the spatial organization of multinational firms using six years of firm level data covering 224 regions of the enlarged european union we evaluate the importance to a firm of locating its activities production headquarters r d logistics and sales close together we find that after controlling for regional characteristics being closely located to a previous investment positively affects firm location choice however the impact of distance is dependent on the type of investment production or service the impact dies out faster for service activities finally we show that a surprisingly positive effect comes from locating a new production plant close to an existing production investment but in another country

public good differentiation and the intensity of tax competition we show that in a setting where tax competition promotes efficiency variation in the extent to which firms can use public goods to reduce costs brings about a reduction in the intensity of tax competition this in turn brings about a loss of efficiency in this environment a minimum tax counters the reduction in the intensity of tax competition thereby enhancing efficiency split the difference tax harmonization also potentially enhances efficiency but would not be agreed upon by governments because it lowers the payoff to at least one of them this paper also presents an explanation for how traditionally high tax countries have continued to set taxes at a relatively high rate even as markets have become more integrated

foreign direct investment intra firm trade and ownership structure abstract asymmetric information about true opportunity cost in trade between a multinational and its foreign affiliate can alleviate the hold up problem in foreign direct investment selling shares in the affiliate to locals is also beneficial because it increases the parent multinational s information rent that is protected from a host government s confiscatory taxation

does market based electricity price affect china s energy efficiency abstract china is in a critical period of market oriented reform and energy transition as a crucial means to regulate supply and demand under the market oriented mechanism the electricity price can promote the development of energy efficiency by optimizing resource allocation with the gradual increase in electricity consumption the influence of its price on energy consumption is also gradually enhanced therefore this paper evaluated the process of electricity price marketization and conducted a spatial temporal comparative analysis of the effect of electricity price on energy efficiency by controlling economic policy and other price factors the results show that 1 the marketization degree of china s electricity price has improved with steady steps 2 market oriented electricity price has a stable positive correlation with energy efficiency in both the short and long term 3 marketization improves the promotion effect of electricity price on energy efficiency and the influence of electricity price is more significant in the eastern region with a high degree of marketization and the subsequent stage 4 the impact of market oriented electricity price on energy efficiency is asymmetric the impulse response under positive and negative shock is opposite and under the positive shock the response time is longer and the degree is greater

democracy and development the devil in the details does democracy promote economic development this paper reviews recent attempts to address this question that exploited within country variation it shows that the answer is largely positive but also depends on the details of democratic reforms first the sequence of economic vs political reforms matters countries liberalizing their economy before extending political rights do better second different forms of democratic government lead to different economic policies and this might explain why presidential democracy leads to faster growth than parliamentary democracy third it is important to distinguish between expected and actual political reforms taking expectations of regime change into account helps identify a stronger growth effect of democracy

strategic behaviour and the rules for international taxation of capital this paper examines the welfare of a capital exporting or source country and a capital importing or host country under tax credit and tax deduction systems for the international taxation of capital because the two tax systems may create quite different strategic incentives for the countries the authors compare the equilibria in the tax setting game played by the two countries under each system they find that the tax credits system introduces an antitrade bias into the equilibrium contrary to initial impressions and that both capital exporting and capital importing countries will prefer the tax deductions scheme to tax credits copyright 1989 by royal economic society

political regimes and the extractive capacity of governments taxation in democracies and dictatorships recent political and economic transformations in latin america africa asia and eastern europe have brought about a renewed interest in the incentives and capabilities of different types of political regimes to implement policies that are deemed necessary for economic development in particular policies aimed at increasing tax revenue one central question is whether democracies can collect as much in taxes as dictatorships this article addresses this question by examining whether regime type classified as democracy or dictatorship has a causal impact on a government s capacity to mobilize resources through taxation on the basis of data gathered for 108 countries for the period between 1970 and 1990 the article concludes that observed differences across countries regarding the level of taxes collected by the government are not due to the fact that some are under a democracy and others under a dictatorship concerns about the inability of democratic regimes to collect taxes are therefore unfounded

the latin american state the role of the state in latin american economic development is undergoing fundamental reconsideration even while political scientists have been bringing the state back in economists have been busy trying to take it out evans rueschmeyer and skocpol 1985 reduced government intervention has seemingly been the winning side earlier presumptions about the clear benefits of public guidance no longer orient development strategy in most countries in the region instead there is new vitality to the claims for the advantages of market liberalization and privatization of state enterprise an apparent new consensus regarding a diminished role for the state in latin america has emerged reinforced by the rising liberal tendencies in industrialized countries and the precipitate rejection of central planning in the socialist bloc this debate is central to development economics as a field so much so that deepak lal 1985 p 53 identifies its demise with this new recognition of the importance of policy induced and thus far from inevitable distortions created by irrational dirigisme but this reconsideration takes on a special significance in latin america for two reasons first the model of state led industrialization through import substitution is identified with the region raul prebisch and the economic commission for latin america 1950 were the most prominent advocates of this new post world war ii development strategy and it still is esteemed by many latin americans second countries of the region have experienced a sharp break with past growth trends in the 1980s experiencing a cumulative average decline in per capita income of some 10 percent during the decade there is strong impetus for a new approach

