Since the beginning of the financial crisis in 2007/2008, new lending in the euro area has slowed sharply and the old loans experienced ‘evergreening’, that is, bad loans have been rolled over rather than being liquidated. Even though ameliorating evergreening is key to promote lending for new investment projects and growth, no systematic evergreening measures exist. In this paper, we propose a new cross-country evergreening index and develop a public-choice model to explain why evergreening may reflect the incentives of regulators to forebear. Our evergreening index is based on a survey we designed and was administered by the ifo Institute to about 1000 experts in over 80 countries. We bring the model to the data using a heteroscedastic probit model and find that evergreening is higher in: (i) euro-area countries than in the rest of the world; (ii) in countries facing bank distress; and (iii) is highest in countries which experience banking distress and are members of the euro area. These results are consistent with our theoretical model. (JEL codes: F33, F55 and E58)
{"title":"Evergreening in the Euro Area: Evidence from Survey Data and a Conceptual Framework","authors":"Sven Steinkamp, A. Tornell, F. Westermann","doi":"10.1093/cesifo/ifaa017","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa017","url":null,"abstract":"\u0000 Since the beginning of the financial crisis in 2007/2008, new lending in the euro area has slowed sharply and the old loans experienced ‘evergreening’, that is, bad loans have been rolled over rather than being liquidated. Even though ameliorating evergreening is key to promote lending for new investment projects and growth, no systematic evergreening measures exist. In this paper, we propose a new cross-country evergreening index and develop a public-choice model to explain why evergreening may reflect the incentives of regulators to forebear. Our evergreening index is based on a survey we designed and was administered by the ifo Institute to about 1000 experts in over 80 countries. We bring the model to the data using a heteroscedastic probit model and find that evergreening is higher in: (i) euro-area countries than in the rest of the world; (ii) in countries facing bank distress; and (iii) is highest in countries which experience banking distress and are members of the euro area. These results are consistent with our theoretical model. (JEL codes: F33, F55 and E58)","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifaa017","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47848991","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}
Abstract We employ hourly electricity load data for Switzerland as a real-time indicator of the economic effects of the lockdown following the spread of SARS-CoV-2. Our findings reveal that following the drastic lockdown, overall electricity use decreased by 4.6%, with a reduction of even 14.3% in the Canton of Ticino where the number of confirmed cases per capita was one of the highest in Switzerland and also stricter measures such as closures of construction sites and industrial companies were implemented on top of federal regulations. Looking at working days only, we estimate a Swiss-wide decrease in electricity consumption of 7.4%. Assuming industry, services, transport, and agriculture account for 67% of electricity demand, the 4.6% decrease in electricity use implies an almost 7% output reduction in these sectors. In addition, the reduced electricity imports and the change in the generation mix of neighbouring countries, also translates into reduced CO2 emissions related to these imports. (JEL codes: C53, Q4, C3)
{"title":"Electricity Use as a Real-Time Indicator of the Economic Burden of the COVID-19-Related Lockdown: Evidence from Switzerland","authors":"Benedikt Janzen, Doina Radulescu","doi":"10.1093/cesifo/ifaa010","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa010","url":null,"abstract":"Abstract We employ hourly electricity load data for Switzerland as a real-time indicator of the economic effects of the lockdown following the spread of SARS-CoV-2. Our findings reveal that following the drastic lockdown, overall electricity use decreased by 4.6%, with a reduction of even 14.3% in the Canton of Ticino where the number of confirmed cases per capita was one of the highest in Switzerland and also stricter measures such as closures of construction sites and industrial companies were implemented on top of federal regulations. Looking at working days only, we estimate a Swiss-wide decrease in electricity consumption of 7.4%. Assuming industry, services, transport, and agriculture account for 67% of electricity demand, the 4.6% decrease in electricity use implies an almost 7% output reduction in these sectors. In addition, the reduced electricity imports and the change in the generation mix of neighbouring countries, also translates into reduced CO2 emissions related to these imports. (JEL codes: C53, Q4, C3)","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifaa010","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46038626","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}
Chunding Li, John Whalley, Chuantian He, Chuangwei Lin
The 2008 financial crisis did not precipitate global retaliatory trade intervention, in seeming contrast to the Great Depression in 1930s. This article discusses the influence of model structure in optimal tariff (OT) calculations in explaining this puzzle. We emphasize how earlier literature reports high OTs in numerical calculation (of a hundred percent) but only uses simple trade models. We use numerical general equilibrium (GE) calibration and simulation methodology to calculate OTs both with and without retaliation in a series of observationally equivalent models and explore the influence of model structures on OT levels. We gradually add more realistic features into the basic GE model, and show sharply declined OTs, which suggests that trade retaliation incentives effectively disappear with the deepening of globalization in 2008 compared to 1930. (JEL codes: F11, C63, F13).
