taxation and democratization summary anecdotal evidence from pre modern europe and north america suggests that rulers are forced to become more democratic once they impose a significant fiscal burden on their citizens one difficulty in testing this taxation causes democratization hypothesis empirically is the endogeneity of public revenues i use introductions of value added taxes and autonomous revenue authorities as sources of quasi exogenous variation to identify the causal effect of the fiscal burden borne by citizens on democracy the instrumental variables regressions with a panel of 122 countries over the period 1981 2008 suggest that revenues have on average a mild positive effect on democracy

when in rome how non domestic companies listed in the uk may not comply with accepted norms and principles of good corporate governance does home market culture explain these corporate behaviours and attitudes to compliance non domestic companies are increasingly present on the london stock exchange such companies have specific governance requirements they may seek to access capital in a more liquid market and to diversify ownership the reputational bonding coffee northwest univ law rev 93 641 708 1999 columbia law rev 102 1757 1831 2002 to a prestigious exchange should be a statement to the market of a propensity to disclosure and a willingness to protect minority shareholders yet many non domestic companies retain tightly controlled shareholding structures and are based in emerging regions where national culture norms differ to the uk we hypothesise that non domestic companies are likely to be less compliant with the principles of the uk corporate governance code and suggest a correlation between lower levels of compliance and non domestic companies from countries that demonstrate high power distance in the hofstede culture s consequences international differences in work related values 1980a cultural value framework we find some encouraging signs of compliance with the reigning governance code principles in board structures however we find only partial compliance in leadership and board effectiveness measures in those companies from cultures high on the power distance scale further we include analysis into ownership characteristics and find companies from emerging markets are dominated by a single or controlling group of shareholders which is likely to impact on attitudes to compliance and is particularly evidenced in terms of board structures with no executive directors or led by an executive chairman much of the prior research effort into the levels of compliance with the uk s comply or explain approach to governance has produced mixed results and focused on all companies in our exploratory approach to analysing only the non domestic subsample we report some evidence linking cultural distance to lower levels of compliance with the uk standards we develop a framework to guide future research into the context and cultural underpinnings of this sub sample of companies hypothesising that frequent market capitalisation induced index changes may divert attention away from any potential compliance issues on the one hand our evidence is encouraging for governance regimes based on voluntary compliance disclosures such as the uk and similar european and international markets as we report partial compliance with the principles of the current governance code our research may however be helpful in guiding future versions of the uk governance framework and other international governance regimes adopting the comply or explain approach and in setting policy to improve disclosure it contributes to the understanding of the specific context of non domestic companies and any cultural tendencies to non compliance by demonstrating evidence of lower levels of compliance with key principles of the code by non domestic companies we present a framework enabling lawmakers to further improve corporate governance codes

money anticipated changes and policy effectiveness the lucas sargent wallace l s w proposition states that expected policy changes have no influence on real economic variables even in the short run see robert lucas 1972 and thomas sargent and neil wallace 1975 one form of empirical test of the l s w proposition the neutrality proposition began with robert barro s 1977 1978 seminal articles supporting the neutrality proposition however more recent papers including those by david small 1979 john makin 1982 and frederic mishkin 1982a b have reexamined the relationships between anticipated and unanticipated money vs output unemployment and inflation and have found evidence suggesting that anticipated monetary changes do have real effects all of the above cited studies use expectations procedures which estimate for example a money growth equation over the entire period under consideration however this approach assumes that when expectations are being formed at the beginning of the period economic agents have the relevant information for the entire period in this note i reexamine the impact of expected vs unexpected monetary changes focusing on the informational restrictions actually faced by economic agents when formulating expectations the structure of the model used here is similiar to the models of barro and mishkin a measure of real output is assumed to be a function of a policy variable and a vector of predetermined variables the policy variable can be decomposed into anticipated and unanticipated components algebraically

semi autonomous revenue authorities in sub saharan africa silver bullet or white elephant a major component of tax administration reform in sub saharan africa for the last 30 years has been the creation of semi autonomous revenue authorities saras the effects of their creation on rev

aggregate employment and intertemporal substitution in the uk in this paper the author sets up estimates and tests an explicit model of aggregate labor supply based on the intertemporal substitution hypothesis the model is derived as the optimal decision rule of an infinitely living household maximizing an intertemporal ces utility function over consumption and leisure the evidence suggests that for aggregate employee hours the model is rejected but that for the total number of employees in employment the estimates are broadly consistent with the theory the assumed constant elasticity of substitution is estimated at around 0 2 and this estimate implies a short run real wage and real interest rate elasticity of labor supply of the same order copyright 1987 by royal economic society

