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- : Computable General Equilibrium; Micro-simulation; Fiscal Policy; Pakistan (1)
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Articles 1 - 30 of 112
Full-Text Articles in Social and Behavioral Sciences
Successful Tax Reforms In The Recent International Experience: Lessons In Political Economy And The Nuts And Bolts Of Increasing Country Tax Revenue Effort, Jorge Martinez-Vazquez
Successful Tax Reforms In The Recent International Experience: Lessons In Political Economy And The Nuts And Bolts Of Increasing Country Tax Revenue Effort, Jorge Martinez-Vazquez
ICEPP Working Papers
The main objective of this paper is to extract practical lessons on increasing tax revenue effort that are relevant to developing countries. Specifically, it focuses on insights from two dimensions: the political economy requirements to generate public support for reform and the technical factors (“nuts and bolts”) of substantially increasing tax revenue effort. General topics covered include the political economy preconditions that facilitate tax reform, how and by whom tax reform should be implemented, the timing of reform efforts, determinants of current tax effort, tax policy choice options, tax administration options, and the enhancement of tax morale and compliance norms. …
Evidence On Economies Of Scale In Local Public Service Provision: A Meta-Analysis, Juan Luis Gómez-Reino, Santiago Lago-Peñas, Jorge Martinez-Vazquez
Evidence On Economies Of Scale In Local Public Service Provision: A Meta-Analysis, Juan Luis Gómez-Reino, Santiago Lago-Peñas, Jorge Martinez-Vazquez
ICEPP Working Papers
The standard theory of optimal jurisdictional size hinges on the existence of economies of scale in the provision of local public goods and services. However, despite its relevance for forced local amalgamation programs and related policies, the empirical evidence on the existence of such economies of scale remains elusive. The main goal of this paper is to produce an updated and comprehensive quantitative review of the existence of economies of scale in the provision of local public goods using a meta-analysis approach to systematize the wide range of empirical approaches and modeling frameworks found in the previous literature. Our analysis …
Fiscal Policies, Decentralization, And Life Satisfaction, Manuela Ortega Gil
Fiscal Policies, Decentralization, And Life Satisfaction, Manuela Ortega Gil
ICEPP Working Papers
This paper studies the relationship between wellbeing and governments’ fiscal policies across the world, including government decentralization, over the period between 1999 and 2018. In contrast to the previous literature on wellbeing, the current paper investigates four forms of life satisfaction (SL) as the dependent variable and tries to answer whether different types of public spending program, different types of taxes and the level of fiscal decentralization influence wellbeing as measured by life satisfaction. The analysis uses survey data from two sources of life satisfaction variables: The World Values Survey and the European Values Survey, both of which use a …
Do You Know To Whom You Pay Your Taxes?: The Case Of Decentralized Spain, Julio López-Laborda, Fernando Rodrigo, Eduardo Sanz-Arcega
Do You Know To Whom You Pay Your Taxes?: The Case Of Decentralized Spain, Julio López-Laborda, Fernando Rodrigo, Eduardo Sanz-Arcega
ICEPP Working Papers
A necessary condition for the efficiency gains that the theory of fiscal federalism attributes to decentralization to be effective is that citizens rightly assign the governmental responsibility for public action. However, surveys show that most Spaniards are unable to correctly identify the taxes received by the various levels of government. Exploiting the 2015 wave of the Spanish Institute for Fiscal Studies’ Fiscal Barometer, this paper empirically determines the profile of citizens who are best able to identify the allocation of taxes among levels of government in Spain. The estimates suggest that these citizens are those who are able to identify …
The Fiscal Architecture Of Subnational Governments In Federal Nepal, Khim Lal Devkota
The Fiscal Architecture Of Subnational Governments In Federal Nepal, Khim Lal Devkota
ICEPP Working Papers
The formation of the three tiers of government represents a novel experiment in Nepal’s federal journey since the adoption of the new constitution in 2015. State power in the former unitary system, both rights and responsibilities, has been divided across federal, provincial and local tiers of government, with a mix of exclusive and concurrent powers for each. In matters within their jurisdiction, subnational governments can formulate laws on financial rights, set their own budgets, make decisions, devise plans and policies, implement those plans, levy taxes, and collect revenues. In the roughly three years since devolution went into effect, a few …