{"title":"The 2008 Financial Crisis and the Lack of Retaliatory Trade Intervention","authors":"Chunding Li, John Whalley, Chuantian He, Chuangwei Lin","doi":"10.1093/cesifo/ifaa012","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa012","url":null,"abstract":"The 2008 financial crisis did not precipitate global retaliatory trade intervention, in seeming contrast to the Great Depression in 1930s. This article discusses the influence of model structure in optimal tariff (OT) calculations in explaining this puzzle. We emphasize how earlier literature reports high OTs in numerical calculation (of a hundred percent) but only uses simple trade models. We use numerical general equilibrium (GE) calibration and simulation methodology to calculate OTs both with and without retaliation in a series of observationally equivalent models and explore the influence of model structures on OT levels. We gradually add more realistic features into the basic GE model, and show sharply declined OTs, which suggests that trade retaliation incentives effectively disappear with the deepening of globalization in 2008 compared to 1930. (JEL codes: F11, C63, F13).","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"88 3","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138504593","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}
Eggertsson (2012, American Economic Review, 102, 524–55) finds that when the nominal interest rate hits the zero lower bound, the aggregate demand (AD) curve becomes upward-sloping and supply-side policies that reduce the natural rate of output, such as the New Deal implemented in the 1930s, are expansionary. His analysis is restricted to a conventional equilibrium where the AD curve is steeper than the aggregate supply (AS) curve. Recent research, however, demonstrates that an alternative equilibrium arises if the AD curve is flatter than the AS curve. In that case, the same policies become contractionary. In this article, I allow for both possibilities, and let data decide which equilibrium the US economy actually resided in during the Great Depression. Following the work of Blanchard and Quah (1989, American Economic Review, 79, 655–73), I find that there is a high probability that New Deal policies were contractionary. (JEL codes: E32, E52, E62, N12).
{"title":"The Effect of New Deal Policies Revisited","authors":"Yangyang Ji","doi":"10.1093/cesifo/ifaa008","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa008","url":null,"abstract":"\u0000 Eggertsson (2012, American Economic Review, 102, 524–55) finds that when the nominal interest rate hits the zero lower bound, the aggregate demand (AD) curve becomes upward-sloping and supply-side policies that reduce the natural rate of output, such as the New Deal implemented in the 1930s, are expansionary. His analysis is restricted to a conventional equilibrium where the AD curve is steeper than the aggregate supply (AS) curve. Recent research, however, demonstrates that an alternative equilibrium arises if the AD curve is flatter than the AS curve. In that case, the same policies become contractionary. In this article, I allow for both possibilities, and let data decide which equilibrium the US economy actually resided in during the Great Depression. Following the work of Blanchard and Quah (1989, American Economic Review, 79, 655–73), I find that there is a high probability that New Deal policies were contractionary. (JEL codes: E32, E52, E62, N12).","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":" ","pages":""},"PeriodicalIF":1.3,"publicationDate":"2020-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifaa008","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46998895","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":"Introduction to the Special Issue ‘New Perspectives on Tax Administration Research’1","authors":"Christos Kotsogiannis","doi":"10.1093/cesifo/ifaa009","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa009","url":null,"abstract":"","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"66 1","pages":"181-184"},"PeriodicalIF":1.3,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifaa009","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44266988","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 studies the role of cashless payments in third-party reporting for the purposes of value-added tax (VAT) compliance management. In economies with well-developed financial institutions, the traceability of digital payments could serve as a deterrent to sales suppression even in the absence of explicit policies utilizing electronic payments for tax enforcement. Using country-level data for the European Union, this article shows that a 1% increase in the value of payments made with cards to gross domestic product (GDP) improves VAT performance by 0.05A¢Â€Â“0.09%. This effect is found to be strongest in economies characterized by low level of trust in public institutions, and does not vary with the extent of third-party reported information used by tax administrations, or the presence of a large-scale VAT invoice matching system. The result is robust to a rich number of characteristics controlling for various aspects of VATA¢Â€Â™s design.