the choice between market failures and corruption because government intervention transfers resources from one party to another it creates room for corruption as corruption often undermines the purpose of the intervention governments will try to prevent it they may create rents for bureaucrats induce a misallocation of resources and increase the size of the bureaucracy since preventing all corruption is excessively costly second best intervention may involve a certain fraction of bureaucrats accepting bribes when corruption is harder to prevent there may be both more bureaucrats and higher public sector wages also the optimal degree of government intervention may be nonmonotonic in the level of income

wars and state capacity the article builds a simple model to investigate how different types of armed conflict shape fiscal capacity the state s ability to raise revenue from taxes it starts from the simple observation

a little bit more evidence on the natural rate hypothesis from the u k abstract the evidence for the neutrality of anticipated changes in monetary policy in the u k over the period 1963q1 1982q1 is examined breaks in the stochastic process generating the money stock are used to identify the model the results are generally unfavourable to the proposition that only unanticipated money matters

anticipated and unanticipated money a case study of malaysia the paper tests the lsw proposition that unanticipated policy changes affect real economic variables by using malaysian data over the period 1970 1 1990 4 the empirical evidence changes in fiscal policy and balance of payments do not affect real output thus lending support to the proposition on the other hand anticipated monetary policy and inflation influence output in the short run lending support to mishkin s views of the economy and rejecting the lsw proposition in addition the long run neutrality proposition is not supported by the data moreover unanticipated changes in inflation do influence real output in the short run lending support to the lsw proposition however unanticipated changes in monetary policy balance of payments and fiscal policy do not influence real output lending support to the classical view of the economy and rejecting the lsw proposition furthermore the monetarist s view that inflation is a monetary phenomenon is rejected the findings also show that unanticipated

prices output and the balance of payments in an open economy with rational expectations abstract the paper outlines an open economy version of the lucas competitive equilibrium rational expectations model it analyses the determination of output prices exports imports and the exchange rate under fixed and floating exchange rate regimes where information on the current exchange rate is used to infer the current values of foreign and domestic monetary shocks output is influenced by both foreign and domestic monetary shocks but independent of systematic foreign and domestic monetary growth under both exchange rate regimes flexible exchange rates insulate the domestic economy from systematic foreign monetary growth

the influence of unanticipated money growth on real output some cross country estimates two major propositions can be deduced from the theories of the business cycle developed in 4 14 15 161 1 monetary growth affects real output only if it is unanticipated 2 the impact on output of unanticipated monetary growth declines the more unpredictable monetary growth becomes proposition 1 has been tested on u k data in 2 3s on u s data in 5 6 7 and on canadian data in 19 the best known but somewhat informal test of proposition 2 is contained in 15 on data from a cross section of eighteen countries l in this paper we apply the method described in 3 to test proposition 1 using data from a range of countries furthermore we develop and discuss a formal method of testing proposition 2 and apply that method to the same data our main conclusion is that neither proposition can be decisively rejected

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

influence of firm performance and gender on ceo compensation in this article we continue the examination of top executive pay by comparing performance total pay and the influence of ceo gender we analyse compensation differences between male and female ceos using nonparametric analysis we calculate the potential compensation for each executive using two benchmarks first each executive s performance and compensation are evaluated relative to members of the same gender to produce a same gender measure of under compensation each executive s compensation is also benchmarked against the other gender s potential compensation producing an other gender measure of under compensation together both measures allow an analysis of the gender specific potential salaries of each executive while controlling for performance the approach is applied to a sample of male and female executives the results indicate that women are under compensated

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

the origins of state capacity property rights taxation and politics economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes this paper develops a framework where policy choices in market regulation and taxation are constrained by past investments in legal and fiscal capacity it studies the economic and political determinants of such investments demonstrating that legal and fiscal capacity are typically complements the results show that among other things common interest public goods such as fighting external wars as well as political stability and inclusive political institutions are conducive to building state capacity some correlations in cross country data are consistent with the theory

a disequilibrium model of rational expectations for the u k so far the new classical model and the policy ineffectiveness proposition have been tested essentially within an equilibrium framework and disequilibrium methods of estimation have been used to estimate the labor market models in this paper the authors develop an aggregate goods market model for the united kingdom in which the new classical rational expectations hypothesis and the disequilibrium approach are integrated their estimates of the model show that the structural parameters are well determined and price adjustment in the united kingdom is very sluggish therefore the new classical policy ineffectiveness proposition is not valid for the united kingdom copyright 1991 by royal economic society

