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on Payment Systems and Financial Technology |
| By: | Ahmed, Ovais |
| Abstract: | The purpose of the study is to explain about blockchain technology and how to use of blockchain technology for modern economics practices. We focused on this paper to put the light on blockchain usage in some other areas of economy such as, governance and political decision making, public finance, financial institution & stock market trading, global trading and other economic activities. The literature showed that blockchain is rapidly growing at globally and increasing digital money for transactions through peer to peer network. The opinion is given in this research to implement blockchain technology on behind the every single sector of economy to prevent from corruption, fraudulent/ fake funding on infrastructure and human capital. |
| Keywords: | Blockchain Technology, Digital Economics, Cryptocurrency |
| JEL: | M0 O33 Y2 Y8 |
| Date: | 2017–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80967&r=pay |
| By: | Chaikal Nuryakin (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Prani Sastiono; Faradina Alifia Maizar (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Pyan Amin; Lili Yunita (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Nanda Puspita (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Moslem Afrizal (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta); Christine Tjen (Researcher, Institute for Economic and Social Research, Faculty of Economics, University of Indonesia, Jakarta) |
| Abstract: | The initiative to enhance financial inclusion in Indonesia has been done through Financial Digital Service (LKD) by Bank Indonesia (BI) and Smart Act Branchless Banking Service for Financial Inclusion (Laku Pandai) by Financial Services Authority (OJK). There are several factors contributing to the success of both programs. One of the most important factors is the quality of the agents in charge. In order to monitor the development progress of financial inclusion brought by both programs, LPEM FEBUI conducted preliminary research through financial service agent field survey in West Nusa Tenggara and Aceh. The programs inclusiveness, challenges faced by agents, and opportunity for service expansions are three components assessed in the study. The results depicted that, despite the leap in the number of agents, both programs so far serve mainly as complimentary service. It is also found that, although agents find sufficient profitability and sustainability, there are still notable challenges in infrastructure, funding, and technical capability which need to be addressed. Such results recommend regulator, especially BI and OJK, to put more attention on the establishment of information and training center for their agents and enhancement on digital inclusion as well as electricity coverage |
| Keywords: | Financial Inclusion — LKD — Laku Pandai — Digital Inclusion |
| JEL: | G28 G21 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:lpe:wpaper:201708&r=pay |
| By: | Stavros Stavroyiannis |
| Abstract: | Digital currencies and cryptocurrencies have hesitantly started to penetrate the investors, and the next step will be the regulatory risk management framework. We examine the Value-at-Risk and Expected Shortfall properties for the major digital currencies, Bitcoin, Ethereum, Litecoin, and Ripple. The methodology used is GARCH modelling followed by Filtered Historical Simulation. We find that digital currencies are subject to a higher risk, therefore, to higher sufficient buffer and risk capital to cover potential losses. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1708.09343&r=pay |
| By: | Koutroumpis, Pantelis; Leiponen, Aija; Thomas, Llewellyn D W |
| Abstract: | Abstract Inventions depend on skills, experience, and information exchange. Information is shared among individuals and organizations both intentionally and unintentionally. Unintentional flows of knowledge, or knowledge spillovers, are viewed as an integral element of technological progress. However, little is known about the overall patterns of knowledge flows across technology sectors or over long periods of time. This paper explores whether it is possible to identify “invention machines” – technologies that help create new inventions in a wide range of other sectors – and whether shifts in the patterns of knowledge flows can predict future technological change. In the spirit of big data we analyze the entire PatStat database of 90 million published patents from 160 patent offices over a century of invention and exploit variation within and across countries and technology fields over time. The direction and intensity of knowledge spillovers measured from prior-art citations highlight the transition from mechanical to electrical instruments, especially industrial control systems, and the rise of information and communication technologies as “invention machines” after 1970. Most recently, the rapidly increasing impact of digital communications on other fields may herald the emergence of cloud computing and the industrial internet as the new dominant industrial paradigm. |