The Effect Of Crises On Fiscal And Political Recentralization: Large-Panel Evidence, Gustavo Canavire-Bacarreza, Pablo Evia Salas, Jorge Martinez-Vazquez
The Effect Of Crises On Fiscal And Political Recentralization: Large-Panel Evidence, Gustavo Canavire-Bacarreza, Pablo Evia Salas, Jorge Martinez-Vazquez
ICEPP Working Papers
Economic stability plays a key role in any fiscal and political decentralization process. In the face of financial and economic shocks, when revenues and expenditures are reduced, countries may decide to gather resources at the central level—creating a recentralization scenario—or may take away devolved powers and centralize political institutions. Using data for 75 countries, we examine the effects of economic crisis on fiscal and political decentralization. We find that several types of crises lead to fiscal recentralization; only in the case of domestic borrowing crises is the effect further revenue decentralization, probably reflecting the central government’s willingness to empower subnational …
Welfare Benefits In Highly Decentralized Fiscalsystems: Evidence On Interregional Mimicking, Luis Ayala, Ana Herrero, Jorge Martinez-Vazquez
Welfare Benefits In Highly Decentralized Fiscalsystems: Evidence On Interregional Mimicking, Luis Ayala, Ana Herrero, Jorge Martinez-Vazquez
ICEPP Working Papers
This paper analyzes the determinants of welfare benefit levels within a highly fiscally decentralized context. More specifically, we analyze the role of mimicking as a driver of the institutional design of subnational government policies in the absence of federal co-ordination and financing. Empirically, we focus on the welfare benefit programs of Spanish regional governments during the period 1996-2015. Our results strongly support the significant role played by mimicking: regional public agents observe what their peers are doing and act accordingly, and this holds even in a context of low mobility of households.
Electoral Accountability And Fiscal Federalism:The Case Of Peru, Janet Porras Mendoza, Charles R. Hankla, Jorge Martinez-Vazquez
Electoral Accountability And Fiscal Federalism:The Case Of Peru, Janet Porras Mendoza, Charles R. Hankla, Jorge Martinez-Vazquez
ICEPP Working Papers
Accountability is at the heart of the democratic enterprise. One commonly touted benefit of decentralization is that it promotes this accountability by allowing sub-national governments to target fiscal policy more precisely to the varying preferences of people in different locales. But if accountability is really functioning as it should, then citizens should use the ballot box to reward and punish local officials for their concrete policy behavior. In other words, we should not only be able to link the presence of decentralization with improvements in local public goods, but we should also be able to connect voting behavior in specific …
Trust In Government Institutions And Tax Morale, Antonios M. Koumpias, Gabriel Leonardo, Jorge Martinez-Vazquez
Trust In Government Institutions And Tax Morale, Antonios M. Koumpias, Gabriel Leonardo, Jorge Martinez-Vazquez
ICEPP Working Papers
What actions do governments around the world take that may affect individuals’ trust in the government that positively influence tax morale (or a positive attitude toward tax compliance)? This paper researches which are the most salient government institutions that breed individual trust and the extent to which this trust ends up increasing citizens’ tax morale. We use cross-country survey information from the World Values Survey and the Freedom House spanning 92 countries and six survey waves during the period 1981-2014. Conditional on the level of political rights and civil liberties, we confirm prior evidence that trust in government organizations positively …
Fiscal Stability During The Great Recession:Putting Decentralization Design To The Test, Santiago Lago-Peñas, Jorge Martinez-Vazquez, Agnese Sacchi
Fiscal Stability During The Great Recession:Putting Decentralization Design To The Test, Santiago Lago-Peñas, Jorge Martinez-Vazquez, Agnese Sacchi
ICEPP Working Papers
