Fiscal Illusion and Cyclical Government Expenditure: State Government Expenditure in the United States

A well‐established literature argues that fiscal illusion increases the level of government expenditure. This article focuses on the proposition that fiscal illusion also influences the cyclicality of government expenditure. Predictions are formed with reference to government reliance on high income elasticities of indirect tax revenues and on intergovernmental transfers. Predictions are tested with reference to the expenditures of 36 states in the United States from 1980 to 2000. Government expenditures are more likely to be procyclical when citizens systematically underestimate the cost of taxation.     

Lifetime Net Average Tax Rates in Australia Since Federation—A Generational Accounting Study

This paper presents estimates of average net payments to government, as a per cent of average lifetime labour earnings, for generations born in Australia since Federation (1901), based on historical data combined with several reasonable future scenarios covering fiscal policy, growth and demographic change. The results shed light on whether certain generations have been treated more favorably by the public sector than others this century. The main conclusion is that the average lifetime net tax rate will, under reasonable'assumptions, be of the order of 37–39 per cent for all currently living generations born since the mid-1930s.     

Health Policy and Equity of Health Care Financing in Australia: 1973–2010

Using data from Australian Taxation Statistics and Household Expenditure Surveys we analyze the distribution of health care financing in Australia over almost four decades. We compute Kakwani Progressivity indices for four sources of health care financing: general taxation, Medicare Levy payments, Medicare Levy Surcharge payments, and direct consumer payments, and estimate the effects of major policy changes on them. The results demonstrate that the first three of these sources of health care financing are progressive in Australia, while the distribution of direct payments is regressive. Surprisingly, we find that neither the introduction of Medicare in Australia in 1984 nor the Extended Medicare Safety Net in 2004 had significant effects on the progressivity of health care financing in Australia. By contrast, the Lifetime Cover scheme—introduced in 2000 to encourage people to buy and hold private health insurance—had a progressive effect on health care financing.     

The Social Opportunity Cost of Consumption for Australia, 1960–61 to 1988–89

The social opportunity cost of consumption (SOCC) for an economy is the rate at which current consumption can be traded for consumption in the future. The SOCC is an important determinant of the socially optimal levels of investment and the current account surplus and should be an input into the framing of government economic policy. Using overseas interest rates, the SOCC for Australia is calculated in this article. The calculated series is fairly constant for the 1960s and then has a pronounced cyclical pattern from the late 1960s to 1988–89. The average value of the SOCC for Australia is about four per cent.     

USE OF NATIONAL ACCOUNTS FOR A SHORT-TERM ECONOMETRIC MODEL: 1954–1966

A quarterly macro-econometric model of Japan's postwar economy has been constructed for the period 1954–1965 FY on the basis of standardized quarterly national income accounts. The model is designed for facilitating short-term economic forecasting and formulating adequate fiscal and monetary policy. Longer-term factors such as labor mobility, technical progress, etc., were also considered in the model.
The model consists of fifty-three equations related to most of the macroeconomic variables in both money and real terms, and the equations were estimated in principle by the limited information maximum likelihood method. Principal exogenous variables related to policy instruments are government expenditures including transfers, parameters of tax functions, interest rate, and prices and fares controlled by the government, etc. In formulating the model, non-linear specifications were used whenever found necessary.
Results of our testing on its predictive capability indicated fairly satisfactory performances for our observation period and also for 1966 FY. Multipliers related to fiscal and monetary policy were also obtained, indicating the dynamic characteristics of the Japanese economy, in particular, represented by dynamic business fixed investment, as compared with corresponding multipliers of the U.S. models.
Although the model is exploratory and to serve as a core for a more disaggregated "Master Model," the usefulness of the model for our purposes and the workability of our quarterly national accounts data for model-building have been recognized. The quarterly data, however, still remain to be improved especially in regard to consistency between income and expenditure and integration with flow-of-funds accounts.     

Structural Deficits and Fiscal Policy Stance in Australia, 1966–67 to 1988–89

This study adjusts the total deficit (or net public sector borrowing requirement) of the whole of the public sector in Australia for the effects of changes in both the level of economic activity and the implicit tax that inflation imposes on the holders of government bonds. Both adjustments are important, even when looking at year-to-year changes in the structural deficit. When the stance of fiscal policy is measured by the structural deficit as a percentage of gross domestic product, four years stand out as years of major changes. In each of the years 1973-74, 1979-80 and 1987-88 the stance of fiscal policy was substantially tightened with the abrupt tightening in 1979-80 being the largest change, though not much larger than that in 1973-74. By far the biggest change relaxing the stance of fiscal policy was in 1983-84, and the change in this year was the biggest of any change in either direction in the period.     