{"title":"Traceable Payments and VAT Design: Effects on VAT Performance","authors":"Boryana Madzharova","doi":"10.1093/cesifo/ifaa003","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa003","url":null,"abstract":"This article studies the role of cashless payments in third-party reporting for the purposes of value-added tax (VAT) compliance management. In economies with well-developed financial institutions, the traceability of digital payments could serve as a deterrent to sales suppression even in the absence of explicit policies utilizing electronic payments for tax enforcement. Using country-level data for the European Union, this article shows that a 1% increase in the value of payments made with cards to gross domestic product (GDP) improves VAT performance by 0.05A¢Â€Â“0.09%. This effect is found to be strongest in economies characterized by low level of trust in public institutions, and does not vary with the extent of third-party reported information used by tax administrations, or the presence of a large-scale VAT invoice matching system. The result is robust to a rich number of characteristics controlling for various aspects of VATA¢Â€Â™s design.","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"66 1","pages":"221-247"},"PeriodicalIF":1.3,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifaa003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45402918","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}
B. Erard, Patrick Langetieg, Mark Payne, Alan H. Plumley
The tax compliance literature is primarily focused on taxpayers who fail to accurately report their taxes when they file their returns. In this article, our focus is on A¢Â€Â˜ghostsA¢Â€Â™A¢Â€Â”individuals who do not even file a tax return. To learn more about this relatively understudied population, we examine a combination of US administrative data and matched Census survey data. Our results indicate that 10A¢Â€Â“12% of US households with a federal filing requirement fail to file a timely income tax return. Approximately 40% of such households do eventually file a late return. However, the tax gap associated with those who never file is substantial, amounting to an estimated $18A¢Â€Â“20 billion each year. To gain new insights into what drives individuals to become ghosts, we employ a novel econometric methodology (calibrated probit analysis). We find that the failure to file a timely return is negatively associated with age and income, but positively associated with having a high filing burden and being married. Taxpayers with income near the filing threshold are also less likely to file on time, particularly if they are not eligible for a refundable tax credit. We also find evidence of regional variation in filing compliance.
{"title":"Flying under the Radar: Ghosts and the Income Tax","authors":"B. Erard, Patrick Langetieg, Mark Payne, Alan H. Plumley","doi":"10.1093/cesifo/ifz021","DOIUrl":"https://doi.org/10.1093/cesifo/ifz021","url":null,"abstract":"The tax compliance literature is primarily focused on taxpayers who fail to accurately report their taxes when they file their returns. In this article, our focus is on A¢Â€Â˜ghostsA¢Â€Â™A¢Â€Â”individuals who do not even file a tax return. To learn more about this relatively understudied population, we examine a combination of US administrative data and matched Census survey data. Our results indicate that 10A¢Â€Â“12% of US households with a federal filing requirement fail to file a timely income tax return. Approximately 40% of such households do eventually file a late return. However, the tax gap associated with those who never file is substantial, amounting to an estimated $18A¢Â€Â“20 billion each year. To gain new insights into what drives individuals to become ghosts, we employ a novel econometric methodology (calibrated probit analysis). We find that the failure to file a timely return is negatively associated with age and income, but positively associated with having a high filing burden and being married. Taxpayers with income near the filing threshold are also less likely to file on time, particularly if they are not eligible for a refundable tax credit. We also find evidence of regional variation in filing compliance.","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"66 1","pages":"185-197"},"PeriodicalIF":1.3,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifz021","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44553220","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}
John W D’Attoma, Clara Volintiru, Antoine Malézieux
{"title":"Corrigendum to: Gender, Social Value Orientation, and Tax","authors":"John W D’Attoma, Clara Volintiru, Antoine Malézieux","doi":"10.1093/cesifo/ifaa007","DOIUrl":"https://doi.org/10.1093/cesifo/ifaa007","url":null,"abstract":"","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"66 1","pages":"301-301"},"PeriodicalIF":1.3,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifaa007","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49259303","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 aims to investigate the effect of tax amnesties on tax compliance decisions of taxpayers. In particular, we focused on Turkish taxpayers’ fairness perceptions and their voluntary tax compliance after the recent legislation of 6736, which is claimed to be the biggest tax amnesty (for example, tax debt restructuring legislation) in the last decade. This article also investigates the difference between tax amnesty benefiters and non-benefiters when it comes to their tax compliance and fairness perceptions. This article starts with a summary of the literature with a particular focus on Turkey. The research looks into the influence of the perception of tax amnesties on fairness and tax compliance of taxpayers while controlling for widely discussed factors that influence tax compliance such as risk awareness and government trust. The survey was conducted with 1028 participants and a structural model was constructed to test for the above-mentioned effects. We found fairness perception of the taxpayers is negatively affected by tax amnesties. Additionally, the findings showed that acceptance/approval of taxpayers on tax amnesty practice is effective on taxpayer compliance. Finally, only tax amnesty benefiters’ fairness perception is negatively influenced by tax amnesties while the effect is not significant on benefiters.