voluntary agreements in the field of energy efficiency and emission reduction review and analysis of experiences in the european union abstract a number of member states of the eu have introduced voluntary agreements vas that aim to deliver energy savings and emission reductions via increased energy efficiency in different end use sectors mainly targeting industry where there is a successful track record of cooperation between public authorities and the private sector vas can offer advantages to public authorities in comparison to legislation most importantly better flexibility when introduced or updated greater acceptance by industry possibility for tailor made solutions e g at the level of industrial sectors and opportunity to overcome the information asymmetry between public authorities and private actors nevertheless vas have been criticized for lack of specific obligations and lenient targets as well as for deficiencies in compliance monitoring and self reporting and difficulty in establishing the policy additionality of va activity this paper analyses the design of existing vas in terms of general framework targets and sectors obligations and commitments motivation to join reporting and monitoring provisions and results of existing vas as reported by national authorities the paper summarizes the key characteristics of voluntary agreements and gives recommendations for the successful application of this policy tool

long term drivers of taxation in francophone west africa 1893 2010 abstract which factors have driven fiscal revenue in sub saharan africa in the long run we address this question by studying quantitatively the long term relationship between fiscal outcomes economic expansion and external dependency in four francophone west african countries benin cote d ivoire niger and senegal between 1893 and 2010 using panel co integration modelling we find a long term relationship between on the one hand tax revenue and local economic development proxied by international trade and on the other hand tax revenue and developments of the economy and taxation in the former colonizing power france the results indicate that economic expansion has been a significant factor in driving the long term development of tax revenue in west africa just as it was in historical europe but also point to the historical vulnerability and external dependency of the fiscal systems of the four west african countries we suggest that the wider implication of these results is that they point to the importance of deepening our understanding of how domestic contexts interact with external economic and institutional external forces to shape african fiscal systems in contrast to factors such as inter state warfare that are ubiquitous in narratives of historical european taxation and state development

the theory of taxation for developing countries tax policy has far reaching implications for economic development and public administration this book which presents a modern theory of public finance brings together many of the most distinguished economists who have written on the subject they provide coherent principles for tax design and a systematic framework for the analysis of practical questions of tax reform and pricing policy in developing countries the book is especially timely as countries experience increasing shortages of government revenue and the distortions brought about by poorly designed tax systems it pays particular attention to the special problems of developing countries such as the taxation of agriculture the aim throughout is to develop techniques that can be quantitatively applied given the data available and empirical case studies illustrate the methods in action the authors analyze the links between tax theory social cost benefit analysis and the pricing of publicly supplied goods and services they also explore the empirical and econometric problems of identifying the tradeoffs between equity and efficiency other topics treated include the analysis of labor markets the taxation of foreign private investment and of fuel and the pricing of education although the models used concentrate on developing countries most of the methods and discussion apply as well to the problems of more affluent countries

is there a necessary condition for democracy the role of state capacity in postcommunist countries although postcommunist countries share a common past the variability of outcomes in both democracy and economic reform is very large in the region only a few countries have become western type democracies in central and eastern europe and the baltic by contrast the norm is clearly not democracy for other soviet successor states in this article the author attributes this variation to differences in the infrastructural capacity of the state using both quantitative and qualitative analyses within 26 postcommunist countries the author argues that for democracy to flourish the state must first possess the necessary means to maintain law and order and to protect the rights of citizens in other words to ensure the maintenance and delivery of essential public goods the results show that the links between a strong state that has been able to apply a definitive set of rules and democratic institutions are clear

public violence and state building in central america this article examines the role played by war and public violence more generally in the state building experiences of central america bellicist theory expects that wars provide a stimulus to extractive efforts thus enhancing the autonomy and capacity of the state over time though recent qualitative studies of south america find the opposite i expand the reach of bellicist theory to central america through the broader concept of public violence which captures the long term impact of external and internal rivals on the state the quantitative tests demonstrate that central american interstate and civil wars reduce the extractive ability of states consistent with the south american evidence interstate rivals stimulate extractive efforts among governments whereas intrastate rivals detract from those efforts incorporating the concept of public violence into bellicist theory thus helps to increase our understanding of central american state building

incentive compatible regulation of a foreign owned subsidiary abstract transfer prices are administered charges for intra firm transfers of factors of production for a multinational firm transfer prices for international transfers provide the means to redistribute costs and increase global profits given variations in national tax and profit repatriation policies local regulation of a subsidiary may thus be necessary to limit the welfare costs of strategic transfer pricing prusa journal of international economics 1990 28 155 172 characterizes the welfare maximizing regulations for a monopoly subsidiary that induce the firm to report transfer prices truthfully we show however that it can be more efficient to implement regulations that encourage the firm to misrepresent its true transfer costs

