Spillover effects of taxes on government debt: a spatial panel approach

It is claimed that tax policy is neither time- nor space-independent due to cross-border tax base mobility, which induces spillovers. Specifically, fiscal shocks in one country are supposed to have an impact on fiscal policies in other countries. Different types of taxes influence economies differently. This paper addresses the question of their impact on government debt. Within a framework of spatial econometric modeling, we evaluate the impact of capital, labor and consumption taxes on public debt in 34 European countries in 2002–2011, and find strong spatial spillovers. We show that a consumption tax and, to a lesser degree, a capital tax significantly affect the sovereign debt, and that the global relations play a leading role (i.e. dominate the local ones) in shaping fiscal policy.     

Multicountry dynamic multipliers under fixed and floating exchange rates: An econometric analysis

The present paper attempts to analyze the dynamic multiplier effects of fiscal monetary policies for developed countries in a consistent framework of a global econometric model under both fixed and flexible exchange rate regimes. The paper first discusses the estimation of exchange rate functions for eight developed countries with special reference to “fundamentals” in economic performance such as international gaps in inflation, productivity, expected real rate of return, and so on. The results are then incorporated into the global model to derive and compare dynamic multipliers under both fixed and flexible exchange rate regimes. “Insulation effects” are observed in most cases in terms of both output and inflation, though this differs according to the country. Policy implications are discussed at the end.     

Capital mobility among advanced countries

Mobility of capital has been studied by examining savings–investment correlations, real interest rates differentials, covered and uncovered interest parity, and equity home bias. All these examine the capital mobility question indirectly. This paper directly tests the return/total flow specification of the Mundell–Fleming model. It finds that while portfolio equity and debt flows are, direct investment is not; and in every case, the inclusion of direct investment makes the aggregative-capital variable unresponsive to interest rates. Asset-based exchange rate models may benefit by looking at the composition of cross-border assets, countries can have independent monetary policies with full capital mobility, and macroeconomic policy trilemma for open economies disappears.     

Macroprudential policy and the probability of a banking crisis

The ultimate purpose of macroprudential policy is to avoid financial instability, such as banking crises, which have a long-lasting and devastating effect on the economy. Although a growing number of studies have examined the effects of macroprudential policy on credit growth, few empirical studies have analyzed its effect on the probability of a banking crisis. Does macroprudential policy actually affect the probability of a banking crisis? Do other macroeconomic policies matter for the effectiveness of macroprudential policy? To answer these questions, this paper empirically investigates the effect of macroprudential policy on the probability of a banking crisis and its relationship with other macroeconomic policies. Specifically, using data on 65 countries from 2000 to 2016, we employ a probit model to analyze the effect of changes in the loan-to-value (LTV) ratio on crisis probability. Our results show that macroprudential policy is effective in changing the probability of a banking crisis via a credit channel and that its effectiveness depends on other macroeconomic policies. Changes in the LTV ratio are found to be effective in influencing the probability of a banking crisis in countries that have inflation targeting frameworks, floating exchange rate regimes, and/or no capital controls. Our results underscore the importance of policy coordination among different government bodies to design an appropriate macroprudential policy, especially in the current context of the Covid-19 crisis.     

Activation as a Common Framework for Social Policies towards Lone Parents

This article compares recent social policy reforms in respect of lone-parent families in three different national contexts: France, the Netherlands and the UK. In all three countries there is an increasing focus on activation policies to promote employment among lone parents. The authors examine whether this common framework of activation has led to a policy convergence across these three countries.     

Central banks’ priorities and the left/right partisanship of exchange rates

This study argues that when central banks subordinate all policy goals to achieving price stability greater central bank independence encourages left-wing governments to seek greater exchange rate stability. Such central bank policy priorities make the Left's preferred distributive policies more dependent on the effectiveness of fiscal policy, which under high capital mobility increases with exchange rate stability. In contrast, right-wing governments put greater emphasis on market adjustments and price stability. Hypotheses are tested by estimating the sensitivity of exchange rate variation to partisanship, central bank independence, and the salience of price stability, using a Prais-Winsten estimator and Instrumented Variables, run on pooled cross-section time-series data from 22 OECD countries during 1990-2004.     

