reaction or interaction spatial process identification in multi tiered government structures abstract this paper models horizontal and vertical fiscal externalities in a multi tiered structure of government and implements maximum likelihood and instrumental variables estimation techniques to identify the source of spatial dependence in english local government expenditures the results show that when vertical fiscal externalities among upper tier county authority and lower tier district authority expenditures are explicitly taken into account the estimated magnitude of inter district fiscal interactions is substantially reduced the observed positive spatial autocorrelation among district expenditures can consequently be attributed to a large extent to common reaction to county fiscal policies rather than to actual strategic interaction

optimal selling strategies when buyers may have hard information abstract consider a revenue maximizing seller who can sell an object to one of n potential buyers each buyer either has hard information about his valuation i e evidence that cannot be forged or is ignorant the optimal mechanism is characterized it turns out that more ignorance can increase the expected total surplus even when the buyers are ex ante symmetric the object may be sold to a buyer who does not have the largest willingness to pay nevertheless an additional buyer increases the expected total surplus in the symmetric case whereas more competition can be harmful if there are ex ante asymmetries

policy innovation in local jurisdictions testing for neighborhood influence in school choice policies before making difficult decisions individuals tend to collect information on decision makers in reference groups with respect to policy innovations in a decentralized public sector this may give rise to positive neighborhood influence on adoption decisions in this paper u s school district data are used to show that decision makers indeed are heavily affected by decision makers in reference groups the policy innovation under consideration is inter district public school choice the results suggest that if a given district s neighbors expected benefits from adopting school choice policies increase this substantially increases the original district s probability of adoption the paper thus supports the view that the diffusion of policy innovations is stimulated by horizontal interaction among local governments

tax competition among u s states racing to the bottom or riding on a seesaw abstract dramatic declines in capital tax rates among u s states and european countries have been linked by many commentators to tax competition an inevitable race to the bottom and underprovision of local public goods this paper analyzes the reaction of capital tax policy in a given u s state to changes in capital tax policy by other states our study is undertaken with a novel panel data set covering the 48 contiguous u s states for the period 1965 to 2006 and is guided by the theory of strategic tax competition the latter suggests that capital tax policy is a function of foreign out of state tax policy preferences for government services and home state and foreign state economic and demographic conditions the slope of the reaction function the equilibrium response of home state to foreign state tax policy is negative contrary to casual evidence and many prior empirical studies of fiscal reaction functions this result which stands in contrast to most published findings is due to two critical elements that allow for delayed responses to foreign tax changes and responses to aggregate shocks omitting either of these elements leads to a misspecified model and a positively sloped reaction function our results suggest that the secular decline in capital tax rates at least among u s states reflects synchronous responses among states to common shocks rather than competitive responses to foreign state tax policy while striking given prior empirical findings these results are fully consistent with the implications of the theoretical model developed in this paper and presented elsewhere in the literature rather than racing to the bottom our findings suggest that states are riding on a seesaw consequently tax competition may lead to an increase in the provision of local public goods and policies aimed at restricting tax competition to stem the tide of declining capital taxation are likely to be ineffective

optimal procurement contracts with pre project planning the paper studies procurement contracts with pre project investigations in the presence of adverse selection and moral hazard to model the procurer s problem we extend a standard sequential screening model to endogenous information acquisition with moral hazard the optimal contract displays system atic distortions in information acquisition due to a rent effect adverse selection induces too much infor mation acquisition to prevent cost overruns and too little information acquisition to prevent false project cancellations moral hazard mitigates the distortions related to cost overruns yet exacerbates those related to false negatives the optimal mechanism is a menu of option contracts that achieves the dual goal of providing incentives for information acquisition and truthful information revelation

a spatial analysis of provincial corporate income tax responses evidence from canada using a model of interdependent tax choices and accounting for equalization entitlements and general transfers this paper estimates making use of a spatial econometric framework corporate income tax setting functions for all canadian provincial governments the results show that there is a statistically significant positive fiscal interaction among a subset of provinces and between all provinces and the federal government provincial corporate income taxes are also found to be negatively related to equalization entitlements general federal transfers and the federal corporate income tax a robustness check on the fiscal relationship between ontario and quebec verifies the existence of significant bi directional fiscal interdependencies the paper also introduces u s state corporate income taxes as covariates and examines their interaction with canadian provinces a l aide d un modele de choix fiscaux interdependants et en tenant compte des paiements de perequation et des transferts generaux ce texte calibre a l aide d un cadre econometrique spatial les fonctions de definition de fiscalite des revenus de societes de tous les gouvernements provinciaux canadiens les resultats montrent qu il y a un effet d interaction positif significatif entre un sous ensemble de provinces et entre les provinces dans leur ensemble et le gouvernement federal les impots sur le revenu des societes des provinces sont co relies negativement avec les paiements de perequation les transferts generaux et l impot federal sur le revenu des societes des tests de robustesse montrent qu il y a relation d interdependance fiscale bidirectionnelle significative entre le quebec et l ontario le memoire introduit les impots sur le revenu des societes aux etats unis comme co variables et examine leur interaction avec ce qui se passe dans les provinces canadiennes

the impressive contribution of canadian economists to fiscal federalism theory and policy the study of fiscal federalism has been central to the research of canadian economists since the rowell sirois report to mark the 50th anniversary of the founding of the canadian economics association it is fitting to take stock of their contributions we focus on the period since 1982 and emphasize the main scholarly publications of an inclusive array of canadian economists and economists in canadian universities our attention is devoted to applications in the context of federal and provincial governments setting aside related issues in municipal government finance we briefly discuss instances where the fiscal federalism literature has informed policy debates including through policy research institutes government commissions and international organizations la contribution impressionnante des economistes canadiens a la theorie et a la politique du federalisme fiscal l etude du federalisme fiscal a ete un element central de la recherche des economistes canadiens depuis la commission rowell sirois au moment de celebrer le 50eme anniversaire de la fondation de l association canadienne d economique le moment est approprie pour prendre la mesure de leurs contributions on se concentre sur la periode apres 1982 et on souligne les principales publications savantes d un ensemble inclusif d economistes canadiens et d economistes dans les universites canadiennes une attention particuliere est portee aux applications dans le contexte federal et provincial mettant de cote les enjeux relies a la finance municipale on discute brievement des instances ou la litterature sur le federalisme fiscal a eclaire les debats de politiques publiques y compris a travers les instituts de recherche sur les politiques publiques les commissions gouvernementales et les organisations internationales