major oecd country industrial sector interfuel substitution estimates 1960 1979 abstract a range of static and dynamic translog based expenditure shares models are estimated for non energy producing industrial sectors of the major seven countries of the oecd area sectoral energy volume and fuel efficiency bias variables are shown to be significant over and above individual prices in explaining individual fuel expenditure shares statistically significant own price and cross price elasticities of demand are presented for individual countries with some magnitudes varying considerably across alternative model specifications

strategic tax competition implications of national ownership abstract two jurisdictions compete to capture the rents of a large multinational enterprise mne which invests locally and which is partly owned by local investors the mne contributes to local welfare by tax payments and dividends and it has private information about the efficiency of the operations in the two localisations it is shown that the distortions in the mne s real investment portfolio are determined by a trade off between fiscal externalities and equity externalities and that investments in the case of strategic tax competition may be lower than in the co operative case ownership matters and we show how the firm may reduce its overall tax payments by influencing the distribution of owner shares between investors in the two countries

us residential energy demand and energy efficiency a stochastic demand frontier approach this paper estimates a us frontier residential aggregate energy demand function using panel data for 48 states over the period 1995 to 2007 using stochastic frontier analysis sfa utilizing an econometric energy demand model the in efficiency of each state is modeled and it is argued that this represents a measure of the inefficient use of residential energy in each state i e waste energy this underlying efficiency for the us is therefore observed for each state as well as the relative efficiency across the states moreover the analysis suggests that energy intensity is not necessarily a good indicator of energy efficiency whereas by controlling for a range of economic and other factors the measure of energy efficiency obtained via this approach is this is a novel approach to model residential energy demand and efficiency and it is arguably particularly relevant given current us energy policy discussions related to energy efficiency

putting foxes in charge of the hen house the political economy of harvest quota regulations this paper considers a dynamic common agency model of natural resource harvest quota regulation in which both conservationists and harvesters vie to influence the regulator s quota allocations as well as the choice of regulator conservationists tend to benefit from the adoption of regulation since the regulator will reduce the aggregate harvest quota relative to the unregulated equilibrium harvesters however only support the adoption of regulation if the regulator places sufficient weight on their welfare because harvester s support of regulation is conditional while conservationist s support of regulation is unconditional harvester s interests tend to be over represented in the truthful markov perfect equilibrium

is the implementation of energy saving and emission reduction policy really effective in chinese cities a policy evaluation perspective abstract reducing pollutant emissions while ensuring a stable economic growth is an important embodiment of sustainable development based on the national comprehensive demonstration of energy saving and emission reduction fiscal policy eser policy proposed by the chinese government in 2011 this paper analyzes the impact of such policy on emissions reduction and economic growth under the framework of differences in differences did method this paper first identifies the implementation conditions of eser policy then we adopt three specifications to control the endogenous problem for the selection of demonstration cities the robustness test verifies the reliability of our findings and the spillover effect analysis reveals the deficiency of this policy we reach the following conclusions 1 different from the previous studies we find that the eser policy can effectively reduce the pollutant emissions while ensuring a stable economic growth 2 however the event study reveals that the reduction effect is only existing in the demonstration period which means that this policy is not sustainable 3 furthermore we find no spillover effect of eser policy on the non policy targeted pollutant suggesting that the local government only cares about the reduction of policy targeted pollutants based on these findings we propose that the future energy saving and emissions reduction policy formulation should focus on the policy sustainability and overall environmental performance

inequality and personal income taxation the origins and effects of legislative malapportionment why does personal income taxation pit remain relatively low in many developing countries despite a period of democratic advancement and rapid economic growth this stylized fact is hard to reconcile with standard political economy models of taxation that expect democratic regimes to bring about redistribution in countries that suffer from high inequality this article argues that the details of political institutions are key to understand why pit remains low in many developing and unequal countries in particular we show how legislative malapportionment may prevent the use of personal income taxes as a major revenue source by skewing the distribution of political power across groups malapportionment is usually not exogenous but the result of design by those with political power at the transition or reform moment as such it depends on the structure of political and economic power in society based on a sample of more than 50 countries between 1990 and 2007 this article finds that a countries with

endogeneity and the dynamics of internal corporate governance abstract we use a well developed dynamic panel generalized method of moments gmm estimator to alleviate endogeneity concerns in two aspects of corporate governance research the effect of board structure on firm performance and the determinants of board structure the estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity we re examine the relation between board structure and performance using the gmm estimator in a panel of 6 000 firms over a period from 1991 to 2003 and find no causal relation between board structure and current firm performance we illustrate why other commonly used estimators that ignore the dynamic relationship between current governance and past firm performance may be biased we discuss where it may be appropriate to consider the dynamic panel gmm estimator in corporate governance research as well as caveats to its use

foreign direct investment and host country policies a rationale for using ownership restrictions abstract this paper examines host governments motivation for restricting ownership shares of multinational firms mnfs in foreign direct investment fdi projects an mnf with a productivity advantage is willing to invest in a host country the host government wants to capture the mnf s surplus yet cannot observe it due to the mnf s private information about its firm specific advantage in contrast a joint venture jv partner might observe this surplus depending on its ownership share the host government can alleviate its informational constraints by using ownership restrictions to force a jv this calls into question the wisdom of calls for liberalizing fdi flows by the wholesale elimination of domestic jv requirements we show that the optimal mechanism involves ownership restrictions that decrease as the size of the mnf s firm specific advantage increases