unemployment in the united kingdom since the war in this paper we first present a competitive macroeconomic model of an open economy which is suitable for estimation and contrast this with a non competitive model we then derive unemployment equations from the various models and estimate them over annual data from 1948 1979 we draw the following conclusions i the competitive model of the labour market does not fit the facts ii the non competitive model generates an equation for the constant inflation rate of unemployment which reveals how at certain times such as the mid 1970s a combination of factors conspired to raise this level forcing the government into a deflationary stance to prevent inflation rising drastically iii a number of factors have raised the level of unemployment in a secular fashion since the war in particular the increase in the variation of relative prices the increase in the benefit to income ratio the introduction of employment protection legislation and the rise in the intersectoral shifts of the labour force

anticipated monetary policy and real output evidence from latin american countries this paper is an empirical investigation of the effects of anticipated and unanticipated monetary policies on real output for 13 ldcs in latin and central america the well know mishkin econometric procedure is applied to the annual imf date for the decomposition of actual money growth into anticipated and unanticipated components and the evidence of significant relation between anticipated money supply and real output for each country is reported the results derived in this paper thus provide additional empirical support for the validity of the non classical rational expectations macro models of fisher and phelps and taylor

tax revenue performance and vulnerability in developing countries this paper addresses vulnerability of revenue to external shocks using export composition to capture economic structure and differentiating countries according to income levels resource endowments and political regimes this gives a richer characterization than previous studies lower income countries are vulnerable to shocks especially in terms of trade associated with the greatest revenue loss democratic regimes seem to be less vulnerable to revenue losses due to shocks than non democracies whereas revenue in resource rich is more vulnerable to shocks except natural disasters than non resource rich countries we find a negative relationship between manufacturing exports and revenue in lower income countries

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

real effects of anticipated and unanticipated money some problems of estimation and hypothesis testing abstract the paper addresses two issues that arise in estimation and testing of the real effects of anticipated and unanticipated money first it is shown that identification of the effects of unanticipated or unperceived monetary growth on real output is possible only if the a priori restriction is imposed that monetary growth does not depend on unanticipated or unperceived output second the existing empirical work of barro and others does not allow for three known channels through which money can affect real variables these are 1 past and present anticipations of future monetary growth the inflation tax channel 2 expectations of monetary growth in a given period conditioned at various preceding dates the fischer phelps taylor effect and 3 past and present revisions in forecasts of future monetary growth the presence of the first of these would mean that alternative open loop monetary growth rules have real effects the presence of the other two implies that monetary feedback rules can have real effects omission of the first channel can lead to biased estimates of the effects of past anticipated monetary growth potentially serious observational equivalence problems are associated with the other two

tenure promotion and executive remuneration commentators frequently remark on the need to pay high levels of chief executive officer remuneration to attract motivate and retain the best executives for britain s leading companies this paper presents the results of an empirical investigation into tenure promotion and executive remuneration the remuneration of the chief executive officers at some of britain s largest businesses is examined in the majority of cases the ceo had not been lured away from rivals but had risen through the internal labour market often after a long term employment relationship moreover long job tenure and internal promotion were associated with higher levels of pay it is concluded that understanding of this controversial issue will be improved if it is recognized that a part of current executive pay may be a reward for previous successful performance

disaggregate supply evidence for the uk 1989 disaggregate supply evidence for the uk applied economics vol 21 no 10 pp 1397 1409

unanticipated money output and prices in greece in this paper we estimate and test a small neoclassical macromodel for greece the model incorporates the natural rate hypothesis in that only unanticipated inflation can affect real output and is monetarist in nature as the demand for output is derived from the demand for money function the restrictions implied by the model cannot be rejected by either single equation or simultaneous equation tests thus we find little evidence against the proposition that no monetary policy rule can affect real output once it becomes anticipated and that the elasticity of prices with respect to money is unity

eight questions about corruption this paper will discuss eight frequently asked questions about public corruption 1 what is corruption 2 which countries are the most corrupt 3 what are the common characteristics of countries with high corruption 4 what is the magnitude of corruption 5 do higher wages for bureaucrats reduce corruption 6 can competition reduce corruption 7 why have there been so few recent successful attempts to fight corruption 8 does corruption adversely affect growth

