The Political Economy of Reforms: Empirical Evidence from Post-Communist Transition in the 1990s

Using a novel data set from post-communist countries in the 1990s, this paper examines the link-ages between political constraints, economic reforms and growth. Results from a dynamic panel analysis suggest that public support for reform is negatively associated with increases in income inequality and unemployment. In addition, both ex post and ex ante political constraints referring to the extent of public support affect progress in economic reforms, which in turn determines eco-nomic growth. These findings highlight that while economic reforms are needed to foster growth, they must be designed in such a way that they do not undermine political support for reform.political constraints, economic reform, transition, growth, dynamic panel models

FIRMS AND PUBLIC SERVICE PROVISION IN RUSSIA

This paper reports first results from a survey of 404 middle-sized and large manufacturing firms from 40 Russian regions in April-June 2003. We examine the extent of social service and infrastructure provision by the firms and the firms’ assessment of the quality of public infrastructure and the regulatory environment. Background information of ownership, investment, performance, competition, and finance decisions of the firms is also gathered. The data reveal that despite major divestments of social services during 1990s, a great majority of firms still provide at least some form of social services. For example, 56% of the firms have their own housing or support local housing, and 73% of the firms have recreation facilities or support employee’s recreation activities. While managers view the social service provision as non-essential and costly, many of the firms continue to provide these services, even to users other than their own workforce. The quality of public infrastructure is generally assessed as being good or satisfactory; the respondents were the least satisfied with the quality of roads. Over a half of the firms provide their own heat, but mainly due to technological reasons – although public service interruptions do occur – and 24% of the firms give support to the maintenance and construction of public road network. The regulatory burden the firms face continues to be severe. In more than half of the firms, for example, the general manager has to spend more than two weeks in negotiations about public infrastructure with the authorities. These descriptive results indicate that there is still a lot scope for improvement in the quality and quantity of public service provision in Russia. Enterprises are still engaged rather heavily in social service provision, road network would require improvements, and the easing of regulatory burden should continue. Addressing these questions is likely to be vital for the sustainability of investments and growth in Russia.

Interleukin-18 alters protein expressions of neurodegenerative diseases-linked proteins in human SH-SY5Y neuron-like cells

Peer reviewe

Moral Hazard, Income Taxation, and Prospect Theory

WP 2004-04 April 2004JEL Classification Codes: D81; H21The standard theory of optimal income taxation under uncertainty has been developed under the assumption that individuals maximize expected utility. However, prospect theory has now been established as an alternative model of individual behavior, with empirical support. This paper explores the theory of optimal income taxation under uncertainty when individuals behave according to the tenets of prospect theory. It is seen that many of the standard results are either overturned, or modified in interesting ways. The validity of the First Order Approach requires new conditions that are developed in the paper. And when these conditions are valid, it is shown that optimal marginal tax rates on low incomes will tend to be lower under prospect theory than under expected utility theory

Poverty and Welfare Measurement on the Basis of Prospect Theory

WP 2013-07 January 2013JEL Classification Codes: I32; O12This study has been prepared within the UNU-WIDER project on 'New Approaches to Measuring Poverty and Vulnerability', directed by Jukka Pirttilä and Markus Jäntti. This paper is reproduced here by permission of UNU-WIDER, who commissioned the original research and holds copyright thereon. UNU-WIDER gratefully acknowledges the financial contributions to the research programme from the governments of Denmark, Finland, Sweden, and the United Kingdom

How should commodities be taxed? : A counter-argument to the recommendation in the Mirrlees Review

The Mirrlees Review recommends that commodity taxation should in general be uniform, but with some goods consumed in conjunction with labour supply (such as child care) left untaxed. This article examines the validity of this claim in an optimal income tax framework. Contrary to the recommendation of the review, our theoretical results imply that even if all goods other than the good needed for working are separable from leisure, the optimal tax on these goods should not be uniform. Instead, commodity taxes should discourage consumption of goods with large expenditure elasticities. Our results imply that the optimal commodity tax system is dependent on the expenditure side of the government. For instance, if the government fully subsidizes the cost of the good needed for working, then commodity taxation is uniform under the standard separability assumption. Calibration exercises suggest that these results can be quantitatively important

MORAL HAZARD, INCOME TAXATION, AND PROSPECT THEORY

The standard theory of optimal income taxation under uncertainty has been developed under the assumption that individuals maximize expected utility. However, prospect theory has now been established as an alternative model of individual behaviour, with empirical support. This paper explores the theory of optimal income taxation under uncertainty when individuals behave according to the tenets of prospect theory. It is seen that many of the standard results are either overturned, or modified in interesting ways. The validity of the First Order Approach requires new conditions that are developed in the paper. And when these conditions are valid, it is shown that optimal marginal tax rates on low incomes will tend to be lower under prospect theory than under expected utility theory