an incentive compatible approach to the transfer pricing problem abstract this paper offers an alternative approach to regulating certain types of transfer pricing if the multinational enterprise s transfer price decision is not regulated it will manipulate the transfer price in order to maximize net global profit traditional approaches argue for ad hoc penalty schedules to mitigate manipulative transfer pricing in contrast this paper offers an incentive compatible approach which explicitly incorporates the informational asymmetries that encourage misreports the model has the desirous feature that the optimal regulatory policy has self enforcing properties that is the firm will find it profit maximizing to report true costs

the taxing task of taxing transnationals financial and real investment flexibility tax competition and superior economic information by transnationals both create a rationale for corporate income taxation and limit the effectiveness of such taxation while these factors have led to a variety of transnational tax policies such as deferral double taxation apportionment and trade rules very few of these institutional features have been integrated into tax competition and agency models in this paper i show how the integration of investment flexibility tax competition and agency issues is crucial to our understanding of corporate tax policies

putting up or shutting up on the individual level relationship between taxpaying and political interest in a developmental context abstracthistorical research mainly focused on early modern europe has suggested a positive link between taxation and democracy this study approaches the connection in a present day developmental context by looking at differences between taxpayers and non taxpaying citizens in terms of political interest a precondition for accountability demands using survey data from sub saharan africa a multilevel analysis shows that taxpaying increases political interest the causal direction of this finding is confirmed through an instrumental variable analysis the results support the existence of the mechanisms underlying the theory of taxation working as a generator of political engagement and democracy

the political performance of third world governments and the debt crisis l he developing countries suspension of payments on their external debt is as much a consequence of the political weakness of their governments and the excessive politicization of their economic policies as it is a result of unfavorable structural changes in the international economy differences in debtor governments political performances are treated as an explicit variable rather than as residuals to an economic explanation in estimating the probability of developing countries suspending their external debt service payments using a logit model i analyze fifty eight developing countries for the years 1970 1984 the results show that political capacity can be decisive in correctly predicting the probability of a government s suspending its external debt service payments the model predicts 96 of the total outcomes correctly and 80 of the debt payment suspension cases correctly

the politics of taxation introduction to the special section abstractdomestic revenue mobilisation has received growing attention in recent years international players such as the organisation for economic co operation and development oecd the world bank and the g20 are calling for more determined action to combat tax evasion and avoidance developing countries are urged to increase their own tax collection however implementing and sustaining tax reforms has proven to be a challenging task for many governments this special section provides new evidence on the political factors determining taxation in developing countries the articles gathered here address two distinct yet related questions first which factors shape long term taxation patterns and why are these patterns so difficult to change even when they prove to be dysfunctional in many ways second which factors determine the fate of specific tax reforms evidence from case studies covering six countries is complemented by a statistical analysis of factors influencing revenue vulnerability in the fac

seigniorage and political instability the importance of seigniorage relative to other sources of government revenue differs markedly across countries this paper tries to explain this regularity by studying a political model of tax reform the model implies that countries with a more unstable and polarized political system will have more inefficient tax structures and thus will rely more heavily on seigniorage this prediction of the model is tested on cross sectional data for seventy countries the authors find that after controlling for other variables political instability is positively associated with seigniorage copyright 1992 by american economic association

modelling oecd industrial energy demand asymmetric price responses and energy saving technical change abstract the industrial sector embodies a multifaceted production process consequently modelling the derived demand for energy is a complex issue made all the more difficult by the need to capture the effect of technical progress of the capital stock this paper is an exercise in econometric modelling of industrial energy demand using panel data for 15 oecd countries over the period 1962 2003 exploring the issue of energy saving technical change and asymmetric price responses although difficult to determine precisely it is tentatively concluded that the preferred specification for oecd industrial energy demand incorporates asymmetric price responses but not exogenous energy saving technical change

political regimes and economic growth arguments that relate regimes to growth focus on property rights pressures for immediate consumption and the autonomy of dictators while everyone seems to agree that secure property rights foster growth it is controversial whether democracies or dictatorships better secure these rights the main mechanism by which democracy is thought to hinder growth is pressure for immediate consumption which reduces investment only states that are institutionally insulated from such pressures can resist them and democratic states are not the main argument against dictatorships is that authoritarian rulers have no interest in maximizing total output these views are summarized in turn

political determinants of state capacity in latin america summary in this article we argue that both democracy and governments partisanship have a bearing on state capacity in latin america we also maintain that state capacity is a condition rooted in history and society it can be built or purposefully undermined in particular in latin america parties of the left have frequently operated to reallocate social and political clout in favor of underprivileged groups the inclusion of the latter in the political process helped states to thwart pressures from dominant elites opposing redistribution and tax increases these mobilized groups have also pushed for universal public services as high quality education health care or public housing which required well functioning administrations and an adequate institutional capacity thus contributing to consolidate stateness in the area whereas previous qualitative studies analyzed the mechanisms that relate democracy and political partisanship to state capacity we test this hypothesis quantitatively to this end we estimate the effect over time of democracy political parties and other socio demographic factors on a composite measure of stateness obtaining supportive evidence in particular we find that higher democracy levels and left leaning governments favored the growth of state strength in the area during 1975 2009 and discuss these findings with reference to the political experience of latin america