gathering information before signing a contract after being offered a contract an agent has the possibility to observe the state of nature this enables him to refuse the contract in unfavorable states but burdens him with an observation cost the authors show that the principal offers a contract in which the agent has no incentive to observe the state of nature and they explore its terms later they show that the principal finds it profitable to organize competition between several agents even though he has monopoly power and can push a single agent down to his reservation utility copyright 1992 by american economic association

multilateral productivity comparisons when some outputs are undesirable a nonparametric approach multilateral productivity comparisons of firms producing multiple outputs some of which are undesirable are obtained by making two modifications to the standard farrell approach to efficiency measurement the restriction that production technology satisfy strong disposability of outputs is relaxed to allow for the fact that undesirable outputs may be freely disposable and the efficiency measures are modified to allow for an asymmetric treatment of desirable and undesirable outputs performance measures that satisfy these requirements are calculated as solutions to programming problems the methodology is applied to a sample of mills producing paper and pollutants

evaluating environmental performance using data envelopment analysis the case of european countries abstract environmental efficiency is considered to be a critical pillar of sustainable development consequently improving environmental performance has aroused attention at both the local and global level this study evaluated the environmental performance of european union eu countries using the data envelopment analysis dea approach and the global malmquist luenberger index although literature using the dea approach to measure environmental performance exists this study s main contribution was considering different types of undesirable outputs and using long term panel data on eu countries in particular the dea window analysis technique was applied to evaluate the environmental performance of 27 eu countries in cross sectional and time varying data during the period 2000 2017 three dea models were examined labor capital and energy were used as common inputs with a combination of different outputs including gross domestic product carbon dioxide and particulate matter emissions and waste the empirical results revealed that the trends in the environmental performance of the entire eu and its individual countries were similar under all examined models environmental performance was indeed negatively affected by the financial crisis of 2007 2008 this impact was mainly observed in eastern eu countries furthermore both economic and environmental variables significantly influenced countries overall efficiency the analysis using the global malmquist luenberger index elucidated that overall eu countries experienced the efficiency improvement during the study period although fluctuations were observed these results enable countries and policymakers to understand their environmental performance identify strengths and weaknesses and set targets for further improvement based on the current best practices of comparable peers

endogenous private information structures we formally incorporate the option to gather information into a game and thus endogenize the information structure we ask whether models with exogenous information structures are robust with respect to this endogenization any nash equilibrium of the game with information acquisition induces a nash equilibrium in the corresponding game with an exogenous structure we provide sufficient conditions on the structure of the game for which this remains true when nash is replaced by sequential we characterize the sequential nash equilibria of games with exogenous information structures that can arise as a sequential nash equilibrium of games with endogenous information acquisition

strategic fiscal interaction among oecd countries this paper investigates whether oecd countries compete with each other for mobile factors by using various fiscal tax spending policy instruments we use a panel dataset of 20 oecd countries over the 1982 2000 period results reveal evidence that international capital inflows fdi are affected by fiscal policy at home and abroad also there is evidence that domestic capital tax rates react i positively to changes in capital tax rates in neighboring countries and ii negatively to changes in public investment spending in neighboring countries in contrast strategic interdependence over public investment spending decisions is not established

competition in the public school sector evidence on strategic interaction among us school districts abstract this paper provides evidence on strategic interaction among local school districts the analysis makes use of a significant change in the institutional environment for school districts in michigan in 1996 when the state established a voluntary inter district choice program the school districts participation decisions are modelled as discrete choice decisions using a spatial latent variable model strong effects are found saying that lagged adoptions of neighbors positively affect the current probability of participation a simple test exploiting limitations of student mobility in inter district transfers suggests that the driving force for interdependencies among adoption decisions was competition for students

vertical fiscal externalities and the environment we show that imposition of a state level environmental tax in a federation crowds out pre existing federal taxes we explain how this vertical fiscal externality can lead unilateral state level environmental policy to generate a welfare gain in the implementing state at the expense of other states even absent any environmental benefits using a computable general equilibrium model of the canadian federation we show that vertical fiscal externalities can be the major determinant of the welfare change following environmental policy implementation by a state government our numerical simulations indicate that as a consequence of vertical fiscal externalities state governments can reduce greenhouse gas emissions by over 20 percent without any net cost to themselves

vertical tax competition in brazil empirical evidence for icms and ipi in the period 1995 2009 abstract the main objective of this study is to quantify the impact caused by changes in federal tax on the tax policy of the brazilian states considering the presence of horizontal tax competition between states using panel data covering 26 brazilian states plus the federal district during the period 1995 2009 two models were estimated representing the average reaction of the states in response to changes in federal tax rates in the first model both levels of government act simultaneously whereas in the second model reaction is sequential with the federal government acting as the leader in defining its effective tax rates the results indicate a positive and significant response of states to increases in the federal tax rate resulting in an over taxation of the common tax base and higher tax rates additional tests show that the first model is the most suitable to represent the problem analysed