Productivity growth,external shocks,and capital inflows in Chile: A general equilibrium analysis

This paper uses a computable general equilibrium model to analyze the growth path of the Chilean economy during 1977–1981. During that period a comprehensive package of reforms liberalized international trade and removed restrictive labor legislation. As a result of the reforms, there were large changes in relative prices and in the structure of production and demand, and the economy enjoyed unprecedented growth with declining inflation. But large macroeconomic imbalance become evident toward the end of the period and in 1982 Chile experienced an abrupt and severe recession. Taking the real exchange rate as an exogenous policy variable, and using the observed levels of employment growth and foreign capital inflows, this paper compares model-generated growth paths with those of the economy. First, the benchmark simulation path is used to estimate the magnitude and pattern of growth and productivity change during the 1971–1981 period. Next, counter-factual simulations are used to assess how Chile's economic performance would have differed if (a) external events had been different; and (b) foreign capital inflows had been different. The analysis suggests that the macroeconomic imbalances that led to the crisis in 1982 were exacerbated by the large capital inflows and real exchange rate appreciation that resulted from the use of the exchange rate as a stabilization device.     

Socioeconomic status,perceived inequality of opportunity,and attitudes toward redistribution

Previous research suggests that an individual’s socioeconomic status (SES) is negatively associated with attitudes toward redistributive policies. The objective of this study is to examine whether the relationship between an individual’s subjective SES and his or her attitudes toward redistribution is contingent upon perceptions of inequality of opportunity. A series of multilevel analyses was performed using data from 28 countries from the 2009 International Social Survey Program (ISSP). Results revealed that the relationship between individual SES and attitudes toward redistribution was weaker among individuals who more strongly believed that success lies beyond the control of individuals. Shared perceptions of inequality of opportunity at the country level were also significant. The relationship between SES and attitudes toward redistribution was weaker in countries with higher levels of public perceptions of inequality of opportunity. In conclusion, people commensurately support redistribution policies (even contrary to their own self-interest) as they recognize the significance of inequality of opportunity. The greater the support among people for redistribution against their self-interest, the weaker the social cleavage in attitudes toward redistribution across different SES strata, and the higher the overall level of support for redistribution in society.     

A model for the coordination of recovery policies in the OECD region

The paper presents a world econometric model of the LINK type, which is then applied to the study of the recovery prospects of the OECD economies. Specifically, several policy packages coordinated at the international level are assessed for the period 1978–1980.The model includes country specific macroeconomic structures for eight developed economies, and different type structures for five additional developing countries. The obvious policy and behavioral differences that exist between these two groups of countries are highlighted through the specification, in one case, of demand-oriented Keynessian models able to capture short-term cyclical phenomena. The supply orientation with several resource gaps (savings, foreign exchange, etc.) prevails for the developing economies. The two sections after the introduction review broadly the main modeling features of the project, including the international comparison of structural parameters. In the following sections several policy experiments are attempted. The underlying behavioral assumptions stress the community of interest that prevails among OECD economies. These experiments consider the case of stimulative policies adopted in (1) the United States alone, (2) three engine countries (United States, Federal Republic of Germany, and Japan), and (3) several developed countries that are part of the OECD system. Other experiments assume additional policy packages to correct present current account imbalances. The general conclusion of the study is that the prospects for economic recovery in the OECD area depend to a crucial extent on the ability of the member countries to agree on policies able to make the major economic indicators of each economy converge toward levels that are domestically manageable and mutually supporting.     

Is democracy pro poor in Sub-Saharan Africa?

