By: Zhenyu Cui
    Abstract: In this paper we study the Omega risk model with surplus-dependent tax payments in a time-homogeneous diffusion setting. The new model incorporates practical features from both the Omega risk model(Albrecher and Gerber and Shiu (2011)) and the risk model with tax(Albrecher and Hipp (2007)). We explicitly characterize the Laplace transform of the occupation time of an Azema-Yor process(e.g. a process refracted by functionals of its running maximum) below a constant level until the first hitting time of another Azema-Yor process or until an independent exponential time. This result unifies and extends recent literature(Li and Zhou (2013) and Zhang (2014)) incorporating some of their results as special cases. We explicitly characterize the Laplace transform of the time of bankruptcy in the Omega risk model with tax and discuss an extension to integral functionals. Finally we present examples using a Brownian motion with drift.
    Date: 2014–03
  13. By: Theodore Mitrakos (Bank of Greece)
    Abstract: This paper presents the recent trends and the characteristics of inequality, poverty and living conditions in Greece, emphasising the distributional effects of the austerity measures adopted during the current economic crisis. Moreover, the decomposition analysis of the study examines the structure of inequality and the contribution of various income sources in overall inequality, while the main characteristics of the Greek social solidarity system and the poor distributional impact of social benefits are also discussed. To this end, household income from the Greek Household Budget and the EU Statistics of Income and Living Conditions surveys are used. The available data indicate that income inequality and relative poverty has increased, yet not dramatically, during the current crisis, although the composition of the poor population changed considerably. However, the sharp decline in disposable income and the dramatic increase in unemployment has led to a significant deterioration in economic prosperity and absolute poverty, i.e. when the poverty line in real terms remains stable in the pro-crisis levels.
    Keywords: inequality;poverty;living conditions;redistribution impact
    JEL: D31 I31
    Date: 2014–02
  14. By: Burgert, Matthias; Schmidt, Sebastian
    Abstract: How does the need to preserve government debt sustainability affect the optimal monetary and fiscal policy response to a liquidity trap? To provide an answer, we employ a small stochastic New Keynesian model with a zero bound on nominal interest rates and characterize optimal time-consistent stabilization policies. We focus on two policy tools, the short-term nominal interest rate and debt-financed government spending. The optimal policy response to a liquidity trap critically depends on the prevailing debt burden. In our model, while the optimal amount of government spending is decreasing in the level of outstanding government debt, future monetary policy is becoming more accommodative, triggering a change in private sector expectations that helps to dampen the fall in output and inflation at the outset of the liquidity trap. JEL Classification: E31, E52, E62, E63, D11
    Keywords: deficit spending, discretion, monetary and fiscal policy, new Keynesian model, zero nominal interest rate bound
    Date: 2013–12
  15. By: Michal Myck; Mateusz Najsztub
    Abstract: We conduct detailed analysis of the Polish Household Budget Survey data for the years 2006-2011 with the focus on its representativeness from the point of view of microsimulation analysis. We find important discrepancies between the data weighted with baseline grossing-up weights and official statistics from other sources. A number of re-weighting exercises is examined from the point of view of the accuracy of microsimulation results and we show that using a combination of demographic calibration targets with several economic status variables or tax identifiers from the microsimulation model substantially improves the correspondence of model results and administrative data. While demographic re-weighting is neutral from the point of view of income distribution, calibrating the grossing-up weights to adjust for economic status and tax identifiers significantly increases income inequality. We argue that although data reweighting can substantially improve the accuracy of microsimulation it should be used with caution.