raising taxes through equalization a simple theory suggests that a common form of federal horizontal equalization grants should cause subnational governments to levy higher tax rates distorting local tax bases and so increasing federal transfers to test this i examine canadian provincial tax policies in the 1972 2002 period consistent with the theory provinces respond to expansions of equalization transfers by increasing their own tax rates i estimate that on average tax rates in grant receiving provinces were substantially and significantly higher as a consequence of the transfer formula jel classification h21 une theorie simple suggere qu une forme usuelle d octrois federaux de perequation horizontale devrait entrainer les gouvernements sub nationaux a imposer de plus hauts taux d imposition modifiant ainsi les bases de fiscalite locale et ce faisant accroissant les transferts federaux pour mettre au test cette hypothese on examine les politiques fiscales des provinces canadiennes pour la periode entre 1972 et 2002 d une maniere qui semble supporter l hypothese les provinces ont repondu a un accroissement des transferts de perequation en accroissant leur propre taux d imposition on estime que les taux moyens d imposition dans les provinces qui recoivent des transferts sont plus eleves de maniere substantielle et significative en raison de la formule de transferts

taxation and deadweight loss in a system of intergovernmental transfers intergovernmental transfer programs in many federal systems including canada attempt to equalize differences in subnational jurisdictions tax capacities on the basis of the so called representative tax system rts it is shown that rts equalization grants effectively compensate subnational governments for a portion of the deadweight loss associated with taxes and consequently the grants may tend to increase the distortionary tax rates chosen by subnational governments this may be the case even when equalization is confined to tax bases that themselves are nondistortionary such as the taxation of pure economic rents

cognitive and institutional perspectives of eco efficiency the paper sketches out a theoretical framework for analysing the interplay between eco efficiency cognition and institutions it derives from analytical shortfalls of the prevailing literature which features strongly engineering and business economics by using insights from new institutional economics from cognitive science and partly from evolutionary economics it emphasises the role cognition and institutions play in the adoption of green technologies by firms a cognitive perspective derives from recent research on simple heuristics and context based rationality it is proposed that those findings can serve to analyse decision making of individual actors respectively firms and thus should complement economic analysis a second proposition is that eco efficiency and normative rules such as a factor four strongly rely upon institutions i e the ability of institutions to evolve over time and the development of those institutions that are most appropriate to enhance technological change in this regard business institutions and competition are crucial but regulatory needs remain in order to safeguard continuity of knowledge creation the framework allows for an analysis why overall adoption of eco efficiency still can be considered relatively slow and why some markets and firms are far ahead as a brief case study the article reflects upon german waste law s ability to enhance eco efficiency

strategic fiscal interaction across borders evidence from french and german local governments along the rhine valley abstract this article contributes to the literature on local tax interactions its novelty lies in its focus on the interactions of local governments across national borders we use panel data for the french and german municipalities in the rhine valley for the period 2000 2007 the local governments of each country influence firms overall tax burdens but the tax instruments available at the local level differ we estimate panel models that distinguish between the effects of competing municipalities belonging to the same country and belonging to the other country our empirical model shows that local jurisdictions along borders choose their business tax rates based on those of their domestic neighbors and that foreign fiscal policy does not have an impact on the local domestic tax setting behavior in these contexts

measuring the efficiency of health systems of oecd countries by data envelopment analysis abstractthis study aims to assess the efficiency of health sectors of 34 oecd countries by employing input oriented data envelopment analysis dea method both under constant and variable returns to scale assumptions in the analysis the number of doctors number of patient beds and health expenditure per capita were used as input variables and life expectancy at birth and infant mortality rate were used as outputs at the first stage dea analysis was performed for 34 countries and at the second stage outlier 8 countries were eliminated to form a more homogeneous group and to achieve more accurate results 11 of the 26 countries were found to have efficient health systems and there is room for efficiency improvements in health sector in the remaining 15 countries

income redistribution in a federal system of governments abstract though the traditional literature in fiscal federalism argues that the federal government should have primary responsibility for income redistribution u s states are in fact actively engaged in redistribution this paper develops a positive model of the respective roles of state and federal governments that can rationalize this observation redistribution by states creates positive horizontal fiscal externalities to other states due to migration but negative vertical fiscal externalities to the national government due to changes in reported taxable income we forecast that states will engage in at least some redistribution though to a lesser degree the greater are mobility relative to taxable income elasticities the federal government can then choose the degree of federal redistribution to assure that the net externalities are zero given such policies we then estimate the welfare weights and migration elasticities for different income groups that would generate the effective net tax schedules observed in the u s the parameter estimates are broadly plausible suggesting that the model can help explain the division of responsibilities for redistribution between state and federal governments

tax incentives in fiscal federalism an integrated perspective models of fiscal federalism rarely account for the efficiency implications of intergovernmental fiscal ties for federal tax policy this paper shows that fiscal institutions such that federal tax deductibility vertical revenue sharing and fiscal equalization being common features of existing federations encourage local taxation but may discourage federal taxation furthermore the structure of public spending is skewed towards local spending we also show that when considering leviathan governments fiscal institutions reduce confiscatory taxation by the federal government the result is contrary to the cartelization hypothesis brennan and buchanan 1980 finally we characterize the efficient design of intergovernmental fiscal ties jel classification h7 hl h20

an optimal taxation approach to fiscal federalism in a federal system of government each unit of government decides independently how much of each type of public good to provide and what types of taxes and which tax rates to use in funding the public goods in this paper we explore what types of problems can arise from this decentralized form of decision making in particular we describe systematically the types of externalities that one unit of government can create for nonresidents through both its public goods decisions and its taxation decisions the paper also explores briefly what the central government might do to lessen the costs of decentralized decision making

does fiscal decentralization constrain leviathan new evidence from local property tax competition this paper reexamines whether fiscal decentralization constrains leviathan government using panel data for pennsylvania we compare actual property tax rates to the leviathan revenue maximizing rates for municipalities school districts and counties using spatial econometric methods we also estimate the degree of spatial dependence at the three levels of local government we find that fiscal decentralization results in stronger intergovernmental competition and lower tax rates we also find evidence of collusion among school districts that exhibit high interdependence but also high tax rates this calls into question the current literature s blind use of spatial dependence as a measure of intergovernmental competition