| Keywords: | Innovation, patents, electrical instruments, instruments, information technology |
| JEL: | O32 O31 O12 |
| Date: | 2017–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:rif:wpaper:52&r=pay |
| By: | Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Refk Selmi (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour) |
| Abstract: | Much significant research has been done to investigate various facets of the link between Bitcoin price and its fundamental sources. This study goes beyond by looking into least to most influential factors-across the fundamental, macroeconomic, financial, speculative and technical determinants as well as the 2016 events-which drove the value of Bitcoin in times of economic and geopolitical chaos. We use a Bayesian quantile regression to inspect how the structure of dependence of Bitcoin price and its determinants varies across the entire conditional distribution of Bitcoin price movements. In doing so, three groups of determinants were derived. The use of Bitcoin in trade and the uncertainty surrounding China's deepening slowdown, Brexit and India's demonetization were found to be the most potential contributors of Bitcoin price when the market is improving. The intense anxiety over Donald Trump being the president of United States was shown to be a positive determinant pushing up the price of Bitcoin when the market is functioning around the normal mode. The velocity of bitcoins in circulation, the gold price, the Venezuelan currency demonetization and the hash rate were found to be the fundamentals influencing the Bitcoin price when the market is heading into decline. |
| Keywords: | Bitcoin price,Bayesian quantile regression ,correlation,determinants |
| Date: | 2017–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01548710&r=pay |
| By: | Jamal Bouoiyour (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour); Refk Selmi (CATT - Centre d'Analyse Théorique et de Traitement des données économiques - UPPA - Université de Pau et des Pays de l'Adour) |
| Abstract: | Although Bitcoin has long been dominant in the crypto scene, it is certainly not alone. Ether is another cryptocurrency related project that has attracted an intensive attention because of its additional features. This study seeks to test whether these cryptocurrencies differ in terms of their volatile and speculative behaviors, hedge, safe haven and risk diversification properties. Using different econometric techniques, we show that a) Bitcoin and Ether are volatile and relatively more responsive to bad news, but the volatility of Ether is more persistent than that of Bitcoin; b) for both cryptocurrencies, the exuberance and the collapse of bubbles were identified, but Bitcoin appears more speculative than Ether; c) there is negative and significant correlation between Bitcoin/Ether and other assets (S&P500 stocks, US bonds, oil), which would indicate that digital currencies can hedge against the price movements of these assets; d) there is negative tail independence between Bitcoin/Ether and other financial assets, implying that these cryptocurrencies exhibit the function of a weak safe haven; and e) The inclusion of Bitcoin/ Ether in a portfolio improve its efficiency in terms of higher reward-to-risk ratios. But investors who hold diversified portfolios made of stocks or bonds and Ether may face losses over bearish regime. In such situation, stock and bond investors may take a short position on Bitcoin. |
| Keywords: | safe haven,Bitcoin, Ether,volatility,speculation,hedge,risk diversification |
| Date: | 2017–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01567277&r=pay |
| By: | Elie Bouri (USEK Business School, Holy Spirit University of Kaslik (USEK), POB 446 Jounieh, Lebanon); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Amine Lahiani (LEO, University of Orleans, Orléans – France, Montpellier Business School, Montpellier, France); Muhammad Shahbaz (Montpellier Business School, Montpellier, France) |
| Abstract: | Unlike prior studies, this study examines the nonlinear, asymmetric and quantile effects of aggregate commodity index and gold prices on the price of Bitcoin. Using daily data from July 17, 2010 to February 2, 2017, we employed several advanced autoregressive distributed lag (ARDL) models. The nonlinear ARDL approach was applied to uncover short- and longrun asymmetries, whereas the quantile ARDL was applied to account for a second type of asymmetry, known as the distributional asymmetry according to the position of a dependent variable within its own distribution. Moreover, we extended the nonlinear ARDL to a quantile framework, leading to a richer new model, which allows testing for distributional asymmetry while accounting for short- and long-run asymmetries. Overall, our results indicate the possibility to predict Bitcoin price movements based on price information from the aggregate commodity index and gold prices. Importantly, we report the nuanced result that most often the relations between bitcoin and aggregate commodity, on the one hand, and between bitcoin and gold, on the other, are asymmetric, nonlinear, and quantiles-dependent, suggesting the need to apply non-standard cointegration models to uncover the complexity and hidden relations between Bitcoin and asset classes. |
