We examine the stance of fiscal policy for 32 OECD countries from 1986 to 2023 by comparing for each country-year observation the signs of the output gap and the change in the cyclically adjusted budget balance. We find that fiscal policies are often pro-cyclical. We test possible explanations using comparative statistics for country-year observations with pro- and counter-cyclical policies. Our evidence suggests that fiscal rules and institutional quality are not related to the prevalence of pro-cyclicality. Likewise, several political-economy arguments suggested for explaining pro-cyclical fiscal policies do not receive strong support. However, poor access to finance makes fiscal policies more pro-cyclical. (JEL codes: E62, H50, and H62)
{"title":"What Makes Discretionary Counter-Cyclical Fiscal Policy so Difficult? An Analysis of 32 OECD Countries","authors":"J. de Haan, Bram Gootjes","doi":"10.1093/cesifo/ifad001","DOIUrl":"https://doi.org/10.1093/cesifo/ifad001","url":null,"abstract":"\u0000 We examine the stance of fiscal policy for 32 OECD countries from 1986 to 2023 by comparing for each country-year observation the signs of the output gap and the change in the cyclically adjusted budget balance. We find that fiscal policies are often pro-cyclical. We test possible explanations using comparative statistics for country-year observations with pro- and counter-cyclical policies. Our evidence suggests that fiscal rules and institutional quality are not related to the prevalence of pro-cyclicality. Likewise, several political-economy arguments suggested for explaining pro-cyclical fiscal policies do not receive strong support. However, poor access to finance makes fiscal policies more pro-cyclical. (JEL codes: E62, H50, and H62)","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2023-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46087061","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The possibility of creating a state bank has received much recent attention in the USA. In 2021, six states introduced legislation to create a state bank; in 2019, similar legislation was enacted in California for municipal banks. This article develops a framework to evaluate state banking, reviews prior experiences with state banking and related alternatives to traditional private banking, and identifies five questions determining the advisability of creating a state bank. The overall goal is to shed some light on whether a state bank can be a useful tool to further state economic development and the welfare of state residents (JEL codes: G21 (banks), G28 (government policy, financial institutions), and H70 (state and local governments)).
{"title":"Is a State Bank A Useful Economic Development Tool in the USA?","authors":"Robert S. Chirinko","doi":"10.1093/cesifo/ifac012","DOIUrl":"https://doi.org/10.1093/cesifo/ifac012","url":null,"abstract":"\u0000 The possibility of creating a state bank has received much recent attention in the USA. In 2021, six states introduced legislation to create a state bank; in 2019, similar legislation was enacted in California for municipal banks. This article develops a framework to evaluate state banking, reviews prior experiences with state banking and related alternatives to traditional private banking, and identifies five questions determining the advisability of creating a state bank. The overall goal is to shed some light on whether a state bank can be a useful tool to further state economic development and the welfare of state residents (JEL codes: G21 (banks), G28 (government policy, financial institutions), and H70 (state and local governments)).","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45884991","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In today’s globalized and interconnected world, international relationships are becoming ever more important. This applies not only to political relations but also to transnational attachment, a positive and solidary mutual attitude between the citizens of two countries, which is mainly based on social capital and trust. In particular border areas can benefit enormously when people have a bond with their neighboring country and its inhabitants. Due to their geographic proximity and historically shaped identity, border regions have a high potential for increased economic and social exchange. While empirical work on these characteristics of specific border areas is scarce, this article presents a novel approach which applies the concept of transnational social capital taking the French–German border area as an example. The representative study is based on telephone interviews, which were conducted in the border area and in regions within the two countries as a control for country-level effects. We find strong evidence for border region attachment in form of higher levels of social capital and trust in the border area. Our findings have important implications for borderland economies in general and in particular for cross-border resilience with regard to prevailing risks like upcoming nationalism and disasters such as the Covid-19 pandemic.