This study examines if democracy reduces poverty in 40 Sub-Saharan African countries for the period 1999–2018. For this purpose, we employ the Generalised Method of Moments. The results show that democracy is not directly associated with poverty reduction in sub-Saharan Africa. However, this observation hides important non-linearities and an interesting pattern of policy complementarities. Indeed, democracy is associated with poverty reduction in countries where economic growth is strong and human capital high. The robustness tests carried out do not change these results. This means that poor economic growth and weak human capital not only have a direct negative effect on the well-being of SSA countries, but also prevent the poor in those countries from benefitting the gains of democracy. Therefore, in order to reduce poverty in SSA, policy makers should continue the process of democratization while simultaneously adopting policies of economic development and human capital building. Democracy in isolation is useless for the poor in SSA.     

论国际投资保护中的法律冲突与协调

国际投资的法律保护是国际投资法中的核心问题之一,它涉及对外国投资及投资者的待遇标准、国家责任与外交保护权、国有化及其赔偿等法律问题.由于作为资本输入国的发展中国家和作为资本输出国的发达国家立场不同、利益不同,因此在国际投资的保护问题上经常出现各种争执,进而影响国际投资活动的正常进行.如何协调他们之间的冲突,为国际投资活动提供发展中国家和发达国家都能够接受的法律框架.     

Exchange rate and wage policies in Central and Eastern Europe

After the eastern enlargement of the European Union (EU) and due to increasing labor market integration, wage determination in Central and Eastern Europe (CEE) has become a key issue in European economic policy making. In addition, a controversial discussion concerning the monetary integration of CEE countries into the EMU has emerged. Both issues have earned particular academic and political interest because Eastern and Western Europe are at different stages of economic development and volatile international capital flows seem to require either a higher degree of wage or exchange rate flexibility. Based on the Scandinavian model of wage adjustment by Lindbeck (1979), we analyze the role of exchange rates in the wage determination process of the Central and Eastern European countries to identify which exchange rate strategy contributes to faster wage convergence in Europe. Panel estimations suggest that workers in countries with fixed exchange rates are likely to benefit in the long run from higher wage increases.     

Savings and economic growth in South Africa: A multivariate causality test

This study takes a fresh look at the direction of causality between savings and economic growth in South Africa during the period 1950–2005. The study was motivated by the low and declining savings rate currently prevailing in South Africa, on the one hand, and the dwindling level of economic growth experienced in the country during the 1990s, on the other. Given the weakness associated with the bivariate causality framework, the current study incorporates foreign capital inflow as an intermittent variable in the bivariate model between savings and economic growth—thereby creating a simple trivariate causality framework. Using the cointegration-based error–correction mechanism, the study finds a bi-directional causality between savings and economic growth to prevail in the short run and a distinct unidirectional causal flow from economic growth to savings to dominate in the long run. On balance, the study finds growth-led savings to predominate in South Africa. The results also show that foreign capital inflow and savings Granger-cause each other, while economic growth Granger causes foreign capital inflow. The study, therefore, recommends that in the short run, South African policies should be geared towards achieving both higher savings and economic growth in order to boost investors’ confidence and to attract foreign capital inflow. However, in the long run, the country should shift its focus towards achieving higher economic growth, in order to boost the domestic savings and to sustain a steady flow of foreign capital investment.     

汇率制度退出与转型：文献综述

如何退出已有汇率制度安排，向更具弹性的汇率制度转型？这是当前新兴市场和发展中国家面临的一个重要问题。在维持已有制度的边际成本与边际收益一致时退出已有汇率制度是最优的。最佳退出时机的经验判断原则取决于该国的经济结构、经济发展阶段、经济冲击、政治与制度因素等。这些因素同时也决定了该国汇率制度退出和转型的策略选择。汇率制度转型所需的基本条件是：一个具有一定深度和一定流动性的外汇市场，一套连贯的中央银行外汇市场干预的政策措施，一个恰当的名义锚，监测和管理公共部门和私人部门外汇风险暴露的有效机制。     

Asset markets and foreign exchange intervention: A model of the Belgo-Luxemburg economic union

In this article a general formulation of government intervention policies in the foreign exchange market is integrated in the framework of an asset market model. The policy reaction function is based on a trade off between exchange rate and reserve stock fluctuations; constant exchange rates and a pure float are derived as limiting cases of the intervention schedule. An exchange rate equation is derived from the short run portfolio equilibrium of the model and is successfully tested using data for the Belgo-Luxemburg Economic Union (1967–1979). Our policy conclusions contrast the European Snake constraints for the Belgian Franc with Artus's findings (IMF Staff Papers XXIII(2), July 1976) for the leading DM.     