政府竞争、财政压力及其调节作用研究*——以地方政府财政支出偏向为视角

本文以政府间事权与支出责任划分改革为出发点，基于2009—2017年地级市层面的面板数据，运用系统GMM估计方法审视财政压力、政府竞争与地方政府民生支出偏向之间的相关关系。实证分析结果表明，相较于政府竞争而言，财政压力才是降低地方政府民生支出偏向的主要原因。财政压力对政府竞争具有调节作用，政府竞争对民生支出偏向的反向作用程度显著依赖于财政压力。具体而言，政府竞争对教育、医疗卫生、社会保障与就业支出偏向不具有直接效应，但在财政压力的调节作用下显著影响上述三项支出。本文进一步发现，经济发展水平越低，政府竞争与民生支出偏向之间的相关关系越不显著；地方政府在执行多任务导向型的中央决策时，具有较为明显的自我选择倾向。     

THE DISTRIBUTIONAL CONSEQUENCES OF GOVERNMENT SPENDING AND TAXATION IN THE U.S., 1989 AND 2000

We assess the effects of government expenditures and taxation on household economic well-being in the United States in 1989 and 2000. Net government expenditure is estimated as the difference between government expenditures incurred on behalf of the household sector—transfers and public consumption—and the taxes paid by that sector. We incorporate the estimates of net government expenditures into a wealth-adjusted measure of income. We find that overall inequality in our income measure is considerably reduced by net government expenditures. Results from decomposition analysis show that the inequality-reducing effect of net government expenditures owed more to expenditures than to taxes.     

影响我国地方政府财政支出效率的因素研究*——基于财政、晋升和发展压力的视角#br#

提高地方政府财政支出效率是实现财政可持续发展的重要条件。本文使用2004—2016年我国30个省份的数据,基于DEA模型和Malmquist指数测算了我国地方政府的财政支出效率,并分析了财政压力、晋升压力和发展压力对地方政府财政支出效率的影响。结果表明：（1）各地区财政支出技术效率变动指数均值和规模效率均值变化差异不大;（2）财政压力越大,地方政府财政支出效率越低;（3）经济增长率越高,地方政府财政支出效率越低;（4）地方政府超额完成中央的经济发展目标有利于改善当地财政支出效率。     

How to reform China’s fiscal system?

ABSTRACT

As the population aging, China’s government expenditures, including general fiscal expenditure, healthcare and social security expenditure, will grow more rapidly than government revenues, tending to elevate government debt. Local governments undertake overwhelming 85% of total general fiscal revenue and are responsible for healthcare and social security, and their debt has been growing. Fiscal reforms are imperative, including tax reforms, the structure of government spending reforms, social security reforms, healthcare reforms, local public finance reforms, and central and local government’s fiscal relationship reforms. This paper will explore the fiscal challenges China faces and discuss how to reform the fiscal system to cope with these challenges.     

Do budget maximizing public officials increase the probability of property reassessment?

County governments in Pennsylvania face non‐binding limits on their property tax rates. These are considered non‐binding because they do not place a limit on tax levies or expenditures. Assuming local public officials have monopoly power, tax rate limits can be circumvented by reassessing the property tax base. A two‐stage process was hypothesized in which the probability of reaching tax rate limits first was determined and the probability of reassessment then was determined. The effect of budget maximizing government officials at each stage was tested for 66 Pennsylvania counties over the 1970–1995 period. The empirical results showed that variables associated with budget maximizing behaviour influenced the choice in each stage. Public expenditure growth increased the probability of reaching the tax rate limit in the first stage while reaching the tax rate limit increased the probability of reassessment in the second stage. The estimates also showed that economic, fiscal and taste variables were significant determinants of these probabilities.     

