Applying tax policy models in country economic work : Bangladesh, China, and India

General principles can guide the design of the overall contours of a tax reform package to a considerable extent. This paper reports on the use of three tax policy models to analyze issues in the course of undertaking economic work with the regional departments in the World Bank's Operational Complex. The first model, that for Bangladesh, is used to demonstrate how the relative attractiveness of different revenue-raising options depends sensitively on the workings of labor markets and substitution relationships in production. The second model, that for China, emphasizes the importance of taking a system-wide view of taxation in a decentralizing socialist economy, where the coexistence of administered and free market prices for the same commodities can make standard tax reform prescriptions most inappropriate. The third model, that for India, examines the kinds of domestic tax adjustment that would be necessary in the wake of reductions in import tariffs in order to allow the government to continue to meet its real expenditures wihout any change in foreign borrowing, but taking into account changes in the prices of intermediates and capital goods resulting from tariff reform. The paper also discusses the costs involved in constructing and implementing tax policy models and summarizes the principal finding of the paper.Environmental Economics&Policies,Public Sector Economics&Finance,Economic Theory&Research,Banks&Banking Reform,Municipal Financial Management

Increasing inequality in transition economies : is there more to come?

This paper decomposes changes in inequality, which has in general been increasing in the transition economies of Eastern Europe and the former Soviet Union, both by income source and socio-economic group, with a view to understanding the determinants of inequality and assessing how it might evolve in the future. The empirical analysis relies on a set of inequality statistics that, unlike"official data", are consistent and comparable across countries and are based on primary records from household surveys recently put together for the World Bank study"Growth, Poverty and Inequality in Eastern Europe and the Former Soviet Union: 1998-2003"[World Bank (2005b)]. The increase in inequality in transition, as predicted by a number of theoretical models, in practice differed substantially across countries, with the size and speed of its evolution depending on the relative importance of its key determinants, viz., changes in the wage distribution, employment, entrepreneurial incomes and social safety nets. Its evolution was also influenced by policy. This diversity of outcomes is exemplified on the one hand for Central Europe by Poland, where the increase in inequality has been steady but gradual and reflects, inter alia, larger changes in employment and compensating adjustments in social safety nets and, on the other for the Commonwealth of Independent States by Russia, where an explosive overshooting of inequality peaked in the mid-1990s before being moderated through the extinguishing of wage arrears during its post-1998 recovery. The paper argues that the process of transition to a market economy is not complete and that further evolution of inequality will depend both on (i) transition-related factors, such as the evolution of the education premium, a bias in the investment climate against new private sector firms which are important vehicles of job creation and regional impediments to mobility of goods and labor, as well as increasingly (ii) other factors, such as technological change and globalization. The paper also contrasts key features of inequality in Russia in the context of other transition economies with trends in inequality observed in China where rapid economic growth has been accompanied by a steep increase in inequality. It argues that the latter's experience is, to a large extent, a developmental, rather than a transition-related phenomenonderiving from the rural-urban divide and is, therefore, of limited relevance for predicting changes in inequality in Russia.Poverty Impact Evaluation,Inequality,Services&Transfers to Poor,Economic Theory&Research,Equity and Development

The coordinated reform of tariffs and domestic indirect taxes

Tariffs on imports protect domestic producers and raise public revenue. The World Development Report 1987 finds that effective rates of protection to manufacturing in developing countries typically exceed 40 percent; while the World Development Report 1988 estimates that the importance of import taxes in tax revenue is over 20 percent in Asia, sub-Saharan Africa and in the Middle East and North Africa, compared to 2 percent in the industrial countries. These figures clearly show that tariff reform, which is intended to reduce anti-export bias and promote an outward-oriented development strategy, can be viable only if alternative and administratively collectible sources of revenue can be found to offset potential revenue losses. The tradeoff between liberalization and fiscal imperatives is thus frequently central to tariff reform. This paper argues that tariff reform must be seen as part of a broader program of tax reform. The need to adopt such a public finance perspective is argued with reference to selective reviews of country experience with trade liberalization and tax reform, protection and revenue objectives in developing countries and the instruments available to further those policy goals.Environmental Economics&Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Public Sector Economics&Finance,Trade and Regional Integration

