Abatement R&D,market imperfections,and environmental policy in an endogenous growth model

We develop an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from private abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.     

BEHAVIOURAL COMPLEXITY

Abstract The paper compares and contrasts complexity economics and neoclassical economics. It proposes a framework for modelling complex systems and, accordingly, utilizes agent‐based simulation to examine consumption behaviour in a complex model and in a neoclassical model. Results suggest that complex behaviour leads to higher accumulation of wealth, better efficiency and greater stability. These results are consistent with the nature of complex systems whereby ‘the whole is greater than the sum’, and where unexpected system properties emerge from simple local interactions.     

Why are population flows so persistent?

A neoclassical model of local growth is developed by integrating the static equilibrium underlying compensating differential theory as the steady state of a neoclassical growth model. Numerical results show that even very small frictions to labor and capital mobility along with small changes in local productivity or local quality of life suffice to cause highly persistent population flows. Wages and house prices, in contrast, jump most of the way to their new steady state. The model suggests that cross-sectional regressions of local population growth can help to identify past and present changes in the determinants of representative-agent welfare. More generally, it provides a framework for interpreting observed local growth rates.     

TAX REVENUE-FINANCED PUBLIC ABATEMENT AND WELFARE: A CONSUMPTION TAX CASE

This paper develops a model of public abatement financed either by a pollution tax or by a consumption tax. It shows that consumption tax revenue-financed public abatement raises welfare more than pollution tax revenue-financed public abatement does when the pollution tax rate rises. This result is worthwhile for environmental protection policy makers when they are determining the revenue source of public abatement.     

The optimal carbon tax mechanism for managing carbon emissions

Along Pigouvian lines, the carbon tax not only exceeds the carbon emission damage imposed on society, but ignores the potential cost from deliberate carbon abatement, which in turn challenges the stability and optimality of the Pigouvian solution. For correcting these distortions, this paper amends the standard Pigouvian version by using piecewise tax functions to approximate the social damage curve of carbon emissions. An optimal carbon tax mechanism is designed, where the tax is endogenously determined from social welfare maximization. With the help of a modification instrument, the carbon tax corrects emitters’ non-optimal individual decision and the social optimum is implemented efficiently. How to put the carbon tax into practice is examined under both the deterministic and stochastic modeling settings. In both cases, we demonstrate the structure and effectiveness of the carbon tax in detail. Moreover, a flexible adjustment tax scheme is proposed, which may produce the double-dividend effect that reduces carbon emissions and relieves financial burden of carbon abatement simultaneously. These may improve the application of market-based carbon-reducing tools in public management and pollution regulation.     

The firm's insurance decision. Some questions raised by the capital asset pricing model

Using the capital asset pricing model it is shown that the firm will be indifferent towards insurance against specific risks. Insurance against systematic risks involves a transfer of these non-diversifiable risks from the firm to the insurance company, and will thus only be available at a price which reflects the ‘market price of risk’. Again the firm will be indifferent towards insurance. This then leads to the investigation of alternative motivations for a firm purchasing insurance — the costs of financial distress, human capital considerations, asymmetry of information and tax laws.     

MODELS OF REGIONAL GROWTH: PAST,PRESENT AND FUTURE

Abstract This paper presents an overview of various models of regional growth that have appeared in the literature in the last 40 years. It considers the past, and therefore supply‐side models, such as the standard neoclassical, juxtaposed against essentially demand‐side approaches such as the export‐base and cumulative causation models (as integrated into the Kaldorian approach); before moving on to the ‘present’ and more recent versions of the neoclassical model involving spatial weights and ‘convergence clubs’, as well as new economic geography core–periphery models, and the ‘innovation systems’ approach. A key feature of the more recent literature is an attempt to explicitly include spatial factors into the model, and thus there is a renewed emphasis on agglomeration economies and spillovers. Discussing ‘present’ and ‘future’ approaches to regional growth overlaps with the current emphasis in the literature on the importance of more intangible factors such as the role of ‘knowledge’ and its influence on growth. Finally, there is a discussion of the greater emphasis that needs to be placed at the ‘micro‐level’ when considering what drives growth, and thus factors such as inter alia firm heterogeneity, entrepreneurship and absorptive capacity.     

