the stochastic convergence of co2 emissions a long memory approach in response to equity concerns surrounding the spatial distribution of co2 emissions and assumptions of co2 convergence within some climate models this paper examines the convergence of co2 emissions within the oecd over the period 1870 2004 more specifically using the local whittle estimator and its variants we examine whether relative per capita co2 emissions are fractionally integrated that is they are long memory processes which although highly persistant may revert to the mean trend in the long run our results suggest that co2 emissions within 13 out of 18 oecd countries are indeed fractionally integrated implying that they converge over time albeit slowly interestingly though the countries whose emissions are not found to be fractionally integrated are some of the highest polluters within the oecd at least in per capita terms our results have implications both for future studies of co2 convergence and for climate policy

interjurisdictional spillovers decentralized policymaking and the elasticity of capital supply a key question in the fiscal federalism literature is whether decentralized policymaking in an economy with spillovers among jurisdictions leads to an efficient outcome see e g oates 1972 a striking example where this question is of particular importance is the current debate on global warming the failure of the copenhagen summit in late 2009 has shown impressively that centralized solutions to the climate change problem are hard to realize one might thus want to know whether a decentralized policy approach where each country chooses its own climate policy without coordinating it with the climate policy of other countries gives hope for an efficient policy outcome further important examples of decentralized decision making in the presence of interjurisdictional spillover effects can be found in the decentralized provision of education and infrastructure at first glance it is hardly imaginable that decentralized policymaking can ever be optimal it is not only the very existence of spillovers that causes doubt the policy instruments themselves also create policy externalities despite this presumption against the efficiency of decentralized policymaking the previous literature provides several studies in which decentralization leads to an undistorted policy choice an important example is the paper of oates and schwab 1988 who argue that the choice of capital taxes in an economy with identical jurisdictions mobile capital and local pollution may indeed be efficient in a remarkable recent paper ogawa and wildasin 2009 extend the analysis to account for transboundary pollution spillovers and asymmetric countries and still get the efficiency result in their model emissions and thus the extent of spillovers generated by a jurisdiction is proportional to capital employed in this jurisdiction the choice of capital taxes is then distorted by the jurisdictions incentives for tax competition and by the jurisdictions disregard of spillover effects but the key argument is that both distortions just neutralize each other and thereby lead to efficient capital tax rates our paper contributes to this literature and points to the important role that the elasticity of aggregate capital supply with respect to the net rate of return to capital plays for the efficiency of decentralized policymaking in accordance with the previous literature we show that under a fixed capital supply zero capital supply elasticity the decentralized policy choice is indeed optimal if the capital supply elasticity is strictly positive however capital tax rates are inefficiently low in the decentralized

fdi and taxation a meta study despite the continuing political interest in the usefulness of tax competition and tax coordination as well as the wealth of theoretical analyses it still remains open whether or when tax competition is harmful moreover the influence of tax differentials on multinationals decisions is still insufficiently analyzed thus economists have increasingly resorted to empirical analysis in order to gain insights on the elasticity of fdi with respect to company taxation as a result the empirical literature on taxation and international capital flows has grown to a similar abundance during the last 25 years as the respective theoretical literature its heterogeneity leads to a rising need for concise reviews on the existing empirical evidence in this paper we extend former meta analyses on fdi and taxation in three ways first we add the most recent publications unconsidered in meta analyses up to date second we apply a different methodology by using a broad set of meta regression estimators and explicitly discuss which one is most suitable for application to our meta data third we address some important issues in research on fdi and taxation to the clarification of which meta analysis can make valuable contributions these issues are mainly the influence of variables which might moderate effects of tax differentials e g public spending the implications of using aggregate fdi data as opposed to firm level information on measured tax effects the implications of bilateral effective tax rates and the possible presence of publication bias in primary research

do better schools matter parental valuation of elementary education the evaluation of numerous school reforms requires an understanding of the value of better schools given the difficulty of calculating the relationship between school quality and student outcomes i turn to another method and use house prices to infer the value parents place on school quality i look within school districts at houses located on attendance district boundaries houses then differ only by the elementary school the child attends i thereby effectively remove the variation in neighborhoods taxes and school spending i find that parents are willing to pay 2 5 percent more for a 5 percent increase in test scores this finding is robust to a number of sensitivity checks

economic growth and pollutant emissions in tunisia an empirical analysis of the environmental kuznets curve abstract this paper investigates the relationship between economic growth and pollutant emissions for a small and open developing country tunisia during the period 1961 2004 the investigation is made on the basis of the environmental kuznets curve hypothesis using time series data and cointegration analysis carbon dioxide co 2 and sulfur dioxide so 2 are used as the environmental indicators and gdp as the economic indicator our results show that there is a long run cointegrating relationship between the per capita emissions of two pollutants and the per capita gdp an inverted u relationship between so 2 emissions and gdp has been found with income turning point approximately equals to 1200 constant 2000 prices or to 3700 in ppp constant 2000 prices however a monotonically increasing relationship with gdp is found more appropriate for co 2 emissions furthermore the causality results show that the relationship between income and pollution in tunisia is one of unidirectional causality with income causing environmental changes and not vice versa both in the short run and long run this implies that an emission reduction policies and more investment in pollution abatement expense will not hurt economic growth it could be a feasible policy tool for tunisia to achieve its sustainable growth in the long run