tax shares in developing economies a panel study abstract tax shares the ratio of tax receipts to gnp or gdp vary across countries for a number of reasons stage of development availability of appropriate tax handles sources of non tax income and differences in tastes for public goods in this study a model is developed to explain differences in tax shares for a set of eight african countries the model is estimated using a panel of data covering the time period 1973 1981 a measure of tax effort for each of the countries is obtained by applying the estimated coefficients to the variables of the country and comparing the actual tax share to the predicted tax share further insight is gained into differences in tax shares and tax effort by application of the model to the direct and indirect tax shares of the countries

different paths to the modern state in europe the interaction between warfare economic structure and political regime theoretical work on taxation and state building borrows heavily from early modern european experience while a number of european states increased centralized tax revenues during this period for others revenues stagnated or even declined and these variations have motivated alternative arguments for the determinants of fiscal and state capacity this study reviews the arguments concerning the three determinants that have received most attention namely warfare economic structure and political regime and tests them by making use of a new and comprehensive tax revenue dataset our main finding is that these three determinants worked in interaction with each other specifically when under pressure of war it was representative regimes in more urbanized commercial economies and authoritarian regimes in more rural agrarian economies that tended to better aggregate domestic interests towards state building

intrafirm trade arm s length transfer pricing rule and coordination failure abstract this paper demonstrates that uniform imposition of the arm s length principle on transfer pricing leads to coordination failure among countries in terms of economic welfare if the countries trade products in the form of intrafirm transactions by multinational firms mnfs to highlight this implication we first show that imposition of the arm s length principle on an mnf induces it to transfer a product among subordinate divisions at marginal cost i e the competitive price which is consistent with the purpose of the principle nonetheless if regulators in each country impose the principle on mnfs all of the following economic welfare measures decrease compared with the situation where the principle is not imposed 1 consumer welfare in each of the trading countries 2 profit of each mnf and thus 3 total world economic welfare this result indicates that it is possible that enforcement of the principle has no positive effect at all in the world because economic welfare of all economic agents deteriorates when the principle is imposed a numerical analysis demonstrates that this possibility arises in a broad range of circumstances even including the situation where a giant economic world power and a small underdeveloped country mutually trade products in these circumstances an agreement among trading countries that no country imposes the arm s length principle may encourage pareto improvement of the world economy

adoption of low cost energy efficiency measures in the tertiary sector an empirical analysis based on energy survey data this paper empirically explores factors driving the adoption of low cost energy efficiency measures in the tertiary sector which mainly consists of public and private services trade commerce and some small industries the measures considered include switching off installations or lighting managing energy use and routinely considering energy efficiency for new purchases our statistical analysis employs single and multivariate probit models relying on more than 1500 observations from a recent representative survey of the tertiary sector in germany the findings suggest that the landlord tenant dilemma holds for the adoption of all low cost energy efficiency measures considered they further imply that financial incentives such as higher energy prices accelerate the diffusion of low cost energy measures our findings also provide some evidence that knowledge transfer from the mother company to a subsidiary enhances the diffusion of low cost energy efficiency measures likewise public sector organizations are more likely to adopt energy management by and large though sectoral heterogeneity appears to have little impact on the adoption of low cost energy efficiency measures

multinationals tax competition and outside options abstract we analyze tax competition when a multinational firm has invested in two countries but also has an outside option e g towards a third country an interesting finding is that more attractive outside options for firms may constitute a win win situation the firm as well as its present host countries may gain when this occurs the reason that it benefits the host countries is that an enhanced outside option reduces the inefficiencies of tax competition an implication of the result is that better outside options for multinational firms may reduce the gains from host countries policy coordination and thus reduce those countries incentives to coordinate their policies also with a development where outside options become more accessible the perceived costs of tax competition e g in terms of underprovision of public goods may be overestimated our findings may also have implications for international negotiations since it provides an argument for mutual reduction of entry barriers as this may improve outside options

coordination and the provision of incentives to a common regulated firm abstract this paper considers the problem faced by two regulators in providing incentives to a common privately informed regulated firm under various degrees of coordination in the model the firm exerts effort toward cost reduction and self dealing and incentives can be input based monitoring and output based demanded cost targets full coordination between the regulators leads to the second best allocation a setting in which the regulators do not fully coordinate leads to i higher overall monitoring more aggressive input based incentives and ii higher demanded cost targets i e more lenience in terms of output based incentives as a consequence of i in all possible equilibria the effort toward cost reduction will be smaller when the agent reports to two regulators who do not coordinate i and ii imply that the impact on the effort toward self dealing activities is ambiguous in our leading example self dealing will be larger if the regulators coordinate on monitoring levels but smaller if they choose monitoring levels independently