{"title":"Border Region Attachment: An Empirical Study on Regional Social Capital in the French–German Border Area","authors":"Marcus Wiens, Miriam Klein, Frank Schultmann","doi":"10.1093/cesifo/ifac010","DOIUrl":"https://doi.org/10.1093/cesifo/ifac010","url":null,"abstract":"In today’s globalized and interconnected world, international relationships are becoming ever more important. This applies not only to political relations but also to transnational attachment, a positive and solidary mutual attitude between the citizens of two countries, which is mainly based on social capital and trust. In particular border areas can benefit enormously when people have a bond with their neighboring country and its inhabitants. Due to their geographic proximity and historically shaped identity, border regions have a high potential for increased economic and social exchange. While empirical work on these characteristics of specific border areas is scarce, this article presents a novel approach which applies the concept of transnational social capital taking the French–German border area as an example. The representative study is based on telephone interviews, which were conducted in the border area and in regions within the two countries as a control for country-level effects. We find strong evidence for border region attachment in form of higher levels of social capital and trust in the border area. Our findings have important implications for borderland economies in general and in particular for cross-border resilience with regard to prevailing risks like upcoming nationalism and disasters such as the Covid-19 pandemic.","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138504596","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The article asks whether the exercising of the NATO membership option is justified for Finland and Sweden in the light of their geopolitical state after Russia’s attack on Ukraine. It was the Gallup democracy, which launched the political moves toward the membership. In both countries, the majority of people turned to favor the membership within 2–3 months. Finland activated first. Sweden was fast in catching up with the Finnish process. The theory of option pricing is employed to analyze the optimal timing of exercising the option when the uncertainty regarding the value of the membership is rapidly diluting. The Turkish intervention in the membership process after the membership applications of Finland and Sweden were delivered suggests a bargaining phase once the application is delivered. Finally, the effects of the Gallup surveys on the political equilibrium are analyzed in a voter–politician model (JEL codes: D72, D74, and H56).
{"title":"Gallup Democracy in Exercising the NATO Membership Option: The Cases of Finland and Sweden","authors":"V. Kanniainen","doi":"10.1093/cesifo/ifac008","DOIUrl":"https://doi.org/10.1093/cesifo/ifac008","url":null,"abstract":"\u0000 The article asks whether the exercising of the NATO membership option is justified for Finland and Sweden in the light of their geopolitical state after Russia’s attack on Ukraine. It was the Gallup democracy, which launched the political moves toward the membership. In both countries, the majority of people turned to favor the membership within 2–3 months. Finland activated first. Sweden was fast in catching up with the Finnish process. The theory of option pricing is employed to analyze the optimal timing of exercising the option when the uncertainty regarding the value of the membership is rapidly diluting. The Turkish intervention in the membership process after the membership applications of Finland and Sweden were delivered suggests a bargaining phase once the application is delivered. Finally, the effects of the Gallup surveys on the political equilibrium are analyzed in a voter–politician model (JEL codes: D72, D74, and H56).","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44162245","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To reduce their public revenue dependence on international trade tax revenue, policymakers in developing countries have engaged (with the assistance of international financial institutions and bilateral donors) in the reform of their tax revenue structure, with a view to reducing their public revenue dependence on international trade tax revenue. This reform (referred to as tax reform) is particularly important given the ongoing unavoidable trade liberalization that sooner or later further erode international trade revenue. Using an unbalanced panel dataset of 127 countries over the period 1980–2019, and the two-step system generalized method of moments, the present article investigates the public debt effect of this tax reform. The empirical analysis has shown that a greater extent of tax reform helps to reduce public debt, with the magnitude of this negative effect being larger in countries with a high share of non-resource tax revenue in public revenue. In addition, the public debt reduction effect of tax reform is larger, the greater is countries’ share of international trade tax revenue in non-resource tax revenue. This analysis has important policy implications. (JEL codes: H63, H10, and H20)
{"title":"Effect of Tax Structure Reform on Public Debt in Developing Countries","authors":"S. Gnangnon","doi":"10.1093/cesifo/ifac006","DOIUrl":"https://doi.org/10.1093/cesifo/ifac006","url":null,"abstract":"\u0000 To reduce their public revenue dependence on international trade tax revenue, policymakers in developing countries have engaged (with the assistance of international financial institutions and bilateral donors) in the reform of their tax revenue structure, with a view to reducing their public revenue dependence on international trade tax revenue. This reform (referred to as tax reform) is particularly important given the ongoing unavoidable trade liberalization that sooner or later further erode international trade revenue. Using an unbalanced panel dataset of 127 countries over the period 1980–2019, and the two-step system generalized method of moments, the present article investigates the public debt effect of this tax reform. The empirical analysis has shown that a greater extent of tax reform helps to reduce public debt, with the magnitude of this negative effect being larger in countries with a high share of non-resource tax revenue in public revenue. In addition, the public debt reduction effect of tax reform is larger, the greater is countries’ share of international trade tax revenue in non-resource tax revenue. This analysis has important policy implications. (JEL codes: H63, H10, and