Fiscal Policy and External Adjustment: New Evidence

Relatively little empirical evidence exists about countries’ external adjustment to changes in fiscal policy and, in particular, to changes in taxes. This paper addresses this question by measuring the effects of tax and government spending shocks on the current account and the real exchange rate in a sample of four industrialized countries. Our analysis is based on a structural vector autoregression in which the interaction of fiscal variables and macroeconomic aggregates is left unrestricted. Identification is instead achieved by exploiting the heteroscedasticity of the structural disturbances. Three main findings emerge: (i) the data provide little support for the twin-deficit hypothesis, (ii) the estimated effects of unexpected tax cuts are generally inconsistent with the predictions of standard economic models, except for the US, and (iii) the puzzling real depreciation triggered by an expansionary public spending shock is substantially larger in magnitude than predicted by traditional identification approaches.Government spending, current account, exchange rate, taxes, structural vector auto-regression, twin deficits

Measuring the Effects of Fiscal Policy

Measuring the effects of discretionary fiscal policy is both difficult and controversial, as some explicit or implicit identifying assumptions need to be made to isolate exogenous and unanticipated changes in taxes and government spending. Studies based on structural vector autoregressions typically achieve identification by restricting the contemporaneous interaction of fiscal and non-fiscal variables in a rather arbitrary way. In this paper, we relax those restrictions and identify fiscal policy shocks by exploiting the conditional heteroscedasticity of the structural disturbances. We use this methodology to evaluate the macroeconomic effects of fiscal policy shocks in the U.S. before and after 1979. Our results show substantive differences in the economy’s response to government spending and tax shocks across the two periods. Importantly, we find that increases in public spending are, in general, more effective than tax cuts in stimulating economic activity. A key contribution of this study is to provide a formal test of the identifying restrictions commonly used in the literature.Fiscal policy, Government spending, Taxes, Primary deficit, Structural vector auto-regression, Identification

Optimizing Landfill Capacity: A Numerical Study of the Slope Inclination Variation Impact on Landfill Storage Capacity and Its influence on the Safety Factors under Different Models

As an attempt to enhance landfill capacity and extend its lifespan, this research explores the effect of slope inclination on landfill storage capacity and its implementation on the safety factors using numerical simulations. A geometric approach was used to determine the capacity change with inclination, and a new probabilistic calculation method, which accounts for the heterogeneity of waste layers, was employed to analyze the safety factor for different slope angles. Over 100 conducted calculations for each inclination were used to investigate the effect of slope variation on landfill safety. The results show that increasing inclination leads to a significant increase in landfill capacity. The safety factor results indicate that the conventional method, assuming homogenous waste, classifies 1:3 and 1:2 slopes as safe, while the new suggested method showed that a 2:3 inclination could be considered safe, especially since the calculation is not considering the safety-enhancing effect of daily cover layers. This study highlights the importance of considering the heterogeneity of waste layers in safety factor analysis, and the use of multi-layered nonhomogeneous calculation method, which provides more flexibility in design parameters. This research presents a significant step forward in constructing safe and cost-effective landfills. The use of a new probabilistic calculation method in designing landfills leads to more accurate and reliable results while maintaining safety standards. This research has important implications for the design and management of landfills and can be used as a guide for future studies in this field.

Do board characteristics affect the financial soundness of Islamic banks

AbstractThis paper was conducted to analyze the impact of the Board of Directors’ characteristics on the financial soundness of Islamic banking, using panel data regression. Composed of 67 Islamic banks over 2015-2018 period. The level of Islamic bank soundness is individually employing the Z-score measure Overall, the results of this study indicate that the soundness of Islamic banks is not adversely affected by the appointment of the independent non-executive director and the institutional director. However, the foreign director and the femal director have a positive impact on the financial soundness of banks. While, the Board of Directors’ size does not have any significant effect on the financial soundness of Islamic banks. With this study, we hope to provide new insights to the literature review andidentify the relationship between the Board of Directors and the financial soundness of Islamic banking. It has been recommended to increase the level of female presence and the foreignon the Board of Directors of Islamic banks. KeywordsBoard of Directors, Corporate Governance, Financial soundness, Gender diversity, Islamic Banking, Shariah compliance

