Regional update

Economic indicators ; Labor market ; Louisiana ; New Mexico ; Texas

Beyond the border : Europe - risk and reward under monetary unification

European Central Bank ; European currency unit ; European Monetary System (Organization) ; Unemployment - Europe

Fuel Tax Incidence and Supply Conditions

In this paper, we provide new evidence regarding the pass-through of diesel and gasoline taxes to prices, and how the estimated pass-through depends on a variety of supply conditions including a measure of state residual supply elasticity, and refinery and inventory constraints. In addition, we estimate the response of tax incidence to gasoline content regulations, which complicate the supply chain by increasing product heterogeneity. We find that state gasoline and diesel taxes are on average fully passed on to consumers. We also find that the pass-through of diesel taxes is greater in settings where untaxed uses of diesel are more important, which corresponds to times when residual supply is more elastic. We find that only half of the state diesel tax is passed on to consumers when U.S. refinery capacity utilization is above 95 percent. Gasoline taxes, on the other hand, are fully passed through regardless of season or capacity utilization, indicating that a gas tax holiday would provide price relief to consumers. We find that regional gasoline content regulations affect pass-through--we estimate tax pass-through is 22 percentage points lower in a state using two blends of gasoline than a state using one blend of gasoline.

Should We Broaden the Fuel Tax Base?

Currently, the rules of fuel taxation in the U.S., like the U.S. tax code more generally, is complex and riddled with inconsistencies. The tax rate applied to carbon-based fuels varies widely depending on the type of fuel, purpose of consumption, and identity of the user. These inconsistencies only invite tax evasion and result in fuel tax revenues that fall short of even covering the costs associated with fuel consumption. Not simply for the sake of environmental policy, but as a matter of deficit reduction, the tax reform concept of base broadening can and should be applied to fuel taxation. Taxing carbon-based fuels more consistently will lead to increased revenues without raising the tax rate. The resultant gain in tax revenue could be as high as $28 billion per year at current levels of fuel consumption.https://repository.upenn.edu/pennwhartonppi/1010/thumbnail.jp

Why Did Firms Practice Segregation? Evidence from Movie Theaters during Jim Crow

Racial segregation by businesses during Jim Crow was often voluntary and practiced without a legal mandate. Voluntary segregation can be driven by profit-motivated business owners catering to racist white customers or discrimination by business owners. We assess the relative importance of customers’ and firms’ discrimination by examining the 1953 desegregation of Washington, DC, movie theaters, which occurred rapidly because of a Supreme Court ruling affecting only businesses in Washington. Using weekly data for a nationwide sample of theaters, we find that revenues of Washington theaters fell relative to other theaters, consistent with reduced demand from biased white customers. We use a test for firms’ discrimination based on a model of the screening decision for films with black actors cast in prominent roles. We cannot reject that the run length of these films was profit motivated. Together, our results point toward customer discrimination as a primary cause of public accommodation segregation

Fuel Tax Incidence and Supply Conditions

The incidence of taxes on consumers and producers plays a central role in evaluating energy tax policy, yet the literature testing the main predictions of the tax incidence model is sparse. In this paper, we examine the pass-through rate of state gasoline and diesel taxes to retail prices, and importantly we estimate the dependence of pass-through on factors constraining the gasoline and diesel supply chains. We consider several factors that alter the elasticity of supply, including within state heterogeneity in gasoline content requirements, refinery capacity utilization, inventory constraints, and variation in the demand for untaxed uses of diesel. In general, we find that in periods of time when the supply chain is constrained, and the constraint is plausibly unrelated to shifts in demand, the pass-through rate of fuel taxes declines. We describe several potential implications for tax policy, including tax breaks during peak driving season and during times of supply disruptions such as after major hurricanes.

Can we Agree? On the Rash\=omon Effect and the Reliability of Post-Hoc Explainable AI

The Rash\=omon effect poses challenges for deriving reliable knowledge from machine learning models. This study examined the influence of sample size on explanations from models in a Rash\=omon set using SHAP. Experiments on 5 public datasets showed that explanations gradually converged as the sample size increased. Explanations from <128 samples exhibited high variability, limiting reliable knowledge extraction. However, agreement between models improved with more data, allowing for consensus. Bagging ensembles often had higher agreement. The results provide guidance on sufficient data to trust explanations. Variability at low samples suggests that conclusions may be unreliable without validation. Further work is needed with more model types, data domains, and explanation methods. Testing convergence in neural networks and with model-specific explanation methods would be impactful. The approaches explored here point towards principled techniques for eliciting knowledge from ambiguous models.Comment: 13 pages, 6 figures and 6 table