does competition for capital discipline governments decentralization globalization and public policy competition among countries or regions within them to attract mobile capital is often thought to discipline their governments motivating them to invest more in infrastructure reduce waste and corruption and spend less on non productive public goods the result should be convergence on business friendly policies we argue that this requires an assumption units start out very similar that is often unrealistic if units are heterogeneous in natural resources geographical location inherited human capital or infrastructure capital mobility often weakens discipline on the poorlyendowed units this may help explain disappointing results of liberalizing capital flows within russia and sub saharan africa jel f36 h73 h87

is there a turning point in the relationship between income and energy use and or carbon emissions abstract we analyze the effect of fuel mix model specification and the level of development on the presence and size of a turning point in the relationship between income and energy use and or carbon emissions the results indicate that fuel mix the specification for income and the level of economic development affect conclusions about whether there is a turning point in the relationship between economic activity and energy use and carbon emissions including fuel shares generally reduces the size of a turning point that is estimated from a panel that includes observations from both oecd and non oecd nations but this result varies according to the level of development for oecd nations there is limited support for a turning point in the relationship between income and per capita energy use and or carbon emissions for non oecd nations there is no turning point in the relationship between income and either energy use or carbon emissions instead the relationship is positive together the results indicate that forecasters and policy makers should not depend on a turning point in the relationship between income and energy use or carbon emissions to reduce either

nash equilibria in models of fiscal competition abstract this paper analyzes nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition small number nash equilibria in which tax rates are the strategic variables are shown not to coincide with nash equilibria in which public expenditure levels are the strategic variables

corporate taxation in the oecd in a wider context against the background of increased globalisation statutory corporate tax rates have shown a clear downward trend over the last two decades the sharp decline in these rates was accompanied by substantial tax base broadening and a comparable reduction in personal income tax rates only until the early 1990s this suggests that corporate tax competition is of increasing importance so far corporate tax revenues remain fairly stable but an analysis of corporate taxation in the context of the overall tax systems shows that a substantial shift towards value added taxes has taken place while the trends so far have been driven by smaller european countries recent tax reforms indicate that increasing tax competition is inducing a shift towards consumption even for larger economies

spurious rejections by cointegration tests induced by structural breaks the effects on three cointegration tests are examined when the series analysed are independent integrated processes each with a structural break although there are differences in detail among the tests the results indicate in all cases that when structural breaks are neglected in the analysis spurious rejections indicating the presence of cointegration can occur

are shocks to ecological footprint in oecd countries permanent or temporary abstract the main goal of this study is to check the unit root properties of the ecological footprint and its six subcomponents cropland footprint grazing land footprint fishing grounds footprint forest land footprint built up land footprint and carbon footprint in 25 oecd the organisation for economic co operation and development countries during the period 1961 2013 this study uses a new stationarity test with sharp and smooth breaks in the panel setting developed by bahmani oskooee et al 2014 empirical findings demonstrate that the fishing grounds footprint does not have mean reverting behavior while the remaining ecological indicators display stationary properties under the assumption of both homogenous and heterogeneous long run variance therefore if policymakers decide to decrease the size of the fishing grounds footprint they will not face stiff resistance in addition to the panel results the univariate stationarity test results can also help policymakers in each country design effective emission reduction policies

the implications of competition among jurisdictions does tiebout need politics the paper investigates whether compensation among local jurisdiction is by itself sufficient to ensure efficient provision of local public goods jurisdictions have fixed boundaries and each has an entrenched government with the power to tax and supply the public good residents can move costlessly among jurisdictions it is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency though residents can vote with their feet land is immobile hence governments can unsurp some land rents for their own ends increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power

state and local fiscal policy and growth at the border abstract the paper studies the connection between state and local fiscal policy as measured by the share of government spending and revenues in personal income and the economic activity of counties that share a state border i construct a panel of pairs of us counties that share a state border from the 1970s to 2012 economic activity is measured by county employment wages and business establishments the state and local government spending and revenue shares are aggregates for the states on the respective sides of the border i estimate distributed lag regressions of changes in economic activity on changes in state and local government budgets in two ways the first double difference utilizes change in the difference between border counties this suggests a quite modest relocation of economic activity away from states with fiscal expansion i then look at activity on each side of the border separately and find more substantial and consistently negative effects of fiscal expansion on both sides of the border a border county shares the negative consequences for its neighbor of growth in the size of that neighbor s state and local governments this negative fiscal externality is roughly half the size of the direct negative effects from similar own state spending increases and the sum of the two is substantial economically