There is a longstanding debate in the economics literature on whether fiscally decentralized countries are inherently more fiscally unstable. The Great Recession provides a fertile testing ground for analyzing how the degree of decentralization does actually affect countries’ ability to implement fiscal stabilization policies in response to macroeconomic shocks. We provide an empirical analysis aiming at disentangling the roles played by decentralization design itself and several recently introduced budgetary institutions such as subnational borrowing rules and fiscal responsibility laws on country’s fiscal stability. We use OECD countries’ data since 1995, which includes both a boom period of worldwide economic growth …
Vertical Fiscal Imbalance And Local Fiscal Discipline: Empirical Evidence From China, Junxue Jia, Yongzheng Liu, Jorge Martinez-Vazquez, Kewei Zhang
Vertical Fiscal Imbalance And Local Fiscal Discipline: Empirical Evidence From China, Junxue Jia, Yongzheng Liu, Jorge Martinez-Vazquez, Kewei Zhang
ICEPP Working Papers
Using a nationwide city-level panel dataset for China for the years 1999-2009, this paper examines the effects of vertical fiscal imbalances (VFI) on local fiscal discipline, and explicitly explores the institutional conditions under which these effects may take place. We find that higher VFI levels induce fiscal indiscipline by reducing tax effort of local governments. We exploit the unique Chinese fiscal institution of assigning taxing power for local taxes and shared taxes to two separate authorities (i.e., the local tax bureau and the central tax bureau, respectively) in several ways. We show that local governments respond to the presence of …
Tobacco And Alcohol Excise Taxes For Improving Public Health And Revenue Outcomes: Marrying Sin And Virtue?, Richard M. Bird
Tobacco And Alcohol Excise Taxes For Improving Public Health And Revenue Outcomes: Marrying Sin And Virtue?, Richard M. Bird
ICEPP Working Papers
Excise taxes on alcohol and tobacco have long been a dependable and significant revenue source in many countries. More recently, considerable attention has been paid to the way in which such taxes may also be used to attain public health objectives by reducing the consumption of products with adverse health and social impacts. Some have gone further and argued that explicitly earmarking excise taxes on alcohol and tobacco to finance public health expenditures – marrying sin and virtue as it were – will both make increasing such taxes more politically acceptable and provide the funding needed to increase such expenditures, …
International Debt Forgiveness: Who Getspicked And Its Effect On The Tax Effort Ofdeveloping Countries, Leanora Alecia Brown, Jorge Martinez-Vazquez
International Debt Forgiveness: Who Getspicked And Its Effect On The Tax Effort Ofdeveloping Countries, Leanora Alecia Brown, Jorge Martinez-Vazquez
ICEPP Working Papers
We explore whether the expectation of debt forgiveness discourages developing countries from attaining sustainable fiscal independence through improving their tax effort. While the international financial community advises poor countries to improve revenue mobilization, the same international community routinely bail-out poor countries that fail to meet their loan repayment obligations. The act of bailing-out creates an expectation about receiving debt forgiveness time and again in the future. The key prediction of our theoretical framework is that in the presence of debt forgiveness, countries’ tax efforts will decline and more so the higher the intensity of the bailouts. We test this using …
Do Government Preferences Matter For Tax Competition?, Yongzheng Liu
Do Government Preferences Matter For Tax Competition?, Yongzheng Liu
ICEPP Working Papers
This paper explores how government preferences a ect the choices of capital tax rates in the presence of tax competition. We develop a model in which governments, di erentiating in their preferences for economic development and regional equality, compete for mobile capital over corporation taxes. The key prediction of the model, borne out in data from OECD countries over the years 1990-2007, is that countries emphasizing more on economic development tend to choose lower level of corporate income tax rates than the counterparts that stressing more on regional equality. Our result contributes to the tax competition literature by advancing a …
Tax Structure And Corruption: Cross-Country Evidence, Yongzheng Liu, Haibo Feng
Tax Structure And Corruption: Cross-Country Evidence, Yongzheng Liu, Haibo Feng
ICEPP Working Papers