International Homelessness: Policy, Socio-Cultural, and Individual Perspectives

This article draws on other papers in the special issue and additional literature to offer a multi-level framework for understanding the causes of homelessness in the developed world and efforts to reduce or end it. Social policies that reduce inequality and provide income and other supports to those at the bottom of the income distribution are associated with lower levels of homelessness across nations. The allocation of subsidies, patterns of social exclusion, and individual levels of economic, social, and human capital interact to influence who becomes homeless. Interventions to reduce homelessness at one level (e.g., social policy) can counteract vulnerabilities at a different level (e.g., individual risk factors) .     

Improving educational resilience in the OECD countries: Two convergent paths

While equality of opportunity in education has been studied, the literature mainly focuses on academic performance and its determinants. Thus, to help fill this gap, this paper identifies the factors that contribute to improving equality of opportunity and the policies that should be implemented to achieve it. This work is novel in various ways. First, it defines student resilience in a new way using multilevel models applied to two groups of countries. Second, it analyses the determinants of equality of opportunity in the OECD and makes economic policy recommendations. Using the PISA waves from 2003 to 2018, our results show that uniform economic policies should not be pursued across all OECD countries. While countries in the relatively poor group need economic policies that boost per student expenditure, countries in the richer group should prioritise human capital via teacher salary. In other words, in the richer countries, it is not the level of expenditure that matters but how it is spent. Our results also demonstrate the importance of soft skills for the equality of opportunity of students in all cases. Thus, we recommend designing education policies aimed at developing these skills.     

A simple test on the convergence of social security transfer in OECD countries

The growing trend toward globalization not only has aggravated international competition but also has increased interdependence among countries, inducing the need for harmonization and convergence of socioeconomic policies across countries. This paper examines whether the convergence phenomenon holds for social security transfers as a percentage of GDP in OECD countries, applying the traditional methodology of σ- and β-convergence.     

Does the perception of benefit fraud shape tax attitudes in Europe?

After the negative effect of the recent financial crisis on public finances in many countries, it is of a great interest to study attitudes towards taxation to identify effective policies to enhance public support for taxation and welfare programs. In this paper, we analyze empirically people’s attitudes towards taxation in European countries. In particular, we test whether the perception about benefit fraud may produce different effects on preferences over the size of the welfare state along the income distribution. Moreover, we test if contextual variables are relatively more relevant than individual characteristics in determining attitudes towards taxation. Using different data sources for many EU countries in 2008, we contrast those hypotheses taking advantage of multilevel techniques. Our results suggest that policies targeting the deterrence of benefit fraud such as higher penalties and more frequent benefit investigations, increase the high earners’ willingness to pay taxes and then the size of the welfare state. We also find that contextual characteristics explain a larger variance of attitudes toward taxation than individual characteristics, suggesting that the same policy for all UE countries might be not a good strategy.     

Real and financial shocks,exchange rate regimes and the probability of a currency crisis

We analyze the relationships among shocks, exchange rate regimes, and capital controls in relation to the probability of a currency crisis. Based on the theoretical model by Nakatani (2016, 2017a), we use panel data on 34 developing countries and apply a probit estimation. We find that both productivity shocks and risk premium shocks trigger currency crises, whereas productivity shocks are important for severe currency crises. We also find that the effects of these shocks on the probability of a crisis are larger for floating exchange rate regimes and that capital controls mitigate the effects of productivity shocks in pegged regimes.