the quantity and quality of life and the evolution of world inequality gdp per capita is usually used to proxy for the quality of life of individuals living in different countries welfare is also affected by quantity of life however as represented by longevity this paper incorporates longevity into an overall assessment of the evolution of cross country inequality and shows that it is quantitatively important the absence of reduction in cross country inequality up to the 1990s documented in previous work is in stark contrast to the reduction in inequality after incorporating gains in longevity throughout the post world war ii period health contributed to reduce significantly welfare inequality across countries this paper derives valuation formulas for infra marginal changes in longevity and computes a full growth rate that incorporates the gains in health experienced by 96 countries for the period between 1960 and 2000 incorporating longevity gains changes traditional results countries starting with lower income tended to grow faster than countries starting with higher income we estimate an average yearly growth in full income of 4 1 percent for the poorest 50 percent of countries in 1960 of which 1 7 percentage points are due to health as opposed to a growth of 2 6 percent for the richest 50 percent of countries of which only 0 4 percentage points are due to health additionally we decompose changes in life expectancy into changes attributable to 13 broad groups of causes of death and three age groups we show that mortality from infectious respiratory and digestive diseases congenital perinatal and ill defined conditions mostly concentrated before age 20 and between ages 20 and 50 is responsible for most of the reduction in life expectancy inequality at the same time the recent effect of aids together with reductions in mortality after age 50 due to nervous system senses organs heart and circulatory diseases contributed to increase health inequality across countries

tax competition in federations revisited we extend keen and kotsogiannis 2002 2004 by considering all purpose public goods that are beneficial to both producers and consumers horizontal externality resp vertical externality exerted by tax competition will not necessarily lead to inefficient outcomes

competing for capital when labor is heterogeneous this paper investigates the impacts of capital mobility and tax competition in a setting with imperfect matching between firms and workers the small country always gains and the large country always loses from tax competition thus implying tax competition leads to redistribution from the large to the small country however the large country always attains a higher utility than does the small country these results imply that our model encapsulates both the importance of being small as well as the importance of being large we also show that tax harmonization leads to redistribution from the large to the small country

a political economy theory of partial decentralization we revisit the classic problem of tax competition in the context of federal nations and derive a positive theory of partial decentralization a capital poor median voter chooses to use redistributive capital taxes to provide public goods the expectation of high capital taxes however results in a small capital stock which lowers returns to redistribution the median voter therefore wants to commit to a lower level of capital taxes she does so by setting a partial degree of decentralization in the constitution the equilibrium degree of decentralization balances the positive effect of tax competition on capital taxes with the loss in redistribution that results we show that the degree of decentralization is nonmonotonic in inequality increasing in the redistributive efficiency of public good provision and decreasing in capital productivity when public goods are heterogeneous in their capacity to transfer funds all voters agree that goods with high redistributive capacity should be decentralized

on welfare measurement in cities this paper extends project evaluation in a spatial urban economy to consider the more general case of distortionary public finances if a local public improvement is financed at least in part by a distortionary property tax we show that residential land prices do not accurately measure the value of land improvements even when households are identical and the improvement is infinitesimally small the magnitude and direction of the measurement error will depend on the second order effects on aggregate demand via changes in population density at each location and on overall city size

strategic public policy around population thresholds abstract political economists have long maintained that politicians respond to both re election and financial incentives this article contributes to the latter literature by analysing whether when and how local office holders respond to the economic incentives embedded in exogenously imposed population thresholds leading to an increased number and remuneration of local politicians building on insights from the urban economics and public finance literatures we argue that local politicians may strategically adjust fiscal and housing policies to stimulate in migration when approaching a population threshold where their remuneration increases using data from all 589 belgian municipalities over the period 1977 2016 our results confirm that approaching important population thresholds causes lower local tax rates and the granting of additional building permits particularly for apartments these policy changes occur early in the election cycle and at least for housing policy are restricted to incumbent mayors themselves expecting to benefit from crossing the population threshold

evidence of long memory behavior in u s renewable energy consumption this study examines the degrees of time persistence in u s total renewable energy consumption using innovative fractional integration and autoregressive models with monthly data from 1981 1 to 2010 10 the results indicate that renewable energy consumption is better explained in terms of a long memory model that incorporates persistence components and seasonality the degree of integration is above 0 5 but significantly below 1 0 suggesting nonstationarity with mean reverting behavior the presence of long memory behavior persistence in renewable energy consumption suggests that random shocks may very well move renewable energy consumption from pre determined target levels for a period of time

eco dumping capital mobility and international trade a small open economy s optimal environmental policy is studied in a model with international capital mobility and local pollution the country produces traded as well as non traded goods is it in the country s interest to engage in ecological dumping by choosing generous pollution allowances for the traded good sector the answer depends decisively on the policy regime in use dumping is not optimal if the country ensures that the implicit rent on pollution is completely appropriated within the country however if the implicit factor reward on pollution leaves the country because it accrues to foreign owners of mobile capital the local welfare maximizing government tends to discriminate against the traded good sector the opposite of ecological dumping

