Pub Date : 2021-03-01DOI: 10.11130/JEI.2021.36.1.20
Teresia Angelia Kusumahadi, Fikri C Permana
This study aims to examine the impact of COVID-19 on stock return volatility in 15 countries worldwide. Using daily data from January 2019 to June 2020, we find that changes in exchange rates have negatively affected stock returns in most countries. We also identify structural changes over the observation period; these structural changes occur not just after the first case of COVID-19 but also earlier in the period. Based on threshold generalized autoregressive conditional heteroskedasticity regressions, we find evidence that the emergence of COVID-19 affected stock return volatility in all observed countries except the United Kingdom. Furthermore, we find that the presence of COVID-19 in a country positively affects return volatility. However, the magnitude of this effect is small in every observed country. This finding suggests the need for in-depth studies of other factors that affect stock return volatility besides the occurrence of COVID-19.
{"title":"Impact of COVID-19 on Global Stock Market Volatility","authors":"Teresia Angelia Kusumahadi, Fikri C Permana","doi":"10.11130/JEI.2021.36.1.20","DOIUrl":"https://doi.org/10.11130/JEI.2021.36.1.20","url":null,"abstract":"This study aims to examine the impact of COVID-19 on stock return volatility in 15 countries worldwide. Using daily data from January 2019 to June 2020, we find that changes in exchange rates have negatively affected stock returns in most countries. We also identify structural changes over the observation period; these structural changes occur not just after the first case of COVID-19 but also earlier in the period. Based on threshold generalized autoregressive conditional heteroskedasticity regressions, we find evidence that the emergence of COVID-19 affected stock return volatility in all observed countries except the United Kingdom. Furthermore, we find that the presence of COVID-19 in a country positively affects return volatility. However, the magnitude of this effect is small in every observed country. This finding suggests the need for in-depth studies of other factors that affect stock return volatility besides the occurrence of COVID-19.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":"36 1","pages":"20-45"},"PeriodicalIF":1.2,"publicationDate":"2021-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49206318","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-02-20DOI: 10.21203/RS.3.RS-257879/V1
S. Gnangnon
The COVID-19 health pandemic has exposed the strong vulnerabilities of countries, including developing ones to shocks, and underlined the need for exploring ways to strengthen countries' resilience to future shocks. The current paper uses the dataset made recently available by the United Nations Conference on Trade and Development (UNCTAD) to examine (for the first time) the effect of productive capacities on economic complexity. The analysis further investigates whether Aid for Trade (AfT) flows matter for the influence of productive capacities on economic complexity in recipient-countries. The analysis uses a sample of 126 countries (including both developed and developing countries) over the period 2002-2018, and adopts the two-step system Generalized Methods of Moments (GMM) approach. Results have shown that productive capacities exert a positive effect on economic complexity over the full sample. However, the magnitude of this positive effect varies across different sub-samples, with Least developed countries (LDCs) enjoying the lowest magnitude of this positive effect. Furthermore, total AfT flows are positively associated with economic complexity, with LDCs enjoying a higher positive effect than other countries. Interestingly, total AfT flows exert a higher positive effect on economic complexity in countries that experience low levels of overall productive capacities. The latter finding highlights the need for donor-countries to scale-up AfT flows in favour of countries (such as LDCs) that are characterized by low levels of productive capacities. Finally, the empirical outcomes indicate that productive capacities enhance economic complexity in countries that receive higher amounts of total NonAfT flows.
