nep-pub New Economics Papers
on Public Finance
Issue of 2013‒11‒29
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Changes in Income Distributions and the Role of Tax-Benefit Policy During the Great Recession: An International Perspective By Bargain, Olivier; Callan, Tim; Doorley, Karina; Keane, Claire
  2. tax incidence with strategic firms on the soft drink market. By Bonnet, Céline; Réquillart, Vincent
  3. The effect of tax enforcement on tax morale By Antonio Filippin; Carlo V. Fiorio; Eliana Viviano
  4. Tax Principles and Coordination of Trade and Domestic Policies under Imperfect Competition By Kenji Fujiwara
  5. Fiscal Consolidations and Public Debt in Europe By Gianluca Cafiso; Roberto Cellini
  6. The Effect of Immigration on Public Finances By Ian Preston
  7. The State of State Capacity: a review of concepts, evidence and measures By Cingolani, Luciana

  1. By: Bargain, Olivier (University of Aix-Marseille II); Callan, Tim (Economic and Social Research Institute, Dublin); Doorley, Karina (IZA); Keane, Claire (ESRI, Dublin)
    Abstract: This paper examines the impact on inequality and poverty of the economic crisis in four European countries, namely France, Germany, the UK and Ireland, and the contribution of tax and benefit policy changes. The period examined, 2008 to 2010, was one of great economic turmoil, yet it is unclear whether changes in inequality and poverty rates over this time period were mainly driven by changes in market income distributions or by tax-benefit policy reforms. We disentangle these effects by producing counterfactual ("no reform") scenarios using tax-benefit microsimulation and representative household surveys of each country. For the period under study, we find that the policy reaction has contributed to stabilizing or even decreasing inequality and relative poverty in the UK, France and especially in Ireland, a country where rising unemployment would have otherwise increased poverty. Market income inequality has nonetheless pushed up inequality and relative poverty in France. Relative poverty and, notably, child poverty, have increased in Germany due to policy responses combined with the increasing inequality of market income.
    Keywords: tax-benefit policy, inequality, poverty, decomposition, microsimulation, crisis
    JEL: H23 H53 I32
    Date: 2013–11
  2. By: Bonnet, Céline; Réquillart, Vincent
    Date: 2013
  3. By: Antonio Filippin (University of Milan); Carlo V. Fiorio (University of Milan); Eliana Viviano (Bank of Italy)
    Abstract: In this paper we argue that tax enforcement is an additional contextual factor affecting tax morale, one of the most important determinants of tax compliance. By using a unique dataset that merges a representative sample of Italian households with administrative data on tax enforcement, we find first that tax morale is positively correlated with tax enforcement. Second, to deal with possible endogeneity of tax enforcement, we show that results are confirmed in an IV specification using the change in the tax gap at the provincial level as an instrument for tax enforcement. Finally, we provide evidence that the impact of tax enforcement and social environment is stronger at low quantiles of tax morale. Our results show that apart from lowering the expected value of tax evasion, tax enforcement has an additional and indirect effect on tax compliance through its effect on tax morale.
    Keywords: tax morale, tax enforcement, tax gap.
    JEL: H26 H29 D70
    Date: 2013–10
  4. By: Kenji Fujiwara (School of Economics, Kwansei Gakuin University)
    Abstract: We construct an exporting monopoly model to compare destination- and origin-based commodity taxes in a context of a trade and domestic tax reform. We show that an export tax reduction and a change in destination (resp. origin) tax that fix the world price is strictly Pareto-improving (resp. deteriorating), which holds whether markets are integrated or segmented. This result may provide a new rationale for preferring the destination-based consumption tax to the origin-based production tax that has been discussed in the literature of tax harmonization and tax competition.
    Keywords: export tax, consumption tax, production tax, monopoly, strict Pareto improvement/deterioration
    JEL: F12 F13 H2
    Date: 2013–11
  5. By: Gianluca Cafiso; Roberto Cellini
    Abstract: The objective of this paper is to gain insights into the relationship between deficit-reducing policies and the evolution of the debt/GDP ratio. We consider past events of fiscal consolidation in a selected group of EU countries and check what is the associated change of the debt/GDP ratio both from a short and medium-term perspective. As for the medium-term perspective, we do also differentiate between tax-based and savings-based fiscal consolidations. Our results point towards a positive short-term effect, while the medium-term effect turns out to be negative. Savingsbased fiscal consolidations result to be less negative on the debt/GDP ratio’s evolution than tax-based ones.
    Keywords: Fiscal consolidations;debt/GDP ratio;Europe
    JEL: H63 E63
    Date: 2013–11
  6. By: Ian Preston (University College London)
    Abstract: The impact of immigration on the public finances is an important influence on public opinion. This paper aims to provide a thorough conceptual survey, pointing out the complexities of a full understanding and the relevance of indirect effects and covering both static perspectives and longer run dynamic issues. It considers simple accounting approaches which are relatively neglectful of behavioural responses but also tries to bring out the complexities in the nature of the relationship between rates of immigration and the public exchequer that come with more sophisticated modelling of its economic effects.
    Date: 2013–11
  7. By: Cingolani, Luciana (UNU-MERIT / MGSoG)
    Abstract: What is state capacity and how does it affect development? The concept of state capacity acquired centrality during the late seventies and eighties, sponsored by a rather compact set of scholarly works. It later permeated through several disciplines and has now earned a place within the many governance dimensions affecting economic performance. The present article aims to provide a historical account of the evolution and usage of the state capacity concept, along with its various operationalizations. It examines in particular: a) the growing distance in the usage of the concept by different disciplinary and thematic fields; b) the process of `branching out' of the concept from restricted to more multidimensional definitions; c) the problems with construct validity and concept stretching, and d) the generalized lack of clarity that exists regarding the institutional sources of state capacity.
    Keywords: state capacity, statebuilding, fiscal performance, bureaucracies, neopatrimonialism
    JEL: D73 D74 H10 H20 O43
    Date: 2013

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