{"title":"Are Tax Amnesties Good for Us All? Understanding Influence of Tax Amnesties on Benefiters and Non-Benefiters","authors":"Recep Yücedoğru, Idris Sarisoy","doi":"10.1093/cesifo/ifz020","DOIUrl":"https://doi.org/10.1093/cesifo/ifz020","url":null,"abstract":"\u0000 This article aims to investigate the effect of tax amnesties on tax compliance decisions of taxpayers. In particular, we focused on Turkish taxpayers’ fairness perceptions and their voluntary tax compliance after the recent legislation of 6736, which is claimed to be the biggest tax amnesty (for example, tax debt restructuring legislation) in the last decade. This article also investigates the difference between tax amnesty benefiters and non-benefiters when it comes to their tax compliance and fairness perceptions. This article starts with a summary of the literature with a particular focus on Turkey. The research looks into the influence of the perception of tax amnesties on fairness and tax compliance of taxpayers while controlling for widely discussed factors that influence tax compliance such as risk awareness and government trust. The survey was conducted with 1028 participants and a structural model was constructed to test for the above-mentioned effects. We found fairness perception of the taxpayers is negatively affected by tax amnesties. Additionally, the findings showed that acceptance/approval of taxpayers on tax amnesty practice is effective on taxpayer compliance. Finally, only tax amnesty benefiters’ fairness perception is negatively influenced by tax amnesties while the effect is not significant on benefiters.","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"66 1","pages":"285-300"},"PeriodicalIF":1.3,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifz020","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49655956","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 use of payment cards in Greece more than tripled in value between 2014 and 2017. Their penetration lifted off with the imposition of capital controls in 2015 and then remained on an uptrend, aided further by the measures of law 4446/2016. According to the findings of the study: (i) the law had a statistically significant, positive impact on card usage, especially in the second half of 2017, controlling for the effects of macroeconomic factors and capital controls and (ii) the penetration of electronic payments had a significant positive impact on tax compliance. Nevertheless, the average level of card use in Greece has remained lower than the EU average, while it presents significant heterogeneity across sectors and geographical areas. In conclusion, more targeted measures are warranted in order to enhance further the penetration of electronic payments, which would yield even greater fiscal benefits.
{"title":"Penetration of Digital Payments in Greece after Capital Controls: Determinants and Impact on VAT Revenues","authors":"S. Danchev, Georgios Gatopoulos, Nikolaos Vettas","doi":"10.1093/cesifo/ifz019","DOIUrl":"https://doi.org/10.1093/cesifo/ifz019","url":null,"abstract":"The use of payment cards in Greece more than tripled in value between 2014 and 2017. Their penetration lifted off with the imposition of capital controls in 2015 and then remained on an uptrend, aided further by the measures of law 4446/2016. According to the findings of the study: (i) the law had a statistically significant, positive impact on card usage, especially in the second half of 2017, controlling for the effects of macroeconomic factors and capital controls and (ii) the penetration of electronic payments had a significant positive impact on tax compliance. Nevertheless, the average level of card use in Greece has remained lower than the EU average, while it presents significant heterogeneity across sectors and geographical areas. In conclusion, more targeted measures are warranted in order to enhance further the penetration of electronic payments, which would yield even greater fiscal benefits.","PeriodicalId":51748,"journal":{"name":"Cesifo Economic Studies","volume":"66 1","pages":"198-220"},"PeriodicalIF":1.3,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1093/cesifo/ifz019","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49004457","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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