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on Public Finance |
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Issue of 2009‒11‒21
seven papers chosen by |
| By: | Anastasios G. Karantounias with Lars Peter Hansen; Thomas J. Sargent |
| Abstract: | This paper studies an optimal fiscal policy problem of Lucas and Stokey (1983) but in a situation in which the representative agent's distrust of the probability model for government expenditures puts model uncertainty premia into history-contingent prices. This situation gives rise to a motive for expectation management that is absent within rational expectations and a novel incentive for the planner to smooth the shadow value of the agent's subjective beliefs to manipulate the equilibrium price of government debt. Unlike the Lucas and Stokey (1983) model, the optimal allocation, tax rate, and debt become history dependent despite complete markets and Markov government expenditures. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2009-29&r=pub |
| By: | Matthew Denes; Gauti B. Eggertsson |
| Abstract: | This paper outlines a simple Bayesian methodology for estimating tax and spending multipliers in a dynamic stochastic general equilibrium (DSGE) model. After forming priors about the parameters of the model and the relevant shock, we used the model to exactly match only one data point: the trough of the Great Depression, that is, an output collapse of 30 percent, deflation of 10 percent, and a zero short-term nominal interest rate. Because we form our priors as distributions, the key economic inference of our analysis--the multipliers of tax and spending--are well-defined probability distributions derived from the posterior of the model. While the Bayesian methods used are standard, the application is slightly unusual. We conjecture that this methodology can be applied in several different settings with severe data limitations and where more informal calibrations have been the norm. The main advantage over usual calibration exercises is that the posterior of the model offers an interesting way to think about sensitivity analysis and gives researchers a useful way to describe model-based inference. We apply our simple estimation method to the American Recovery and Reinvestment Act (ARRA), passed by Congress as part of the 2009 stimulus plan. The mean of our estimate indicates that ARRA increased output by 3.6 percent in 2009 and 2010. The standard deviation of this estimate is 1 percent. |
| Keywords: | Depressions ; Econometric models ; Taxation ; Government spending policy |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:403&r=pub |
| By: | Gauti B. Eggertsson |
| Abstract: | Tax cuts can deepen a recession if the short-term nominal interest rate is zero, according to a standard New Keynesian business cycle model. An example of a contractionary tax cut is a reduction in taxes on wages. This tax cut deepens a recession because it increases deflationary pressures. Another example is a cut in capital taxes. This tax cut deepens a recession because it encourages people to save instead of spend at a time when more spending is needed. Fiscal policies aimed directly at stimulating aggregate demand work better. These policies include 1) a temporary increase in government spending; and 2) tax cuts aimed directly at stimulating aggregate demand rather than aggregate supply, such as an investment tax credit or a cut in sales taxes. The results are specific to an environment in which the interest rate is close to zero, as observed in large parts of the world today. |
| Keywords: | Fiscal policy ; Interest rates ; Taxation ; Government spending policy |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:402&r=pub |
| By: | Matovu, John; Twimukye, Evarist; Nabiddo, Winnie; Guloba, Madina |
| Abstract: | The Uganda government has since 1987 initiated a sequence of tax reforms to address the fiscal challenges facing the country. This paper uses a Computable General Equilibrium (CGE) model to analyze the welfare effects of tax reforms on households and the impact of these challenges on production and firm activities. The findings are consistent with previous studies which found that the introduction of VAT was indeed a progressive policy reform. Zero rating all food items and agricultural products mainly benefit the low income households whose consumption basket is mainly food items. In a quest for further sources of revenue by overtaxing the rich, this could generate further revenues albeit lower savings and investments by this group. Finally, over-reliance on excise duties especially on petroleum and alcohol drinks affects the transportation sectors which are also used by the poor. In our results we find that taxation of petrol and rising excise duties indeed is a regressive policy stance. |
| Keywords: | Computable General Equilibrium (CGE), Twimukye, Nabiddo, Taxation, Tax base, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Livestock Production/Industries, |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eprcrs:54801&r=pub |
| By: | Bategeka, Lawrence; Guloba, Madina; Kiiza, Julius |
| Abstract: | the paper examines the gender dimensions of personal income tax (PIT) in Uganda with an eye on the possible gender biases that may be embedded in the tax system. It further addresses the issues of Uganda achievement of substantive gender equality rather than formal equality as regards the impact of taxes from a gender perspective. This is in line with Convention on the elimination of all forms of discrimination against all people as if they are the same and synonymous with equality of opportunity... we find that PIT paid by different household earning types increases gender inequality. We also find that some tax systems only worsens gender gaps and hardly is a useful tool that could be used to close the gender gaps. This paper proposes how PIT could be reformed with a view to using taxation as a tool for the realization of substantive gender equality. |
| Keywords: | Gender equality, CEDAW, Taxation, Income tax, Kiiza, Bategeka, Guloba, Economic policy research center, Community/Rural/Urban Development, Consumer/Household Economics, Demand and Price Analysis, Financial Economics, Institutional and Behavioral Economics, |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eprcrs:54938&r=pub |
| By: | Callan, Tim; Keane, Claire; Walsh, John R. |
| Keywords: | Ireland |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp322&r=pub |
| By: | Sennoga, Edward; Matovu, John M.; Twimukye, Evarist |
| Abstract: | Uganda still lags behind in its tax collections at the domestic level. For most of the commodities the tax collection effort is not more than 5 percent relative to the statutory rate of 18 percent. This results into a situation where the government has to rely a lot on foreign financing. From the analysis, there is a lot of improvement where URA can be able to increase its tax effort. this could be achieved by targeting commodities that are under-taxed and excluding food items for equity purposes. Increasing domestic collection would also result into less over reliance on taxing a few commodities especially fuel which is interlinked with a lot of other sectors and could indeed harm growth in the long-run. We also find that the tax effort on imports is sufficient. However, import duties on fuel remain very high and this could be a symptom of the poor domestic tax collection. |
| Keywords: | Taxation, Tax base, Domestic taxes, import duty, Sennoga, Twimukye, Matovu, EPRC, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Public Economics, |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eprcrs:54802&r=pub |