Tax compliance, income distribution and social norms

This paper studies the effect of income inequality on tax evasion. To discuss the topic, we present a simple model, based on Benabou and Tirole [6], that incorporates incentives for tax compliance such as punishment and fines, intrinsic motivation and social norms. Since we consider a regressive system of incentives to comply, income inequality increases the value of tax evasion although overall propensity to comply is unaffected. In this framework, we consider the hypothesis that social norms are group specific as in the case of social segregation or status related networks. We show that all the negative effects of inequalities are amplified: the difference between the tax compliance of the income groups and the value of tax evasion increase

FISCAL-MONETARY POLICY COORDINATION AND DEBT MANAGEMENT: A TWO STAGE DYNAMIC ANALYSIS

This paper studies the interaction between two autonomous policymakers, the central bank and the government, in managing public debt as the result of a two-stage game. In the first stage the institutional regime is established. This determines the equilibrium solution to be applied in the second stage, in which a differential game is played between the two policymakers. It is shown that, if the policymakers can communicate before the game is played, (multiple-equilibrium) coordination problems can be solved by using the concept of correlated equilibrium. Unlike Nash equilibrium, which only allows for individualistic and independent behaviour, a correlated equilibrium allows formonetary and fiscal policies, differential games, correlated equilibrium.

Lobbying for Education in a Two-sector Model

In a two-period model, firms specialized in two different sectors lobby to induce the government to subsidize the type of education complementary to their production. Lobbying is endogenous. We show that, if lobbying is not costly, both sectors will lobby in equilibrium and education policy will induce the same skill composition that would be chosen by the social planner. However, if lobbying is costly, only one sector finds it profitable to offer monetary contribution and direct resources towards the type of education required by its production. Which sector will engage in lobbying depends on relative size, productivity and price in the two sectors.

Plastic number and possible optimal solutions for an Euclidean 2-matching in one dimension

In this work we consider the problem of finding the minimum-weight loop cover of an undirected graph. This combinatorial optimization problem is called 2-matching and can be seen as a relaxation of the traveling salesman problem since one does not have the unique loop condition. We consider this problem both on the complete bipartite and complete graph embedded in a one dimensional interval, the weights being chosen as a convex function of the Euclidean distance between each couple of points. Randomness is introduced throwing independently and uniformly the points in space. We derive the average optimal cost in the limit of large number of points. We prove that the possible solutions are characterized by the presence of "shoelace" loops containing 2 or 3 points of each type in the complete bipartite case, and 3, 4 or 5 points in the complete one. This gives rise to an exponential number of possible solutions scaling as p^N , where p is the plastic constant. This is at variance to what happens in the previously studied one-dimensional models such as the matching and the traveling salesman problem, where for every instance of the disorder there is only one possible solution.Comment: 19 pages, 5 figure

EUCLIDEAN CORRELATIONS IN COMBINATORIAL OPTIMIZATION PROBLEMS: A STATISTICAL PHYSICS APPROACH

In this thesis I discuss combinatorial optimization problems, from the statistical physics perspective. The starting point are the motivations which brought physicists together with computer scientists and mathematicians to work on this beautiful and deep topic. I give some elements of complexity theory, and I motivate why the point of view of statistical physics, although different from the one adopted in standard complexity theory, leads to many interesting results, as well as new questions. I discuss the connection between combinatorial optimization problems and spin glasses. Finally, I briefly review some topics of large deviation theory, as a way to go beyond average quantities. As a concrete example of this, I show how the replica method can be used to explore the large deviations of a well-known toy model of spin glasses, the p-spin spherical model. In the second chapter I specialize in Euclidean combinatorial optimization problems. In particular, I explain why these problems, when embedded in a finite dimensional Euclidean space, are difficult to deal with. I analyze several problems (the matching and assignment problems, the traveling salesman problem, and the 2-factor problem) in one dimension to explain a quite general technique to deal with one dimensional Euclidean combinatorial optimization problems. Whenever possible, and in a detailed way for the traveling-salesman problem case, I also discuss how to proceed in two (and also more) dimensions. In the last chapter I outline a promising approach to tackle hard combinatorial optimization problems: quantum computing. After giving a quick overview of the paradigm of quantum computation (and its differences with respect to the classical one), I discuss in detail the application of the so-called quantum annealing algorithm to a specific case of the matching problem, also by providing a comparison between the performance of a recent quantum annealer machine (the D-Wave 2000Q) and a classical super-computer equipped with an heuristic algorithm (an implementation of parallel tempering). Finally, I draw the conclusions of my work and I suggest some interesting directions for future studies

Inequality, redistribution and the allocation of public spending in education. A political-economy approach.