econometric issues in macroeconomic models with generated regressors the paper critically reviews the literature on the econometric issues raised by the use of generated regressors gr in empirical models the economic rationale for the use of gr is considered with examples being drawn from several macroeconomic examples including new classical macroeconomic ncm models which postulate monetary neutrality various estimation methods are discussed for models which include surprise or unexpected terms and the strengths and weaknesses of each approach are investigated drawing upon the work of mcaleer and mckenzie 1991 situations where the typically inefficient two step estimation 2se method will be efficient are highlighted problems of model misspecification and measurement errors are also investigated an empirical section highlights some of the dangers of using uncorrected 2se estimation results through a careful consideration of many recent attempts to test the ncm monetary neutrality hypothesis copyright 1993 by blackwell publishers ltd

production structure and cyclical behaviour abstract the aggregate production structure of the greek economy like that of other semi and less developed economies has not been seriously investigated despite the fact that such structure is essential in properly explaining stagflation productivity growth and factor substitution in this paper a long run production function that holds on average is estimated actual output is connected to it through an estimated behavioural utilization equation depending on unexpected demand cost and inventory changes factor productivity growth is also examined and no conclusive evidence of a secular drop emerges

political business cycles democratization and economic reform the case of africa abstract this paper presents cross country evidence that political business cycles are alive and well in the nascent democracies of the developing world africa provides fertile ground for the study of political business cycles this paper uncovers systematic electorally timed interventions in five monetary and four fiscal policy variables in a panel of african countries these findings are consistent with the predictions of rational opportunistic political business cycle theory if africa s increasingly frequent elections are associated with reversals of fiscal and monetary policy reform there is a potential conflict between political and economic reform

a quarterly model of unanticipated monetary growth output and the price level in the u k 1963 1978 abstract this paper develops and estimates using quarterly data from 1963 to 1978 a three equation model of the u k economy in which output is affected only by unanticipated monetary growth whereas the price level is influenced by both anticipated and unanticipated changes in the money supply expectations of monetary growth are assumed to be muth rational the model was estimated using efficient procedures and tests of the over identifying restrictions were favourable to the model specification in particular anticipated monetary growth was found to have no significant effect on output

the effects on output of anticipated and unanticipated money growth a case study of an oil producing country the new classical macroeconomic hypotheisis regarding the effecs of money growth on real variables sugggests that the anticipated changes in money supply on real variables are neutral irrespective of the time horizon whereas the unanticipated changes in the money supply although neutral in the long run exert significant influence on real variables in the short run this proposition has produced unsettled empirical results the present study attempts to verify empirically the new classical hypothesis in the case of a developing oil producing middle eastern country iraq our study suggests that the anticipated components of money growth rates have positive and significant influence on real variables the results of this study do not lend support to the new classical hypothesis instead they suggest that a steady growth rate of money supply that is fully anticipated by economic agents builds confidence by reducing errors in expectation regarding the behaviour of the money supply and provides easier ac

tax me if you can ethnic geography democracy and the taxation of agriculture in africa it is typically assumed that african leaders enact policies that benefit their ethnoregional group using all types of patronage crop production and political power are geographically concentrated in many african countries and this paper exploits this overlap to cast doubt on this conventional wisdom it shows using data on 50 country crop combinations that cash crop farmers who are ethnically identified with the head of state face higher taxes furthermore democratic regimes impose lower taxes this paper shows that farmers who have few alternatives face higher taxes african leaders have used local intermediaries to exert control over the countryside and to ensure that farmers do not support alternative candidates it suggests that as leaders are better at selecting and monitoring these intermediaries in their home areas they can extract more from the majority at home than abroad using taxes on cash crops which are regionally but not individually targetable

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

total board remuneration and company performance using a hitherto neglected source of data this paper combines executive emoluments with executive options to construct a broader measure of executive pay than has been possible in earlier british studies the result of including the long term share option component of pay along with the more commonly utilized short term component of emoluments is to reveal executive pay as being significantly more sensitive to company performance than has previously been thought to be the case the paper questions the current policy stance of british institutional investors and of the greenbury committee with respect to executive share options copyright 1996 by royal economic society