spillovers and international competition for investments abstract two jurisdictions compete to attract shares of the investment budget of a large multinational enterprise whose investments confer positive spillovers on national firms the firm has private information about its efficiency and about spillovers it is shown that the firm may be harmed by tax competition relative to a cooperative tax agreement tax competition may induce excessive investments in the country where the positive spillover effects are lowest also with sufficiently asymmetric spillovers investments under competition will be excessively spread out not properly concentrated to the country where spillovers would be largest

instrument choice in a fishery abstract this paper considers the choice of regulatory instruments in a fishery fishing captains consumers and input suppliers each attempt to influence the regulator s choice of instruments the regulator chooses among instruments such as input restrictions entry restrictions or individual transferable quotas itqs regulatory instruments that result in zero fishery rents can only occur if the regulator places an extraordinary weight on the welfare of input suppliers relative to fishing captains and consumers indeed heterogeneity of fishing captains is neither necessary nor sufficient to obtain regulations that fail to generate fishery rents

explaining fiscal policies and inflation in developing countries abstract in this paper we investigate empirically the determinants of inflation seigniorage and fiscal deficits in developing countries we first test the optimal taxation theory of inflation for a group of 21 lcds we find that the implications of this theory are rejected for all these countries we then proceed to implement a number of tests based on the new political economy approach to macroeconomic policies we deal with some of the implications of a credibility and reputation model and of a strategic government behavior model we find that the data support the most important predictions of the political economy view of fiscal policy our measures of political instability and political polarization play an important role in explaining cross country differences in seigniorage inflation government borrowing and fiscal deficits we end by discussing directions for future research

is democracy more expropriative than dictatorship tocquevillian wisdom revisited abstract we reexamine the incentive effect of political democracy on the tax rate by defining a political regime over two dimensions the extent of the franchise and the extent that the redistribution of tax revenues is biased towards the rich standard tocquevillian models assume that even if there is limited franchise there is no redistribution bias from this it follows that democracy is more expropriative than oligarchy because a poorer median voter opts for higher taxes introducing the realistic assumption of a redistribution bias we find a countervailing effect democratization decreases exploitation by the rich on the disenfranchised poor since tax revenues are redistributed over a larger base the median voter may gain less from redistributive taxation we call this the olson effect

building support for taxation in developing countries experimental evidence from mexico abstract drawing on insights from the literature on institutional design how rules shape behavior to achieve desired outcomes this article examines how certain design features of taxes such as allowing for civil society oversight earmark mechanisms that direct tax revenue for a specific purpose and sunset provisions that make the duration of taxes finite affect political support for tax reforms it also evaluates how three important aspects of the fiscal exchange trust in government perceptions of the public good and level of income shape the effect of these design features based on an original survey experiment focusing on the provision of public safety in mexico i find that these design features increase political support for taxation especially among those with low trust in government and low income these findings have important implications not just for mexico but also a number of other countries across latin america that have both low levels of extraction and increased public spending imperatives

business organisations party systems and tax composition in developing countries a comparison between colombia and peru abstractthis paper explores the relationship between socio political institutions and tax composition in developing countries it argues that strong business organisations and stable political party systems reduce the uncertainty of fiscal contracts for economic elites the decrease in uncertainty leads elites to accept a larger share of the tax burden which governments then collect using progressive tax types more intensively to illustrate this claim i provide evidence from a comparative analysis of the peruvian and the colombian tax history between 1970 and 2010

comparative assessment of policies targeting energy use efficiency in lithuania abstract energy efficiency is an important issue of european climate policy energy efficiency is measured by the energy intensity of an economy showing how much energy expressed in kilograms of oil equivalent kgoe is used for the production of one unit 1000 eur of gdp there are huge differences between eu old and new member states though there are some trends of energy intensity convergence between eu member states however the achieved decrease in energy intensity is attributable mostly to a loss of energy intensive industrial capacities in the transformation process there is a crucial difference between whether the energy intensity of a given economy decreases as a result of downscaling energy intensive activities or because of increased energy efficiency in activities that are maintained it is important to make sure that this distinction is made within the policy framework which at present is not the case the aim of the paper is to assess policies targeting energy intensity decrease in lithuania in terms of efficiency effectiveness and efficacy and to select the best policies able to increase energy efficiency in activities that are maintained

the political economy of growth a critical survey of the recent literature this article reviews the recent literature on the political economy of growth focusing on the research that has developed at the intersection of the endogenous growth literature and the new political economy it explores the relationship among four key variables economic growth and capital accumulation political instability political freedom and democratic institutions and income inequality