the effective tax rate and the pretax rate of return abstract this paper presents new estimates of the taxes paid on nonfinancial corporate capital on the pretax rate of return to capital and on the effective tax rate the basic time series show that both the pretax rate of return and the effective tax rate have varied substantially in the past quarter century an explicit analysis indicates that after adjusting for different aspects of the business cycle pretax profitability was between one and 1 5 percentage points lower in the 1970s than in the 1960s the rate of profitability in the 1960s was also about one half of a percentage point greater than the profitability in the 7 years of the 1950s after the korean war changes in productivity growth in inflation in relative unit labor costs and in other variables are all associated with changes in profitability none of these variables however can explain the differences in profitability between the 1950s 1960s and 1970s looking at broad decade averages the effective tax rate and the pretax rate of return move in opposite directions lower pretax profits occuring when the tax rate is high there thus appears to have been no tendency for pretax profits to vary in a way that offsets differences in effective tax rates

efficiency analysis for exogenously fixed inputs and outputs we evaluate by means of mathematical programming formulations the relative technical and scale efficiencies of decision making units dmus when some of the inputs or outputs are exogenously fixed and beyond the discretionary control of dmu managers this approach further develops the work on efficiency evaluation and on estimation of efficient production frontiers known as data envelopment analysis dea we also employ the model to provide efficient input and output targets for dmu managers in a way that specifically accounts for the fixed nature of some of the inputs or outputs we illustrate the approach using real data for a network of fast food restaurants

from theory to practice canadian economists contributions to public finance we survey canadian economists contributions to the field of public finance from the mid 1980s to 2016 we highlight the development and extension of the models and tools of public economics and the empirical studies that have deepened our understanding of the efficiency and distributional issues over a wide range of public finance issues we also highlight contributions to the development of policies through commissioned reports and the important role that canadian institutions the canadian tax foundation the think tanks and the federal and provincial departments of finance have played in shaping tax and fiscal policies de la theorie a la pratique contributions des economistes canadiens a la finance publique on examine les contributions des economistes canadiens au domaine de la finance publique du milieu des annees 1980 a 2016 on souligne le developpement et l extension des modeles et des outils d economie publique et les etudes empiriques qui ont aide a approfondir notre comprehension des enjeux d efficacite et de distribution dans un vaste eventail de questions de finance publique on souligne aussi les contributions des rapports commandites au developpement de politiques publiques ainsi que le role important d institutions canadiennes l association canadienne d etudes fiscales les groupes d experts ainsi que les ministeres des finances du gouvernement federal et des gouvernements provinciaux dans le design des politiques fiscales

a comment on weak disposability in nonparametric production analysis in his 2005 paper in this journal kuosmanen argues that shephard s specification of weak disposability in activity analysis dea models is not correct we show that shephard s specification does satisfy weak disposability and is the smallest technology to do so

measuring and forecasting regional environmental and economic efficiency in italy abstractenvironmental and economic efficiency has being receiving growing attention among researchers in general terms this concept is related to the capability of the economic systems to employ natural resources efficiently so as to increase economic and human wealth this clearly implies that both the economic and ecological aspects of decisions ought to be considered bearing this in mind this article considers economic and ecological performance together by applying data envelopment analysis and the malmquist productivity index to investigate the efficiency of the 20 italian regions from 2004 to 2011 the results reveal that the northern regions have been more efficient than the southern ones highlighting the strong geographical differences between the two furthermore this article uses the grey system theory to forecast regional economic and environmental efficiency the results of the forecasting analysis show that the north south duality remains strong and will possibly increase since the r

does federalism lead to excessively high taxes the relative strengths of vertical and horizontal tax externalities turn on the balance between the interest responsiveness of the supply of savings and demand for capital the extent to which immobile factors are taxed by the states and the strength of preferences between federal and state expenditures the vertical externality will dominate if the aggregate tax base of the federation is responsible to the state tax instrument tax interactions in federations are more complex than has often been supposed

modeling undesirable factors in efficiency evaluation abstract data envelopment analysis dea measures the relative efficiency of decision making units dmus with multiple performance factors which are grouped into outputs and inputs once the efficient frontier is determined inefficient dmus can improve their performance to reach the efficient frontier by either increasing their current output levels or decreasing their current input levels however both desirable good and undesirable bad factors may be present for example if inefficiency exists in production processes where final products are manufactured with a production of wastes and pollutants the outputs of wastes and pollutants are undesirable and should be reduced to improve the performance using the classification invariance property we show that the standard dea model can be used to improve the performance via increasing the desirable outputs and decreasing the undesirable outputs the method can also be applied to situations when some inputs need to be increased to improve the performance the linearity and convexity of dea are preserved through our proposal

information provision before a contract is offered this paper considers an agency model in which the agent can update the principal s belief before the contract is offered we identify that the agent who has a bad potential to perform the task has a small chance to receive information rent but if he receives it he receives a large amount thus the agent may choose to provide more information that shifts the principal s belief to the negative direction if the prior belief is optimistic

the strategic value of partial vertical integration we investigate the strategic incentives for partial vertical integration namely partial ownership agreements between manufacturers and retailers when retailers privately know their costs and engage in price competition with differentiated goods the partial misalignment between the profit objectives within a partially integrated manufacturer retailer hierarchy implies a higher retail price than under full integration this information vertical effect translates into a competition horizontal effect the partially integrated hierarchy s commitment to a higher price induces the competitor to increase its price which strategically relaxes competition our analysis provides implications for vertical merger policy and theoretical support for the recently documented empirical evidence on partial vertical acquisitions

