Towards a Puviani’s Fiscal Illusion Index

This paper presents an index of Fiscal Illusion for 68 democratic countries from 1960 to 2006. The theory of Fiscal Illusion studied relates to a wrong perception of government budget aggregates from the voters’ and taxpayers’ perspectives. In the construction of the index, methodological issues were carefully taken into account. The results obtained reveal that Fiscal Illusion varies greatly around the world. Countries such as Mali, Pakistan, Russia, and Sri Lanka have the highest average values over the time period considered, while Austria, Luxembourg, Netherlands, and New Zealand have the lowest. Regarding the time dimension, between 1980 and 1995 there was a significant decrease in the average value of the index across countries, suggesting a reduction in the adoption of Fiscal Illusion practices during this period. After 1995, the index remained stable in most countries.Fiscal Illusion; Indexes/Indicators; Democracy.

Public capital effects on spanish regions productivity: a non-parametric approach (1965-1998)

This paper contributes to the empirical literature on public capital effects on Spanish regions productivity by applying an alternative approach to examine its influence based on a non-parametric FDH production technology with variable scaling parameters (VP-FDH) proposed in Kersten and Vanden Eeckaut (1999). This technique has significant advantages for regional comparisons of productivity and, more generally, wherever the assumption of convexity for the production set is not likely to be appropriate. My results show that public capital has a significant impact in the less developed regions. When I disaggregate public capital in the «so-called» core and non-core infrastructures I find that the first type of infrastructure have developed an important role in the majority of periods.cross-regions productivity, technological efficiency, public capital, convexity.

A projection model of the contributory pension expenditure of the spanish social security system: 2004-2050

The need for long-term fiscal projections is self evident. Of these projections, pension expenditure is one of the most important since firstly it represents a large share of total expenditure, and secondly because of the positive correlation between this variable and demographic ageing. In this paper, we develop a model to project contributory pension expenditures in the Spanish Social Security System disaggregating the results by pension category, social security regime and sex. The most salient of the results obtained is the expected steady growth of total expenditure in contributory pensions. This would lie around 15% of GDP around 2045 compared to its initial level of barely 8% even though the baseline scenario incorporates a substantial recovery of employment and female participation rates. By pension categories, retirement pensions are those that determine the tendency of total expenditure evolution. Interesting conclusions can also be extracted from the analysis by sex. For instance, even accounting for an increase in female retirement pensions due to their higher participation, the corresponding increase in widow male pensions implies a higher total increase of the total number of contributory pensions accruing to men.Pensions system, sustainability, public expenditure.

Imperfect factor mobility, unemployment, and the short-period incidence of a capital income tax

A crucial feature of the short-run perspective in many policy-relevant issues is the existence of unemployment due to wage rigidities. At the same time, imperfections in the degree of factor mobility between sectors or regions determine the nature and flexibility of the responses of the economy to exogenous shocks. It is no wonder then that the incidence of taxation upon employment and income distribution is a central preoccupation of the fiscal authorities. In this paper we explore the structure of the incidence and the economic effects of a selective capital income tax in a neoclassical, two-sector, two-factor, short-period model in which the existence of a sticky wage that exceeds the maximum level consistent with full-employment leads to unemployment of labour .Tax incidence, capital mobility, unemployment, general equilibrium

Efficiency in the management of urban water services. What have we learned after four decades of research?

The analysis of efficiency in the management of urban water services offers valuable information both for the managers of this service and for public bodies in order to introduce improvements in business practices and in the design of public policies. Since the pioneering study carried out by Ford and Wardford (1969), there have been many attempts to follow this line of research. Due to the importance of the subject and the volume of publications in this field, we believe it is necessary to provide a balance of the work carried out over the last four decades. In this overview, we look at the main questions which have arisen over this period, we provide a synthesis of the results obtained and, finally, we point out some challenges for future research.Water utilities; Efficiency; Firm behaviour; Water

Addictive goods and taxes: A survey from an economic perspective

In this paper we present an overview of the empirical evidence about the effectiveness of using taxation to influence addictive behaviour, and we address the normative question: should greater use be made of sin taxes to fund health care? First, we raise the desirability of linking health care financing and taxation of addictive goods, taking into account efficiency and equity principles. Secondly we present the approaches adopted by economists in the study of addiction and their policy implications. At the end, the empirical evidence of effectiveness of taxes is summarised.Addiction, tobacco, alcohol, sin taxes

Welfare, Revenue and Indirect Tax Harmonization under the Origin Principle

This paper discusses whether some propositions concerning the effects of indirect tax harmonization that have been derived when taxes are levied on a destination basis and revenue is returned to the individuals as a lump-sum transfer can, when accurately reformulated, be extended to a framework where commodities are taxed according to the origin principle and the governments use their revenue to finance the purchase of goods and services. Using a two-country model, it is argued that a non-uniform proportional convergence of domestic taxes towards a properly designed «average » tax structure can be characterized as potentially Pareto-improving. However, these reforms will not, in general, lead to a strict Pareto-improvement where every country is better off without any need for international transfers.: indirect tax harmonization, origin principle, reform of commodity taxes.

Fiscal descentralization and the quality of government: evidence from panel data

In this paper we focus on the relationship between fiscal decentralization and government quality. In a sample of 29 developing and developed countries over the period 1984-1997, fiscal decentralization has a positive effect on institutional quality but this effect diminishes as countries become wealthier. Moreover, the positive effect of fiscal decentralization on government quality is reduced by electoral and decision-making decentralization in poor and medium income countries whereas these forms of decentralization seem to improve the impact of fiscal decentralization on government quality in rich countries.Quality of government, fiscal decentralization, political decentralization, panel data

LA DINÁMICA DE LOS GASTOS DE CAPITAL EN LAS COMUNIDADES AUTÓNOMAS: UN ANÁLISIS DE SUS DETERMINANTES

En el presente trabajo se analizan los factores determinantes de los gastos de capital de las Comunidades Autónomas (CCAA) en el período 1984-1996. Tras una descripción de los principales rasgos que definen su dinámica, procedemos a analizar la importancia relativa de las distintas fuentes de financiación y la existencia de preferencias dispares entre las CCAA sobre el reparto de fondos disponibles entre consumo e inversión pública. Classification-JEL :Gastos de capital, Haciendas Autonómicas, Financiación autonómica.

Income Tax and Top Incomes over the Twentieth Century

The first section of the paper gives a stylised account of the development of the UK income tax structure over the past 200 years, and refers to recent changes in other OECD countries. The second section turns to the distribution of income and summarises the evidence about the top of the income distribution that can be derived from the income tax data. The main results relate to the UK, but comparisons are made with similar evidence for Canada, France, the Netherlands, and the US. The third part of the paper considers the explanation of the observed changes in the distribution and the impact of progressive income taxation. How far are changes in income shares a reflection of the re-arrangement of income? How far are they associated with changes in the composition of top incomes? Conclusions about distributional incidence have to be based on modelling the determination of the personal income distribution, but such modelling is not typically treated in public finance textbooks. The fourth section of the paper considers how the analysis of distributional incidence can be developed, paying specific attention to the explanation of the upper tail of the distribution. : Income, Taxation, Income Distribution, Tax Incidence