LES EXTERNALITES DE CONNAISSANCES LOCALISEES – ASPETS THEORIQUES ET EMPIRIQUES

A partir du concept des externalités de connaissances, l'article revoit la littérature qui explore le phénomène à la fois dans son contexte théorique et dans sa dimension empirique. La partie théorique met en avant des hypothèses selon lesquelles les retombées entrainent des effets d'agglomération, accroissent la productivité régionale et encouragent les comportements innovateurs. Les hypothèses dérivées théoriquement sont étayées par des arguments empiriques, en exposant les limites que celles-ci présentent.externalités de connaissances, proximité géographique, croissance économique régionale

Progressive Tax Reforms in Flat Tax Countries

The adoption of flat tax systems in Central and Eastern European countries have often been supported by arguments of simplicity, higher compliance and lower distortionary effects. However, since income inequality is high in these countries, the question of introducing some progressivity has come to the fore in both policy and academic circles. In this paper, we combine microsimulation and macro models to analyze the effects of moving from a flat to a progressive tax system and we find that a reduction in income inequality can be achieved with positive, albeit negligible, employment and growth impact

Dynamic scoring of tax reforms in the European Union

In this paper, we present the first dynamic scoring exercise linking a multicountry microsimulation and DSGE models for all countries of the European Union. We illustrate our novel methodology analysing a hypothetical tax reform for Belgium. We then evaluate real tax reforms in Italy and Poland. Our approach takes into account the feedback effects resulting from adjustments in the labor market and the economywide reaction to the tax policy changes. Our results suggest that accounting for the behavioral reaction and macroeconomic feedback to tax policy changes enriches the tax reforms' analysis, by increasing the accuracy of the direct fiscal and distributional impact assessment provided by the microsimulation model for the tax reforms considered. Our results are in line with previous dynamic scoring exercises, showing that most tax reforms entail relatively smaller feedback effects in terms of the labor tax revenues for tax cuts benefiting workers, compared with the ones granted to firms

Climate policy design, competitiveness and income distribution: A macro-micro assessment for 11 EU countries

Concerns about industry competitiveness and distributional impacts can deter ambitious climate policies. Typically, these issues are studied separately, without giving much attention to the interaction between the two. Here, we explore how carbon leakage reduction measures affect distributional outcomes across households within 11 European countries by combining an economy-wide computable general equilibrium model with a household-level microsimulation model. Quantitative simulations indicate that a free allocation of emission permits to safeguard the competitive position of energy-intensive trade-exposed industries leads to impacts that are slightly more regressive than under full auctioning. We identify three channels that contribute to this effect: higher capital and labour income; lower tax revenue for compensating low-income households; and stronger consumption price increases following from higher carbon prices needed to reach the same emissions target. While these findings suggest a competitiveness-equity trade-off, the results also show that redistributing the revenues from partial permit auctioning on an equal-per-household basis still ensures that climate policy is progressive, indicating that there is room for policy to reconcile competitiveness and equity concerns. Finally, we illustrate that indexing social benefits to consumer price changes mitigates pre-revenue-recycling impact regressivity, but is insufficient to compensate vulnerable households in the absence of other complementary measures

Beyond averages - Fairness in an economy that works for people

Growing disparities on multiple socio-economic dimensions have contributed to a sense of unfairness and discontent in Europe. Fairness is a subjective phenomenon, but the far-reaching consequences of perceptions of unfairness warrant a closer look at its drivers and underlying dynamics. The report, written before the outbreak of the COVID-19 pandemic, analyses some of the most pertinent dimensions of fairness in relation to the agenda for a fair, inclusive and social European Union. Income inequality, educational inequality and the challenges facing existing welfare state arrangements are discussed from a pre-crisis perspective. Thus, the report gives a snapshot of the state of fairness in Europe before the COVID-19 outbreak and provides a benchmark against which some of the consequences of the current situation can be evaluated.JRC.I.1-Monitoring, Indicators & Impact Evaluatio

Les Externalites de Connaissances Localisees – Aspets Theoriques et Empiriques

A partir du concept des externalités de connaissances, l'article revoit la littérature qui explore le phénomène à la fois dans son contexte théorique et dans sa dimension empirique. La partie théorique met en avant des hypothèses selon lesquelles les retombées entrainent des effets d'agglomération, accroissent la productivité régionale et encouragent les comportements innovateurs. Les hypothèses dérivées théoriquement sont étayées par des arguments empiriques, en exposant les limites que celles-ci présentent

Measuring the Uncertainty in Predicting Public Revenue

This paper provides an assessment of the uncertainty surrounding revenue predictions, through an ex post analysis of European Commission’s forecasts over the last 15 years. It estimates the forecast errors affecting revenue for all 28 Member States, using the different vintages of the autumn and spring Commission forecasts. It analyses both the direction and magnitude of errors, using standard summary statistics. The paper looks into the various components of forecast errors to better understand their drivers (forecasting error related to real GDP, inflation or revenue-to-GDP ratio) and which types of revenues (direct tax, indirect tax or social security contributions) are particularly affected. The paper also examines the pattern of revenue errors over time and in particular how revenue forecasts perform before, during and after the crisis. To further deepen the analysis, a set of tests are carried out on the quality of the prediction (serial correlation, unbiasedness, weak and informational efficiency). The estimator-based tests confirm the sound track record of the European Commission’s forecasts. This is also shown by a comparison with the OECD’s revenue forecasts. Lastly, the paper reviews various possible determinants of forecast errors and examines their significance by means of a pooled time series technique. The econometric study allows for the identification of factors which increase or reduce the risk of over-forecasting revenue.JRC.B.2-Fiscal Policy Analysi

Progressive Tax Reforms in Flat Tax Countries

The adoption of flat tax systems in Central and Eastern European countries have often been supported by arguments of simplicity, higher compliance and lower distortionary effects. However, since income inequality is high in these countries, the question of introducing some progressivity has come to the fore in both policy and academic circles. In this paper, we combine microsimulation and macro models to analyze the effects of moving from a flat to a progressive tax system and we find that a reduction in income inequality can be achieved with positive, albeit negligible, employment and growth impact.JRC.B.2-Fiscal Policy Analysi

Progressive tax reforms in flat tax countries

Much of the literature on flat tax reforms has highlighted the benefits of introducing flat personal income tax systems in transition economies. The advocated benefits of flat tax systems range from their simplicity, higher compliance and lower distortionary effects on growth and employment. These arguments have often been cited to support policy recommendations favouring the adoption of flat tax systems in Central and Eastern European (CEE) countries in the 1990s and the 2000s. However since income inequality is notoriously high in these countries, the question of introducing some progressivity in the tax system has come to the fore in both policy and academic circles. In this paper, we analyse the fiscal, redistributive and macroeconomic impact of (re-)introducing progressivity in a number of CEE countries with flat tax systems. Combining microsimulation and macro models, we find that a significant reduction in income inequality can be achieved by moving from a flat to a progressive tax system with positive, albeit negligible, macroeconomic and employment impact. The magnitude of these effects depends on country-specificities and tax system characteristics, due in particular to the existence of tax allowances and tax credits