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

optimal fiscal policy for a state or local government abstract state and local government services are enjoyed by and taxes borne by two groups residents and non residents this paper addresses the question if state and local governments maximize their residents welfare and cannot distinguish between individual residents and non residents but know the aggregate characteristics of the two groups what set of taxes subsidies and public goods should they choose some of the results obtained are i even when all commodities are taxable and equity is ignored the existence of non resident consumption makes uniform taxation non optimal ii in some cases whether a commodity should be taxed or subsidized is independent of its own price elasticity iii central cities may be subsidized by suburban residents and iv the ability of state and local governments to redistribute is inversely proportional to the openness of the economy

international competition in corporate taxation evidence from the oecd time series despite numerous studies controversy remains about the impact of economic globalization on corporate taxation theoretical models of tax competition generate different predictions about trends in the level of tax burdens and the degree of convergence in tax burdens across countries in this paper we present a purely empirical analysis of the evolution of tax burdens across oecd countries since the 1950s issues of measurement and methodology have contributed to the inconclusive character of studies to date so we begin with an assessment of alternative measures of the burden problems with some commonly used measures of the tax burden are considered and the most plausible measures identified descriptive analysis of these time series reveals no evidence of a competitive race to the bottom in corporate taxation and little evidence of even a harmonization of the tax burden many inferential studies of corporate taxation base their conclusions on cross sectional analysis in contrast we adopt an explicitly time series method to what are essentially time series questions cointegration methodology originally developed to study issues of convergence of living standards is applied and fails to reveal evidence of convergence of tax burdens for the oecd and europe as a whole it does however indicate that there has been some harmonization within smaller groups of countries mainly in northern europe important questions remain about the effectiveness and impact of corporate taxation in an increasingly open and integrated global economy but we find little evidence to support fears that the burden of taxation is being lifted from corporations kenneth stewart and michael webb

public input competition abstract public investment in infrastructure may help create agglomeration economies by attracting mobile factors such as skilled labour competition among regions in public investment can then be destructive this paper analyzes the nash equilibria to a simple model of public input competition even though the regions are assumed identical the equilibrium may not be symmetric the problem with non cooperative behaviour is not only that regions invest too much but that too many regions may choose to invest depending on the parameter values the nash equilibrium may be efficient may be inefficient or may not exist at least not in pure strategies better mobility among regions leads to more aggressive competition the analysis suggests that rents from public investment may be dissipated by governments competition to attract mobile factors

capital tax competition under a common currency abstract we re examine the view that capital taxes are too low when capital is mobile across tax jurisdictions we do so by emphasising a previously neglected implication of decentralised capital tax setting when jurisdictions share a common currency namely capital taxes give rise to a vertical externality by affecting the revenues of the over arching central bank from issuing the common currency this externality may lead ceteris paribus to too high regional capital taxes and may more than offset the usual effects of tax competition in this case and contrary to conventional wisdom decentralised capital taxes will be too high

property value maximization and public sector efficiency abstract this paper analyses the efficiency implications of property value maximization communities are open so that utilities are parametric to housing producers and the local government each local government chooses its public good output to maximize aggregate property value in the community ignoring feedback effects on the composition of the housing stock it is shown that this type of government behavior generates an equilibrium in which all communities are internally pareto efficient

tax competition uniform assessment and the benefit principle abstract in previous discussions it has been argued that tax competition between local governments results in a tax burden on business that is less than the cost of public services for business and in suboptimal levels of public expenditures for residents however this conclusion has never been substantiated by a full theoretical treatment here a theoretical model of tax competition is developed between metropolitan areas with labor perfectly immobile and two local public goods one for residents and one for business for plausible parameter values numerical solutions of the optimality conditions are computed by means of a nonlinear programming algorithm

modeling long run behavior with the fractional arima model abstract when modeling long run behavior fractional arima models can give insights unobtainable with the nonfractional arima models as an application the deterministic trend and unit root with drift models are nested in the fractional arima model this allows testing between the two models based on estimated parameter values this test is applied to postwar us quarterly real gnp the test concludes that gnp is consistent with both models the estimated fractional parameter is significantly smaller than reported in diebold and rudebusch 1989 the difference is explained by bias in the previous estimates relationships with the cumulative impulse response and spectral density at frequency zero are noted

long memory and disaggregated energy consumption evidence from fossils coal and electricity retail in the u s abstract in this paper the long memory properties of disaggregated fossils coal and electricity retail consumption in the u s over the 1989 2009 period are examined the presence of long memory is related to autocorrelation persistence of each series our results show that there is heterogeneity in the order of integration between these types of energy consumption and for the different sectors employed which is affected by the inclusion of a break event the order of integration was generally higher for the case of a break in the intercept than in the slope with the latter being more plausible for all series

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

the political economy of tax coordination as a bargaining game between bureaucrats and politicians in the public finance literature the view prevails that taxcompetition among countries gives rise to an underprovision ofpublic goods and that coordinated tax increases are thereforedesirable public choice arguments in contrast suggest thattax coordination may not be in the interest of thetaxpayers citizens because imperfections of the politicalprocess political distortions may lead to a waste of taxmoney according to this view tax competition is a desirablecheck on the power to tax whereas tax coordination would onlyrelax the budget constraint of an inefficient public sector the present paper integrates the underprovision argument andthe public choice view into a common theoretical framework the government is assumed to consist of politicians andbureaucrats with diverging interests fiscal policy ismodelled as the outcome of a bargaining game between thebureaucrats and the politicians it turns out that coordinatedtax increases always raise the provision of public goods butalso increase the cost of political distortions the effect onthe welfare of the representative citizen may be positive ofnegative depending in particular on the distribution ofbargaining power between bureaucrats and politicians