    Keywords: microsimulation, re-weighting, household data analysis
    JEL: D31 I38
    Date: 2014
  16. By: Schmidt, Sebastian
    Abstract: I show that the zero nominal interest rate bound may render it desirable for society to appoint a fiscally activist policy-maker who cares less about the stabilisation of government spending relative to inflation and output gap stabilisation than the private sector does. I work with a simple New Keynesian model where the government has to decide each period afresh about the optimal level of public consumption and the one period nominal interest rate. A fiscally activist policy-maker uses government spending more aggressively to stabilise inflation and the output gap in a liquidity trap than an authority with preferences identical to those of society as a whole would do. The appointment of an activist policy-maker corrects for discretionary authorities’ disregard of the expectations channel, thereby reducing the welfare costs associated with zero bound events. JEL Classification: E52, E62, E63
    Keywords: discretion, fiscal policy, monetary policy, zero nominal interest rate bound
    Date: 2014–03
  17. By: Virginia Maestri
    Abstract: The European Commission set a target for the reduction of poverty and social exclusion by 2020. Progress are monitored with the help of EU social indicators. Although the inclusion of imputed rent has been advocated by experts in the measurement of income, it has not been adopted in standard social EU2020 indicators. This paper considers the inclusion of housing in the concept of disposable income, put forwards measurement challenges and effect of different approaches. The paper shows that: • Housing wealth and expenditures increased in the last decades • EU2020 target and flagship initiative on the reduction of poverty and social exclusion pay partial attention to housing • Although expert advice the inclusion of imputed rent in the concept of disposable income, this is not part of EU social indicators, because of comparability, measurement and theoretical problems • Several methods are available for the inclusion of housing in disposable income: rental equivalence subjective and objective) and capital market method for imputed rent; out of pocket approach for housing expenses • While the inclusion of imputed rent generally reduces income inequality and poverty, the inclusion of housing expenses increases both; however, imputed rent generates considerable re-ranking and its importance diminished in the early phases of the Great Recession • The inclusion of housing expenses (out of pocket approach) seems more suitable for poverty analyses, while the inclusion of imputed rent estimated with the capital market approach seems more appropriate for tax analyses • Further improvement in EUSILC data are need for a correct measurement of housing returns and costs, in particular with reference to mortgage interest payments
    Date: 2013–06
  18. By: Patrick Bolton; Hui Chen; Neng Wang
    Abstract: We analyze a model of optimal capital structure and liquidity choice based on a dynamic tradeoff theory for financially constrained firms. In addition to the classical tradeoff between the expected tax advantages of debt and bankruptcy costs, we introduce a cost of external financing for the firm, which generates a precautionary demand for liquidity and an optimal liquidity management policy for the firm. An important new cost of debt financing in this context is an endogenous debt servicing cost: debt payments drain the firm's valuable liquidity reserves and thus impose higher expected external financing costs on the firm. The precautionary demand for liquidity also means that realized earnings are separated in time from payouts to shareholders, implying that the classical Miller-formula for the net tax benefits of debt no longer holds. Our model offers a novel perspective for the "debt conservatism puzzle" by showing that financially constrained firms choose to limit debt usages in order to preserve their liquidity. In some cases, they may not even exhaust their risk-free debt capacity.
    JEL: E22 G32 G35 H24 H25
    Date: 2014–03
  19. By: Williamson, Stephen D. (Washington University in St. Louis); Carapella, Francesca (Board of Governors of the Federal Reserve System)
    Abstract: A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for government debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and government debt essentially plays a role as collateral and thus improves borrowers’ incentives. The provision of government debt acts to discourage default, whether default occurs in equilibrium or not.
    JEL: E4 E5 E6
    Date: 2014–02–24
  20. By: Dirk Dohse; Robert Gold
    Abstract: In recent decades, the ethnic composition of the European population has changed substantially, leading to a rapid increase of cultural diversity in the EU as a whole, at the level of individual member states, and at the regional level. This paper focusses on the regional level and investigates the relationship between cultural diversity and regional economic performance for the EU 27. Giving particular attention to regional innovation, GDP per capita, and its development over time, the paper finds that culturally more diverse regions are on average more innovative, which translates into higher growth and better economic performance. An important finding of this study is, however, that the positive effect of cultural diversity on regional economic performance is not present in all sub-samples of the European regions alike.