Measuring the Effects of Fiscal Policy

Measuring the effects of discretionary fiscal policy is both difficult and controversial, as some explicit or implicit identifying assumptions need to be made to isolate exogenous and unanticipated changes in taxes and government spending. Studies based on structural vector autoregressions typically achieve identification by restricting the contemporaneous interaction of fiscal and non-fiscal variables in a rather arbitrary way. In this paper, we relax those restrictions and identify fiscal policy shocks by exploiting the conditional heteroscedasticity of the structural disturbances. We use this methodology to evaluate the macroeconomic effects of fiscal policy shocks in the U.S. before and after 1979. Our results show substantive differences in the economy’s response to government spending and tax shocks across the two periods. Importantly, we find that increases in public spending are, in general, more effective than tax cuts in stimulating economic activity. A key contribution of this study is to provide a formal test of the identifying restrictions commonly used in the literature

Contribution à l'étude de la qualité de l'audit légal : évaluation de la pertinence des spécificités réglementaires françaises

In 2003, the promulgation of the financial security act (LSF) has changed the institutional architecture and audit practice in France. Through the addition of new rules imposed by this act to the persistent specificities since 1966 as the joint audit and tenure of six years, the audit market shows unique. This research examines the impact of this regulatory merger on the quality and the cost of the audit in France. Based on a sample composed by 888 observations of the SBF 250 over the 2005-2010, we found the contribution of rotation audit partners in restricting managerial discretion. Besides its advantage in promoting audit quality, this device supports the negotiation of lower audit fees. We also emphasized the evolution in the parabolic form of the discretionary accruals over tenure. Indeed, the audit quality is lower during the first and last phase of the engagement. This assumption refers to strengthening the skills over time and erosion of critical appraisal at the end of audit tenure. The shift from regulatory fusion helps to maintain the level of high quality on the French market. The combination of the two teams with different listener-audited tenures is a constraint to managerial discretion. However, this shift should not be excessive to limit the oldest’ domination. This drawback of the system of joint audits is limited in the French market. Our results confirm its effectiveness, mainly in the case of two Big 4.La promulgation de la loi de la sécurité financière (LSF) en 2003 a modifié l’architecture institutionnelle et la pratique d’audit en France. Au travers l’adjonction de nouvelles règles imposées par cette loi aux spécificités persistantes depuis 1966 comme le co-commissariat aux comptes et la durée du mandat de six ans, le marché d’audit se montre unique. Cette recherche examine l’impact de cette fusion réglementaire sur la qualité et le coût de l’audit en France. En se basant sur un échantillon composé par 888 observations du SBF 250 sur la période 2005-2010, nous avons révélé l’apport de la rotation des équipes signataires dans la restriction de la discrétion managériale. Outre son avantage dans la promotion de la qualité de l’audit, ce dispositif favorise la négociation à la baisse des honoraires d’audit. Nous avons aussi souligné l’évolution sous forme parabolique de la composante discrétionnaire sur la durée de mandat. En effet, la qualité de l’audit est inférieure pendant la première et la dernière phase de l’engagement. Ce postulat renvoie au renforcement de la compétence dans le temps et l’érosion de l’esprit critique à la fin du mandat. Le décalage, issu de la fusion réglementaire, favorise le maintien du niveau de la qualité élevé sur le marché français. L’association des deux équipes avec des durées auditeur-audité différentes est une contrainte à la discrétion managériale. Toutefois, ce décalage ne doit pas être excessif pour limiter la domination du plus ancien. Cet inconvénient du régime du co-commissariat aux comptes s’est trouvé limité sur le marché français. Nos résultats confirment son efficacité, essentiellement dans le cas d’un collège composé par deux Big 4