| Keywords: | Cointegration, Asymmetry, Nonlinearity, Quantile Dependence, Bitcoin, Commodity, Gold |
| JEL: | C12 G15 Q02 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201760&r=pay |
| By: | Ariane Tichit (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This article analyses the social representations of money from survey data. More specifically, it tests how organizers of a complementary currency system have a distinct perception of money compared to other citizens. The main results confirm the existence of significant differences between the two groups. The structure of their representations shows that for the local currency members money is less tied to official institutions, to the symbol of the sovereign State, to labour and to wages than for the representative population segment. This confirms a number of theoretical studies that see these social innovations as forms of protest against the standard system, questioning the sovereign State currency and close to the concept of unconditional income. Local currencies, through the different social representations of money they contain, could well be drivers of societal change. |
| Keywords: | Social representations of money,Survey data,Abric method,Complementary currencies. |
| Date: | 2017–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01576076&r=pay |
| By: | Billari, Francesco C. (Bocconi University); Giuntella, Osea (University of Pittsburgh); Stella, Luca (Bocconi University) |
| Abstract: | The spread of high-speed Internet epitomizes the digital revolution, affecting several aspects of our life. Using German panel data, we test whether the availability of broadband Internet influences fertility choices in a low-fertility setting, which is well-known for the difficulty to combine work and family life. We exploit a strategy devised by Falck et al. (2014) to obtain causal estimates of the impact of broadband on fertility. We find positive effects of high-speed Internet availability on the fertility of high-educated women aged 25 and above. Effects are not statistically significant both for men, low-educated women, and under 25. We also show that broadband access significantly increases the share of women reporting teleworking or part-time working. Furthermore, we find positive effects on time spent with children and overall life satisfaction. Our findings are consistent with the hypothesis that high-speed Internet allows high-educated women to conciliate career and motherhood, which may promote fertility with a "digital divide". At the same time, higher access to information on the risks and costs of early pregnancy and childbearing may explain the negative effects on younger adults. |
| Keywords: | Internet, low fertility, work and family, teleworking |
| JEL: | J11 J22 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10935&r=pay |
| By: | Tobias Regner (Friedrich Schiller University of Jena); Paolo Crosetto (GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA - Université Grenoble Alpes) |
| Abstract: | Crowdfunding recently emerged as an alternative funding channel for start-ups, creative artists and social endeavors. On specialized web platforms, project creators ask the crowd for support and provide in return a set of rewards, modulated according to the amount of support pledged. Our study investigates the role of self- and social-image enhancing rewards in determining project success. Using data from 346 projects hosted by Startnext, the biggest crowdfunding platform in Germany, we show that providing higher shares of reward levels that let pledgers participate in and experience the project is correlated with project success. |
| Keywords: | social-image,self-image,reward levels,identity,crowdfunding,entrepreneurial finance,donations |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01527150&r=pay |
| By: | Alex Lamarche-Perrin (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS Lyon - École normale supérieure - Lyon - CNRS - Centre National de la Recherche Scientifique); André Orléan (PSE - Paris School of Economics); Pablo Jensen (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS Lyon - École normale supérieure - Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We present a simplistic model of the competition between dierent currencies. Each individual is free to choose the currency that minimizes his transaction costs, which arise whenever his exchanging relations have chosen a dierent currency. We show that competition between currencies does not necessarily converge to the emergence of a single currency. For large systems, we prove that two distinct communities using dier-ent currencies in the initial state will remain forever in this fractionalized state. |
| Date: | 2017–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01531277&r=pay |
