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on Public Finance |
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Issue of 2013‒03‒09
seven papers chosen by |
| By: | Kazuo Nishimura (Institute of Economic Research, Kyoto University); Carine Nourry (Aix-Marseille University (Aix-Marseille School of Economics), CNRS-GREQAM, EHESS & Institut Universitaire de France); Thomas Seegmuller (Aix-Marseille University (Aix-Marseille School of Economics), CNRS-GREQAM & EHESS); Alain Venditti (Aix-Marseille University (Aix-Marseille School of Economics), CNRS-GREQAM, EHESS & EDHEC) |
| Abstract: | We examine the impact of balanced-budget consumption taxes on the existence of expectations-driven business cycles in two-sector economies with infinitely-lived households. We prove that, whatever the relative capital intensity difference across sectors, aggregate instability can occur if the consumption tax rate is not too low. Moreover, we show through a numerical exercise based on empirically plausible tax rates that endogenous business-cycle fluctuations may be a source of instability for all OECD countries, including the US. |
| Keywords: | Aggregate instability, indeterminacy, expectations-driven fluctuations, consumption taxes, balanced-budget rule, infinite-horizon two-sector model. |
| JEL: | C62 E32 H20 O41 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1312&r=pub |
| By: | Ernst, Christof; Richter, Katharina; Riedel, Nadine |
| Abstract: | This paper examines the impact of tax incentives on corporate research and development (R&D) activity. Traditionally, R&D tax incentives have been provided in the form of special tax allowances and tax credits. In recent years, several countries moreover reduced their income tax rates on R&D output. Previous papers have shown that all three tax instruments are effective in raising the quantity of R&D related activity. We provide evidence that, beyond this quantity effect, corporate taxation also distorts the quality of R&D projects, i.e. their innovativeness and revenue potential. Using rich data on corporate patent applications to the European patent office, we find that a low tax rate on patent income is instrumental in attracting innovative projects with a high earnings potential and innovation level. The effect is statistically significant and economically relevant and prevails in a number of sensitivity checks. R&D tax credits and tax allowances are in turn not found to exert a statistically significant impact on project quality. -- |
| Keywords: | corporate taxation,research and development,micro data |
| JEL: | H3 H7 J5 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:662013&r=pub |
| By: | Leonardo Becchetti (University of Rome "Tor Vergata"); Massimo Ferrari (University of Rome "Tor Vergata"); Ugo Trenta (Poste Italiane) |
| Abstract: | We analyse the impact of the introduction of the French Tobin tax on volumes, liquidity and volatility of affected stocks with parametric and non parametric tests on individual stocks, difference in difference tests and other robustness checks controlling for simultaneous month-of-the-year and size effects. Our findings document that the tax has a significant impact in terms of reduction in transaction volumes and intraday volatility. The reduction in volumes traded occurs in similar proportion in non taxed small cap stocks. |
| Keywords: | Financial Transaction Tax; intraday volatility; liquidity, transaction volumes |
| JEL: | G18 G12 G14 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:266&r=pub |
| By: | Yukinobu Kitamura |
| Abstract: | This paper explores a reasonable consumption tax (VAT) reform in Japan, after passing the tax reform bill in the Diet in August 2012. First, the macro (SNA) data indicates that tax revenue increases by about 12 trillion yen if the VAT rate is raised from 5% to 10%. Secondly, the VAT revenue function reveals the revenue elasticity with respect to 1% consumption increase is 0.96. This is very efficient. Thirdly, remaining tax administration issues are discussed. Fourthly the empirical consumer demand system (QUAIDS) is derived from the optimal consumption behavior. Fifthly, using Family Income and Expenditure Survey from January 1985 to April 2012 for the two or more member worker’s household, food and health & medical expenditure indicate significantly negative price elasticity of demand and those for other expenditures are insignificant, i.e. zero. It is justifiable to set a uniform tax rate for those items except food and health & medical expenditure. As to health & medical expenditure, many items within health & medical expenditure are already tax exempt and thus effective tax rate for health & medical expenditure is around 2%. There is no need to consider a further tax rate reduction for this. As to food expenditure, effective tax rate is around 7% due to alcohol and other sales tax. This item is worth considering a reduction of tax rate. However, a share of food expenditure is quite high (i.e. around 20%) so that tax revenue loss would be high if a reduced tax rate is applied for many food items. In addition, it will be quite arbitrary and politically biased to decide as to which food items are to be tax reduced. For a moment, it may be reasonable not to implement any tax reduction for food items. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd12-274&r=pub |
| By: | Ehrhart, H.; Guerineau, S. |
| Abstract: | In this paper we assess the impact of commodity price volatility on tax revenues, while existing works were concentrated on its effect on economic growth. Our empirical analysis is carried out on 80 developing countries over 1980-2008. We compute country-specific indices which measure the volatility of the international price of 41 commodities in the sectors of agriculture, minerals and energy. We find robust evidence that tax revenues in developing countries are hurt by the volatility of commodity prices. More specifically, the volatility of import prices decreases revenues from international trade tax while the volatility of export prices reduces revenues from income tax. We also show that this negative effect on tax revenues is not homogenous between countries. First, the export price volatility impact is negative except for oil exporters for whom it is null. Second, the magnitude of the negative impact of import price volatility on tax revenues depends on the tariff structure, i.e. is greater in countries where tariff dispersion is high. |
| Keywords: | Price Volatility, Tax revenues, Commodities, Developing economies. |
| JEL: | E62 O13 F10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:423&r=pub |
| By: | Islam, Asif M.; Lopez, Ramon E. |
| Abstract: | This study examines the effect of the composition of federal and state government spending on various important air pollutants in the US using a newly assembled data set of government spending. The results indicate that a reallocation of spending from private goods (RME) to social and public goods (PME) by state and local governments reduces sulfur dioxide concentrations while the composition of federal spending has no effect. A 10% percent increase in the share of state and local social and public goods government spending reduces air pollution concentrations by 3 to 5% for Sulfur Dioxide, 2 to 3% for particulate matter 2.5 and 1 to 2 % for ozone. The results are robust to various sensitivity checks. |
| Keywords: | air pollution, government spending, public goods, market imperfections, Environmental Economics and Policy, Public Economics, H50, H40, O13, O44, Q53, |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umdrwp:144406&r=pub |
| By: | Matthew W. McCarter (Argyros School of Business and Economics, Chapman University); Anya C. Samak (School of Human Ecology, University of Wisconsin-Madison); Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University) |
| Abstract: | It is common in organizational life to be simultaneously involved in multiple collective actions. These collective actions may be modeled using public good dilemmas. The developing social dilemma literature has two perspectives – the “divided loyalties” and “conditional cooperation” perspectives – that give opposite predictions about how individuals will behave when they simultaneously play two identical public good games. The current paper creates consensus between these social dilemma perspectives by examining cooperative behavior of participants interacting in two public good games with either different or the same group members. In each round, individuals have a common budget constraint across the two games. In support of the conditional cooperator’s perspective of social dilemmas, we find that playing two games with different, rather than same, group members increases overall contributions. Over the course of the experiment, participants playing two games with different group members shift their contributions significantly more often toward more cooperative public good games than participants playing with the same group members. |
| Keywords: | cooperation, conditional cooperation, public good, experiments, group composition |
| JEL: | C72 C73 C91 D03 H41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-08&r=pub |