nep-pub New Economics Papers
on Public Finance
Issue of 2018‒10‒29
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Progressive taxation and (in)stability in an exogenous growth model with Epstein-Zin recursive preferences By Vasilev, Aleksandar
  2. Optimal Tax Structure for Consumption and Income Inequality:an Empirical Assessment By António Afonso; José Alves
  3. Taxes, benefits and labour force participation: A survey of the quasi-experimental literature By Lundberg, Jacob; Norell, John
  4. The vertical and horizontal distributive effects of energy taxes By Thomas Douenne
  5. The distributive impact of income taxes in Brazil By Rodrigo Cardoso Fernandes; Bernardo Campolina; Fernando Gaiger Silveira

  1. By: Vasilev, Aleksandar
    Abstract: We show that in a exogenous growth model with Epstein-Zin (1989, 1991) recursive preferences calibrated to Bulgarian data under the progressive taxation regime (1993- 2007), the economy exhibits equilibrium indeterminacy. These results are in line with the fi ndings in Benhabib and Farmer (1994, 1996) and Farmer (1999). Also, the findings in this paper are in contrast to Guo and Lansing (1988) who argue that progressive taxation works as an automatic stabilizer. In contrast, under the flat tax regime (2008-16), the same economy calibrated to Bulgarian data now displays saddle-path stability. The decrease in the average effective tax rate addresses the indeterminacy issue and eliminates the "sink" dynamics.
    Keywords: Progressive taxation,Epstein-Zin preferences,Equilibrium (In)determinacy,Bulgaria
    JEL: D51 D91
    Date: 2018
  2. By: António Afonso; José Alves
    Abstract: In the present empirical analysis, we try to assess the impact of taxation on investment, growth. In particular, and by using gross fixed capital formation as a proxy for investment, we intend to evaluate the impact of the taxation structure in investment dynamics, in a short and a long-run perspectives. This empirical exercise was conducted for all OECD countries, during the 1980-2015 period. Through panel data econometric techniques, we find optimal tax-investment threshold values, especially higher for short-term than for long-term horizon. In addition, we find optimal income taxation around 9%, in percentage of GDP, an average optimal value of 12.7% for consumption taxes to promote annual investment growth.
    Keywords: Investment Growth;Tax systems;Fiscal Policy;Optimal taxation
    JEL: E62 H21 O47
    Date: 2018–10
  3. By: Lundberg, Jacob (Timbro); Norell, John (Timbro)
    Abstract: We review the literature that uses quasi-experimental methods to estimate the elasticity of labour force participation with respect to the financial gain from work. We find a wide range of elasticities, with an average of 0.38. 26 out of 31 papers find elasticities larger than 0.1, providing strong evidence that individuals respond to incentives on the extensive margin of labour supply. Elasticities are larger for women and older workers, and have declined over time.
    Keywords: participation elasticity; quasi-experimental methods; labour supply; extensive margin
    JEL: H24 J22
    Date: 2018–10–19
  4. By: Thomas Douenne (Paris School of Economics)
    Abstract: This paper proposes a micro-simulation assessment of the distributional impacts of the French carbon tax. It shows that the policy is regressive, but could be made progressive by redistributing the revenue through a flat-recycling. However, it would still generate large horizontal distributive effects and harm an important share of low-income households. The determinants of the tax incidence are characterized precisely, and alternative targeted transfers are simulated on this basis. The paper shows that given the importance of unobserved heterogeneity in the determinants of energy consumption, horizontal distributive effects are much more difficult to tackle than vertical ones.
    Keywords: Energy taxes, Distributional effects, Demand-System, Micro-simulation
    JEL: D12 H23 I32
    Date: 2018–09
  5. By: Rodrigo Cardoso Fernandes (IPC-IG); Bernardo Campolina (IPC-IG); Fernando Gaiger Silveira (IPC-IG)
    Abstract: "Brazil has always been known as a country marked by inequality. Whether of opportunities, income or property, this inequality is manifest in all stages of wealth accumulation. Within this dire landscape, the country has always stood alongside much poorer nations, while countries with similar income and development profiles have presented substantially better indicators. Many scholars and academics have addressed this disturbing national quirk, analysing its origins and the main variables that have determined its persistent dynamics within Brazilian society. One element that has garnered relatively less attention in the analysis of the determinants of inequality is how the organisation of the tax system can impact the distribution of income. Therefore, in light of our investigation, one of the issues that has been identified as reinforcing the social injustices in Brazil is its national tax structure". (...)
    Keywords: Distributive, impact, income, taxes, Brazil
    Date: 2018–07

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