a positive model of overlapping income taxation in a federation of states abstract this paper develops a positive theory of overlapping income taxation in a federation of states the analysis provides a complete characterization of the equilibrium federal and states tax rates as functions of the level of total productivity dispersion between the states the federal rate is increasing in the level of total productivity dispersion between the states even if the income of the decisive voter at the federal level is above the mean income given that the individuals income is endogenously determined there exists a negative trade off between the implemented federal tax rate and the resulting states tax rates regardless of the pre tax income of the decisive voter at the state level thus high levels of productivity dispersion between the states cause a higher than optimal federal tax rate together with low states tax rates it is also shown that a system of overlapping income taxation is not efficient the resulting inefficiency might be exacerbated by the implementation of a federal matching grants program contradicting previous results in the related normative literature

economic efficiency of greek retail smes in a period of high fluctuations in economic activity a dea approach this study aims to analyse the economic efficiency of greek small and medium retail enterprises before and after the crisis that started in 2008 based on the accounting equation we use data envelopment analysis dea to estimate variable returns of scale efficiency scores and to conclude on specific characteristics that efficient companies have for example on capital structure our results from the dea application show a high degree of inefficiency we found that smes on the islands are more efficient than those on the mainland and that smes in the cities are the least efficient size seems to be important more so on the islands and on the mainland than in the cities we conclude that companies should act more conservatively in terms of operating cost when the first signs of a recession appear in addition during a recession period companies that have evidences that their operations will continue positively should strengthen their operations by raising more own capital finally our study clarifies

designing tax policy in federalist economies an overview abstract the emerging economic federations of the european union russia and south africa along with the established federations in australia canada and the united states confront the task of designing the institutions for federal fiscal policy this paper reviews the literature on the design of tax policy in federalist economies we conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities the usual assignment view of federalis recommends central government policies for example resident based taxation or grants in aid to correct these failures these recommendations assume that the central government will act as a benevolent social planner the political economy view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered alternative legislative structures and constitutional rules are considered

tax competition in a fiscal union with decentralized leadership this paper examines capital tax competition in the presence of an interstate transfer policy without federal commitment lack of commitment implies that local tax policy is chosen prior to federal transfers the paper s main result is that ex post federal policy neutralizes horizontal fiscal externalities insulating tax policy from capital mobility federal policy however introduces a new source of inefficiency unrelated to tax competition specifically ex post transfer payments prove to be equivalent to an interstate revenue sharing system which may render federal intervention in the presence of fiscal externalities welfare deteriorating relative to tax competition

weak disposability in nonparametric production analysis with undesirable outputs environmental economics and natural resources group at wageningen university in the netherlands weak disposability of outputs means that firms can abate harmful emissions by decreasing the activity level modeling weak disposability in nonparametric production analysis has caused some confusion this article identifies a dilemma in these approaches conventional formulations implicitly and unintentionally assume all firms apply uniform abatement factors however it is usually cost effective to abate emissions in those firms where the marginal abatement costs are lowest this article presents a simple formulation of weak disposability that allows for non uniform abatement factors and preserves the linear structure of the model

tourism as a long run economic growth factor the spanish case this paper examines the role of tourism in the spanish long run economic development the tourism led growth hypothesis is confirmed through cointegration and causality testing the results indicate that at least during the last three decades economic growth in spain has been sensible to persistent expansion of international tourism the increase of this activity has produced multiplier effects over time external competitivity has also been proved in the model to be a fundamental variable for spanish economic growth from the empirical analysis it can be inferred the positive effects on income that government policy in the adequacy of supply as well as in the promotion of tourist activity may bring about

a note on the malmquist productivity index in recent years the malmquist index has gained in popularity as a measure of productivity change we demonstrate that in the presence of non constant returns to scale the malmquist productivity index does not accurately measure productivity change the bias is systematic and depends on the magnitude of scale economies

reassessment of the tiebout model abstract the tiebout model has been the reference point for the classical approach to fiscal federalism its emphasis on mobility benefit taxation and the advantages of fiscal competition have informed fiscal federalism since the seminal contributions of musgrave and oates this paper reviews the influence that the tiebout model has had on fiscal federalism and argues that while its insights remain relevant for local government it is far from compelling as a positive description of or a normative prescription for fiscal federalism at the state level some aspects of alternative approaches are presented which lead to different perspectives than tiebout inspired ones

an empirical analysis of intergovernmental tax interaction the case of business income taxes in canada both federal and provincial governments in canada levy corporate taxes on busi nesses in their jurisdictions which potentially gives rise to horizontal and vertical tax exter nalities within the federation using a simple model of interdependent tax choices we estimate tax setting functions for the federal government ontario quebec and an aggregate of the remaining eight provinces we find evidence of significant vertical and horizontal tax inter actions provincial tax rates respond negatively to the federal tax rate while at least some provinces increase their tax rates in response to increases in the tax rates of other provinces

vertical externalities in cigarette taxation do tax revenues go up in smoke abstract in federal systems where tax bases are joint property the tax policy of one level of government affects the tax base of the other this paper examines the interdependence of us federal and state cigarette tax rates our results suggest that states may reduce their cigarette tax rate by as much as 48 cents per dollar increase in the federal tax rate thus a federal tax hike may reduce the amount of generated state tax revenues both directly the overall tax rate rises and the state tax base declines and indirectly the state tax rate declines

the local distribution of endowments matters modelling tax competition with heterogeneous local residents this study expands on the tax competition literature by incorporating the heterogeneity of resource endowments into the tax competition framework it theoretically elaborates that the local distribution of resource endowments affects both the level of tax rate and the degree of spatial dependence in tax competition and empirically confirms the theory using the data for 60 urban municipalities in the seoul metropolitan area sma korea in the years 2004 2006 a spatial panel model for tax cut confirms the presence of tax competition in the sma and the effects on tax cut of the resource endowment distribution another regression model for local indicators of spatial dependence uncovers the fact that the spatial dependence in tax cut is also determined by the local endowment distribution

