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on Transition Economics |
| By: | Klejdysz, Justyna (LMU Munich and ifo Institute); Zawisza, Tom (OECD and Institute for Fiscal Studies) |
| Abstract: | How does the differential tax treatment of employees versus self-employed affect the decision to switch to self-employment? Using administrative data on the universe of taxpayers, we study the impact of a large tax cut for business owners in Poland on high-income individuals’ decisions to transition from employment to self-employment. In 2004, the marginal tax rate for business owners in the top income bracket decreased from 40% to a flat rate of 19%, while employees remained subject to a progressive tax schedule with a top rate of 40%. We find a 17% increase in the probability of high-income employees switching to self-employment five years after the reform. The increase in entries to self-employment was driven by increased transitions to long-term solo self-employment (self-employment without dependent workers), especially in high-skilled service industries. In 2009, another reform reduced the tax differential. The entries from employment to self-employment temporarily decreased, but those who had previously switched to self-employment did not return to employment. These findings suggest that large tax differentials increased the attractiveness of self-employment as an alternative to employment but also increased the share of entrants to self-employment who do not hire workers. |
| Keywords: | employment; self-employment; optimal taxation; income tax; highincome earners |
| JEL: | D31 H20 J62 L26 |
| Date: | 2024–08–16 |
| URL: | https://d.repec.org/n?u=RePEc:ris:mfplwp:0043 |
| By: | Martin, Will; Minot, Nicholas |
| Abstract: | This paper begins with a survey of recent commodity price developments that highlights the magnitude of this price surge and identifies the rapid rise in wheat prices as a key element. The analysis in this paper focuses on the extent to which domestic markets are insulated from these changes and on the resulting impacts on world prices. An econometric analysis using Error Correction Models finds stable long-term relationships between world wheat prices and most domestic prices of wheat and wheat products, but with considerable variation across countries in the rate of price transmission. A case study of the price shocks during the Covid pandemic and the Ukraine food price crisis finds that price insulation roughly doubled the overall increase in world wheat prices and raised their volatility both during periods of price increase and price decline. |
| Date: | 2024–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:dyqek |
| By: | Glas, Alexander; Schölkopf, Julius |
| Abstract: | On 6 June 2024, the European Central Bank (ECB) lowered the main refinancing operations (MRO) rate from 4.5% to 4.25%. This decision followed a period of elevated interest rates intended to combat high inflation in the euro area, which peaked at 10.6% in October 2022 in the aftermath of the COVID-19 pandemic and the Russian invasion of Ukraine. Although inflation levels are now closer to the ECB's medium-term target of 2%, some doubt remains on whether the inflationary pressure has truly abated, since the last mile of the inflation cycle is often perceived as challenging. Indeed, inflation increased again in May 2024 to 2.6%, from 2.4% in April, and the ECB has not committed itself to a certain interest rate path. Instead, it follows a data-dependent meeting-by-meeting approach for further interest rate decisions. In this policy brief, we analyse whether and how much professional forecasters and market analysts disagree on the nature and speed of future interest rate decisions by the ECB. We also consider the role of uncertain dynamics of future inflation and the economic recovery in the euro area to explain the dispersion of interest rate expectations. For this purpose, we asked the participants in the June 2024 wave of the ZEW's Financial Market Survey for their expectations regarding interest rate decisions at upcoming Governing Council meetings. We condition the individual responses on the respondents' short- and medium-term inflation and GDP growth expectations and supplement our findings with similar evidence for the US. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewpbs:300832 |
| By: | Alistair Milne |
| Abstract: | Supply disruptions, in particular the reduced supply of gas following the Russian invasion of Ukraine, has triggered the major energy crisis across all of Europe. This threatens a severe economic downturn with substantially reduced real incomes, widespread business closures and – especially in the UK with its heavy reliance on natural gas for domestic heating – many households pushed into 'fuel poverty', choosing between adequate nutrition and heating for their homes. This note discusses the economic mechanisms driving this crisis and the policy tools available to address it. The principal message is that in a crisis such as this quantities matter. The new UK government is introducing a near complete suspension of price mechanism in domestic energy markets, freezing both household and wholesale prices. Government across Europe will take similar measures. These seem necessary to protect households and businesses. But they are only sticky plasters. There is a near-binding constraint on the overall supply of gas in Europe. Without prices allocating supply, further measures are needed to decide who gets how much gas. So, the policy response must address quantities, turning to administrative management of the physical flows of gas, to secure supply and reduce demand (through public appeal, voluntary proposed consumption reductions and where unavoidable rationing). In practical terms this means, going beyond the price caps (i) negotiating, bilaterally, with Norway as the principal supplier of gas to Europe to ensure energy security, obtaining allocations of gas at below elevated wholesale market prices; and (ii) within the resulting envelope of supply, implement standing plans e.g. in the UK those of BEIS and the National Grid, for allocating limited energy resources in a supply crisis. From the policies announced and discussed so far it appears that the UK government, and its counterparts across Europe, believe that the physical deficit of energy in Europe can be closed by spending unlimited amounts of money. But the underlying problem is a shortage of physical supply. Spending more money, without controlling quantity, drives prices ever higher. This policy stance is reminiscent of the Major government in Black Wednesday 1992. Like that policy it is not sustainable. Turning to administrative management of the quantities of gas deals directly with the supply deficit and will bring the cost of energy closer to normal levels. This is not without economic costs. Low priority consumers will consume less gas than they would like to purchase. Imports of liquid natural gas LNG must still be paid for at a premium price. But much less money than currently announced is needed for protecting households and businesses. No need to burden the taxpayer. |
| Date: | 2022–09 |
| URL: | https://d.repec.org/n?u=RePEc:nsr:niesrp:35 |
| By: | Ivan Boldyrev |
