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on Public Economics |
| By: | Blomquist, Sören (Uppsala Center for Fiscal Studies); Christiansen, Vidar (Department of Economics, University of Oslo); Micheletto, Luca (Uppsala Center for Fiscal Studies) |
| Abstract: | Several contributions in the optimal taxation literature have emphasized that, when individuals’ preferences are not separable between leisure and other goods, it is desirable to supplement a nonlinear income tax with public provision of private goods. Moreover, it has also been shown that the choice between a topping-up and an opting-out scheme depends on whether the publicly provided good is a complement or substitute with leisure, with opting-out (topping-up) being the preferred scheme for goods which are substitutes (complements)for labor. In this paper, using the self-selection approach to tax analysis, we revisit these results in the presence of tax avoidance, and investigate how public provision interacts with the agents’incentives to engage in tax avoidance. Three results are obtained. First, we show that tax dodging opportunities imply that non-separability between labor and other goods is neither a necessary nor a sufficient condition to make public provision of private goods a welfare-enhancing policy instrument. Second, we show how tax dodging opportunities limit the scope for using topping-up provision schemes as a redistributive device. Finally, we show that, for most of the public provision schemes previously analyzed in the literature, being a welfare-enhancing policy instrument goes hand in hand with weakening the agents’incentives to shelter income from the tax authority. However, we also point out an important exception to this pattern. |
| Keywords: | optimal nonlinear income tax; public provision of private goods; tax avoidance |
| JEL: | H21 H26 H42 |
| Date: | 2011–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2011_006&r=pbe |
| By: | Luque, Carlos A.; Haddad, Eduardo A.; Lima, Gilberto T.; Sakurai, Sergio N.; Costa, Silvio M. |
| Abstract: | Redistributive policies carried out by the central government through interregional government transfers is a relevant feature of the Brazilian federal fiscal system. Regional shares of the central government revenues in the poorer regions have been recurrently smaller than the shares of central government expenditures in those regions. Appeal to core-periphery outcomes could be made, as São Paulo, the wealthiest state in the country, concentrated, in 2005, over 40% of total Federal tax revenue, receiving less than 35% of Federal expenditures. These figures suggest a redistribution of public funds from the spatial economic core of the economy to the peripheral areas. This paper investigates the role interregional transfers play in the redistribution of activities in the country, using an interregional input-output approach. Counterfactual simulations allow us to estimate some costs and benefits, for the core and periphery respectively, from such fiscal mechanisms. |
| Keywords: | Interregional government transfers; input-output analysis; impact analysis; Brazilian economy |
| JEL: | H77 H5 R15 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:31292&r=pbe |
| By: | Doraisami, Anita (Asian Development Bank Institute) |
| Abstract: | Several countries have employed countercyclical fiscal policy to ameliorate the impact of the global financial crisis. This study identifies some of the issues and policy implications associated with this policy response in developing countries. Included are case studies of four developing countries in the Asian region—Malaysia, Indonesia, the Philippines, and Singapore. The findings point to a rich diversity in both the size and composition of fiscal stimulus and the challenges which are confronted. This study suggests several steps that countries might take to improve the impact of expansionary fiscal policy in response to future downturns. These include (i) embedding automatic stabilizing impulses through the provision of social safety nets; (ii) increasing tax revenues collected from personal and corporate taxes, by reducing labor market informality through improvements in the business environment; (iii) safeguarding fiscal sustainability; (iv) rebalancing growth by strengthening other sectors of the economy; (v) reducing expenditures on subsidies; and (vi) ensuring smooth and efficient budget execution. |
| Keywords: | countercyclical fiscal policy; asia fiscal policy; fiscal policy; global financial crisis |
| JEL: | E60 E61 E62 E63 |
| Date: | 2011–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0288&r=pbe |
| By: | Nikolaos Georgantzís (GLOBE & Department of Economics, University of Granada); Antonios Proestakis (GLOBE & Department of Economics, University of Granada) |
| Abstract: | Wealth heterogeneity infuences people's behavior in several socioeconomic environments, especially when groups consisting of "unequal" members have to take a collective action which affects all members equally or proportionally. After eliciting real out-of-lab wealth, we form 4-player groups playing an one-shot public good game with heterogeneous laboratory endowments. Endowing subjects according or against their real wealth gives rise to a series of interesting results. Endowment heterogeneity, lack of real relative wealth information and being "rich" both inside and outside the lab raise contributions. Finally, when eliciting subjects' beliefs, we find out that only relatively "poor" subjects expect others to contribute more than what they actually are prepared to do theirselves. |
| Keywords: | Public goods, experiment, endowment heterogeneity, real wealth |
| Date: | 2011–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:gra:wpaper:10/20&r=pbe |
| By: | Luis Carranza; Christian Daude; Ángel Melguizo |
| Abstract: | Latin American countries exhibit a significant gap in infrastructure stocks, due to low and in many cases inefficient public investment, which is furthermore not compensated by private sector projects. In this paper we analyse trends in public and total infrastructure investment in six large Latin American economies, in the light of fiscal developments since the early eighties. We argue that post-crisis fiscal frameworks, notably fiscal rules which are increasingly popular in the region, should not only consolidate the recent progress towards debt sustainability, but also create the fiscal space to close these infrastructure gaps. These points are illustrated in a detailed account of recent developments in the fiscal framework and public investment in the Peruvian case.<BR>Les pays d'Amérique latine présentent une lacune importante dans les stocks d'infrastructure, à cause des faibles et nombreux cas d'investissements publics inefficaces, ce qui n'est compensée par les projets du secteur privé. Dans ce document, nous analysons les tendances publiques et total d'investissement des infrastructures dans six grandes économies latino-américaines, à la lumière de l'évolution fiscal depuis les années quatre vingt. Nous soutenons que les cadres de post-crise fiscales, notamment les règles fiscales qui sont de plus en plus populaire dans la région, devrait non seulement consolider des progrès récemment accomplis vers la viabilité de la dette, mais aussi de créer l'espace budgétaire pour combler ces lacunes dans l'infrastructure. Ces points sont illustrés dans un compte détaillé de l'évolution récente dans le cadre fiscal et l'investissement public dans le cas du Pérou. |