| By: | Alex Lamarche-Perrin (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS Lyon - École normale supérieure - Lyon - CNRS - Centre National de la Recherche Scientifique); André Orléan (PSE - Paris School of Economics); Pablo Jensen (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - ENS Lyon - École normale supérieure - Lyon - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We present a simplistic model of the competition between dierent currencies. Each individual is free to choose the currency that minimizes his transaction costs, which arise whenever his exchanging relations have chosen a dierent currency. We show that competition between currencies does not necessarily converge to the emergence of a single currency. For large systems, we prove that two distinct communities using dier-ent currencies in the initial state will remain forever in this fractionalized state. |
| Keywords: | money, dynamics, increasing returns |
| Date: | 2017–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01531274&r=pay |
| By: | Artecona, Raquel; Chau, Terence |
| Abstract: | Digital work platforms are transforming labor markets around the world. Firms that own, manage and deploy these work platforms have reframed employer–worker relations by defining their core business as the provision of the technology that enables certain services to be provided rather than the provision of those services, and offering their workers independent contractor arrangements rather than employee contracts. This has significant consequences in terms of wages, jobs security and other working conditions. Digital work platforms also increase worker welfare by offering unparalleled flexibility in setting work hours and most permit a workday to be segmented, allowing certain parts of the population who otherwise would not be able to work (due to other commitments or constraints) to have some source of income. At the same time, they pose significant challenges in the labor market. Companies replace employees with contract workers to control costs but this may lead to lower pay, benefits, and job security. Therefore, there is an urgent need for a policy debate on how to best prepare workers for this new reality. This document describes three main concerns: the issue of worker misclassification in digital work platforms, the lack of social security systems for workers in the gig economy that are not considered employees, and the problems that the isolating nature of on-demand work presents with respect to worker organization and the right to collective bargaining. |
| Keywords: | EMPLEO, ECONOMIA BASADA EN EL CONOCIMIENTO, INTERNET, TECNOLOGIA DE LA INFORMACION, TECNOLOGIA DE LAS COMUNICACIONES, MERCADO DE TRABAJO, EMPLEADOS, BIENESTAR SOCIAL, NEGOCIACION COLECTIVA, EMPLOYMENT, KNOWLEDGE-BASED ECONOMY, INTERNET, INFORMATION TECHNOLOGY, COMMUNICATION TECHNOLOGY, LABOUR MARKET, EMPLOYEES, SOCIAL WELFARE, COLLECTIVE BARGAINING |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col034:42046&r=pay |
| By: | Jasmina Arifovic (Simon Fraser University); John Duffy (Department of Economics, University of California-Irvine); Janet Jiang (Bank of Canada) |
| Abstract: | We model the introduction of a new payment method that competes with an existing payment method. Due to network adoption effects, there are two symmetric pure strategy equilibria in which only one of the two payment methods is used. The equilibrium where only the new payment method is used is socially optimal. In an experiment, we find that, depending on the fixed fee for acceptance of the new payment method and on the choices made by participants on both sides of the market, either equilibrium can be selected. An evolutionary learning model provides a good characterization of our experimental data. |
| Keywords: | Payment methods; Network effects; E-money; Experimental economics. |
| JEL: | E41 C35 C83 C92 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:171801&r=pay |
| By: | Behnud Djawadi (Paderborn University); Rene Fahr (Paderborn University); Claus-Jochen Haake (Paderborn University); Sonja Recker (Paderborn University) |
| Abstract: | In Internet transactions, customers and service providers often interact once and anonymously. To prevent deceptive behavior a reputation system is particularly important to reduce information asymmetries about the quality of the o?ered product or service. In this study we examine the e?ectiveness of a reputation system to reduce information asymmetries when customers may make mistakes in judging the provided service quality. In our model, a service provider makes strategic quality choices and short-lived customers are asked to evaluate the observed quality by providing ratings to a reputation system. The customer is not able to always evaluate the service quality correctly and possibly submits an erroneous rating according to a prede?ned probability. Considering reputation pro?les of the last three sales, within the theoretical model we derive that the service provider’s dichotomous quality decisions are independent of the reputation pro?le and depend only on the probabilities of receiving positive and negative ratings when providing low or high quality. Thus, a service provider optimally either maintains a good reputation or completely refrains from any reputation building process. However, when mapping our theoretical model to an experimental design we ?nd that a signi?cant share of subjects in the role of the service provider deviates from optimal behavior and chooses actions which are conditional on the current reputation pro?le. With respect to these individual quality choices we see that subjects use milking strategies which means that they exploit a good reputation. In particular, if the sales price is high, low quality is delivered until the price drops below a certain threshold, and then high quality is chosen until the price increases again. |
