nep-pub New Economics Papers
on Public Finance
Issue of 2009‒07‒28
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Economic Growth and the Role of Taxation – Theory By Gareth D. Myles
  2. Endogenous income taxes in OLG economies By Zhang, Yan; Chen, Yan
  3. The Tradeoff Between Growth and Redistribution: ELIE in an Overlapping Generations Model By David, DE LA CROIX; Michel LUBRANO
  4. Outsourcing And Public Sector Efficiency: How Effective Is Outsourcing In Dealing With Impure Public Goods? By Argentino Pessoa
  5. Improvements and Future Challenges for the Research Infrastructure in Public Finance By Thiess Buettner

  1. By: Gareth D. Myles
    Abstract: Economic growth is the basis of increased prosperity. This makes the attainment of growth a key objective for governments across the world. The rate of growth can be affected by policy choices through the effect that taxation has upon economic decisions and through productive public expenditures. This paper provides a self-contained introduction to the economic modelling of growth and reviews the theoretical evidence on the extent of the link between taxation and growth.<P>La croissance économique et le rôle de la fiscalité - Théorie<BR>La croissance économique est au fondement du progrès de la prospérité. Ceci fait de la croissance un objectif majeur pour les gouvernements du monde entier. Le taux de croissance peut être influencé par des choix de politique économique relatifs à la fiscalité, laquelle a un effet sur les décisions économiques des agents et est liée aux dépenses publiques productives. Cette étude fournit une introduction autonome à la modélisation économique de la croissance et résume les résultats empiriques traitant du lien entre la fiscalité et la croissance.
    Keywords: taxation, fiscalité, croissance économique, croissance, public policy, politique publique, economic growth
    JEL: H2 H3 O4
    Date: 2009–07–15
  2. By: Zhang, Yan; Chen, Yan
    Abstract: This paper introduces fiscal increasing returns, through endogenous labor income tax rates as in Schmitt-Grohe and Uribe (1997), into the overlapping generations model with endogenous labor and consumption in both periods of life (for example, Cazzavillan and Pintus (2004)). We show that under numerical calibrations of the parameters, in particular a reasonable share of first period consumption over the wage income, local indeterminacy can easily occur with small distortionary taxes, provided that the elasticity of capital-labor substitution is less than the share of capital in total income and the wage elasticity of the labor supply is large enough. More important is the fact that increasing the size of tax distortions enlarges the range of values of the consumption--to--wage ratio associated with multiple equilibria, because of two conflicting effects on savings that operate through wage and interest rate.
    Keywords: Indeterminacy; Endogenous labor income tax rate.
    JEL: E32 C62
    Date: 2009–07–22
  3. By: David, DE LA CROIX (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE)); Michel LUBRANO (GREQAM and CNRS)
    Abstract: The ELIE scheme of Kolm taxes labour capacities instead of labour income in order to circumvent the distortionary effect of taxation on labour supply. Still, Kolm does not study the impact of ELIE on human capital formation and investment. In this paper, we build an overlapping generations (OLG) model with heterogenous agents and endogenous growth driven by investment in human capital. We study the effect of ELIE on education investment and other aggregate economic variables. Calibrating the model to French data, we highlight a tradeoff between growth and redistribution. With a perfect credit market, ELIE is successful in reducing inequalities and poverty, but it is at the expense of lower investment in education and slower growth. In an economy with an imperfect credit market where individuals cannot borrow to educate, the tradeoff between growth and redistribution is not overturned but is less severe. However, it is possible to overturn completely that trade-off simply by changing the base of taxation for the young generation which is equivalent to subsidising education.
    Keywords: Education, Growth, Redistribution, Kolm
    JEL: O41 H20 I38
    Date: 2009–06–09
  4. By: Argentino Pessoa (Faculdade de Economia da Universidade do Porto, Portugal)
    Abstract: The debate on new public management, together with the shortage of public funds, has had a considerable impact on public administration. Accordingly, many governments have searched positive impacts on the efficiency, equity and quality provision of public services through increasing competition and active participation of the private sector, considering outsourcing as the appropriate instrument to attain such endeavor. However, private involvement in public services provision is controversial. While, on the one hand it is touted as a way to increase efficiency and accountability by turning over choices to individuals in the market place, on the other hand, some argue that it has the potential to produce considerable fraud and corruption if managerial control by the public sector is weak. So, given this context, we aim to assess the private involvement in public services in efficiency terms, putting aside ideological considerations. So, after the introduction, we present a definition of public goods and we characterize their different types, with particular emphasis on “impure” public goods. Section 3, focuses on market failures together with equity considerations as the main reasons that configure the role of the public sector in providing impure public goods, as well as on the possibility of government failures. Section 4 deals with the benefits and costs of outsourcing in the public sector. Section 5 describes the most frequent forms of private sector involvement in the provision of impure public goods, as well as the advantages and disadvantages of the different options. Section 6 carries out some comments on the need for regulation. Finally, section 7 concludes.
    Keywords: Contracting out, impure public goods, market/government failures, private sector involvement, public sector
    JEL: H42 H50 I18 I28 L33
    Date: 2009–07
  5. By: Thiess Buettner
    Abstract: The paper briefly surveys available data sources and discusses future developments relevant for empirical public finance in Germany. It starts from the notion that public finance deals with decisions of various agents, not only governments, but also private households and firms. Therefore, empirical research needs different types of data. Government decisions are to some extent captured in terms of the budgetary statistics, even though these statistics have shortcomings with regard to the quality of public service provisions and the revenue instruments. To study the decisions of the other agents individual level data is required. While some progress has been made, recently, the combination of various datasets at the individual level is a key priority.
    Keywords: Empirical Research; Public Finance; Budgetary Statistics; Revenue Statistics; Micro-level Data; Taxpayer Data
    Date: 2009

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