{"title":"Effect of Productive Capacities on Economic Complexity: Do Aid for Trade flows Matter?","authors":"S. Gnangnon","doi":"10.21203/RS.3.RS-257879/V1","DOIUrl":"https://doi.org/10.21203/RS.3.RS-257879/V1","url":null,"abstract":"\u0000 The COVID-19 health pandemic has exposed the strong vulnerabilities of countries, including developing ones to shocks, and underlined the need for exploring ways to strengthen countries' resilience to future shocks. The current paper uses the dataset made recently available by the United Nations Conference on Trade and Development (UNCTAD) to examine (for the first time) the effect of productive capacities on economic complexity. The analysis further investigates whether Aid for Trade (AfT) flows matter for the influence of productive capacities on economic complexity in recipient-countries. The analysis uses a sample of 126 countries (including both developed and developing countries) over the period 2002-2018, and adopts the two-step system Generalized Methods of Moments (GMM) approach. Results have shown that productive capacities exert a positive effect on economic complexity over the full sample. However, the magnitude of this positive effect varies across different sub-samples, with Least developed countries (LDCs) enjoying the lowest magnitude of this positive effect. Furthermore, total AfT flows are positively associated with economic complexity, with LDCs enjoying a higher positive effect than other countries. Interestingly, total AfT flows exert a higher positive effect on economic complexity in countries that experience low levels of overall productive capacities. The latter finding highlights the need for donor-countries to scale-up AfT flows in favour of countries (such as LDCs) that are characterized by low levels of productive capacities. Finally, the empirical outcomes indicate that productive capacities enhance economic complexity in countries that receive higher amounts of total NonAfT flows.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2021-02-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48102407","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-15DOI: 10.11130/jei.2020.35.4.684
Tzu-Han Yang, Dengbin Huang, Yo-Yi Huang
This research utilizes hub-spoke analysis to trace the evolution of the textile production chain in East Asia during the period of world textile trade liberalization. We identify two different types of hubs via the functions they perform and track their shifting paths. The results illustrate that the Association of Southeast Asian Nations (ASEAN)-6 is a growing base for final products, while China has successfully shifted from downstream to midand upstream production. Although Japan’s hubness is decreasing in both the upand midstream sectors, it reversed these disadvantages after 2004 and has reinforced its hub status in both areas. It appears that a tri-cycle momentum system is evolving, with each power wheel having its own leading position in the vertically integrated structure. At the same time, the cooperation between China and Japan through upand midstream product trading has weakened, while that between ASEAN and Japan has grown.
{"title":"Evolution of the Textile Production Chain in East Asia from the Hub-Spoke Structure Viewpoint","authors":"Tzu-Han Yang, Dengbin Huang, Yo-Yi Huang","doi":"10.11130/jei.2020.35.4.684","DOIUrl":"https://doi.org/10.11130/jei.2020.35.4.684","url":null,"abstract":"This research utilizes hub-spoke analysis to trace the evolution of the textile production chain in East Asia during the period of world textile trade liberalization. We identify two different types of hubs via the functions they perform and track their shifting paths. The results illustrate that the Association of Southeast Asian Nations (ASEAN)-6 is a growing base for final products, while China has successfully shifted from downstream to midand upstream production. Although Japan’s hubness is decreasing in both the upand midstream sectors, it reversed these disadvantages after 2004 and has reinforced its hub status in both areas. It appears that a tri-cycle momentum system is evolving, with each power wheel having its own leading position in the vertically integrated structure. At the same time, the cooperation between China and Japan through upand midstream product trading has weakened, while that between ASEAN and Japan has grown.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43944332","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-15DOI: 10.11130/jei.2020.35.4.609
Andrea Marino
This paper analyzes the link between ad valorem tariffs and growth in a North-South framework, in which tariff liberalization exerts both U-shaped allocation effects (concerning the distribution of inputs across sectors) predicted by symmetric (North-North) R&D-based models, and monotonic pro-growth location effects (concerning the distribution of firms across countries) highlighted by economic geography literature. It is shown that, regardless of parameters, at sufficiently high tariffs allocation effects prevail. Thus, the equilibrium tariff-growth relationship is non-monotonic in this North-South setting as well. Numerical solutions suggest that such nonlinearities may be relevant and a potential source of misspecification bias in empirical work neglecting them. Tensions between allocation and location effects extend to the tariff-welfare link. This may be non-monotonic as well, depending on parameters. Due to static location effects, full tariff liberalization may not maximize welfare. However, this is the likely outcome under plausible parameter values.