The determinants of corruption have long been an important subject for research in the elds of economics and political science. The literature has identi ed a wide range of factors that cause corruption; however, little research has been done on how the design of government policy in uences corruption. We advance a new factor, the tax structure being measured as both tax mix and tax complexity, as another potential cause of corruption, and present strong supporting evidence by using a large sample of countries over the period 1995-2009. Our ndings indicate that: (1) countries relying more heavily on direct taxes …
Municipal Finance In India: Some Critical Issues, Simanti Bandyopadhyay
Municipal Finance In India: Some Critical Issues, Simanti Bandyopadhyay
ICEPP Working Papers
With the help of the available literature, the paper attempts to assess critically the main problems of municipal finances in India and to bring out the challenges that the municipalities face with respect to revenue generation and expenditure management. The main findings suggest that the urban local bodies in India are confronted with lack of proper decentralization of functions and finances, inadequate revenue generation, expenditure shortfalls leading to poor service delivery. It also analyses the suggestions and recommendations that have been offered in the literature to cope with these critical challenges relating to urban finance.
Coordination Of Infrastructure Investment Across Levels Of Government, Catherine Gamper, Claire Charbit
Coordination Of Infrastructure Investment Across Levels Of Government, Catherine Gamper, Claire Charbit
ICEPP Working Papers
The share of public investment spending at sub-national level has been slowly but steadily increasing over the past two decades across OECD countries. Degrees and forms of decentralization in infrastructure vary widely across countries, but all governments share a common objective, that is to mobilize authorities along shared infrastructure policy objectives. This involves managing a complex web of vertical (across levels of government) and horizontal (across sectors and across the same levels of government) interdependencies, which require substantial coordination among actors to ensure policy alignment and quality investments. Asymmetric information, multiple principal-agent relationships and significant differences in capacities across levels …
Rural Bound: Determinants Of Metro To Non-Metro Migration In The U.S, Anil Rupasingha, Yongzheng Liu, Mark Partridge
Rural Bound: Determinants Of Metro To Non-Metro Migration In The U.S, Anil Rupasingha, Yongzheng Liu, Mark Partridge
ICEPP Working Papers
A general global precept is that agglomeration forces lead to migration from rural to urban areas. Yet, for much of the period since the early 1970s, more people moved from metro to nonmetro U.S. counties. The underlying causes of this pattern have changed over time with economic shocks and changing household preferences. For instance, the post 2000 period has seen a significant decline in domestic migration rates, significant increase in commodity prices that favor rural areas, and potential changes in the valuation of natural amenities that would affect migration. This study investigates the determinants of U.S. gross migration from metro …
Tax Evasion, The Provision Of Public Infrastructure, And Growth: A General Equilibrium Approach To Two Very Different Countries, Egypt And Mauritius, Andrew Feltenstein
Tax Evasion, The Provision Of Public Infrastructure, And Growth: A General Equilibrium Approach To Two Very Different Countries, Egypt And Mauritius, Andrew Feltenstein
ICEPP Working Papers
We construct a dynamic multi-period general equilibrium model and use it to analyze prospects for growth in two very different countries, Egypt and Mauritius. The use of a single model has the advantage that when comparing alternative policies across countries, it is not necessary to worry if different conclusions are based solely upon model differences, as would be the case with multiple models. In the case of Egypt we look at the effects of the revolution of 2011 on growth, in particular, at the impact of a dramatic decline in tourism. In addressing the issue of how to increase growth …
Estimating The Personal Income Distribution In Spanish Municipalities Using Tax Micro-Data, Miriam Hortas-Rico, Jorge Onrubia, Daniele Pacifico
Estimating The Personal Income Distribution In Spanish Municipalities Using Tax Micro-Data, Miriam Hortas-Rico, Jorge Onrubia, Daniele Pacifico
ICEPP Working Papers