impact of energy policy instruments on the estimated level of underlying energy efficiency in the eu residential sector the promotion of energy efficiency is seen as one of the top priorities of eu energy policy ec 2010 in order to design and implement effective energy policy instruments it is necessary to have information on energy demand price and income elasticities in addition to sound indicators of energy efficiency this research combines the approaches taken in energy demand modelling and frontier analysis in order to econometrically estimate the level of energy efficiency for the residential sector in the eu 27 member states for the period 1996 to 2009 the estimates for the energy efficiency confirm that the eu residential sector indeed holds a relatively high potential for energy savings from reduced inefficiency therefore despite the common objective to decrease wasteful energy consumption considerable variation in energy efficiency between the eu member states is established furthermore an attempt is made to evaluate the impact of energy efficiency measures undertaken in the eu residential sector by introducing an additional set of variables into the model and the results suggest that financial incentives and energy performance standards play an important role in promoting energy efficiency improvements whereas informative measures do not have a significant impact

oil nontax revenue and the redistributional foundations of regime stability nontax revenues make up a substantial amount of government revenue around the world though scholars usually focus on individual sources of such revenue for example foreign aid and state owned oil companies using a theory of regime change that builds on recent models of the redistributional foundations of dictatorships and democracies i generate hypotheses regarding all nontax revenue and regime stability i argue that an increase in nontax revenue should be associated with less taxation of elites in democracies more social spending in dictatorships and more stability for both regime types i find support for all three of these hypotheses in a cross sectional time series analysis covering all countries and years for which the necessary data are available significantly i show that the particular source of nontax revenue does not make a difference they all act similarly with regard to regime stability and the causal mechanisms

optimal regulation of multinationals under collusion this paper analyses the optimal collusion proof mechanism for the regulation of multinational firms mnfs in foreign direct investment fdi projects there is a host country with a profitable investment opportunity either a multinational firm mnf or a local firm lf can undertake this project nonetheless due to its firm specific advantage and the mnf has the potential to create a larger surplus the host government faces an informational constraint such that it cannot observe the extra surplus the mnf can generate using this set up karabay 2010 shows that employing foreign ownership restrictions to force a joint venture jv can help the host government to partially overcome its information disadvantage in this paper we extend karabay 2010 by studying the host government s optimal regulatory policy when the mnf and the lf can collude it turns out collusion imposes no cost on the host government and the expected welfare attained in the absence of collusion can still be secured under collusion

regulation of multinational firms with two active governments a common agency approach abstract when a government agency imposes cost based taxes regulations on a multinational with private cost information it may initiate countervailing regulations by another of the governments with which the multinational interacts we analyze the problem of optimal regulation of a multinational under incomplete cost information via trade taxes by multiple governments as a problem of common agency with adverse selection by focusing on the game played by the competing governments we characterize the equilibrium trade taxes and show that the non cooperative behavior of the governments not only reduces aggregate national welfare but also reduces firm profits

dynamic translog and linear logit models a factor demand analysis of interfuel substitution in us industrial energy demand abstract we compare and contrast two popular dynamic flexible functional forms for cost functions the translog and the logit j bus econ stat 8 1990 347 353 using data on us industrial energy demand from 1960 to 1992 which has been analysed by previous studies energy econ 11 1989 89 94 appl econ 21 1989 931 945 j bus econ stat 13 1995 459 465 we show the crucial role played by different dynamic formulations of the translog in this analysis of factor demands with respect to rates of dynamic adjustment and substitution possibilities we conclude that the poor performance of the dynamic translog relative to the dynamic logit cannot be explained solely by dynamic model mis specification or the inclusion of price unresponsive non energy fuel use data our most robust empirical result is that coal and oil are substitutes

the consequences of regime type for public policy outputs most research has shown little association between regime type and public policy outputs in this article we employ a multivariate model and year by year data from 1960 1980 in latin america to analyze the relationship among regime type regime age and public policy the analysis shows regime type to be significantly associated with policy in five areas with regime age have an additional independent effect in several of these areas

on tax efforts and colonial heritage in africa abstract one commonly observed phenomena about taxation in africa are regional differences and the fact that southern african countries have higher levels of shares of taxation in gdp this article argues that the major source of differences in tax effort is the colonial histories of various countries using standard measures of tax effort in a panel data framework and dividing colonial africa along forms of incorporation into the colonial system it shows that african countries and others with similar colonial histories have higher levels of tax effort however the difference disappears when we control for the colonial factor these results hold under different model specifications

do energy efficiency policies save energy a new approach based on energy policy indicators in the eu member states abstract over the last two decades the european union and its member states have introduced policies aimed at improving energy efficiency the energy service directives esd introduced the concept of measurement of energy savings attributed to policies two different and complementary methodologies for the evaluation of energy savings have been developed under the esd the bottom up bu approach based on a technical analysis of each measure and the top down td approach based on the analysis of how energy intensity changes over time bu methods can hardly take into account policy induced behavioural changes whereas td methods have difficulties in disentangling policy induced savings from other savings econometric models have been proposed as a viable alternative to deal with both drawbacks the purpose of this article is to present an econometric model aimed at estimating the energy savings induced by energy efficiency policies in the eu member states in the period 1990 2013 we introduce an explicit measure of energy policy intensity based on the mure database which is used as explanatory variable in a dynamic panel model for 29 european countries our results suggest that energy consumption in 2013 in europe would have been about 12 higher in the absence of energy efficiency policies