    Keywords: Regional Development, Cultural Diversity, Measurement Issues
    JEL: M13 O18 R11
    Date: 2014–03
  21. By: Jouvet, Pierre-André; Renner, Marie
    Abstract: The two main hurdles to a widespread carbon capture and storage (CCS) deployment are: cost and social acceptance issues. Assessing a ccurately social preferences is thus interesting to determine whether CCS is socially optimal. Unlike most academic papers that have a dichotomous approach and consider either the atmospheric pollution (first source of marginal disutility) or the underground pollution ( second source), we consider the problem as a whole: CCS techniques introduce a third source of disutility due to the simultaneous presence of CO2 in the atmosphere and in geological formations. The model and the numerical simulations show that there exist some configurations of social preferences for which CCS grants a higher social welfare provided that public authorities tax the carbon content of fossil fuels and subsidize carbon storage. CCS can even increase simultaneously the social welfare of the country with CCS and the one of the country without. From the perspective of minimizing the decarbonizing costs, we compare the case where each country defines its climate policy and when they are aggregated, in order to assess the transfers required to encourage CCS deployment.
    Keywords: Carbon Capture and Storage; Pollution; Tax; Social acceptance; Social optimum;
    JEL: Q58 Q56 Q53
    Date: 2014
  22. By: Elias Soukiazis (Faculty of Economics, University of Coimbra and GEMF, Portugal); Eva Muchova (Faculty of National Economy, University of Economics in Bratislava, Slovakia); Pedro A. Cerqueira (Faculty of Economics, University of Coimbra and GEMF, Portugal)
    Abstract: Recently, Soukiazis E., Cerqueira P., and Antunes M. (2013) developed a model – hereafter the SCA model - that takes into account the hypotheses that internal and external imbalances can affect economic growth and additionally relative prices are assumed to be not neutral in the pace of economic growth. Although the SCA model is in the spirit of the well known balance of payments constraint hypothesis which became known as Thirlwall´s Law (Thirlwall, 1979) it is more complete in the sense that it considers, along with external imbalances (trade deficits) that internal imbalances (budget deficits or public debt) are additional constraints to economic growth. The recent euro-zone public sovereign debt crisis that started in some peripheral countries shows that when internal imbalances are excessive they can constrain growth and domestic demand, causing severe effects on unemployment rates. The aim of this paper is to apply the more complete SCA model to the Slovak economy (a newly euro-zone member since 2009) and check its accuracy for explaining the growth path in this country. Our empirical analysis shows that Slovakia grew at a higher rate than that allowed by the balance of payments constraint rate and this is consistent with the accumulation of current deficits over the period considered. A scenarios analysis shows that improving trade competitiveness and changing the import and export shares toward current account equilibrium will be the most successful way to achieving higher growth in Slovakia. Financing the economy at a lower cost is also beneficial to growth.
    Keywords: internal and external imbalances, price and income elasticities of external trade, equilibrium growth rates, 3SLS system regressions, supply constraints.