Local income data is an important economic indicator, widely used in a broad range of studies related to regional convergence, urban economics, fiscal federalism, housing and spatial analysis. Despite its importance, there is a lack of official data on local incomes and, most importantly, on local income distributions. In this paper we use official data on personal income tax returns and a reweighting procedure to derive a representative income sample at the local level. Unlike previous attempts in the literature to acquire local income estimates, the results obtained allow us to derive not only an average value for income but …
Decentralized Provision Of Public Infrastructure And Corruption, Anwar Shah
Decentralized Provision Of Public Infrastructure And Corruption, Anwar Shah
ICEPP Working Papers
During the past three decades, a large number of countries have introduced reforms to decentralize public decision making. Such reforms have proved controversial. Critics of these reforms argue that decentralized provision of infrastructure enhances vulnerability to corruption. Proponents of these reforms counter that corruption arises from lack of people empowerment and decentralization by bringing decision making closer to people shines sunlight on government operations and empowers people to hold government to account and thereby offers potential for combating corruption in the long run. They further state that decentralized provision of infrastructure holds a great promise in upgrading infrastructure to underserviced …
Corruption And Firm Tax Evasion, James Alm, Jorge Martinez-Vazquez, Chandler Mcclellan
Corruption And Firm Tax Evasion, James Alm, Jorge Martinez-Vazquez, Chandler Mcclellan
ICEPP Working Papers
Although corruption and tax evasion are distinct and separate problems, they can easily become intertwined and reinforcing. A society that is more corrupt may enable more tax evasion as corrupt officials seek more income via bribes; conversely, higher levels of tax evasion may drive corruption by offering more opportunities for bribes. While a large body of work on each subject separately has emerged, the relationship between the two problems has remained a largely unexplored area. In particular, there is no theoretical work that examines the relationship between corruption and firm tax evasion, focusing on how the potential for bribery of …
The Political Economy Of Local Infrastructure Planning, Leonardo Romeo, Paul Smoke
The Political Economy Of Local Infrastructure Planning, Leonardo Romeo, Paul Smoke
ICEPP Working Papers
Developing countries face considerable challenges in the design and operation of local infrastructure planning systems in decentralized or decentralizing countries. Many of these are well documented, but the complex political economy environment in which planning evolves has received insufficient attention. The forces driving decentralization and other public sector reforms shape how planning emerges, functions and performs. Local planning involves a range of differentially empowered and variously motivated actors at multiple levels and in diverse ways. The dynamics among them can support or undermine authentic local planning, with potentially significant implications for results. This paper reviews the evolution of local infrastructure …
Investing In Health Infrastructure: How Decentralization Matters, Richard M. Bird, Francois Vaillancourt
Investing In Health Infrastructure: How Decentralization Matters, Richard M. Bird, Francois Vaillancourt
ICEPP Working Papers
This paper examines the infrastructure–decentralization nexus in the production of health services with a particular emphasis on the issue of health infrastructure. The first part of the paper presents evidence on health services and infrastructure spending in health for various countries or groups of countries showing the importance of infrastructure spending in the provision of health services. The second part of the paper examines why and how health services are joint production with collective and private characteristics. These characteristics affect the decentralization of such services and thus the decentralization of health infrastructure; it also raises the issue of who should …
Impact Of Fiscal Decentralization On Economic Growth In The Districts Of Nepal, K. L. Devkota
Impact Of Fiscal Decentralization On Economic Growth In The Districts Of Nepal, K. L. Devkota
ICEPP Working Papers
This paper focuses on the evolving pattern of fiscal decentralization and its impact on the growth of per capita GDP of the districts in Nepal. The dependent variable is the growth of the per capita district agricultural GDP, which is, used as a proxy for the annual growth of per capita district GDP growth. The revenue and expenditure indices have been used as the fiscal decentralization variables. The paper also uses a dummy variable for the Local Self Governance Act (LSGA) as a fiscal decentralization variable. From the various regressions, it is found that fiscal decentralization has positively influenced the …