non commitment in performance evaluation and the problem of information distortions abstract auditing is modeled in a sequential game without commitment the manager must decide whether and where to audit a worker s output taking into account all interim information he has obtained the worker will work just hard enough and show it to divert the manager from making an audit or cover up withholding information about his work to make an audit more difficult this usually raises the costs of setting work incentives so incentives are softened sometimes drastically moreover when a worker s on the job information is valuable for entrepreneurial decisions work incentives must be softened to improve the internal flow of information

the determinants of municipal tax rates in british columbia in this paper we study the regional pattern of municipal business property tax rates in the province of british columbia reduced form tax setting equations produce some evidence that municipal governments respond to tax changes in neighbouring jurisdictions a joint investigation of the determinants of tax base and municipal taxation decisions however reveals that it is difficult to interpret this response as arising primarily out of competition over tax base there is also some evidence that municipal tax rates are sensitive to taxes set on the same base by super municipal bodies jel classification c33 h71 les determinants des taux d imposition municipale en colombie britannique dans ce memoire les auteurs etudient le pattern regional des taux d imposition municipale sur la propriete fonciere commerciale dans la province de la colombie britannique on montre a l aide d un modele en forme reduite d equations de definition des taux d imposition que les gouvernements municipaux reagissent aux changements dans les taux d imposition dans leur voisinage cependant un examen conjoint des determinants de la base d imposition et des decisions municipales montre qu il est difficile d interpreter cette reaction comme emanant d une concurrence fiscale on montre aussi que les taux d imposition municipale sont sensibles aux niveaux de fiscalite imposes sur la meme base par les autorites supra municipales

undesirable outputs in efficiency valuations abstract efficiency measurement is usually based on the assumption that inputs have to be minimized and outputs have to be maximized in a growing number of applications however undesirable outputs are incorporated into the production model which have to be minimized in this paper various approaches for treating such outputs in the framework of data envelopment analysis dea are discussed and the resulting efficient frontiers are compared new radial measures are introduced which assume that any change of the output level will involve both undesirable and desirable outputs

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

horizontal and vertical indirect tax competition theory and some evidence from the usa this paper provides a simple theoretical framework for analysing simultaneous vertical and horizontal competition in excise taxes and estimates equations informed by the theory on a panel of us state and federal excise taxes on cigarettes and gasoline we also examine the role played by smuggling the results are generally consistent with the theory when the characteristics of the markets for the goods are taken into account for neither good do federal excise taxes affect state taxes taxes in neighbouring states have a significant and large effect in the case of cigarettes and a much weaker effect in the case of gasoline we also find that in the setting of cigarette taxes concerns about cross border shopping play a more important role than concerns about smuggling

ignorance in a multi agent setting abstract i extend the demski and sappington 1984 model to the case where the agents are with some exogenous probability ignorant i show that an ignorant agent either is not exposed to risk or he receives a lower transfer when the other agent is the informed type the principal wants to discourage choosing the contract designed for an ignorant agent

seigniorage and tax smoothing in the united states 1914 1986 abstract when monetary and fiscal authorities cooperate to minimize the distortionary costs of financing an exogenous stream of government expenditures barro s tax smoothing model implies a long run relationship between tax revenues and inflation previous empirical tests of this relationship are reinterpreted in light of recent work on cointegration and are shown to hold only when stochastic temporal variation in the excess burden of taxes and seigniorage is transitory in nature a new test that holds in the presence of nonstationary disturbances is developed and applied annual u s data from the period 1914 to 1986 reject the revenue smoothing hypothesis

do countries compete over corporate tax rates this paper tests whether oecd countries compete with each other over corporate taxes in order to attract investment we develop two models with firm mobility countries compete only over the statutory tax rate or the effective average tax rate while with capital mobility countries compete only over the effective marginal tax rate we estimate the parameters of reaction functions using data from 21 countries between 1983 99 we find evidence that countries compete over all three measures but particularly over the statutory tax rate and the effective average tax rate this is consistent with a belief amongst governments that location choices by multinational firms are discrete we also find evidence of concave reaction functions consistent with the model outlined in the paper

tax competition as a cause of falling corporate income tax rates a survey of empirical literature since the mid 1980s tax rates on corporate income have declined in most industrialized countries tax competition between countries for mobile capital has frequently been mentioned as an explanation for this development a vast empirical literature dealing with tax competition for mobile capital has emerged this paper categorizes and summarizes the existing empirical studies on this issue particular focus is placed on the isolation of the substantive implications the quantitative study outcomes convey given the empirical evidence surveyed it appears that tax rates indeed decline due to tax competition between countries and in particular due to competition for profits in addition to summarizing the substantive implications of the existing empirical literature the paper addresses the question of whether the existing studies can convincingly isolate tax competition as a driver of falling corporate income tax rates

economics of efficiency measurement by the dea approach three aspects of efficiency measurement by data envelopment analysis are discussed here analytically these aspects comprise output specific input allocations by each firm flexibility in the production process and the role of learning by doing in efficiency improvement

pessimistic information gathering an agent gathers information on productivity shocks and accordingly produces on behalf of a principal information gathering is imperfect and whether it succeeds or not depends on the agent s effort contracting frictions come from the fact that the agent is pessimistic on the issue of information gathering and there are both moral hazard in information gathering private information on productivity shocks and moral hazard on operating effort an optimal menu of linear contracts mixes high powered productivity dependent screening options following good news with a fixed low powered option otherwise

