nep-pub New Economics Papers
on Public Finance
Issue of 2007‒09‒24
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Public finance, aid and post-conflict recovery By James K. Boyce
  2. Tax Evasion and Economies in Transition: Lessons from Tax Theory By Pirttilä, Jukka
  3. Optimal taxation in a growth model with public consumption and home production By Jie Zhang; James Davies; Jinli Zeng; Stuart McDonald
  4. Implementing a Public Private Partnership Model for Managing Urban Health in Ahmedabad By Patel Amit; Ramani K.V.; Mavalankar Dileep; Agarwal Anurag; Maiya Shilpa, Nayak Beena

  1. By: James K. Boyce (University of Massachusetts Amherst)
    Abstract: In the wake of violent conflict, a key element of building a durable peace is building a state with the ability to collect and manage public resources. To implement peace accords and provide public services, the government must be able to collect revenue, allocate resources, and manage expenditure in a manner that is regarded by its citizens as effective and equitable. This paper addresses eight key issues related to this challenge. The first four pertain to resource mobilization: (i) How should distributional impacts enter into revenue policies? (ii) How can postwar external assistance do more to prime the pump of domestic revenue capacity? (iii) Should macroeconomic strictures prescribed for economic stabilization be relaxed to foster political stabilization? (iv) How should the benefits of external resources be weighed against their costs? The second four issues relate to the expenditure side of public finance: (i) How should the dynamics of conflict be factored into public spending policies? (ii) Can the pathologies of a ‘dual public sector’ – one funded and managed by the government, the other by the aid donors – be surmounted by channeling external resources through the government, with dual-control oversight mechanisms to reduce corruption? (iii) How should long-term fiscal sustainability enter into short-term expenditure decisions? (iv) Lastly, is there scope for more innovative solutions to postwar legacies of external debts?
    Keywords: peacebuilding; revenue mobilization; external assistance; foreign aid; post-conflict transitions; public expenditure; horizontal equity; odious debt.
    JEL: E61 E62 E63 F35 F51 F53 H20 H22 H50
    Date: 2007–09
  2. By: Pirttilä, Jukka (BOFIT)
    Abstract: This study considers the pervasive tax evasion of transition economies, with particular reference to Russia’s tax system. Starting with a survey of theoretical literature on tax evasion and corruption, it argues that, although standard tax theory offers many insights, certain special features of transition economies deserve attention. These include the legacy of socialism resulting in a state willing to exercise discretionary power but possibly lacking credibility and public support, the ‘disorganisation’ phenomenon that hampers efficient tax administration, and the relationship of restructuring, speed of reform and the tax system. The paper also contains recommendations on reform of the tax system to achieve reasonable deterrence of evasion.
    Keywords: tax evasion; corruption; transition economies; Russia
    Date: 2007–09–14
  3. By: Jie Zhang (MRG - School of Economics, The University of Queensland); James Davies (Department of Economics, University of Western Ontario); Jinli Zeng (Department of Economics, National University of Singapore); Stuart McDonald (Department of Economics, California Institute of Technology)
    Abstract: In a neoclassical growth model with public consumption, we show the following Pareto optimal tax rules. The government should tax leisure and private consumption at the same rate, and subsidize net investment at the same rate it taxes net capital income. Also, it should tax capital income more heavily than labor income. In an extension for home production, the additional rule is to tax investment for home production at the same rate of the tax on private market consumption. These tax and subsidy rates should be constant over time except the initial tax rate on capital income.
  4. By: Patel Amit; Ramani K.V.; Mavalankar Dileep; Agarwal Anurag; Maiya Shilpa, Nayak Beena
    Abstract: Governments in many developing countries acknowledge they are facing difficulties in their attempt to meet the basic health needs of their populations. They rely on contracting out to private (for-profit and not-for-profit) organizations as a strategy to meet the needs of underserved populations. For the most part, the public sector chooses to contract out primary healthcare services to the private sector to expand access, increase the availability of medicines and medical supplies, and improve the quality of care. In both urban and rural settings, private for-profit and non-profit health service providers serve both the rich and the poor. Communities often recognize private sector healthcare providers to be more responsive to their healthcare needs and preferences in terms of services available, suitable timings and geographical access etc. Private sector has always played a significant role in the delivery of health services in developing countries. Public-private-partnership (PPP) is an approach under which services are delivered by the private sector, while the responsibility for providing the resources rests with the government. Establishing a PPP requires a legal framework acceptable to all the partners, clarity on the commitment of resources, roles and responsibilities of each partner, as well as accountability to provide a given set of services at a desired level of quality and affordable user charges. Formalizing such an arrangement between partners requires conceptualising a framework for Public Private Partnership (PPP) to manage the delivery of health services. In this paper, we describe the design, development and implementation of a PPP for managing urban health services in Ahmedabad city, Gujarat. Our model has succeeded in bringing together compatible public and private partners to plan and deliver quality healthcare services to meet the community needs of Vasna ward, in Ahmedabad. The new Vasna Urban Health centre was inaugurated on July 23, by the Chief Minister of Guajarat. This new centre now serves about 120 outpatients everyday as against an average of 10 outpatients daily earlier.
    Date: 2007–09–08

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