Trade liberalization, fiscal adjustment, and exchange rate policy in India

The authors investigate the impact of India's program of economic stabilization and trade liberalization launched in 1991, a year when the country was in the throes of a foreign exchange crisis. The authors address a key policy tradeoff between trade liberalization and fiscal adjustment arising from India's heavy dependence on tariffs for public revenues. They give quantitative expression to how trade liberalization should be coordinated both with fiscal adjustment - that is, a combination of trade-neutral tax increases and expenditure reduction and with a policy of exchange rate changes to restore both internal and external equilibrium. This paper asks: What is the impact of a reduction in the fiscal deficit characteristic of stabilization programs on tax and expenditure levels, on the real exchange rate, and the current account deficit? What is the effect of a significant trade liberalization without additional external financing on macroeconomic variables such as the required degree of fiscal adjustment and change in the real exchange rate, and, at a more disaggregated level, on output levels in different export-oriented and import-substituting sectors of the economy? What would the impact of such trade liberalization look like should substantive external financing become available without the need for domestic fiscal adjustment? The questions are explored using a general equilibrium model of the Indian economy that focuses on the consequences of trade policy reform. Policymakers are, however, also interested in how various import-substituting industries would be adversely affected by trade liberalization and how particular export-oriented industries would gain from it. These objectives are reconciled by the innovative expedient of implementing two models on a common data base: 1) a disaggregated 72-sector (price sensitive) input-output version that makes simplified assumptions regarding certain economywide relationships; and 2) an aggregated 6-sector version that pays attention to those relationships and can suggest what corrections ought to be made to the results of the sectorally disaggregated analysis. The policy questions were answered for the eve of the 1991 economic reform program launched by India's policymakers. Developments in the principal macroeconomic aggregates in the first two years of the liberalization process were then compared with the outcomes of the model and generally found to correspond closely. This finding encouraged an updating of the model for fiscal 1992-93 and its deployment to analyze the consequences of a set of further economic reforms for subsequent years. The authors conclude by suggesting that the approach developed for this paper could provide broad indications of the economywide and sectoral consequences of pursuing the unfinished agenda of reforms facing policymakers not only in India but in other developing countries as well.Payment Systems&Infrastructure,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Consumption,EnvironmentalEconomics&Policies,Economic Theory&Research,Economic Stabilization,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Consumption

Tax systems in transition

How have tax systems, whose primary role is to raise resources to finance public expenditures, evolved in the transition countries of Eastern Europe and the former Soviet Union? The authors find that: (1) the ratio of tax revenue-to-GDP decreased largely due to a fall in revenue from corporate income tax; (2) the fall in revenue from the corporate income tax led to a decline in the importance of income taxes, notwithstanding a rise in the share of individual income tax; (3) social security contributions together with payroll taxes became less important in the Commonwealth of Independent States; and (4) domestic indirect taxes gained in importancein overall tax revenues. Apart from the increased role of personal income taxation, these developments go in a direction opposite to those observed in poor countries as they get richer. They show a key aspect of transition, namely a movement from a system where the government exercised a preeminent claim on output and income before citizens had access to the remainder, to one with a greatly diminished role for the public sector, as reflected in a lower ratio of public expenditure to GDP, where the government needs to collect revenue in order to spend. Can expected levels of public expenditure be financed by the basic instruments of a modern tax system without creating significant distortions in the private sector? The authors suggest that transition countries, depending on their stage of development, should aim for a tax revenue-to-GDP ratio in the range of 22 to 31 percent, comprising value-added tax (6 to 7 percent), excises (2 to 3 percent), income tax (6 to 9 percent), social security contribution together with payroll tax (6 to 10 percent), and other taxes such as on trade and on property (2 percent). The authors'analysis also sheds light on the links between tax policy, tax administration, and the investment climate in transition countries.Municipal Financial Management,Environmental Economics&Policies,Banks&Banking Reform,Public Sector Economics&Finance,Economic Theory&Research,Environmental Economics&Policies,Public Sector Economics&Finance,Economic Theory&Research,Banks&Banking Reform,Municipal Financial Management