{"title":"Growth and Welfare Implications of Tariff Protection―Location Versus Allocation Effects","authors":"Andrea Marino","doi":"10.11130/jei.2020.35.4.609","DOIUrl":"https://doi.org/10.11130/jei.2020.35.4.609","url":null,"abstract":"This paper analyzes the link between ad valorem tariffs and growth in a North-South framework, in which tariff liberalization exerts both U-shaped allocation effects (concerning the distribution of inputs across sectors) predicted by symmetric (North-North) R&D-based models, and monotonic pro-growth location effects (concerning the distribution of firms across countries) highlighted by economic geography literature. It is shown that, regardless of parameters, at sufficiently high tariffs allocation effects prevail. Thus, the equilibrium tariff-growth relationship is non-monotonic in this North-South setting as well. Numerical solutions suggest that such nonlinearities may be relevant and a potential source of misspecification bias in empirical work neglecting them. Tensions between allocation and location effects extend to the tariff-welfare link. This may be non-monotonic as well, depending on parameters. Due to static location effects, full tariff liberalization may not maximize welfare. However, this is the likely outcome under plausible parameter values.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":"1 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41554253","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-15DOI: 10.11130/jei.2020.35.4.576
Ronghao Jiang, Tenzin Tamang
Numerous studies focus on understanding the organization and operations of global economic and production networks. However, the evolution of the spatial and structural dimensions of these networks has rarely been explored. Drawing on the foreign direct investment (FDI) data from the Zephyr Mergers and Acquisitions (M&A) database, this article investigates the evolutionary patterns of global economic networks from 2000 to 2007 and from 2008 to 2016 (the years preceding and following the financial crisis). First, using social network analysis, we illuminated the network properties of the global FDI flows. Second, we employed a fractional logit panel model to reflect the influences on this evolution. The results reveal major shifts in all network properties explored in the pre-crisis period while relatively gradual growth and minor shifts characterized the post-crisis period. Urban connectivity of nations was found to be significant for FDI in the post-crisis period. Significant variations in the locational attributes between the two periods are also demonstrated.
{"title":"The Evolutionary Dimensions of Global Investment Networks","authors":"Ronghao Jiang, Tenzin Tamang","doi":"10.11130/jei.2020.35.4.576","DOIUrl":"https://doi.org/10.11130/jei.2020.35.4.576","url":null,"abstract":"Numerous studies focus on understanding the organization and operations of global economic and production networks. However, the evolution of the spatial and structural dimensions of these networks has rarely been explored. Drawing on the foreign direct investment (FDI) data from the Zephyr Mergers and Acquisitions (M&A) database, this article investigates the evolutionary patterns of global economic networks from 2000 to 2007 and from 2008 to 2016 (the years preceding and following the financial crisis). First, using social network analysis, we illuminated the network properties of the global FDI flows. Second, we employed a fractional logit panel model to reflect the influences on this evolution. The results reveal major shifts in all network properties explored in the pre-crisis period while relatively gradual growth and minor shifts characterized the post-crisis period. Urban connectivity of nations was found to be significant for FDI in the post-crisis period. Significant variations in the locational attributes between the two periods are also demonstrated.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49350644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-15DOI: 10.11130/jei.2020.35.4.724
Refk Selmi, Jamal Bouoiyour, S. Hammoudeh
In the wake of recent political developments worldwide, future oil supply prospects have become doubtful and uncertainty plays a non-negligible role in determining the dynamics of major macroeconomic variables. This study constructs a factor model with time-varying loadings to decompose the variance of important macroeconomic and financial series for the top 10 oil-producing countries into the contributions from country-specific uncertainty and common uncertainty. The relative importance of the uncertainty estimates in explaining volatility in production, investment, total exports, the exchange rate, and stock prices seems to vary over time, with evidence of alternating periods of high and low persistent uncertainty. Global uncertainty plays a primary role output growth, investment, exports, and stock prices in all countries. Globalization and trade openness contribute to amplifying the international transmission of volatility, explaining the increasing importance of the global uncertainty factor.