the governance of the european energy union efficiency effectiveness and acceptance of the winter package 2016 abstract the new governance mechanisms of the european energy policy proposed by the european commission in its winter package will redefine european energy and climate governance this contribution reviews the proposal its supporting documents and overall stakeholder positions according to the criteria of the efficiency effectiveness and acceptance of governance to assess its ability to support european energy and climate goals we find that the proposed governance amounts to a densely meshed coordination of policies between the european level and member states compared to the present governance system the enhanced mechanism can draw on significant synergies and reduce administrative costs our review of stakeholder positions reveals strong acceptance of enhanced coordination nonetheless our review identifies some potential flaws in terms of governance effectiveness the proposed structures surpass the method of open coordination they could also be seen as a case of harder soft governance in conflict with article 194 2 tfeu finally the local level is excluded

a harmonized calculation model for transforming eu bottom up energy efficiency indicators into empirical estimates of policy impacts abstract this study is an impact analysis of european union eu energy efficiency policy that employs both top down energy consumption data and bottom up energy efficiency statistics or indicators as such it may be considered a contribution to the effort called for in the eu s 2006 energy services directive esd to develop a harmonized calculation model although this study does not estimate the realized savings from individual policy measures it does provide estimates of realized energy savings for energy efficiency policy measures in aggregate using fixed effects panel models the annual cumulative savings in 2011 of combined household and manufacturing sector electricity and natural gas usage attributed to eu energy efficiency policies since 2000 is estimated to be 1136 pj the savings attributed to energy efficiency policies since 2006 is estimated to be 807 pj or the equivalent of 5 6 of 2011 eu energy consumption as well as its contribution to energy efficiency policy analysis this study adds to the development of methods that can improve the quality of information provided by standardized energy efficiency and sustainable resource indexes

interjurisdictional competition with adverse selection abstract in this paper we study the welfare consequences of imposing alternative regimes of competition between two local governments that compete for mobile firms which have private information on their degree of mobility competition among jurisdictions raises the firms rents to higher levels than if jurisdictions were to cooperate therefore from the perspective of a utilitarian federation constitutional constraints on the competition process may be desirable we find that imposing a system of coarser policy instruments improves welfare relative to competition with discretionary instruments because it reduces the socially costly rents that are granted to firms in equilibrium we also find that the gains from constraining competition to uniform policy instruments are maximal when communities are identical but decline if the extent of asymmetry between locations in terms of local market size or technological complementarities increases

from demand side management dsm to energy efficiency services a finnish case study abstract energy conservation is expected to contribute significantly to climate change mitigation and energy security traditionally energy companies have had strong role in providing demand side management dsm measures however after energy market liberalization in europe energy companies dsm activities declined in response the eu issued directive 2006 32 ec on energy end use efficiency and energy services esd to motivate energy companies to promote energy efficiency and conservation closely followed by directive 2012 27 eu on energy efficiency eed requiring the setting up energy efficiency obligation schemes despite strong political and economic motivation energy companies struggle to develop energy efficiency services in liberalised energy markets due to conflicting institutional demands which arise from contradicting policy requirements and customer relations the main challenges in developing new innovative energy efficiency services evidenced by an in depth case study were 1 the unbundling of energy company operations which makes it difficult to develop services when the contribution of several business units is required and 2 the distrust among energy end users which renders the business logic of energy saving contract models self contradictory on the basis of the research avenues out of these dilemmas are suggested

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

the political value of land political reform and land prices in chile in this article we argue that when patron client relations are grounded in economic relationships such as between landlord and worker we should expect clientelism to influence not just how public policy the state and the political system work but also how the economy works we develop a simple model of the economic consequences of electoral clientelism when voting behavior can be observed landlords patrons provide economic rents to workers and in exchange workers vote for parties favored by landlords as votes are used by the landlords to accumulate political rents vote control increases the demand for labor and for land the model implies that the introduction of the australian ballot which destroys this form of clientelism should lead to a fall in the price of land in those areas where patron client relationships are strongest we test the predictions of the model by examining in detail the evolution of land prices in chile around may 31 1958 for which we collected original data a characteristic of rural chile at this time were patron client relations based on the inquilinaje system by which a worker the inquilino entered into a long term often hereditary employment relationship with a landlord and lived on his landlord s estate we show that the introduction of the australian ballot in 1958 led to a fall of about 26 in land prices in the areas where these patron client relationships were predominant

tax reform in developing countries this volume presents the work of experts in most cases the very advisers who designed and helped implement the reforms on the tax reform efforts of a dozen developing nations from the restructuring of the economy of postwar japan to the 1986 reforms in jamaica among the many lessons learned from these efforts are that tax reform is most successful when tax administration is a central rather than peripheral focus of reform efforts and when tax reform is specifically directed toward economic rather than noneconomic objectives other conclusions include the apparently mutually reinforcing nature of tax simplification and tax rate reduction and the role of indirect tax reforms such as the value added tax in successful reform undertakings