    JEL: C32 E12 H6 O4
    Date: 2014–03
  23. By: Carroll, Christopher D.; Slacalek, Jiri; Tokuoka, Kiichi
    Abstract: Using new micro data on household wealth from fifteen European countries, the Household Finance and Consumption Survey, we first document the substantial cross-country variation in how various measures of wealth are distributed across individual households. Through the lens of a standard, realistically calibrated model of buffer-stock saving with transitory and permanent income shocks we then study how cross-country differences in the wealth distribution and household income dynamics affect the marginal propensity to consume out of transitory shocks (MPC). We find that the aggregate consumption response ranges between 0.1 and 0.4 and is stronger (i) in economies with large wealth inequality, where a larger proportion of households has little wealth, (ii) under larger transitory income shocks and (iii) when we consider households only using liquid assets (rather than net wealth) to smooth consumption. JEL Classification: D12, D31, D91, E21
    Keywords: consumption dynamics, cross-country comparisons, liquid assets, MPC, wealth inequality
    Date: 2014–03
  24. By: Carroll, Christopher D.; Slacalek, Jiri; Tokuoka, Kiichi
    Abstract: We present a macroeconomic model calibrated to match both microeconomic and macroeconomic evidence on household income dynamics. When the model is modified in a way that permits it to match empirical measures of wealth inequality in the U.S., we show that its predictions (unlike those of competing models) are consistent with the substantial body of microeconomic evidence which suggests that the annual marginal propensity to consume (MPC) is much larger than the 0.02_0.04 range implied by commonly-used macroeconomic models. Our model also (plausibly) predicts that the aggregate MPC can differ greatly depending on how the shock is distributed across categories of households (e.g., low-wealth versus high-wealth households). JEL Classification: D12, D31, D91, E21
    Keywords: consumption dynamics, microfoundations, MPC, wealth inequality
    Date: 2014–03
  25. By: Leonardo Becchetti (University of Rome "Tor Vergata"); Nazaria Solferino (University of Rome "Tor Vergata"); M. Elisabetta Tessitore (University of Rome "Tor Vergata")
    Abstract: The choice between performing a task today or procrastinating it until tomorrow or later is the building block of any economic action. In our paper we aim to enrich the theoretical literature on procrastination by outlining conditions for bad and good procrastination and looking at the special cases of pathological procrastination, the curse of perfec- tionism and productive procrastination. We discuss how our theoreti- cal framework may be applied to explain different types of (education, investment and production) microeconomic decisions and which policy measures can be taken to avoid bad procrastination.
    Keywords: Time-Inconsistent Preferences, Optimal Effort, Procras- tination, Intertemporal Choice
    JEL: A12 D03 D11 D74 D91
    Date: 2014–03
  26. By: Congressional Budget Office
    Date: 2012–10–25
  27. By: Gabriel M. Ahlfeldt; Kristoffer Moeller; Nicolai Wendland
    Abstract: To analyze the mutually dependent relationship between local economic performance and the demand for and supply of transport services, we employ the structural panel VAR method that is popular in the macroeconomic literature, but which has not previously been applied to the modeling of within-city dynamics of transportation. We focus on a within-city panel of Berlin, Germany, during the heyday of the construction of its dense public transit network (1880-1914). Our results suggest that economic outcomes and supply of transport infrastructure mutually determine each other. Both transport demand and supply seem to be driven more by firms than by residents.
    Keywords: Transport, land use, Berlin, history, panel vector, autoregression
    JEL: R12 R14 R41 N73 N74
    Date: 2014–03
  28. By: ISHIWATA Ayako; Petr MATOUS; TODO Yasuyuki
    Abstract: Poverty reduction in rural Africa necessitates diversification of income sources from agriculture to nonfarm activities. Clustering of micro-enterprises in rural areas can promote nonfarm income. This study examines the determinants of growth in sales and skill levels of microenterprises in a tailor cluster in rural Ethiopia, focusing on the role of business networks. We collected panel data, including measures of business networks through procurement, outsourcing, and financing, for three years from 136 firms, the population in the "survival" cluster. The results show that when firms are closer to the center of business networks, i.e., firms are characterized by a higher centrality measure, they are more likely to increase sales. However, although network centrality is also associated with a higher level of tailoring skills, the skill level itself has no significant effect on sales. The finding implies that consumers in the area are not concerned much about the quality of products. Therefore, while expanding business networks can promote sales and skill levels, incentives to upgrade skills are minimal.
    Date: 2014–03
  29. By: TÓth (István György)
    Abstract: The paper provides an analysis of income inequality developments over the past 30 years in a joint set of the EU countries and OECD (containing specific analyses of income distribution changes in Australia, Canada, Japan, Korea and the US), with concise synthesis of the major findings of within-country and cross-country comparison of inequality trends. In addition to the objective indicators of income distribution and of poverty, available attitude data are surveyed to portray country profiles with respect to inequality and its perception and evaluation. This latter analysis is available for 25 EU member states. In the conclusive parts, the paper also gives an indication of the policy implications, with special references given to current EU debates about policy coordination in monitoring and reporting social changes in the Member States.
    Date: 2013–07

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