| Keywords: | Service Quality, Reputation Systems, Online Markets, Experimental Economics, Markovian Decision Process |
| JEL: | C73 C91 L12 L15 L86 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:ciepap:106&r=pay |
| By: | Rishi Ahuja (Department of Economics, Trinity College Dublin); Ronan C. Lyons (Department of Economics, Trinity College Dublin) |
| Abstract: | Online marketplaces were built with the implicit promise of reducing discrimination. Over time, though, online marketplaces have increasingly been designed to reduce anonymity as an exercise in trust building. While the reduction of anonymity can build trust, such design choices can also facilitate discrimination. This study is the first to examine whether there is discrimination against those in same-sex relationships (SSRs) in the sharing economy. Specifically, we examine whether SSRs face discrimination on the Airbnb platform in Dublin, Ireland, through a field experiment. We find that guests in implied male SSRs are approximately 20-30 percent less likely to be accepted than identical guests in implied opposite-sex relationships (OSRs) and in female SSRs. This difference is driven by non-responses from hosts, not outright rejection, and persists regardless of a variety of host and location characteristics, although male hosts and those with many listings are less likely to discriminate. Discrimination against male SSRs was observed least in the most desirable locations. The findings are not consistent with taste-based discrimination but, with little evidence for statistical discrimination, they raise something of a puzzle about the underlying source of discrimination against those in SSRs. |
| Keywords: | discrimination; sharing economy; field experiment; Airbnb |
| JEL: | J16 R3 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep1917&r=pay |
| By: | Esin Cakan (Department of Economics, University of New Haven, USA); Rıza Demirer (Department of Economics & Finance, Southern Illinois University Edwardsville, Edwardsville, USA); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Josine Uwilingiye (Department of Economics and Econometrics, University of Johannesburg, Auckland Park, South Africa) |
| Abstract: | This paper examines intentional herding among institutional investors with a particular focus on the technology sector that was the driver of the “New Economy” in the United States during the dot-com bubble of the 1990s. Using data on technology stockholdings of 115 large institutional investors, we test the presence of herding by examining linear dependence and feedback between individual investors’ technology stockholdings and that of the aggregate market. Unlike other models to detect herding, we use Geweke (1982) type causality tests that allow us to disentangle spurious herding from intentional herding via tests of bidirectional and instantaneous causality across portfolio positions in technology stocks. After controlling information based (spurious) herding, our tests show that 38 percent of large institutional investors tend to intentionally herd in technology stocks. The findings support the existing literature that investment decisions by large institutional investors are not only driven by fundamental information, but also by cognitive bias that is characterized by intentional herding. |
| Keywords: | Herding, Institutional investors, Causality, Technology stocks |
| JEL: | G02 G11 G14 C18 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201761&r=pay |
| By: | Steve Gui-Diby and Xin Li from the Macroeconomic Policy and Financing for Development Division. (United Nations Economic and Social Commission for Asia and the Pacific) |
| Abstract: | This policy brief presents short case studies of e-tools that make up the different aspects of e-government; the latter encompassing the capacity or aptitude of the public sector to use information and communications technology (ICT) for public service delivery (e-tools) as well as the willingness of the government to use these tools to engage with its citizens and deliver services. The policy brief concludes with some disadvantages of using e-tools, and e-government related areas in which Asia-Pacific countries need to make more efforts. |
| URL: | http://d.repec.org/n?u=RePEc:unt:pbmpdd:pb60&r=pay |
| By: | Nübler, Irmgard. |
| Keywords: | future of work, technological change, promotion of employment |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:994904983402676&r=pay |
| By: | Nora Lustig (Department of Economics, Tulane University) |
