Dynamics of the Market for Corporate Tax‐Avoidance Advice*

This paper addresses the debate over aggressive tax‐planning models and analyzes the role of tax consultants. It focuses on the dynamic interaction between innovation and imitation of aggressive tax‐planning products and governmental tax regulation, and it highlights the importance of the length of regulatory lag in comparison with the time it takes the tax‐consulting industry to imitate newly innovated tax‐avoidance products. It reveals an alignment of interests between highly innovative tax‐consulting firms and the governmental tax legislator/regulator. The conclusions are also relevant for the policy debate on mandatory disclosure rules about aggressive tax‐planning models.     

When and why do countries break their national fiscal rules?

This paper identifies determinants of compliance with various types of national numerical fiscal rules. Based on 51 fiscal rules in force in EU member states from 1995 to 2015, the analysis identifies determinants among specific rule characteristics and their fiscal frameworks, as well as their political, (socio-)economic and supranational environments. While the average compliance across all rules and countries is around 50%, compliance with rules constraining stock (rather than flow) variables, set out in coalitional agreements, as well as rules covering larger parts of general government finances is significantly higher. Furthermore, independent monitoring and enforcement bodies (issuing real-time alerts) turn out to be significantly associated with a higher probability of compliance. Several theories of the deficit bias of governments due to government fragmentation, decentralization and political budget cycles are also significant with regards to compliance with fiscal rules. However, neither the economic environment or business cycle, nor forecast errors (except for an unexpectedly higher primary balance) on average seem to play a significant role.     

Under threat: Rules-based fiscal policy and how to preserve it

Rules-based fiscal policy is under threat. Over the last two decades, it proved frustratingly complicated to strike the right balance between three essential properties of sound fiscal policy rules: simplicity, flexibility, and enforceability. Simplicity has been sacrificed to ensure that more contingent (i.e. flexible) rules remained enforceable. The resulting arrangements have failed to adequately guide fiscal policy, undermining formal compliance, and ultimately, popular and political support for rules. To mitigate the risk that countries abandon rules-based policymaking, we suggest downplaying enforceability—i.e. the role of formal sanctions through enforcement—and enhancing the reputational costs of breaching rules. At the limit, the rule could consist of a simple quantitative benchmark for a key fiscal indicator. To boost reputational effects, independent fiscal councils should focus on debunking the “fiscal alchemy,” clearing the public debate from partisan smokescreens, and fostering popular support for sound fiscal policies.     

Fiscal rules to tame the political budget cycle: Evidence from Italian municipalities

The paper provides evidence that fiscal rules can limit the political budget cycle. It uses data on Italian municipalities during the 2000s and shows that: 1) municipalities are subject to political budget cycles in capital spending; 2) the Italian sub-national fiscal rule (Domestic Stability Pact, DSP) introduced in 1999 has been enforced by the central government; 3) municipalities subject to the fiscal rule show more limited political budget cycles than municipalities not subject to the rule. In order to identify the effect, we rely on the fact that the domestic fiscal rule does not apply to municipalities below 5000 inhabitants. We find that the political budget cycle increases real capital spending by about 10–20 percent on average in the years prior to municipal elections and that municipalities subject to the DSP show a pre-electoral increase in capital spending which is only a quarter of the one of municipalities not subject to the rule.     

儒家传统文化与公司违规行为*——基于中国家族上市公司的分析

本文按照“文化-行为”的逻辑，探讨了作为非正式制度的重要组成部分之儒家传统文化对公司违规行为的影响。本文以2007—2014年沪深两市的中国家族企业上市公司为研究样本，考察了儒家传统文化对上市公司违规行为的影响以及其与正式制度（法律）的交互作用。研究发现，儒家传统文化影响力越强，上市公司违规行为发生的概率越低；并且在儒家传统文化与正式制度（法律）两者交互叠加作用时上市公司违规行为发生的概率更低。     

Monetary policy rules with PID control features: evidence from the UK,USA and EU

ABSTRACT

This paper considers the extent to which the monetary policy operations of three major central banks can be regarded as an application of Proportional-Integral-Derivative (PID) control rules. The paper outlines the general PID framework and estimates a series of dynamic models to identify how interest rate policy adjustments are affected by the rate of inflation and the level of macroeconomic activity. The paper examines data for the UK, the USA and the Eurozone. The results suggest that the PID rules can provide a useful theoretical and empirical framework for estimating central bank responses to the inflation and macroeconomic activity variables by improving the explanatory power of the Taylor rule model and determining the effect of the parameters.     

自然生态空间用途管制分区划定研究——以平潭岛为例

研究目的:在明确自然生态空间内涵和分类的基础上,探讨自然生态空间用途管制分区划定的逻辑框架和技术方法,提出自然生态空间分类、分级管制规则。研究方法:文献综述与GIS空间分析。研究结果:根据不同自然生态系统类型及其空间分布特征将自然生态空间类型划分为森林生态空间、草地生态空间、湿地生态空间和荒地生态空间;基于景观功能识别并按不同管控等级将自然生态空间管制类型区划分为红线区、橙线区和黄线区;同时,依据不同地块主要功能进一步确定自然生态空间用途管制分级,划定用途管制分区结果。研究结论:基于"区域主体功能—景观主导功能—地块主要功能"的自然生态空间管制分区划定逻辑框架,可为构建以功能分类、用途分区、管控分级为导向的自然生态空间用途管制体系提供理论依据和实践借鉴。     

Do national political parties matter? Evidence from Italian municipalities

Recently several countries have experienced a drop in popularity of national political parties, accompanied by the success of independent movements (e.g. “Civic Lists” in Italy). I exploit the success of “Civic Lists” in Italian municipalities and use them as a comparison group for party-affiliated politicians, to test whether national parties affect fiscal discipline. Using a Regression Discontinuity Design (RDD), I show that party-affiliated mayors are more fiscally responsible: they run lower deficits, accumulate less debt and reduce expenditures. The effect is significant only for municipalities not constrained by fiscal rules. This suggests that national parties act as a substitute for fiscal rules in constraining politicians. Besides, I provide evidence that the discipline of party-affiliated politicians is linked to better career prospects: party-affiliated mayors have a higher probability of being re-elected and better chances of being promoted to higher levels of government. Alternative stories find less support in the data.     

Do fiscal rules cause better fiscal balances? A new instrumental variable strategy

This paper estimates the causal effect of fiscal rules on fiscal balances in a panel of 142 countries over the period 1985–2015. Our instrumental variable strategy exploits the geographical diffusion of fiscal rules across countries. The intuition is that reforms in neighboring countries may affect the adoption of domestic reforms through peer pressure and imitational effects. We find that the mere existence of fiscal rules correlates with lower deficits, but the positive link disappears when endogeneity is correctly addressed. However, when considering the strength of rules through a continuous index of fiscal rules’ design, we show that well-designed rules have a statistically significant impact on fiscal balances. We conduct several robustness tests and show that our results are generally robust and not affected by weak instrument problems.     

Fiscal rules and budget forecast errors of Italian municipalities

We study the impact of the domestic stability pact on the accuracy of budget forecasts of Italian municipalities. Identification of the causal effect exploits a quasi-natural experiment generated by the removal in 2001 of the fiscal restraints on budget decisions for municipalities with fewer than 5000 inhabitants and by stricter budgetary restrictions and severe penalties for noncompliers in 2002. We find that relaxing fiscal rules had a sizeable impact on budget forecast errors, especially in 2002. In fact, revenue (expenditure) forecast errors for municipalities with fewer than 5000 inhabitants became 26% (22%) larger than in the past.