Impact of export upgrading on tax revenue in developing and high-income countries*

Empirical studies usually analyse the relationship between an economy’s trade sector and tax revenue in developing countries through the effect of trade liberalization on tax revenue. This paper takes a different angle by examining the impact of export upgrading strategies (export diversification and improvement in export quality) on non-resource tax revenue. The panel data-set covers a sample of 172 countries, including both developed and developing countries, spanning the period 1980–2010. The analysis is conducted both on the entire sample and sub-samples. The findings indicate that export product upgrading exerts a positive and significant effect on non-resource tax revenue, including for the sub-samples considered, with the exception of low-income countries for which we observe mixed results. Moreover, countries which upgrade their export products in a context of trade openness consistently experience higher non-resource tax revenue, both in the short and long term.     

Seasoned equity offerings by small and medium-sized enterprises

Most analyses of small firms’ decision to seek outside equity financing and the conditions thereof concern private firms. Knowledge of the risk and return of entrepreneurial ventures for outside investors is consequently limited. This paper attempts to fill this gap by examining the Canadian context, where small and medium-sized enterprises (SMEs) are allowed to list on a stock market. We analyze seasoned equity offerings launched by SMEs over the last decade. These public issuers can be considered low quality firms with poor operating performance. Managers issue equity before a large decrease in operating and stock market performance. Individual investors do not price the stocks correctly around the issue and incur significant negative returns in the years following the issue. This is particularly true for constrained issuers. We confirm that entrepreneurial outside equity attracts lemons and that individual investors cannot invest wisely in emerging ventures. Probably as a consequence of individual investors’ lack of skill and rationality, the cost of outside equity financing of Canadian public SMEs is abnormally low.     

The Environmental Conundrum of Rare Earth Elements

Clean technologies, such as solar panels and wind turbines, help to curb global emissions, but they require dirty inputs for their production—i.e., mining rare earth elements (REEs) pollutes local environments. REEs are also the object of rent-shifting strategic trade policies, as highlighted by a recent WTO ruling against China’s quotas and tariffs on exports of REEs. We construct a three-country trade model with an environmental damage function, in order to examine the effects of three policies with different implications for the equilibrium quantities of dirty inputs and clean technologies: a downstream subsidy, an upstream export tariff, and an upstream pollution tax. We relate the welfare implications of the policies to the parameters of the damage function and to the number of downstream competitors. The effects of a unilateral policy switch from an export tariff to a domestic pollution tax, as suggested by China’s reaction to the WTO challenge, are also examined.     

How two-party competition treats minorities

The paper studies Downsian electoral competition in the framework of redistributive politics among groups of unequal size. As soon as no group forms a majority on its own, parties treat all voters in the same way at an equilibrium of the Plurality game. This paper has benefited a lot from the referees' careful reading. I also thank for their comments Steve Brams and other seminar participants in Caen and Paris. All remaining errors are mine.     

VAT and the taxation of rents

Cash-flow corporate taxes can tax corporate-source rents and avoid some of the distortions on investment and financing caused by conventional corporate taxes. However, cash-flow taxes applied on an origin basis are prone to international profit-shifting, which can lead to a competitive reduction in tax rates. While this can be avoided by a destination-based cash-flow tax, most countries have opted for origin-based taxation, asserting the right to tax rents generated within their jurisdictions. Since a value-added tax (VAT) implicitly includes rents in its base, it can complement origin-based corporate taxation. We compare and contrast the use of destination and origin VATs as complements to an origin-based cash-flow corporate tax.     

The use of management accounting information by boards of directors to oversee strategy implementation

Past research has overlooked the specific informational needs and uses of management accounting information by boards of directors, which constitute a distinctive unit of analysis, focusing mainly on organizational actors within the boundaries of the firm. The aim of this study is to examine the use of management accounting information to oversee strategy implementation in the context of governance. Specifically, we intend to establish theoretical properties and propose a measurement model that captures the use of budget, financial and non-financial performance indicators by boards of directors to oversee the strategic plan. To develop the measurement instrument, conceptual specifications of constructs have been established based on a matrix approach that combines (i) the information conveyed by the three management accounting practices, along with (ii) two theoretical properties reflecting board activities, namely monitoring implementation of the strategic plan, and questioning of the strategic plan. The validity and reliability of the instrument have been evaluated and discussed using a rigorous multi-method integrated approach that includes a literature review, exploratory interviews, consultation of experts in management accounting and governance, and survey data collected from three samples of boards of directors.     

Electoral competition under imperfect information

Summary. This paper considers electoral competition between two office-motivated parties and one voter, in the presence of two alternative policies and under imperfect information. The theory of refinements of Nash equilibrium predicts the outcome of this three-player game: both parties faithfully use their information and try to find the best policy for the voter. We discuss the meaning of this model for Politics and prove that the same result holds for any number of voters, provided that parties are expected plurality maximizers and that voters satisfy a version of the sincere voting assumption adapted to this strategic setting.Received: 12 December 2001, Revised: 16 June 2003JEL Classification Numbers: C72, D72, D82.Correspondence to: Jean-François LaslierThanks to Gabrielle Demange, Françoise Forges, Roger Guesnerie, Jean-Fran çois Mertens, Thomas Palfrey, Sylvain Sorin and other participants in workshops and conferences in Caen, Paris, Caltech and Yale. Thanks also to two anonymous referees and to Paul Heidues and Johan Lagerlöf for their comments. This work was originated when K. Van der Straeten was at THEMA (Université de Cergy-Pontoise) and DELTA.     

The Problem of the Monetary Realization of Profits in a Post Keynesian Sequential Financing Model: Two solutions of the Kaleckian option

In a Post Keynesian theoretical framework with sequential financing, two solutions to the problem of the monetary realization of profits are presented. Both of these are consistent with the Kaleckian view, according to which actual profits arise from the present expenditure of their anticipated amount. These two solutions form the basis for a theoretical reconsideration of the relationships among the creation of money, consumption, savings and investment.