The dynamics of utility in the neoclassical OLG model

This paper develops a method to study how life-cycle utility of a sequence of cohorts converges to its steady state level in the neoclassical 2-period overlapping generations model. This method allows to characterize utility changes associated with marginal variations in exogenous policy parameters along the entire transition path between two steady states. At the same time, it is not more complicated than a pure steady state analysis. Moreover, it can be applied to economies for which an explicit solution of the transition path is not available.     

What is the potential impact of a taxation system reform on carbon abatement and industrial growth in China?

Economists have long argued that market-based environmental policy such as an environmental tax is beneficial to abate pollution emissions. This study aims at investigating the impact of carbon tax levy on carbon dioxide (CO₂) abatement and industrial growth in China. To this end, the marginal abatement cost (MAC) of industrial CO₂ emissions is estimated as the benchmark of setting the carbon tax rate by using the directional distance function (DDF). This paper employs the polynomial dynamic panel model to forecast the impact of carbon tax levy on target variables such as sectoral value-added and CO₂ intensity. The results reveal that the levy of a CO₂ tax has a negative impact on industrial output only in the short term. In the long term, the impact of CO₂ tax levy on output will become positive. The levy of a CO₂ tax is always beneficial to reduce CO₂ intensity. Corresponding policy suggestions for an environmental taxation system reform are given in the concluding section.     

Carbon taxes and the double dividend hypothesis in a recursive-dynamic CGE model for Spain

A carbon tax is potentially a policy that can reduce CO₂ emissions and mitigate climate risks, at lowest economy-wide costs. We develop a dynamic CGE model for Spain to assess the economic and environmental effects of a carbon tax, and test the double dividend (DD) hypothesis. We simulate the impact of three carbon taxes: €10, €20 and €30 per ton of CO₂. For each tax, four ‘revenue recycling’ scenarios are examined: a reduction of taxes on capital, on labor, on value-added tax, and a scenario in which revenues are not recycled. We find a DD for taxes of €10/ton and lower, within five to seven years of implementation. We estimate an annual CO₂ emissions reduction of around 10% with this tax. Under some circumstances, the DD can be achieved for a tax of €20/ton. In any case, recycling revenues to cut pre-existing taxes reduces costs of imposing carbon taxes.     

Is corporate payout taxation a long run phenomenon? Evidence from international data

This paper examines whether dividend and capital gains taxation influences corporate payout policy using the country level data of 21 countries in panel versions of time series models. We find that dividend relative to capital gains tax penalty is cointegrated with corporate payouts (dividends and share repurchases) i.e. corporate payout taxation may be a long run phenomenon. Further, the cointegrating vector estimates are largely consistent with the traditional view of dividend taxation whereby the tax penalty discourages dividends, while the estimates give limited support to the premise that firms substitute dividends for share repurchases in response to an increase in dividend tax penalty. Long run causality also operates between the tax penalty and payouts in the error correction models. Additionally, dividend tax appears to be more influential than capital gains tax on dividend payout decisions. Lastly, taxation affects dividends more significantly in countries with high investor protection.     

Multiple regimes and cross-country growth behaviour

This paper provides some new evidence on the behaviour of cross-country growth rates. We reject the linear model commonly used to study cross-country growth behaviour in favour of a multiple regime alternative in which different economies obey different linear models when grouped according to initial conditions. Further, the marginal product of capital is shown to vary with the level of economic development. These results are consistent with growth models which exhibit multiple steady states. Our results call into question inferences that have been made in favour of the convergence hypothesis and further suggest that the explanatory power of the Solow growth model may be enhanced with a theory of aggregate production function differences.     

Production theory with profit-constrained revenue-maximization: The duality approach

This paper derives a general version of Baumol's production theory, where the main behavioral assumption is ‘revenue maximization subject to a profit constraint’ instead of ‘profit maximization’. This theory turns out to be analogous to the neoclassical (competitive) production and consumption theories. Employing the fruitful duality approach it is presented here in a unified and very economical form that provides a complete and general analysis of the comparative static behavior of Baumol's firm.     

Endogenous fertility, multiple growth paths, and economic convergence

"This paper extends the Cass-Koopmans optimal growth model to allow for endogenous fertility choice. It is shown that if agents choose their fertility rate, then the net rate of return on capital (marginal product of capital minus the population growth rate) may not be monotonically decreasing in capital. In this case, multiple steady states and growth paths may emerge, which can explain the persistent differentials in income between poor and rich countries, as well as the existence of development miracles and disasters. The paper provides also empirical evidence which supports the existence of multiple convergence groups and is consistent with the theoretical model."     