a test of price sluggishness in the simple rational expectations model u k i950 i980 a recurrent feature of the empirical output and price equations derived from simple rational expectations models is that the effects of nominal shocks persist for a long period of time in barro s i977 a unemployment equation unanticipated monetary growth influences unemployment with lags of up to 2 years in his price equation barro i 98 i unanticipated money has a lag of up to 5 years in the price equation fitted to uk data by attfield et al i 98i real money balances influence prices with a one year lag and unanticipated monetary growth influences them with a 2 year lag of course the existence of lags is neither necessary nor sufficient for the negation of the neutrality proposition of rational expectations models lucas i975 sargent 1979 and blinder and fischer i98i have provided rationales for the existence of lags in the supply equation and demonstrated their consistency with the neutrality proposition similarly the work of attfield et al i98i has indicated that lagged adjustments in the demand for money are also consistent with neutrality in both cases the combination of lagged adjustments with perfectly flexible market clearing prices yields all the neutrality propositions of the models of lucas and others however it is also the case that traditional keynesian type models with sluggish price adjustment imply lags in output and price equations the final equations with keynesian type lags may look very similar to the equations derived by lucas barro and others but their implications about the effectiveness of policy may be very different in the model with sluggish price adjustment supply is not equal to demand so some other rule will have to be found to determine employment and output anticipated monetary policy may be able to influence real economic variables if the employment and output rules are not specifically designed to offset the effects of anticipated policy for this reason a strong test of the neutrality proposition should be able to differentiate between different sources of lags and be able to identify them empirically if the test consists merely of a reduced form equation that identifies the lags and a rationalisation of them that is consistent with the neutrality proposition it can provide only weak evidence which may also be consistent

fiscal capacity and the quality of government in sub saharan africa summary historical evidence from the industrialized world suggests that the expansion of the modern state s capacity to tax eventually led to more democratic and less corrupt governments using a dataset that covers 31 sub saharan african countries over the 1990 2005 period we study whether the positive effect of fiscal capacity on the quality of government prevails in contemporaneous sub saharan africa as well the results provide consistent evidence that within sub saharan africa fiscal capacity decreases corruption and increases democracy

macroeconomic policy and aggregate fluctuations in a semi industrialized open economy greece 1951 1980 abstract in this paper we model the effects of macroeconomic policy in a semi industrialized open economy greece is our case but the model could apply to other similar economies with tightly controlled financial markets and comprehensive foreign exchange restrictions where both the exchange rate and interest rates are administered prices the model consists of three equations which determine output the price level and the trade balance it is largely non keynesian but through the real exchange rate it allows for anticipated monetary policy to affect real output the model is estimated by fiml and its various restrictions cannot be rejected a policy simulation suggests that even friedman s x money growth rule would ensure greater macroeconomic stability in the 1970s than the monetary policy that was actually followed

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

unanticipated monetary growth output and the price level u k 1946 1977 abstract this paper develops and estimates using annual data from 1946 1977 a three equation model of the u k economy in which output is affected only by unanticipated monetary growth whereas the price level is influenced by both anticipated and unanticipated changes in money supply expectations of monetary growth are assumed to be muth rational the model was estimated using efficient procedures and tests of the over identifying restrictions were generally favourable to model specification some features of the price equation are unsatisfactory and the results in this section must be considered tentative

an analysis of the implications of omitting variables from the monetary growth equation in a model of real output and unanticipated money growth abstract for a barro type model of output and unanticipated monetary growth the paper derives the conditions under which the underlying true model can be tested when the model actually being estimated has been misspecified in the sense that important explanatory variables have been omitted from the money growth equation

forecasting rational expectations and the phillips curve an empirical investigation abstract the rational expectations version of the phillips curve is empirically evaluated for switzerland using a wide variety of specifications it turns out that the results are highly sensitive to measurement of both the natural rate and expectations of nominal variables no reliable phillips curve seems to exist in addition information on the relative quality of different forecasting schemes is obtained for a number of important macroeconomic variables

reward design and ceo succession in the uk previous research has shown that top executives often rise to the peak of their organizations after a long term employment relationship and that internal promotion to the top is reflected in enhanced baseline salaries using data from a representative sample of uk companies the links between the fixed and variable elements of the chief executive officer s compensation package are examined and whether the appointment has been promoted internally or recruited from outside of the company from this analysis it is concluded that the positive impact on basic pay of elevation to the top job from within the company is not present in total compensation or the structure of pay it also emerges that although tenure does not significantly impact on the structure of pay it does alter total reward through its impact on the value of options granted longer company tenure reduces both the award of share options and the total value of the remuneration package job tenure on the other hand raises the executive s rew

comment upon a new classical model of the postwar uk the results presented by attfield demery and duck 1981 in the european economic review 18 p 367 385 are replicated the model is re estimated to take account of the policy switch to floating exchange rates in 1972 with rather less than favourable results a major problem being misspecification of the monetary growth equation