land leasing and local public finance in china s regional development evidence from prefecture level cities by analysing the evolution of local governments roles in different periods of china s growth in transition this paper explores local fiscal incentives to use subsidised land and infrastructure as key instruments in regional competition for manufacturing investment since the mid 1990s local land development behaviour is related to china s current land use institutions and intergovernmental arrangements on the basis of panel data covering prefectural level cities from 1999 to 2003 the paper empirically identifies and compares the fiscal impacts of different forms of land leasing by negotiation versus by auction tender policy implications are drawn from this analysis for the further reform of china s urban land system and fiscal institutions

international tax coordination regionalism versus globalism tax competition for mobile capital can undermine the attempts of governments to redistribute income from rich to poor i study whether international tax coordination can alleviate this problem using a general equilibrium model synthesizing recent contributions to the tax competition literature the model highlights the crucial distinction between global tax coordination and regional coordination with high capital mobility between the tax union and the rest of the world the welfare gain from regional capital income tax coordination is only a small fraction of the gain from global coordination even if the tax union is large relative to the world economy

tax competition relative performance and policy imitation rather than about their absolute payoffs governments in fiscal competition often seem to care about their performance relative to other governments moreover they often appear to mimic policies observed elsewhere i study such behavior in a standard tax competition game both with relative payoff concerns and for imitative policies evolutionary stability for games with finitely many players is the appropriate solution concept independently of the number of jurisdictions involved an evolutionarily stable tax policy coincides with the competitive outcome of a tax competition game with infinitely many players it thus involves drastic efficiency losses

state and local tax competition in a spatial model with sales taxes and residential property taxes abstract this paper presents a theoretical model with a uniformly populated line that is divided into local jurisdictions and or states if one level of government imposes sales and residential property taxes and if the spatial extent of each taxing jurisdiction is positive and finite then in nash equilibrium the sales tax rate is less than residential property tax rate housing consumption is suboptimal and the public good is underprovided in each jurisdiction if a very large state or country is divided into local jurisdictions and if both levels of government choose tax rates endogenously then under some assumptions there is an efficient outcome

capital market integration and fiscal sustainability abstract by constructing a two country endogenous growth model with a debt financing government this paper studies the relationship between the sustainability of public finance and increases in inter regional factor mobility to this end it identifies the minimum tax rate that ensures fiscal sustainability against the backdrop of capital tax competition and studies whether competition for mobile capital lowers or improves fiscal sustainability the main findings are as follows i when countries are symmetric increasing capital flows promotes economic growth through the expansion of romer type knowledge spillovers resulting in increased fiscal sustainability in all countries and ii when a marked difference exists between countries tax competition caused by capital movements might lower fiscal sustainability in a country with abundant capital and large outstanding debt

tax uncertainty and business activity abstract we investigate the extent to which uncertainties about tax policies affect business activities we develop a statewide tax uncertainty measure tu measure and show that it captures state corporate tax uncertainty by comparing adjacent counties across state borders we show that increasing tax uncertainty by one standard deviation a 30 increase in the tu measure leads to a 0 17 point per year decrease in the growth rate of establishments over two years the result holds after conducting a variety of robustness checks and is not likely to be driven by general state policy uncertainties

the importance of local corporate taxes in business location decisions evidence from french micro data determinants of businesses locations are known to be multiple locations of partners and competitors are crucial as well as the territory s local characteristics to consider the importance of local taxes we build a poisson model to explain the number of business creations observed in a given municipality first results suggest that there are unobserved factors driving firm creation that are positively correlated with the level of local taxes to deal with this potential source of endogeneity we present an approach close to regression discontinuity design we find that everything else being equal higher local taxes actually tend to deter firms from setting up in a given zone but the effect is weak

long memory in us disaggregated petroleum consumption evidence from univariate and multivariate lm tests for fractional integration previous studies that have tested for a unit root in aggregate energy consumption have potentially reached misleading conclusions because they fail to allow for the possibility that energy consumption might be fractionally integrated and do not distinguish between different types of energy consumption this study tests for long memory in disaggregated petroleum consumption in the united states using univariate and multivariate lagrange multiplier lm tests for fractional integration the results point strongly to the need to distinguish between different forms of energy consumption and allow for a generalization of the i 0 i 1 dichotomy when considering the order of integration of energy consumption allowing for short run dynamics the univariate test suggests that less than 50 of the series are fractionally integrated consistent with expectations the non stationary series are found to have the highest mean and standard deviation the multivariate test suggests that petroleum consumption in the commercial and industrial sectors is clearly fractionally integrated when allowing for short run dynamics and as such exhibits persistent effects while petroleum consumption in the residential sector is a stationary process

the co2 emissions income nexus evidence from rich countries the paper attempts to test the environment kuznets curve ekc hypothesis for 36 high income countries for the period 1980 2005 the test is based on the suggestion of narayan and narayan 2010 various panel data unit root and co integration tests are applied carbon dioxide co2 emissions and gdp series are integrated of order one and co integrated especially after controlling for cross sectional dependence additionally the blundell bond system generalised methods of moments gmm is employed to conduct a panel causality test in a vector error correction mechanism vecm setting unidirectional causality running from real per capita gdp to per capita co2 emissions is uncovered in both the short run and the long run the empirical analysis based on individual countries provides evidence of an ekc for greece malta oman portugal and the united kingdom however it can be observed that for the whole panel a 1 increase in gdp generates an increase of 0 68 in co2 emissions in the short run and 0 22 in the long run the lower long run income elasticity does not provide evidence of an ekc but does indicate that over time co2 emissions are stabilising in the rich countries

