nep-pub New Economics Papers
on Public Finance
Issue of 2010‒02‒20
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Reconciling VAR-based and Narrative Measures of the Tax-Multiplier By Carlo A. Favero; Francesco Giavazzi
  2. Optimal congestion taxes in a time allocation model By De Borger B.
  3. Delegation and emission tax in a differentiated oligopoly By Rupayan Pal
  4. Social security driven Tax wedge and its effects on Employment and Shadow Employment By Marek Gora; Oleksandr Rohozynsky; Irina Sinitsina; Mateusz Walewski
  5. Passenger cars taxation. Romania's case By Lazar, Sebastian
  6. India's Public Finances: Do They Matter By Paul Rawkins

  1. By: Carlo A. Favero; Francesco Giavazzi
    Abstract: The currently available empirical evidence shows remarkable differences between various estimates of the effects on U.S output of an exogenous shift in Federal tax liabilities. Shocks identified via the narrative method, imply a multiplier of about three over . an horizon of three years. Tax shocks identified in fiscal VAR models deliver a much smaller multipier of about one. Is this heterogeneity real, or is it simply the result of different approaches to the identification of exogenous shifts in taxes? Or of different specifications of the empirical model used to estimate the tax multiplier? In this paper we reconcile this apparently contradictory evidence by showing that the large multiplier obtained via the narrative identification methods are generated by the choice of a limited information approach in their estimation and not by the different nature of the shocks. Using the shocks identified by a Narrative methods in a multivariate dynamic model delivers estimates of the tax multiplier very much in line with those obtained in the traditional fiscal VAR approach.
    Date: 2010
  2. By: De Borger B.
    Abstract: The purpose of this paper is to study optimal congestion taxes in a time allocation framework. This makes it possible to distinguish taxes on inputs in the production of car trips and taxes on transport as an activity. Moreover, the model allows us to consider the implications of treating transport as a demand, derived from other activities. We extend several well known tax rules from the public finance literature and carefully interpret the implications for the optimal tax treatment of passenger transport services. The main findings of the paper are the following. First, if governments are limited to taxing market inputs into transport trip production, the time allocation framework (i) provides an argument for taxing congestion below marginal external cost, (ii) implies a favourable tax treatment for time-saving devices such as GPS, and (iii) provides a previously unnoticed argument for public transport subsidies. Second, if the government has access to perfect road pricing that directly taxes transport as an activity, all previous results disappear. Third, in the absence of perfect road pricing, the activity-specific congestion attracted by employment centres, by shopping centres or by large sports and cultural events should be corrected via higher taxes on market inputs in these activities (e.g., entry tickets, parking fees, etc.).
    Date: 2010–02
  3. By: Rupayan Pal (Indira Gandhi Institute of Development Research)
    Abstract: This paper examines how product differentiation as well as strategic managerial delegation affects optimal emission tax rate, environmental damage and social welfare, under alternative modes of product market competition. It shows that, under pure profit maximization, the (positive) optimal emission tax rate is not necessarily decreasing in degree of product differentiation, irrespective of the mode of competition. The possibility of emission tax rate to be positive and lower for more differentiated products, under quantity (price) competition, is higher (lower) in case of delegation than that in case of no delegation. It also shows that, under quantity (price) competition, the equilibrium emission tax rate environmental damage and social welfare are higher (lower) in case of delegation than that in case of no delegation.
    Keywords: Emission tax, price competition, product differentiation, quantity competition, strategic managerial delegation
    JEL: H23 Q50 Q58 L13
    Date: 2009–10
  4. By: Marek Gora; Oleksandr Rohozynsky; Irina Sinitsina; Mateusz Walewski
    Abstract: The aim of this paper was to analyse possible directions and magnitudes of the relationship between the social security driven tax wedge, employment and shadow employment in Russia and Ukraine. Previous results suggest a limited positive relationship between the size of the tax wedge and shadow employment and in recent years both analysed countries undertook serious steps in order to reform and to simplify their payroll tax system and consequently to reduce shadow employment. Our result suggest that the unskilled persons engaged in unregistered jobs in Ukraine and Russia are not "rewarded" with higher net earnings. It seems that, in their case, shadow employment is the way to escape unemployment and resulting poverty, rather than to evade taxes. Hence, it seems that, in this case, broadening of general employment opportunities for this group would result in a decrease in shadow employment. We also found that the effect of the SSN benefits on shadow employment was rather low in both countries. One of the explanations is the fact that SSN benefits remain largely universal, and are not sufficiently tied to former employment history and social security contribution paid.
    Keywords: tax wedge, employment, shadow employment, transition economies
    JEL: E24 J3 H21 O17
    Date: 2009
  5. By: Lazar, Sebastian
    Abstract: The paper presents the Romania tax framework concerning passenger cars taxation in a comparative manner in European context. This framework causes a lot of criticism from European officials and led to some reconsideration that shaped the actual form, which, in our opinion, can be further improved. The paper designs a new methodology of the assessment of the tax, which smoothed its progressivity, which can be considered as exaggerate.
    Keywords: vehicles taxation; comparative analyses; progressivity of taxation; improvement
    JEL: H21
    Date: 2009–05–29
  6. By: Paul Rawkins
    Abstract: India’s general government deficits and public debt have remained high despite faster economic growth in recent years and periodic attempts to instil greater fiscal discipline. Modest fiscal tightening at the centre has been offset by significant fiscal slippages at the states level, leaving the general government deficit largely unchanged as a percentage of GDP.
    Keywords: fiscal, India, government, deficits, GDP, public debt
    Date: 2010

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