H20)","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-08-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47704549","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the effects of refugee inflow on the voting behavior of natives. I employ a difference in differences strategy to identify the voter reaction against the sudden inflow of Syrian refugees to Turkey and use unique data provided by Turk Telecom to proxy natives’ refugee exposure. Data coming from mobile phone usage track the mobility of refugees throughout the year and enables the construction of refugee exposure measures across small geographical areas. I show a small drop in the government party vote share that announced an ‘open door’ policy for refugees. Furthermore, there is evidence for the reaction heterogeneity based on the socio-economic development levels of refugee-hosting areas. While there is a null response in ethnically Kurdish and economically lagging East, a negative reaction is concentrated in socioeconomically more developed areas. Then, exploring the effects in rural and urban areas reveals an interesting divide in the refugee exposure patterns of hosting areas. While in rural areas, natives react against the refugee presence, in urban areas, they react when the mobility (visibility) increases. Anecdotal evidence might help to put findings in context. Manipulating the concerns of voters on Syrians’ receiving citizenship and demographic change might be regarded as two main strategies used by opposition parties. These strategies help convince the secular and conservative-nationalist voters in socioeconomically developed areas. (JEL codes: J01, J08, and J15)
{"title":"Effects of Refugee Inflow on the Voting Behavior of Natives: Application of Mobile Phone Data","authors":"Emine Kubra Usta","doi":"10.1093/cesifo/ifac007","DOIUrl":"https://doi.org/10.1093/cesifo/ifac007","url":null,"abstract":"\u0000 This paper investigates the effects of refugee inflow on the voting behavior of natives. I employ a difference in differences strategy to identify the voter reaction against the sudden inflow of Syrian refugees to Turkey and use unique data provided by Turk Telecom to proxy natives’ refugee exposure. Data coming from mobile phone usage track the mobility of refugees throughout the year and enables the construction of refugee exposure measures across small geographical areas. I show a small drop in the government party vote share that announced an ‘open door’ policy for refugees. Furthermore, there is evidence for the reaction heterogeneity based on the socio-economic development levels of refugee-hosting areas. While there is a null response in ethnically Kurdish and economically lagging East, a negative reaction is concentrated in socioeconomically more developed areas. Then, exploring the effects in rural and urban areas reveals an interesting divide in the refugee exposure patterns of hosting areas. While in rural areas, natives react against the refugee presence, in urban areas, they react when the mobility (visibility) increases. Anecdotal evidence might help to put findings in context. Manipulating the concerns of voters on Syrians’ receiving citizenship and demographic change might be regarded as two main strategies used by opposition parties. These strategies help convince the secular and conservative-nationalist voters in socioeconomically developed areas. (JEL codes: J01, J08, and J15)","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41262230","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Correction to: VAT Listings within the EU Member States and Their Impact on Tax Evasion","authors":"","doi":"10.1093/cesifo/ifac005","DOIUrl":"https://doi.org/10.1093/cesifo/ifac005","url":null,"abstract":"","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-06-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42945683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article discusses the evolution of monetary policy (MP) in Peru in 1996Q1–2019Q4 using a mixture innovation time-varying parameter vector autoregressive (VAR) model with stochastic volatility (TVP-VAR-SV) as proposed by Koop, Leon-Gonzales and Strachan. The main empirical results are: (i) the VAR coefficients and volatilities change more gradually than the contemporaneous coefficients over time; (ii) the volatility of MP shocks was higher under the pre-Inflation Targeting (IT) regime; (iii) a surprise increase in the interest rate produces gross domestic product (GDP) growth falls and reduces inflation in the long run; (iv) the interest rate reacts more quickly to aggregate supply shocks than to aggregate demand shocks; (v) MP shocks explain a high percentage of domestic variables behavior under the pre-IT regime but their contribution decreases under the IT regime. Overall, these results show that MP has contributed in Peru to lower macroeconomic volatility by (i) reducing average long-term inflation, (ii) increasing the response of GDP growth rate to interest rate, and (iii) by becoming more predictable. (JEL codes: C11, C32, and E52).
{"title":"Evolution of Monetary Policy in Peru: An Empirical Application Using a Mixture Innovation TVP-VAR-SV Model*","authors":"Portilla J, Rodríguez G, Castillo B. P.","doi":"10.1093/cesifo/ifab013","DOIUrl":"https://doi.org/10.1093/cesifo/ifab013","url":null,"abstract":"<span><div>Abstract</div>This article discusses the evolution of monetary policy (MP) in Peru in 1996Q1–2019Q4 using a mixture innovation time-varying parameter vector autoregressive (VAR) model with stochastic volatility (TVP-VAR-SV) as proposed by Koop, Leon-Gonzales and Strachan. The main empirical results are: (i) the VAR coefficients and volatilities change more gradually than the contemporaneous coefficients over time; (ii) the volatility of MP shocks was higher under the pre-Inflation Targeting (IT) regime; (iii) a surprise increase in the interest rate produces gross domestic product (GDP) growth falls and reduces inflation in the long run; (iv) the interest rate reacts more quickly to aggregate supply shocks than to aggregate demand shocks; (v) MP shocks explain a high percentage of domestic variables behavior under the pre-IT regime but their contribution decreases under the IT regime. Overall, these results show that MP has contributed in Peru to lower macroeconomic volatility by (i) reducing average long-term inflation, (ii) increasing the response of GDP growth rate to interest rate, and (iii) by becoming more predictable. (JEL codes: C11, C32, and E52).</span>","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138504595","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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