how do local governments decide on public policy in fiscal federalism tax vs expenditure optimization previous literature widely assumes that taxes are optimized in local public flnance while expenditures adjust residually this paper endogenizes the choice of the optimization variable in particular it analyzes how federal policy toward local governments in uences the way local governments decide on public policy unlike the presumption the paper shows that local governments may choose to optimize over expenditures the result most notably prevails when federal policy subsidizes local flscal efiort the results ofier a new perspective of the e ciency implications of federal policy toward local governments and thereby enable a more precise characterization of local government behavior in flscal federalism

memory and infrequent breaks abstract we study how processes with infrequent regime switching may generate a long memory effect in the autocorrelation function in such a case the use of a strong fractional i d model for economic or financial analysis may lead to spurious results

assessing the effects of local taxation using microgeographic data we study the impact of local taxation on the location and growth of firms our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation our approach improves on existing work as it corrects for unobserved establishment heterogeneity for unobserved time varying site specific effects and for the endogeneity of local taxation applied to data for english manufacturing establishments we find that local taxation has a negative impact on employment growth but no effect on entry

decentralization as a constraint to leviathan a panel cointegration analysis this paper extends the empirical literature about the effects of fiscal decentralization on the growth of government along three dimensions it distinguishes between the effects of the level of decentralization from the way local governments finance their expenditures common pool versus own resources it uses a panel cointegration approach to separate the long run effects of decentralization from the short run dynamics and it extends and revises the datasets generally used in these empirical analyses the results show that the amount of revenue raised by sub national governments leads to a long term fall in the size of government but grants have the opposite effect in addition a greater decentralization of expenditure leads to greater overall spending when the short term is considered these influences work slowly as the speed of adjustment towards the desired government size is relatively sluggish in addition in the short run there is also a clear effect from the role of local revenue raising powers that stimulates the growth of government these results appear robust to changes in the composition of the variables countries and periods included the sample

reviving leviathan fiscal federalism and the growth of government this article revisits the influential leviathan hypothesis which pos its that tax competition limits the growth of government spending in decentralized countries i use panel data to examine the effect of fiscal decentralization over time within countries attempting to distinguish between decentralization that is funded by intergovernmental transfers and local taxation first i explore the logic whereby decentralization should restrict government spending if state and local governments have wide ranging authority to set the tax base and rate especially on mobile assets in countries where this is most clearly the case decentralization is associated with smaller government second consistent with theoretical arguments drawn from wel fare economics and positive political economy i show that governments grow faster as they fund a greater portion of public expenditures through intergovernmental transfers

measuring wellbeing performance of carbon emissions using hybrid measure and meta frontier techniques empirical tests for g20 countries and implications for china abstract a quantitative measure of performance that integrates national level carbon emission profiles with key parameters of social and economic wellbeing can provide an effective management tool for policy interventions this paper constructs non parametric evaluation and decomposition models using hybrid measure and meta frontier techniques the proposed models are employed to estimate the wellbeing performance of carbon emissions wpce and identify the sources of wpce inefficiency empirical analyses based on the group 20 g20 countries for the 2000 2015 period shows the worst performance is in the brics country group i e brazil russia india china and south africa known for rapid growth whereas the developed and the developing economies of the g20 group show positive trajectories of performance as for china its performance measure of wpce was the lowest among the g20 indicating significant potential for further improvement the analysis also highlights the role of managerial failure as the primary driver of inefficiency more important than technological inefficiency in explaining efficiency loss within the g20 countries this critical finding the relevance and importance of managerial capability suggests the need for a high level of attention to governance and managerial capacity to ensure continued improvements in performance on carbon emissions and human wellbeing a lesson to be drawn from this study is that china s policies to promote a low carbon economy can benefit from increased priority given to low carbon technological innovation for the energy system transition and enhancement of environmental governance and managerial capacity to achieve a long term sustainability

altered states taxes and the location of foreign direct investment in america this paper compares the distribution between u s states of investment from countries that grant foreign tax credits with investment from all other countries the ability to apply foreign tax credits against home country tax liabilities reduces an investor s incentive to avoid high tax foreign locations state corporate tax rate differences of 1 percent are associated with differences of 9 11 percent between the investment shares of foreign tax credit investors and the investment shares of all others suggesting that state taxes significantly influence the pattern of foreign direct investment in the united states copyright 1996 by american economic association