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

does tourism influence economic growth a dynamic panel data approach on average tourism specialized countries grow more than others this is not consistent with the core of modern economic growth theory that suggests that economic growth is linked to sectors with high tech intensity and large scale in this article we use appropriate panel data methods to study the relationship between tourism and economic growth in general we show that tourism is a positive determinant of economic growth both in a broad sample of countries and in a sample of poor countries however contrary to previous contributions tourism is not more relevant in small countries than in a general sample this is a fully modified version of a working paper co authored by one of the authors

tax base effects and fiscal externalities of local capital taxation evidence from a panel of german jurisdictions abstract this paper provides empirical evidence on the tax base effects of local capital taxation using a large panel of german municipalities it tests whether both the local tax rate and the tax rate in adjacent jurisdictions affect the local tax base the results obtained from a spatial gmm approach confirm a strong negative impact of the local tax rate whereas the average tax rate of neighboring municipalities proves insignificant only if interacted with the relative population size of neighbors a significant positive impact is found indicating that externalities from taxing decisions of adjacent jurisdictions are experienced only by relatively small municipalities

an economic efficiency study on different regions of ghana via slack based data envelopment analysis and regression analysis in this article we evaluate the efficiency of the 10 different regions of ghana using slack based data envelopment analysis a nonparametric linear programming technique furthermore we analyse the variable effects on the efficiency of the regions by various regression models using bootstrap sampling technique the data come from the 1991 1992 and 1998 1999 ghana living standards survey our results show that wealth is not strongly related to efficiency for example the study indicates that the brong ahafo region is the most efficient region but not the most wealthy in ghana generally urban regions are not found to be among the most efficient regions due to the high expenditures the regression analysis shows that female heads of household have an overall positive effect on efficiency in addition any form of education obtained is also found to have a significant positive effect on efficiency

tourism welfare and de industrialization in a small open economy this paper investigates the effects of an expansion of tourism on welfare output and factor prices in the host country using a general equilibrium international trade model in the absence of taxes foreign ownership and distortions an increase in foreign visitors will increase welfare only if the price of nontradables increases factor mobility and foreign ownership tend to reduce the gains from tourism while commodity taxes tend to increase them conditions under which an increase in tourism can lead to deindustrialization are also discussed copyright 1991 by the london school of economics and political science

tax competition and tax co ordination under destination and origin principles a synthesis this paper proposes a general framework for analysing commodity tax competition under destination and origin principles based on three possible tax spillovers the consumer price spillover the producer price terms of trade spillover and rent spillovers a model is presented which can be extended to accommodate all three spillovers using this model many of the results in the existing literature can be derived compared and extended

buyer optimal learning and monopoly pricing this paper analyzes a bilateral trade model where the buyer s valuation for the object is uncertain and she observes only a signal about her valuation the seller gives a take it or leave it offer to the buyer our goal is to characterize those signal structures which maximize the buyer s expected payoff we identify a buyer optimal signal structure which generates i efficient trade and ii a unit elastic demand furthermore we show that every other buyer optimal signal structure yields the same outcome as the one we identify in particular the same price

complementarity free riding and the military expenditures of nato allies abstract this paper examines the major influences of an ally s demand for military expenditures demand equations are estimated for a sample of nato nations using the iterative seemingly unrelated regressions technique evidence is presented indicating that structural changes occured in these equations in the early 1970s this instability is the predicted effect of the doctrine of flexible response adopted by nato during this time period the statistical tests show that the medium sized nuclear powers military expenditures responded identically to income and defense spillins the same held true for the lowland allies

endogenous information and stochastic contracts abstract a growing literature analyzes revenue maximizing contracts for situations in which agents can acquire private information before they decide whether to join the contract it is conjectured that the results also apply to the more natural scenario where information can be acquired either before or after signing this paper shows that in fact the latter scenario is more favorable for the principal using stochastic contracts she can induce information acquisition with some probability and yet appropriate the generated surplus

budget balance through revenue or spending adjustments abstract the paper provides a historical perspective on the issue of whether budget deficits are typically eliminated by increased taxes or by reduced spending by examining u s budget data from 1792 1988 i conclude that about 50 65 of all deficits due to tax cuts and about 65 70 of all deficits due to higher government spending have been eliminated by subsequent spending cuts while the remainder was eliminated by subsequent tax increases in contrast to previous studies the empirical analysis uses error correction models in a way that the intertemporal budget constraint is imposed in the estimation stage

the consequences of overlapping tax bases for redistribution and public spending in a federation tax and expenditure policies are studied in a federation with imperfectly mobile households states implement a linear progressive tax and supply a public good a vertical fiscal externality reflecting the effect of state policies on federal revenues provides an incentive for state taxes to be too progressive a horizontal fiscal externality causes nonoptimal state taxes and expenditures because of the migration effect the federal government implements its own linear progressive tax and makes transfers to the states the federal government can nullify both externalities by appropriate fiscal policies and redistributive taxation can be decentralized to the states c 1998 elsevier science s a

income redistribution in a federal system the question of the appropriate level of government to undertake income redistribution is receiving renewed attention from economists the standard argument about the issue might be summarized as follows 1 interstate migration of taxpayers and transfer recipients raises the cost to voters of income redistribution at the state level above the cost at the federal level 2 statewide redistribution confers spillover benefits to residents of other states 3 therefore as compared with a national system decentralized responsibility for income redistribution yields both less redistribution and less than the socially optimal amount of income redistribution the purpose of this paper is only to question step 1 of the above argument of course readers who accept the assumptions of the standard argument may conclude that the possible weakening of step 1 of that argument reduces the likelihood that its conclusion holds the paper argues that the cost of redistribution faced by state residents may in fact be lower at the state level than at the national level because their federal tax obligations fall as the state redistributes more income thus part of the cost of redistribution at the state level can be exported to residents of other states the state s federal tax bill falls when taxable incomes in the state are reduced by increased redistribution deductibility of state taxes enhances this result but is not necessary for it to demonstrate the proposition without adding unnecessary complication a simple model of income redistribution is described in which governments at all levels use linear tax transfer schedules to redistribute income the single government case is considered first then two levels of government are introduced and finally migration is allowed it is shown that without migration state costs are never greater than national costs of redistribution as long as redistribution reduces total money income when migration is allowed the result depends on the elasticity of migration responses compared with the elasticity of labor supply responses