| Abstract: | Achieving the Sustainable Development Goals will require fiscal resources to deliver the floors in social protection, social services and infrastructure embedded in them. A significant portion of these resources is expected to come from tax collection in developing countries. Raising additional revenues domestically, however, may leave a significant portion of the poor with less cash to buy food and other essential goods. The demand for additional resources must be balanced against the competing need to protect poor households from becoming poorer as a result of taxes. |
| Keywords: | Fiscal incidence, social spending, inequality, poverty, Sustainable Development Goals |
| JEL: | D31 H22 H50 I38 Q01 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1713&r=pay |
| By: | Andre Silva (Universidade Nova de Lisboa); Bernardino Adao (Banco de Portugal) |
| Abstract: | Firm cash holdings increased substantially from 1980 to 2013. The overall distribution of firm cash holdings changed in the same period. We study the implications of these changes for monetary policy. We use Compustat data and a model with financial frictions that allows the calculation of the monetary policy effects according to the distribution of cash holdings. We find that the interest rate channel of the transmission of monetary policy has become more powerful, as the impact of monetary policy over real interest rates increased. With the observed changes in firm cash holdings, the real interest rate takes 3.4 months more to return to its initial value after a shock to the nominal interest rate. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:528&r=pay |
| By: | Nora Lustig (Department of Economics, Tulane University) |
| Abstract: | Using standard fiscal incidence analysis and the new methodological developments by the Commitment to Equity (CEQ) Institute, this paper estimates the impact of fiscal policy on inequality and poverty in sixteen countries in Latin America around 2010. With information on incomes, consumption, and other dimensions available in household surveys, and knowledge about the characteristics of the fiscal system, the CEQ method consists in allocating to each individual the burden of personal income and consumption taxes, and the benefits from cash transfers, consumption subsidies, and government spending on education and health. This process yields the pre-fiscal and post-fiscal income concepts of interest. These income concepts, in turn, are used to calculate the corresponding indicators of inequality and poverty. Thus, one can estimate, for each country, the impact of the fiscal system and each of its components on inequality and poverty. Since the methodology that was applied is the same, results are comparable across countries. The countries that redistribute the most are Argentina, Brazil, Costa Rica, and Uruguay. Guatemala, Honduras, and Peru are the countries that redistribute the least. Fiscal policy reduces extreme (income) poverty in twelve out of the sixteen countries. The incidence of poverty after taxes, subsidies, and cash transfers, however, is higher than market income poverty in Bolivia, Guatemala, Honduras, and Nicaragua, even though fiscal policy reduces inequality in these four countries. Contributory pensions have a heterogeneous effect on inequality and, contrary to some expectations, their impact is equalizing in nine of the countries. In the sixteen countries, spending on pre-school and primary education is equalizing and pro-poor (per capita benefits decline with income per capita). Spending on secondary education is always equalizing; it is also pro-poor in some of the countries. Spending on tertiary education is never pro-poor but it is equalizing in all the countries except for Guatemala. Spending on health is always equalizing but pro-poor only in some countries. Latin America presents a great deal of heterogeneity in the size of the state and the countries’ capacity to use their fiscal power to reduce inequality and poverty. A higher share of social spending (to GDP) is associated with a larger redistributive effect but countries with similar, or even lower, shares of social spending show heterogeneous redistributive effects implying that other factors beyond size such as the composition and targeting of social spending (and taxes) are at play. It is important to emphasize that a higher redistributive effect is not necessarily a desirable outcome since in this article there is no estimation of the impact of redistributive policy on fiscal sustainability and efficiency. In some countries, the burden of consumption taxes is such that a portion of the poor are net payers into the fiscal system (before receiving "in kind" transfers in education and health). Governments should examine whether this undesirable effect could be avoided, or at least reduced, through an expansion of targeted cash transfers and/or reduction in the consumption taxes that are particularly burdensome for the poor. |
| Keywords: | Incidencia fiscal, desigualdad, pobreza, impuestos, transferencias, America Latina |
| JEL: | D31 H22 I38 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1714&r=pay |