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

a critique of tiebout s theory of local public expenditures the last section of this paper presents a rigorous version of tiebout s theory of local public goods it is shown that equilibria exist and are pareto optimal this rigorous theory follows closely the more rigorous part of tiebout s work this rigorous theory makes a number of very special assumptions which make local public goods essentially private the body of this paper presents a series of examples which show that if one tries to generalize the rigorous version of tiebout s theory in a number of interesting directions then equilibria may no longer exist or may not be pareto optimal the conclusion is that tiebout s idea does not lead to a satisfactory general theory of local public goods the goal of this paper is to point out that tiebout s notion of equilibrium with local governments does not have the nice properties of general competitive equilibrium except under very restrictive assumptions tiebout 39 suggested that there are competitive forces which tend to make local governments allocate resources in a pareto optimal fashion consumers choose to live in those towns with the mix of taxes and public goods they prefer local governments choose this mix so as to attract inhabitants this idea may seem intriguing for it suggests that the invisible hand solves an important part of samuelson s perplexing public goods problem 32 tiebout in fact makes an argument which is nearly rigorous i give a rigorous version of his argument at the end of the paper however in this rigorous version so many restrictive assumptions are made that public goods become essentially private in the body of the paper i give a series of examples with which i try to convince the reader that one is forced to adopt tiebout s restrictive assumptions the idea is that if one changes any of his assumptions then either equilibria may not exist or may not be pareto optimal my examples are presented in the context of a general class of tiebout models i consider several subclasses one of which is the special case considered by tiebout in each of the subclasses except that considered by tiebout i give a counterexample either to the existence of equilibrium or to its pareto optimality the subclasses are so chosen that the difficulties they reveal would be shared by any reasonable tiebout model which differed from his special case i believe that my examples controvert tiebout s suggestion 39 last paragraph that his theory compares favorably with competitive equilibrium theory most of the examples in this paper have already appeared in the literature i cite related work as i go along what is new here is that i assemble the examples in a unified argument

who benefits from partial tax coordination in this paper we investigate whether partial tax coordination is beneficial to countries within and outside a tax union in which countries are supposed to compete in taxes and infrastructure our results demonstrate that a subgroup of countries agreeing on a common tax rate can harm both member and nonmember states this is in contrast to the classical findings that partial tax harmonisation is pareto improving when a minimum tax rate is imposed within a tax union we demonstrate that it does not necessarily improve the welfare of the member countries moreover both the high tax and low tax countries can be worse off this conclusion is at odds with the classical result that a high tax country benefits from the imposition of a lower tax bound

some substitution effects in the location decision of a firm this article extends the classical static theory of the firm to allow for the interaction of the location and output and input decisions equilibrium conditions are determined the comparative static effects of changes in the price and transport cost parameters on the location and quantity variables are deduced

how a race to the bottom can make you fat abstractthis article measures the effect of fiscal competition on obesity rates in the united states through education and health spending we hypothesize that fiscal competition to attract firms r

endogenous timing in the presence of non monotonicities the aim of this paper is to generalize the endogenous timing game proposed by hamilton and slutsky games and economic behavior 1990 2 pp 29 46 by allowing the payoff or the marginal payoff of a player to become non monotonic with respect to the strategy of the opponent we propose a taxonomy of the subgame perfect nash equilibria based on the characteristics of the payoff functions proposed by eaton canadian journal of economics 2004 37 pp 805 29 we determine under which conditions of the initial payoff functions commitment has a social value and when the simultaneous move nash equilibrium is commitment robust and discuss its pareto efficiency

reassessing the environmental kuznets curve for co2 emissions a robustness exercise the number of studies seeking to empirically characterize the reduced form relationship between a country economic growth and the quantity of pollutants produced in the process has recently increased significantly in several cases researchers have found evidence pointing to an inverted u benvironmental kuznetsq curve in the case of co2 however the evidence is at best mixed in this paper we reconsider that evidence by assessing how robust it is when the analysis is conducted in a different parametric setup and when using alternative emissions data from the international energy agency relative to the literature our contribution can be viewed as a robustness exercise in these two respects the econometric results lead to two conclusions firstly published evidence on the ekc does not appear to depend upon the source of the data at least as far as carbon dioxide is concerned secondly when an alternative functional form is employed there is evidence of an inverted u pattern for the group of oecd countries with reasonable turning point regardless of the data set employed not so for non oecd countries as the ekc is basically increasing slowly concave according to the iea data and more bellshaped in the case of cdiac data d 2005 elsevier b v all rights reserved

corporate income taxation of multinationals in a general equilibrium model abstract this paper contributes to the discussion on separate accounting versus formula apportionment in the corporate income taxation of multinational enterprises the innovation is that we consider a general equilibrium tax competition model with an endogenous interest rate in contrast to previous studies we show that tax rates are inefficiently low not only under separate accounting but also under formula apportionment moreover we identify a wide range of empirically relevant cases where formula apportionment is superior to separate accounting independent of the magnitude of the concealment cost of profit shifting the reason for the change in results is that one country s tax rate affects other countries additionally via changes in the interest rate

foreign investment incentives and international cross hauling of capital this note shows how international tax competition can give rise to special tax breaks for foreign investment discriminatory tax treatment of outside investment can give rise to socially harmful cross flows of international investment paradoxically an increase in the costs associated with foreign investment can increase welfare