{"title":"Common and Country-Specific Uncertainty Fluctuations in Major Oil-Producing Countries: A Comparative Study","authors":"Refk Selmi, Jamal Bouoiyour, S. Hammoudeh","doi":"10.11130/jei.2020.35.4.724","DOIUrl":"https://doi.org/10.11130/jei.2020.35.4.724","url":null,"abstract":"In the wake of recent political developments worldwide, future oil supply prospects have become doubtful and uncertainty plays a non-negligible role in determining the dynamics of major macroeconomic variables. This study constructs a factor model with time-varying loadings to decompose the variance of important macroeconomic and financial series for the top 10 oil-producing countries into the contributions from country-specific uncertainty and common uncertainty. The relative importance of the uncertainty estimates in explaining volatility in production, investment, total exports, the exchange rate, and stock prices seems to vary over time, with evidence of alternating periods of high and low persistent uncertainty. Global uncertainty plays a primary role output growth, investment, exports, and stock prices in all countries. Globalization and trade openness contribute to amplifying the international transmission of volatility, explaining the increasing importance of the global uncertainty factor.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":"35 1","pages":"724-750"},"PeriodicalIF":1.2,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44321037","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-15DOI: 10.11130/JEI.2020.35.4.643
S. Gnangnon
This study contributes to the extant literature on the effectiveness of Aid for Trade (AfT) flows in recipient-countries by examining the effect of these resource flows on wage inequality in the recipientcountries’ manufacturing sector. The analysis shows that AfT interventions help reduce wage inequality in the manufacturing sector of countries that have liberalized trade policies, enjoy greater trade openness, experience higher exports of labor-intensive manufacturing products, higher exports of low-skill-intensive manufacturing products, and greater exports of high-skill-intensive manufacturing products. Additionally, AfT interventions contribute to moderating the negative effect of export product concentration (e.g., on primary products) on wage inequality in the manufacturing sector. Finally, AfT flows reduce wage inequality in the manufacturing sector of countries that import manufacturing products (including machinery and transport equipment goods) or enjoy wider multilateral trade liberalization.
{"title":"Aid for Trade Flows and Wage Inequality in the Manufacturing Sector of Recipient-Countries","authors":"S. Gnangnon","doi":"10.11130/JEI.2020.35.4.643","DOIUrl":"https://doi.org/10.11130/JEI.2020.35.4.643","url":null,"abstract":"This study contributes to the extant literature on the effectiveness of Aid for Trade (AfT) flows in recipient-countries by examining the effect of these resource flows on wage inequality in the recipientcountries’ manufacturing sector. The analysis shows that AfT interventions help reduce wage inequality in the manufacturing sector of countries that have liberalized trade policies, enjoy greater trade openness, experience higher exports of labor-intensive manufacturing products, higher exports of low-skill-intensive manufacturing products, and greater exports of high-skill-intensive manufacturing products. Additionally, AfT interventions contribute to moderating the negative effect of export product concentration (e.g., on primary products) on wage inequality in the manufacturing sector. Finally, AfT flows reduce wage inequality in the manufacturing sector of countries that import manufacturing products (including machinery and transport equipment goods) or enjoy wider multilateral trade liberalization.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41743970","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-12-15DOI: 10.11130/jei.2020.35.4.751
K. Kpognon, H. A. Ondoa, Mamadou Bah
This study analyzes the effect of trade openness and labor market regulation on youth employment in Sub-Saharan Africa (SSA). It covers a panel of 41 countries over the period 2002-2017, a period determined by the availability of the relevant data on labor market regulation. The results obtained using pooled ordinary least squares (OLS) regression and instrumental variable-two-stage least squares (IV-2SLS) estimators reveal that trade openness and labor market regulation rigidity have a positive and significant impact on youth employment in SSA. More interestingly, trade openness negatively and significantly affects youth employment in more rigid labor markets in SSA. This result remains robust in several robustness tests. Finally, this study also examined the case of young women’s employment in SSA.