But Most Of All We Love Each Other: Does Social Cohesion Pay Off? Evidence From Fdi Flows To Middle Income Countries, Wasseem Mina
But Most Of All We Love Each Other: Does Social Cohesion Pay Off? Evidence From Fdi Flows To Middle Income Countries, Wasseem Mina
ICEPP Working Papers
The World Bank (2013) argues that social cohesion shapes the context in which entrepreneurs make investment decisions and therefore job creation. In this paper, we focus on FDI as one link of primary importance in this argument, and empirically examine the relationship between social cohesion and FDI flows. Using panel data on 52 middle income countries for the period 1984-2012, we first identify social cohesion-related institutions using principal component analysis and then examine the influence of those institutions individually and as a principal component on FDI flows. PCA identifies religion in politics, internal and external conflicts, and ethnic tensions as …
Decentralization And Infrastructure: Principles And Practice, Roy W. Bahl, Richard M. Bird
Decentralization And Infrastructure: Principles And Practice, Roy W. Bahl, Richard M. Bird
ICEPP Working Papers
This paper reviews the theoretical and practical issues surrounding the decentralization of responsibility for the provision of infrastructure to local governments in low income countries. The focus is on structural rather than management issues. There is plenty of evidence that following the theory can lead to efficient outcomes under decentralization, but also plenty of evidence that the theory and the practice often diverge widely. Seven policy rules that could support a successful decentralization of appropriate infrastructure services are drawn out of this review.
The Infrastructure Gap And Decentralization, Luis Andres, Dan Biller, Jordan Schwartz
The Infrastructure Gap And Decentralization, Luis Andres, Dan Biller, Jordan Schwartz
ICEPP Working Papers
This paper proposes an economic logic for underpinning decentralization in the infrastructure sectors. It starts by detailing the definition of the infrastructure gap and the methodologies to calculate it. It provides some global trends for developing countries in terms of the gap and briefly discusses financing possibilities for developing countries to address the gap. Then it turns to the discussion of the link between the infrastructure gap and decentralization, providing a typology infrastructure subsectors and possible jurisdiction of service provision. It briefly discusses the potential for raising local finances for provision and the relationship between poverty and provision. While it …
Decentralization And Infrastructure: From Gaps To Solutions, Jonas Frank, Jorge Martinez-Vazquez
Decentralization And Infrastructure: From Gaps To Solutions, Jonas Frank, Jorge Martinez-Vazquez
ICEPP Working Papers
The subnational dimension of infrastructure emerges as one of the greatest challenges in contemporary public finance policy and management. Given the localized nature of most infrastructures, ensuring its efficient provision represents a challenge for all countries irrespective of their level of centralization or decentralization. This paper introduces the fundamental questions surrounding the provision of infrastructure in decentralized settings and summarizes the findings from a collection of original essays prepared for this volume by a set of worldwide experts on this subject with the objective of advancing our understanding of the interplay between decentralization and infrastructure. More specifically, the paper discusses …
Rural Roads: The Challenge Of Decentralized Implementation, Simon D. Ellis, Aurelio Menendez
Rural Roads: The Challenge Of Decentralized Implementation, Simon D. Ellis, Aurelio Menendez
ICEPP Working Papers
This paper will review the key elements required for effective decentralized implementation of rural roads programs. It will review the range of options available and the evidence for successful implementation where it exists. Section 2 makes the case for the importance of rural roads and sets out the evidence for the socio-economic benefits. Section 3 addresses the responsibilities for implementation and critical importance of having clarity over network ownership. Section 4 highlights the difficulties of finance, particularly for longer term maintenance, and sets out options for improving allocations and the reliability of receipt for those allocations. Section 5 sets out …