When does International Capital Mobility Require Tax Coordination?

Basic economic theory identifies a number of efficiency gains that derive from international capital mobility. But just as with free trade in goods, there is no guarantee that capital mobility makes everyone better o¤. Consequently, capital mobility may be politically unsustainable even though it enhances efficiency. This paper discusses how such a dilemma might arise, and suggests that international tax coordination might serve as a way out under some circumstances.capital movements;taxation

The macroeconomics of a financial Dutch disease

We describe the medium-run macroeconomic effects and long-run development consequences of a financial Dutch disease that may take place in a small developing country with abundant natural resources. The first move is in financial markets. An initial surge in foreign direct investment targeting natural resources sets in motion a perverse cycle between exchange rate appreciation and mounting short- and medium-term capital flows. Such a spiral easily leads to exchange rate volatility, capital reversals, and sharp macroeconomic instability. In the long run, macroeconomic instability and overdependence on natural resource exports dampen the development of nontraditional tradable goods sectors and curtail labor productivity dynamics. We advise the introduction of constraints to short- and medium-term capital flows to tame exchange rate/capital flows boom-and-bust cycles. We support the implementation of a developmentalist monetary policy targeting competitive nominal and real exchange rates in order to encourage product and export diversification

Worker remittances and the global preconditions of ‘smart development’

With the growing environmental crisis affecting our globe, ideas to weigh economic or social progress by the ‘energy input’ necessary to achieve it are increasingly gaining acceptance. This question is intriguing and is being dealt with by a growing number of studies, focusing on the environmental price of human progress. Even more intriguing, however, is the question of which factors of social organization contribute to a responsible use of the resources of our planet to achieve a given social result (‘smart development’). In this essay, we present the first systematic study on how migration – or rather, more concretely, received worker remittances per GDP – helps the nations of our globe to enjoy social and economic progress at a relatively small environmental price. We look at the effects of migration on the balance sheets of societal accounting, based on the ‘ecological price’ of the combined performance of democracy, economic growth, gender equality, human development, research and development, and social cohesion. Feminism in power, economic freedom, population density, the UNDP education index as well as the receipt of worker remittances all significantly contribute towards a ‘smart overall development’, while high military expenditures and a high world economic openness are a bottleneck for ‘smart overall development’

Warfare, Fiscal Capacity, and Performance

We exploit differences in casualties sustained in pre-modern wars to estimate the impact of fiscal capacity on economic performance. In the past, states fought different amounts of external conflicts, of various lengths and magnitudes. To raise the revenues to wage wars, states made fiscal innovations, which persisted and helped to shape current fiscal institutions. Economic historians claim that greater fiscal capacity was the key long-run institutional change brought about by historical conflicts. Using casualties sustained in pre-modern wars to instrument for current fiscal institutions, we estimate substantial impacts of fiscal capacity on GDP per worker. The results are robust to a broad range of specifications, controls, and sub-samples

Cosmopolitanism, Self-Interest and World Government

Cosmopolitans, if they are interested in seeing their principles realised, must hope that persons worldwide can become motivated to act in accordance with what those principles demand. But although it is important that genuinely moral motives are developed, we should not ignore the potential pragmatic value of self-interested motives to the realisation of cosmopolitan ends. This article considers three such motives: economic self-interest, prudent self-interest and democratic self-interest. I argue that in each case, usefully harnessing these motivations implies or requires global political integration that amounts to ‘world government’. This argument has the effect of reinforcing the already popular view that realising cosmopolitan principles entails global political integration. For those who already endorse that view, my argument will act as supporting evidence; by contrast it represents a challenge to those cosmopolitans who have remained ambivalent about, or indeed have explicitly rejected, the need for global political integration

Economic growth, law, and corruption: evidence from India

Is corruption influenced by economic growth? Are legal institutions such as the ‘Right to Information Act (RTI) 2005’ in India effective in curbing corruption? Using a panel dataset covering 20 Indian states for the years 2005 and 2008 we estimate the effects of growth and law on corruption. Accounting for endogeneity, omitted fixed factors, and other nationwide changes we find that economic growth reduces overall corruption as well as corruption in banking, land administration, education, electricity, and hospitals. Growth reduces bribes but has little impact on corruption perception. In contrast the RTI Act reduces both corruption experience and corruption perceptio

The early experience of smart specialization implementation in EU cohesion policy

This paper discusses the early-stage experience of the smart specialization agenda within EU Cohesion Policy. The analysis examines the types of policy prioritization choices made by different member states and regions and seeks evidence on the extent to which weaker regions, in particular, might be constrained in their choices. The paper then reviews the evidence arising out of various surveys of policy-makers’ own experience and perceptions of the agenda, and concludes with a discussion of the major features of the policy progress so far and the main challenges ahead

Foreign Direct Investment, Aggregate Demand Conditions and Exchange Rate Nexus: A Panel Data Analysis of BRICS Economies

In this study, we attempt to provide underlying theoretical and empirical explanations for exchange rate appreciation due to foreign capital influx and aggregate demand conditions in the BRICS economies. The empirical analysis is based on a panel dataset of BRICS countries over the time period 1992–2013 to substantiate our theoretical findings. For panel co-integration, Pedroni and Johansen-Fisher panel co-integration tests are conducted to compare co-integration among panel countries. We also analyze the results from Dumitrescu-Hurlin panel causality test among variables and use Granger Causality to test for the causal patterns in each of the individual countries. Our findings showed that the exchange rate volatility is directly affected by the flows of FDI, GDP per capita, Capital formulation and House hold consumption. The results have profound implications in terms of exchange rate stability in the BRICS countries and associated risks

Greece’s Three-Act Tragedy:A Simple Model of Grexit vs. Staying Afloat inside the Single Currency Area

Against the backdrop of the Greek three-act tragedy, we present a theoretical framework for studying Greece’s recent debt and currency crisis. The model is built on two essential blocks: first, erratic macroeconomic policymaking in Greece is described using a stochastic regimeswitching model; second, the euro area governments’ responses to uncertain macroeconomic policies in Greece are considered. The model’s mechanism and assumptions allow either for a Grexit from the euro area or, conversely, the avoidance of Greece’s default against its creditors. The model also offers useful guidance to understand key drivers of the long-winded negotiations between the Syiza government and the euro area governments