| Keywords: | fiscal policy, fiscal rules, Latin America, infrastructure, politique budgétaire, Amérique latine, infrastructure |
| JEL: | E62 H54 O54 |
| Date: | 2011–06–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:301-en&r=pbe |
| By: | Hitzschke, Stephan |
| Abstract: | This work investigates the interrelation between production efficiency and population size of German cities. The productive efficiency in this context is the scale efficiency, which is a result of positive and negative agglomeration externalities. The investigation is performed in a two-stage process. First, the efficiency in terms of scale efficiency is measured using nonparametric methods. The second stage investigates the relation of scale efficiency and populations size. It turns out that the optimal city size in Germany is about 220,000 inhabitants, which is almost the mean size of all German cities involved. Although there are regional differences, optimal city size remains stable as the mean size. |
| Keywords: | Efficiency analysis, optimal city size, population size, German cities |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:dar:ddpeco:50741&r=pbe |
| By: | Gauti B. Eggertsson |
| Abstract: | This paper analyzes the effectiveness of fiscal policy at zero nominal interest rates. I solve a stochastic general equilibrium model with sticky prices assuming that the government cannot commit to future policy. Real government spending increases demand by boosting public consumption. Deficit spending increases demand by generating inflation expectations. I compute multipliers of government spending that calculate by how much each dollar of spending increases output. Both the deficit and the real spending multipliers can be large, but the multiplier of deficit spending depends critically on monetary and fiscal cooperation: it can be large with cooperation and zero without it. The theory suggests one interesting interpretation of why recovery measures–such as fiscal spending, exchange interventions, and large increases in the money supply–had a smaller effect on nominal demand in Japan during the Great Recession (1992-2006) than during the US's Great Depression (1929-1941). In both episodes, the short-term nominal interest rate was close to zero. The theory suggests that part of the difference can be explained by the fact that, while monetary and fiscal policy were coordinated in the US during the Great Depression, they were not in Japan during the Great Recession. The overall conclusion of the paper is that the effect of given policy actions depends crucially on the institutional setup in the economy. |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:628&r=pbe |
| By: | Raouf Boucekkine (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Giorgio Fabbri (Dipartimento Matematica e statistica - Université de Naples); Fausto Gozzi (Dipartimento di Scienze Economiche e Aziendali - Libera Università INTERNAZIONALE DEGLI STUDI SOCIALI G. CARLI) |
| Abstract: | In this paper, we devise a social criterion in the spirit of the critical utility level of Blackorby-Donaldson (1984) to study an optimal population size problem in an endogenously growing economy populated by workers living a fixed amount of time and without capital accumulation. Population growth is endogenous. The problem is analytically solved, yielding closed-form solutions to optimal demographic and economic dynamics. It is shown that provided the economy is not driven to optimal finite time extinction, the optimal solution is egalitarian for appropriate choices of the critical utility levels: all individuals of any cohort are given the same consumption. The results obtained do not require any priori restriction of the values of the elasticity of intertemporal substitution unlike in several related papers. |
| Keywords: | Optimal population size; finite life span; critical utility value; optimal extinction; balanced growth paths |
| Date: | 2011–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00599084&r=pbe |
| By: | Hoang Van Long; Mitsuyasu Yabe (Department of Agriculture and Resource Economics, Faculty of Agriculture, Kyushu University, Japan) |
| Abstract: | In Vietnam, the poor have long been assumed to be the ethnic minorities mostly living in the highlands. After more than two decades of introducing Doi moi policy into the economy, along with having enjoyed various improvements in social and economic aspects, the disparities between the majority and ethnic majorities, the lowlands and the highlands, and between regions, still have been widened. This paper aims at examining income inequality, its affecting factors in rural areas, and exploring the current situation of regional economic disparities using both development policy review and econometrics approaches. Data from Vietnam Household Living Standard Survey (VHLSS) 2008 was used in the study. The expenditure per capita was employed as the dependent variable to regress with household characteristics and resources. In addition, the regional dummy variables were employed to show the different effects from different geographic locations. The results showed that the household characteristics and resources such as education level, perennial land area, water surface area, and the accessibility to infrastructure facilities such as road, electricity and local market had positive effect on expenditure. Furthermore, the North Central Coast region showed negative impact on household expenditure. Interestingly, this finding does not absolutely follow the hypothesis and indicates that the economic development strategy and polices should be adjusted to decrease the gap among regions based on their economic advantages for balancing the economic situation of the whole country in the future |
| Keywords: | Inequality, Disparity, Regional Development, Rural Development, Vietnam |
| JEL: | M0 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:cms:2icb11:2011-119&r=pbe |