| Abstract: | What are the effects of authoritarian regimes on scholarly research in economics? And how might economic theory survive ideological pressures? The article addresses these questions by focusing on the mathematization of economics over the past century and drawing on the history of Soviet science. Mathematics in the USSR remained internationally competitive and generated many ideas that were taken up and played important roles in economic theory. These same ideas, however, were disregarded or adopted only in piecemeal fashion by Soviet economists, despite the efforts of influential scholars to change the economic research agenda. The article draws this contrast into sharper focus by exploring the work of Soviet mathematicians in optimization, game theory, and probability theory that was used in Western economics. While the intellectual exchange across the Iron Curtain did help advance the formal modeling apparatus, economics could only thrive in an intellectually open environment absent under the Soviet rule. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2407.14315 |
| By: | Bachev, Hrabrin; Ivanov, Bozhidar |
| Abstract: | A new holistic framework for an adequate understanding of the system of agri-food governance and for assessing its quality, incorporating interdisciplinary New Institutional Economics, is suggested. Agri-food governance is defined as a complex system including (1) agri-food and related agents; (2) rules, forms, and mechanisms that govern their behavior, activities, and relations; (3) processes and activities related to making managerial decisions; (4) a specific social order resulting from the governing process; (5) outcomes of the functioning of the system in terms of realization of sustainability goals. For assessing the quality of governance, a multidimensional hierarchical system of well-defined Good Governance Principles, Criteria, Indicators, and Reference Values is presented and experimented. The first-in-kind evaluation of the quality of agrarian governance in Bulgaria, based on statistical data and experts’ assessments, found that it is at a moderate EU level. In terms of Sustainability, it is at a good level while for Process, Means, and Order the level is satisfactory. The best performance is for principles of Equity and Solidarity, and Good Working Public Sector while the poorest one is for Working Private Sector and Stakeholder's Involvement. In the latter direction, combined public, private, and collective efforts are to be made to improve agri-food governance in the country. |
| Keywords: | Agricultural and Food Policy, Community/Rural/Urban Development, Institutional and Behavioral Economics |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344282 |
| By: | Allan, R.; Daud, A.; Rosli, A. |
| Abstract: | Pepper, the world's most used spice has been widely used ever since ancient times. This spice has a high value in terms of monetary due to its medicinal properties. This berry-like spice has never lost its popularity as the world's most traded and used spice. In response to its market value, a study was conducted to analyse the market price movement of black pepper among four world major producers – India, Indonesia, Vietnam, and Malaysia. This study addresses the co-movement among these four major pepper-producing markets by setting the world’s top producer Vietnam, as the dependent variable whilst India, Indonesia, and Malaysia are set as the independent variables. Due to the high price fluctuation of this storable commodity and significant price diversity in different markets, market integration among major producers is essential to study. The unison among the global pepper market is important, not only regarding producers and consumers but also in terms of profit maximization and economic risk management. The study uses the Johansen cointegration approach and the vector error correction model to analyse and evaluate the presence and strength of co-movement of price amongst the market, from the perspective of export freight on board price. The study has found that there are co-movements in the market Vietnam, India, Indonesia, Malaysia, and Sri Lanka, despite obvious price differences and frequent fluctuations. The markets are found to be operating as a single organism. The convergence of pepper prices is found to be significant, and the model is stable for the export of black pepper. |
| Keywords: | Agribusiness, Production Economics |
| Date: | 2024–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:ags:asea24:344439 |
| By: | Hamdi Ben-Nasr (Qatar University); Sabri Boubaker (VNU - Vietnam National University [Hanoï], Métis Lab EM Normandie - EM Normandie - École de Management de Normandie, Swansea University) |
| Abstract: | We add to the literature on the economic outcomes of government debt and argue that government debt increases crash risk via two channels: (i) hoarding bad news and (ii) tax avoidance. Based on a large international sample, our results indicate that stock crash risk is positively associated with government debt. Our conclusions are robust when we treat endogeneity issues, and our tests confirm the validity of bad news hoarding and tax avoidance as channels through which government debt influences stock price crash risk. |
| Keywords: | Government debt, Fiscal policy uncertainty, Bad news hoarding, Tax avoidance, Crash risk |
| Date: | 2024–02–16 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04648524 |
| By: | Tho, Le Canh Bich; Umetsu, Chieko |
| Abstract: | The Vietnamese government has developed a strategy for rice production with the goal of reducing export volumes and concentrating on the quality of aromatic and high-quality rice. There are approximately 1 million hectares of aromatic paddy cultivation in the Mekong Delta (MKD) provinces each year, which accounts for about 25% of the total paddy area. Understanding the overall efficiency of aromatic rice in VMKD becomes essential due to the potential development of both domestic and export markets for aromatic rice. Therefore, the purpose of this research is to examine how MKD's farmers produce aromatic rice and determine the factors determining its production efficiency. Primary data were collected through a survey of 247 aromatic rice cultivators. The non-radial data envelopment analysis, a slack-based measure (SBM), was employed to consider the overall efficiency and agrochemical overutilization of each rice farm. In general, aromatic rice production in the MKD achieved an overall efficiency of 63%. In this regard, the RVT variety has the highest SBM score at 0.72, while Jasmine 85 has the lowest SBM score at 0.61. The factors that contribute to household efficiency include obtaining a larger farm size, participating in cooperatives, and practicing eco friendly farming. In addition, aromatic rice producers still use much more than the required amount of inputs for production. The aromatic rice sector should follow climate-smart agricultural practices in order to comply with export standards. This includes a significant reduction in the use of seeds, agrochemicals, and water. |
| Keywords: | Farm Management, Production Economics, Productivity Analysis |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344329 |