Changing dividend policies caused by the Tax Reform Act of 1986: An empirical analysis

In this paper the authors analyze the change in dividend yield (and capital gains yield) patterns of the group of 1108 firms listed on the monthly CRSP tapes from 1984 to 1988. It was anticipated that the Tax Reform Act of 1986 would lead to a pattern of increasing dividend yields and decreasing capital gains yields in 1987 and 1988 due to the elimination of the capital gains tax rate by 1988 and the overall reduction in personal tax rates. The results were consistent across all dividend groups as expected.     

REDUCE EMPLOYERS’ SOCIAL SECURITY CONTRIBUTIONS AND CONTROL LABOR FRAUD: REMEDIES FOR SPAIN'S AILING ECONOMY?

The aim of this paper is to quantify the impact of the reduction on social security contributions (SSCs) of employers recently claimed by the Spanish enterprisers’ organizations on the main macroeconomic variables. The effects of this tax reform are evaluated with a Computable General Equilibrium model with the neoclassical closure rule. The model is calibrated with a Social Accounting Matrix for the year 2000 (SAMES-00) elaborated by the authors. Results show that lower SSCs of employers raise employment, households’ welfare and real gross domestic product (GDP) but also increase the public deficit. These positive effects remain when the reduction is compensated with personal income taxes to keep the public deficit/GDP ratio constant and also when the compensating variable is value-added tax (VAT). Unlike in previous studies, the most positive effects are obtained when the lower public revenues are compensated via lower coverage of unemployment benefits.     

Property Tax and Housing Returns

This paper evaluates the effects of property tax on housing. While land tax and capital gains tax are widely used for curbing hoarding of land and speculation, its effectiveness is inconclusive. The imposition of a capital gains tax will impair the liquidity of property transaction, lower the rate of return on property investment, and reduce revenue from land sales which represents an important tax resource for the communities. This paper shows that a capital gains tax is capitalized into housing prices. Individuals tend to postpone the purchase of houses because of transaction taxes. Using an impulse response function, we show that a transaction tax has a dynamic negative impact on housing returns. While this paper focuses on Hong kong, for the purpose of comparison Singapore and Taiwan are also discussed.     

On the Priority of Labor Over Capital

In his encyclical Laborem Exercens, John Paul II asserts the principle of the priority of labor over capital. The purpose of this article is to examine this principle. The conflict between labor and capital is often noted as an essential part of capitalism. There is a long tradition of assigning more significance to labor than to capital. In fact, the classical economists argued that labor determined the “value” of a good. To understand this conflict, we must first review what is capital and its role in capitalism. We will then look at John Paul II’s assertion of the principle of labor over capital, followed by a review of how economists have understood the relationship between labor and capital. Neoclassical economists dismiss labor and capital as classes, so they believe there is no conflict. We examine one neoclassical economist’s claim of a gap in the principle of the priority of labor over capital by not including finance capital in the analysis. We demonstrate that the Church’s teachings on usury answer the objections raised. We conclude with a review of the implications of the priority of labor over capital.     

The interaction of corporate dividend policy and capital structure decisions under differential tax regimes

We develop a valuation model that integrates corporate capital structure and dividend payout policies. The resulting “extended” Miller (J Financ 32:261–297, 1977) model explicitly incorporates the different tax rates on corporate income, personal interest, dividends, and capital gains. We apply the model to ten different U.S. tax regimes since 1979 and generate several testable predictions. When the dividend tax rate exceeds the capital gains tax rate, dividend payout can partially offset value-enhancing effects of leverage. When the two rates are close, dividend payout loses its moderating influence. Using the S&P 1500 universe, we obtain empirical results that are consistent with the model’s predictions.     

基于海外投资商与东道国动态博弈的税收风险研究

海外投资商遭受的东道国税收风险对投资成败具有关键影响作用,如何更好地规避税收风险,实现海外投资收益最大化,是投资者面临的难题。在综合考虑海外投资商对东道国本地企业的技术溢出效应和竞争效应基础上,构建海外投资商与东道国之间的动态博弈框架,分析海外投资商与东道国的策略互动,寻求海外投资商应对税收风险的最优投资策略。研究结果表明：东道国政府通常会给予海外投资商特定免税期,不过达到稳定状态后,均衡税率和海外投资商的资本存量会受技术溢出影响。