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on Public Finance |
| By: | Felix Bierbrauer (Max Planck Institute for Research on Collective Goods, Bonn); Pierre C. Boyer (University of Mannheim, Department of Economics) |
| Abstract: | We study Downsian competition in a Mirrleesian model of income taxation. The competing politicians may differ in competence. If politicians engage in vote-share maximization, the less competent politician's policy proposals are attractive to the minority of rich agents, whereas those of the competent politician are attractive to the majority of poor agents. The less competent politician wins with positive probability, which gives rise to a political failure in the sense of Besley and Coate (1998). Political failures are avoided if politicians maximize winning probabilities. Nevertheless, the two equilibria cannot be Pareto-ranked, the minority may be better off under vote-share maximization. |
| Keywords: | Electoral Competition, Non-linear Income Taxation, Candidate Quality |
| JEL: | H21 C72 D72 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2010_45&r=pub |
| By: | Dr. Christin Lutz (GWS - Institute of Economic Structures Research); Dr. Ulrike Lehr (GWS - Institute of Economic Structures Research) |
| Abstract: | Study for the European Environmental Agency, Copenhagen “Tax reform in Europe over the next decades: implication for the environment, for eco-innovation and for household distribution” Task A: Eco-innovation Literature review on eco-innovation and ETR Modelling of ETR impacts with GINFORS |
| Keywords: | Tax, Europe |
| JEL: | H |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:gws:dpaper:10-2&r=pub |
| By: | Heléne Lundqvist |
| Abstract: | While the literature on how intergovernmental grants affect the budget of receiving jurisdictions is numerous, the very few studies that explicitly deal with likely endogeneity problems focus on grants targeted towards specific sectors or to specific type of recipients. The results from these studies are mixed and make clear that knowledge about grants effects is to this date still insufficient. This paper contributes by estimating causal effects on local expenditures and income tax rates of general, nontargeted grants to Finnish municipalities. This is done in a difference-in-difference model utilizing policy-induced increases in grants to a group of remotely populated municipalities. The robust finding is that increased grants have a negligible effect on local income tax rates, but that there is an immediate one-to-one correspondence between grants and local expenditures. Furthermore, expenditures continue to increase also some time after the grant increase, although this response is estimated less precisely. The flypaper behavior displayed by the treatment group can potentially be explained by ?sepa-rate mental accounting'? ? i.e., voters treating the government budget constraint separately from their own. |
| Keywords: | Intergovernmental grants, difference-in-difference model, fly-paper effect |
| JEL: | H72 C23 H71 R51 H77 |
| Date: | 2010–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:15&r=pub |
| By: | Leonor Coutinho; Luc De Wulf; Santiago Florez; Cyrus Sassanpour |
| Abstract: | Until the early 1990s, the discussions on fiscal policy primarily centered on the functions of economic stabilization, income redistribution and resource allocation. Long-term growth was not usually viewed as an end itself, and fiscal policy was often not sufficiently tailored to the different circumstances and priorities of countries at different stages of development. It is only relatively recently that the discussion has gradually focused on the links between different dimensions of quality of public finances and economic growth. Based on the conceptual framework for linking the quality of public finances and economic growth that has been developed by the European Commission and applied to the EU Member States, this study examines the conditions under which the budgetary policy, and more specifically expenditure, revenue and financing design would be supportive of growth in the Mediterranean partner countries of the European Union. The study also highlights some of the interlinkages between fiscal policy and growth and summarises empirical findings found in the literature with particular focus on Mediterranean partner countries of the European Union. The main findings of the study are similar to those that apply to the EU Member States and can be summarised as follows: • The way government expenditures are financed matters. Deficit and debt financing clearly undermines growth performance. • The composition of expenditure does matter however the efficiency of the expenditure undertaken is even more important for growth. For countries with good governance indicators the positive impact of the productive expenditures on growth was enhanced. The analysis was applied to the efficiency of education and health expenditures with basically similar results. • Notwithstanding the importance of 'fair' income distribution, when tax policy relies heavily on income taxation to do so, the analysis suggests a likely negative effect on growth. Specifically, consumption taxes were found to depress growth by up to four times less than income taxes. The study concludes by highlighting possible areas in the planning and execution of fiscal policy and governance where growth enhancing interventions can be applied. |
| Keywords: | public finance, economic growth, Mediterranean region |
| JEL: | H1 H2 H3 H5 H6 H7 E6 O1 O2 O4 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnrepo:0094&r=pub |