Convergence in Institutions and Market Outcomes: Cross-Country and Time-Series Evidence from the BEEPS Surveys in Transition Economies

This paper uses the BEEPS firm-level data to study the process of convergence of transition countries with developed market economies. The primary focus of the study is on competition and market structure, finance and the structure of lending to firms, and how firms respond to the economic environment by restructuring; we are able to do this because the BEEPS cover thousands of firms from virtually all transition countries over a long time period (1996-99 through 2002-05), as well firms from developed market economies, thus providing a set of natural benchmarks. We find substantial evidence of convergence of transition countries with developed market economies in a number of dimensions. The pattern of growth at the country, sectoral and firm level shows rapid growth of the new private sector and of the micro- and small-firm sectors, with the size distribution of firms moving towards the pattern observed in the BEEPS surveys of developed market economies. Our interpretation of the evidence on competition is that there is an initial move by firms into niches to exploit local market power, and later in transition entry and domestic competitive pressure increases. In finance, the increasing reliance on retained earnings in transition countries reflects a maturation of the sector as new firms come to rely less on informal and family sources of finance. The scale of restructuring and innovation activity is as high or higher in transition economies as in developed market economies. Interestingly, we find evidence of an inverse-U shape pattern, with the peak of restructuring activity taking place in 2002, the middle of the period analyzed. Throughout, the regional patterns suggest greater convergence in the transition countries that joined the European Union in 2004 than in the other, lower-income transition economies.transition, convergence, market structure, competition, enterprise finance, enterprise restructuring

Neural Decoder for Topological Codes using Pseudo-Inverse of Parity Check Matrix

Recent developments in the field of deep learning have motivated many researchers to apply these methods to problems in quantum information. Torlai and Melko first proposed a decoder for surface codes based on neural networks. Since then, many other researchers have applied neural networks to study a variety of problems in the context of decoding. An important development in this regard was due to Varsamopoulos et al. who proposed a two-step decoder using neural networks. Subsequent work of Maskara et al. used the same concept for decoding for various noise models. We propose a similar two-step neural decoder using inverse parity-check matrix for topological color codes. We show that it outperforms the state-of-the-art performance of non-neural decoders for independent Pauli errors noise model on a 2D hexagonal color code. Our final decoder is independent of the noise model and achieves a threshold of $10 \%$. Our result is comparable to the recent work on neural decoder for quantum error correction by Maskara et al.. It appears that our decoder has significant advantages with respect to training cost and complexity of the network for higher lengths when compared to that of Maskara et al.. Our proposed method can also be extended to arbitrary dimension and other stabilizer codes.Comment: 12 pages, 12 figures, 2 tables, submitted to the 2019 IEEE International Symposium on Information Theor

Simple and Effective Multi-Paragraph Reading Comprehension

We consider the problem of adapting neural paragraph-level question answering models to the case where entire documents are given as input. Our proposed solution trains models to produce well calibrated confidence scores for their results on individual paragraphs. We sample multiple paragraphs from the documents during training, and use a shared-normalization training objective that encourages the model to produce globally correct output. We combine this method with a state-of-the-art pipeline for training models on document QA data. Experiments demonstrate strong performance on several document QA datasets. Overall, we are able to achieve a score of 71.3 F1 on the web portion of TriviaQA, a large improvement from the 56.7 F1 of the previous best system.Comment: 11 pages, updated a referenc

Managing paediatric Graves’ disease

Graves’ disease is the most common cause of hyperthyroidism in children. Anti-thyroid drug treatment with carbimazole or its active metabolite methimazole is offered as first line initial treatment but it induces remission in only 30%of children. Propylthiouracil is not recommended in children because of its association with severe hepatic toxicity. For those who relapse after ATD, radioactive iodine can be offered as definitive therapy except in cases with severe Graves’ ophthalmopathy or patients with large goitre who are the candidates for surgery. Total (or near total) thyroidectomy  is the surgical procedure of choice for treating paediatric patients with  Graves’ disease as it reduces the risk of recurrent hyperthyroidism which was seen in patients undergoing subtotal or partial thyroidectomy