{"title":"Trade Openness and Youth Employment in Sub-Saharan Africa: Should We Regulate the Labor Market?","authors":"K. Kpognon, H. A. Ondoa, Mamadou Bah","doi":"10.11130/jei.2020.35.4.751","DOIUrl":"https://doi.org/10.11130/jei.2020.35.4.751","url":null,"abstract":"This study analyzes the effect of trade openness and labor market regulation on youth employment in Sub-Saharan Africa (SSA). It covers a panel of 41 countries over the period 2002-2017, a period determined by the availability of the relevant data on labor market regulation. The results obtained using pooled ordinary least squares (OLS) regression and instrumental variable-two-stage least squares (IV-2SLS) estimators reveal that trade openness and labor market regulation rigidity have a positive and significant impact on youth employment in SSA. More interestingly, trade openness negatively and significantly affects youth employment in more rigid labor markets in SSA. This result remains robust in several robustness tests. Finally, this study also examined the case of young women’s employment in SSA.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2020-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48144869","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-11-30DOI: 10.11130/jei.2020.35.4.559
Young Ji Kim, S. Kim
This paper investigates the relationship between business cycle synchronization and trade integration in the Latin American region. Using data for 17 Latin American countries and the United States (US) from 1980 to 2018, we document the time-series characteristics of business cycle synchronization and intraand inter-regional trade in the region and empirically test whether trade integration contributed to business cycle synchronization. The data demonstrate that the business cycle synchronization index has been steadily increasing in the region. Regional trade integration increased until the financial crisis in 2008 and decreased slightly thereafter. The results of a system generalized method of moments (GMM) regression indicate that bilateral trade with the US significantly increased business cycle synchronization in the region, except during the 2000s, while regional trade had no significant effect. These results emphasize the importance of the indirect trade channel, especially with the US, as a main channel of business cycle synchronization in Latin America.
{"title":"Trade Integration and Business Cycle Synchronization in Latin American Countries","authors":"Young Ji Kim, S. Kim","doi":"10.11130/jei.2020.35.4.559","DOIUrl":"https://doi.org/10.11130/jei.2020.35.4.559","url":null,"abstract":"This paper investigates the relationship between business cycle synchronization and trade integration in the Latin American region. Using data for 17 Latin American countries and the United States (US) from 1980 to 2018, we document the time-series characteristics of business cycle synchronization and intraand inter-regional trade in the region and empirically test whether trade integration contributed to business cycle synchronization. The data demonstrate that the business cycle synchronization index has been steadily increasing in the region. Regional trade integration increased until the financial crisis in 2008 and decreased slightly thereafter. The results of a system generalized method of moments (GMM) regression indicate that bilateral trade with the US significantly increased business cycle synchronization in the region, except during the 2000s, while regional trade had no significant effect. These results emphasize the importance of the indirect trade channel, especially with the US, as a main channel of business cycle synchronization in Latin America.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":"35 1","pages":"559-575"},"PeriodicalIF":1.2,"publicationDate":"2020-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41611376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-08-31DOI: 10.11130/jei.2020.35.3.353
S. Menguy
We study the link between tax competition, efficiency of available fiscal bases and public indebtedness levels in the member countries of a monetary union. Theoretically, labor taxation would be the most efficient way to collect fiscal resources, as this production factor is more rigid; so, only initially weakly indebted countries can afford to have weak labor taxation rates. Empirical data also validate the decreasing relation between consumption taxation rates and public debt levels. On the contrary, capital taxation would be less efficient, because of capital mobility. If the capital taxation rate is higher than in the rest of the monetary union, tax evasion could deteriorate the fiscal base and increase the public debt to GDP ratio. So, empirical data show an ambiguous trend between the historical evolution of implicit capital taxation rates and public debt levels in the Euro Area.
{"title":"Tax Competition, Fiscal Policy, and Public Debt Levels in a Monetary Union","authors":"S. Menguy","doi":"10.11130/jei.2020.35.3.353","DOIUrl":"https://doi.org/10.11130/jei.2020.35.3.353","url":null,"abstract":"We study the link between tax competition, efficiency of available fiscal bases and public indebtedness levels in the member countries of a monetary union. Theoretically, labor taxation would be the most efficient way to collect fiscal resources, as this production factor is more rigid; so, only initially weakly indebted countries can afford to have weak labor taxation rates. Empirical data also validate the decreasing relation between consumption taxation rates and public debt levels. On the contrary, capital taxation would be less efficient, because of capital mobility. If the capital taxation rate is higher than in the rest of the monetary union, tax evasion could deteriorate the fiscal base and increase the public debt to GDP ratio. So, empirical data show an ambiguous trend between the historical evolution of implicit capital taxation rates and public debt levels in the Euro Area.","PeriodicalId":45678,"journal":{"name":"Journal of Economic Integration","volume":"35 1","pages":"353-395"},"PeriodicalIF":1.2,"publicationDate":"2020-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42093249","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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