The incidence of public expenditure in education appears to be skewed in favour of the middle and upper classes. This paper inquires into the determinants of this bias using a political economy approach. We develop a model with two time periods with an election occurring between the two. In the first period, agents differ in their initial wealth. In the second period, differences in wealth are combined with differences in income. In the first period, the incumbent government issues debt to finance public spending in education and decides how to allocate available resources between primary and tertiary education. Both increase aggregate income, but while investment in primary education reduces income inequality, investment in tertiary education increases it. At the beginning of the second period, a two-party electoral competition is held and probabilistic voting decides the winner. By varying the parameters of the linear income tax, the elected policy-maker can redistribute resources between low and high income individuals, while by choosing a debt default rate she can renege on the promise to fully repay public obligations, redistributing resources from bond-holders to tax-payers. We show that the investment in primary education might not be (politically) viable. Intuitively, investment in primary education, by reducing income inequality with respect to wealth inequality, might increase the desired debt default rate of future policy makers, making issuing debt to finance primary education unfeasible.policy choices in representative democracies, public investment in education, redistribution, government debt repayment.

Political support to public debt repudiation in a Monetary Union - the role of the geographical allocation of debt.

The main arguments for the Stability and Growth Pact turn on the need to protect the European Central Bank against inflationary pressures from the fiscally prodigal countries (repudiation through inflation). Taking a political economy approach, in this paper we inquire into the conditions under which national governments may reach the decision for a partial or total repudiation of their debt. The main result produced by our model is that a debt management policy of lowering effective yields might be the dominant option for a self-interested government whose creditors consist in part of non-residents. On the basis of such result we argue that the impact of the fiscal position of the various member countries on the stability of EMU does not depend on the stock of debt but on the proportion of it that is held abroad.Monetary union; Public debt; Government default; Political economy; Political support; Special interests; Common agency.

Correlated disorder in myelinated axons orientational geometry and structure

While the ultrastructure of the myelin has been considered to be a quasi-crystalline stable system, nowadays its multiscale complex dynamics appears to play a key role for its functionality, degeneration and repair processes following neurological diseases and trauma. In this work, we have investigated the axons interactions associated to the nerve functionality, measuring the spatial distribution of the orientational fluctuations of axons in a Xenopus Laevis sciatic nerve. At this aim, we have used Scanning micro X-ray Diffraction (SmXRD), a non-invasive already applied to other heterogeneous systems presenting complex geometries from microscale to nanoscale. We have found that the orientational spatial fluctuations of fresh axons show a correlated disorder described by Levy flight distribution. Thus, we have studied how this correlated disorder evolves during the degeneration of the nerve. Our results show that the spatial distribution of axons orientational fluctuations in unfresh, aged nerve loose the correlated disorder assuming a randomly disordered behaviour. This work allows a deeper understanding of nerve states and paves the way to study other materials and biomaterials with the same technique to detect and to characterize their states and supramolecular structure, associated with dynamic structural changes at the nanoscale and mesoscale.Comment: 9 pages, 4 figure

Exact value for the average optimal cost of bipartite traveling-salesman and 2-factor problems in two dimensions

We show that the average cost for the traveling-salesman problem in two dimensions, which is the archetypal problem in combinatorial optimization, in the bipartite case, is simply related to the average cost of the assignment problem with the same Euclidean, increasing, convex weights. In this way we extend a result already known in one dimension where exact solutions are avalaible. The recently determined average cost for the assignment when the cost function is the square of the distance between the points provides therefore an exact prediction $$\overline{E_N} = \frac{1}{\pi}\, \log N$$ for large number of points $2N$. As a byproduct of our analysis also the loop covering problem has the same optimal average cost. We also explain why this result cannot be extended at higher dimensions. We numerically check the exact predictions.Comment: 5 pages, 3 figure