do global co2 emissions from fossil fuel consumption exhibit long memory a fractional integration analysis abstractin this article we use an autoregressive fractionally integrated moving average approach to measure the degree of fractional integration of aggregate world co2 emissions and its five components coal oil gas cement and gas flaring we find that all variables are stationary and mean reverting but exhibit long term memory our results suggest that both coal and oil combustion emissions have the weakest degree of long range dependence while emissions from gas and gas flaring have the strongest with evidence of long memory we conclude that transitory policy shocks are likely to have long lasting effects but not permanent effects accordingly permanent effects on co2 emissions require a more permanent policy stance in this context if one were to rely only on testing for stationarity and non stationarity one would likely conclude in favour of non stationarity and therefore that even transitory policy shocks have permanent effects our fractional integration analysis highlights that this i

tax avoidance and business location in a state border model abstract previous studies have struggled to demonstrate that higher taxes deter business activity we revisit this issue by estimating the effect of changes over time in cross border differences in state tax conditions on the tendency for new establishments to favor one side of a state border over the other identification is enhanced by taking account of previously overlooked reciprocal agreements that require workers to pay income tax to their state of residence as opposed to their state of employment when reciprocal agreements are in force higher personal income tax rates lure companies from across the border while corporate income tax and sales tax rates have the opposite effect where reciprocal agreements are not in place the results are largely reversed these patterns are amplified in heavily developed locations and differ in anticipated ways by industry and corporate non corporate status of the establishment overall results strengthen the view that state level tax policies do affect the location decisions of entrepreneurs and new business activity but not in a way that lends itself to a one size fits all summary

the taxation of financial capital under asymmetric information and the tax competition paradox information sharing between governments is examined in an optimal taxation framework we introduce a taxonomy of alternative systems of international capital income taxation and characterize the choice of tax rates and information exchange the model reproduces the conclusion found in earlier literature that integration of international caopital markets may lead to the under provision of publicly provided goods however in contrast to previous results in the literature under provision occurs due to inefficiently coordinated expectations we show that there exists a second equilibrium with an efficient level of public good provision as well as complete and voluntary information exchange between national tax authorities

tax competition in imperfectly competitive markets abstract the literature on strategic trade policy has shown that in imperfectly competitive markets governments have an incentive to subsidize exports of their own firms yet the consequence of the departure from laissez faire is a wasteful subsidy race in contrast this paper shows that even in imperfectly competitive markets there is a strong tendency for laissez faire to prevail the driving force is the firms willingness to exploit tax or subsidy differentials by relocating production a small tax differential induces firms to change their place of production the change in market structure has a negligible effect on the oligopoly equilibrium but a non negligible impact on government revenues when tax policy is non discriminatory governments gain lose by attracting all firms when production is taxed subsidized hence laissez faire is the only equilibrium since from the point of view of the two producing countries laissez faire nondiscrimination pareto dominates the intervention equilibrium discrimination nondiscrimination is a simple device to result in a mutual beneficial outcome

are shocks to ecological balance permanent or temporary evidence from lm unit root tests abstract ecological balance can be described as the difference between ecological footprint and biocapacity it is an important indicator of sustainable and environmental development in this regard the current study aims to determine whether policies on ecological balance are effective in g7 and e7 countries covering the period of 1961 2016 to this end we use the lagrange multiplier lm unit root test lm unit root test with structural breaks and fourier lm unit root test as well as more powerful versions of these tests to investigate the stationarity of the ecological balance we also examine the effectiveness of policies regarding ecological footprint and biocapacity the empirical results obtained from both linear and non linear unit root tests show that ecological balance is stationary in germany italy japan the us china india indonesia mexico and turkey while it is non stationary in the remaining five countries however the findings based on the structural break unit root tests suggest that ecological balance is stationary in more countries finally the overall results indicate that shocks to the ecological balance in g7 countries have a more permanent effect than in e7 countries therefore g7 countries can better apply environmental protection policies than e7 countries can in the long term in brazil canada france russia and the uk environmental policies can be effectively implemented to regulate ecological balance

inequalities in life expectancy and the global welfare convergence abstract becker et al 2005 maintain that including life expectancy gains in a welfare indicator result in a reduction of inequality between 1960 and 2000 twice as great as when measured by per capita income we discuss their methodology and show it determines the convergence result we use an alternative methodology based on fleurbaey and gaulier 2009 which monetizes differences in life expectancy between countries at each date rather than life expectancy gains we show that including life expectancy has no effect on the evolution of world inequality

a three input model of the spatial effects of a central city wage tax abstract this paper considers the short run and long run spatial effects on wages employment and business capital as functions of location of a localized increase in wage tax rates the model is most applicable to a central city that has a higher wage tax rate than the surrounding suburbs the inclusion of land as a third input in production significantly reduces the long run effects of a central city wage tax on employment near the central city boundary as compared with a model in which labor and capital are the only two inputs the short run effects are significantly less than the long run effects

international comparisons of living standards by equivalent incomes we propose a measure of living standards for international comparisons based on gdp per capita the measure incorporates corrections for international flows of income labor risk of unemployment healthy life expectancy household demography and inequalities the method for comparing populations that differ in some non income dimension consists of computing the equivalent variation of income that would make each population indifferent between its current situation and a reference situation with respect to the non income dimension this is applied to 24 oecd countries the obtained ranking of countries differs substantially from the gdp ranking