public capital and total factor productivity new evidence from the italian regions 1970 98 destefanis s and sena v 2005 public capital and total factor productivity new evidence from the italian regions 1970 98 regional studies 39 603 618 this paper analyses the relationship between industrial total factor productivity and public capital across the 20 italian administrative regions it adds upon the existing literature in a number of ways it analyses a longer period 1970 98 it allows for the role of human capital accumulation it tests for the existence of a long run relationship between total factor productivity and public capital through previously suggested panel techniques and for weak exogeneity of public capital and it assesses the significance of public capital within a non parametric set up based on the free disposal hull the results confirm that public capital has a significant impact on the evolution of total factor productivity particularly in the southern regions this impact is mainly ascribed to the core infrastructures road and airports harbours railroads w

local fiscal competition an application to sales taxation with multiple federations abstract local sales tax rates influence the location of retail activity this paper develops a theory and empirical identification strategy for studying sales tax competition with multiple federations as exemplified by multiple counties each containing several cities in addition to strategic interactions with nearby cities and a city s own county city tax rates are influenced by the tax rates of neighboring counties cities react heterogeneously to own county sales tax rates depending on distance to the county border using data on the driving time to county borders and a comprehensive cross section of local sales tax rates i exploit variation in proximity to county borders to identify vertical fiscal competition cities located near county borders react more intensely to their county s tax rate in comparison to towns at the interior an increase in the neighboring county tax rate raises city tax rates in nearby counties

regional resilience in italy a very long run analysis cellini r and torrisi g regional resilience in italy a very long run analysis regional studies resilience is a concept referring to the manner in which systems react to and recover from shocks according to several recent analyses resilience can explain different regional economic performances however this study indicates that this explanation is quite unconvincing when applied to the italian regions in the very long run 1890 2009 only few shocks emerge to have specific impact effects differing across regions while the recovery experience is ever spatially homogeneous hence it is difficult to discern genuine differences in regional resilience this evidence can be interpreted as a reason why the regional differences in italy are huge and persistent

the value of ignorance this article provides a new perspective on the information structure of an agent in a standard model of adverse selection before the contracting takes place the agent has the opportunity to gather private information on a relevant parameter that affects final payoffs i allow for the possibility that the agent remains uninformed with some probability the agent s optimal choice of information structure is derived and it is shown that in the case of two states of nature the possibility of remaining ignorant has a positive strategic value for the agent since a poor information structure generates strategic benefits there will be no equilibrium in which the agent is perfectly informed even if additional information is costless at the margin

vertical versus horizontal tax externalities an empirical test abstract we study taxation externalities in federations of benevolent governments where different hierarchical government levels tax the same base one can observe two types of externalities a horizontal externality working among governments of the same level and leading to tax rates that are too low compared to the social optimum and a vertical externality working between different levels of government and leading to suboptimally high tax rates building on the model of keen and kotsogiannis keen michael j kotsogiannis christos 2002 does federalism lead to excessively high taxes american economic review 92 1 363 370 we derive a discriminating hypothesis to distinguish vertical and horizontal tax externalities based on measurable variables this test is applied to a panel data set on local taxes in a sample of swiss municipalities that feature direct democratic fiscal decision making so as to maximize the correspondence with the benevolent governments of the theory we find that vertical externalities dominate they are thus an observed empirical phenomenon as well as a notable extension to the theory of tax competition

piling on multilevel government and the fiscal common pool this article discusses the common pool problems that arise when multiple territorially overlapping governments share the authority to provide services and levy taxes in a common geographic area contrary to the traditional tiebout model in which increasing the number of competing governments improves efficiency i argue that increasing the number of overlapping governments results in overfishing from the shared tax base i test the model empirically using data from u s counties and find a strong positive relationship between the number of overlapping jurisdictions and the size of the local public sector substantively the overlap effect amounts to roughly 10 of local revenue

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

exclusionary policies in urban development under servicing migrant households in brazilian cities localities in developed countries often enact regulations to deter low income households from moving in in developing countries such restrictions lead to the emergence of informal housing sectors to deter low income migrants localities in developing countries withhold public services to the informal housing sector using a large sample of brazilian localities we examine migration and exclusion focusing on the public provision of water to small houses where low income migrants are likely to live withholding water connections reduces the locality growth rate particularly of low education households in terms of service provision during dictatorship in brazil we find evidence of strategic exclusion where localities appear to withhold services to deter in migration we also find evidence of strategic interactions among localities within metro areas in their setting of service levels if one locality provides more services to migrant households other localities respond by withholding service

vertical tax competition and consumption externalities in a federation with lobbying abstract we consider a federation with two layers of government in which leviathan policy makers levy an excise tax on a consumption good that generates a negative externality and that is produced in an imperfectly competitive market when both layers of government are allowed to tax policy choices are affected also by vertical tax competition in this setting tax policy in general is not efficient we then examine how special interest groups may influence tax policy by lobbying the policy makers we find that depending on market structure and on the level of the externality lobbying can improve efficiency and that tax base sharing by two layers of government can be more efficient than taxation by a single layer

the relationship between firm mobility and tax level empirical evidence of fiscal competition between local governments the mobility of the tax base may influence fiscal outcomes the many theoretical contributions about the role of mobility are not matched by empirical evidence existing studies address strategic interaction between governments but have little to say about mobility we introduce a new measure of mobility conditions based on the geographic profit variability of industrial sectors the econometric analysis shows a systematic negative relationship between mobility conditions and tax level among municipalities in norway the analysis takes into account neighborhood effects in a spatial model and the endogeneity of mobility conditions is handled with instrumental variables