Discrimination and job search theories for black British young men

The paper examines empirically the relationship between government revenues and expenditures in four European countries: Greece, Spain, Ireland, and Portugal. In relative terms all four may be considered as the poorest members of the European Union. Yet, they present a fairly diverse picture as far as their macroeconomic performance and fiscal position is concerned. The empirical findings from cointegration and causality tests that are reported here indicate that in the case of Greece and Ireland tax and spending decisions are taken simultaneously by the fiscal authority, the tax-and-spend hypothesis is supported in the case of Spain, while absence of any causal ordering between government expenditure and tax revenues has been established for Portugal.     

EFFICIENCY EFFECTS OF CHANGES IN COMMONWEALTH GRANTS TO THE STATES: A CGE ANALYSIS*

This paper describes CSF, a general equilibrium model encompassing factors of relevance to economic efficiency in Federal/State funding including: interstate differences in tax bases and unit costs of State‐provided goods; factor mobility; congestion; State‐government behaviour incorporating the possibility that governments in subsidised States embark on expenditures with low benefit/cost ratios (flypaper effects); fiscal externalities; and non‐discretionary expenditures in each State associated with special national responsibilities. The model is applied to Australia where Federal/State funding is a major political and economic issue. Welfare effects of moving from the present Australian funding system based on fiscal equalisation to a system of equal‐per‐capita grants are calculated. CSF implies that the welfare gain from this move would be small. The most important source of potential welfare gain is a reduction in flypaper effects. The recognition of congestion externalities can eliminate the small welfare gain, but only under seemingly extreme assumptions. The results are not very sensitive to variations in assumptions concerning population mobility and fiscal externalities.     

Macroeconomic effects of fiscal policy in Pakistan: a disaggregate analysis

This study analyzes the macroeconomic effects of fiscal policy on macroeconomic variables in Pakistan. The study utilizes VAR framework and uses quarterly data of Pakistan from 1976Q1 to 2017Q4. The results showed that after an increase in government expenditures, private consumption and prices take three quarters to increase, while private investment follows the declining trend. Private consumption and interest rate are negatively related with taxes, while private investment and prices are positively related with taxes. Real GDP, private consumption and interest rate respond positively with an increase in developmental expenditure, public consumption and public investment. Private investment is negatively related with development expenditure, public consumption and public investment. An increase in direct tax as well as indirect tax leads to an increase in real GDP, private investment and interest rate, while private consumption takes three to five quarters to responds. Private investment and prices are positively related with non-tax revenue, while real GDP, private consumption and interest rate are negatively related. These results support the Keynesian view that government expenditure and taxes are useful tools to stimulate the economic activity, while crowding-out hypothesis holds in Pakistan as well. An active and efficient role of government is required for macroeconomic stability.     

基于公共财政构架下财政支出结构的优化

现阶段我国要建立与市场机制相适应的公共财政，就必须科学界定公共财政支出范围，优化财政支出结构，这样才能提高财政支出效率，降低政府运作成本，减少对竞争性领域的财政投资，强化公益性事业支出，最终实现支出结构的优化调整.     

Fiscal Implications of Immigration—A Net Present Value Calculation

Focusing on the net fiscal effects, the gain from admitting immigrants is computed for a welfare state with large expenditures and a large tax burden (Sweden). Prices and behavior are held constant, which allows a detailed analysis of the effects of immigration. The present value of future tax revenues minus outlays is potentially large; USD 23,500 per young working‐age immigrant, but an average new immigrant represents a net government loss of USD 20,500. The dominant factors are employment rates and age. For young working‐age immigrants, the “break‐even” participation rate for which the gain would be zero is 60%, well below the empirical rate for this group.     

Fiscal policy and economic activity in South Asia

This paper analyzes whether fiscal policy in South Asia amplifies or smoothens business cycle fluctuations. It estimates several econometric models to explore the cyclicality of government spending and tax buoyancy. In South Asia, tax revenue increases less than one to one with changes in gross domestic product (GDP), but public spending increases more than proportionally. For each percentage point change in GDP growth, government expenditure changes by 1.3 percentage points. While changes in tax revenue have no significant impact on economic activity, the government spending multiplier is positive and significant: each additional US dollar (USD) of spending leads to an immediate increase in GDP of 0.2 USD and to an increase of 0.4 USD in the medium run. The impact of public spending on economic activity is entirely due to capital expenditure, which is also more procyclical. Procyclical public spending and a positive expenditure multiplier imply that fiscal policy in South Asia amplifies boom‐and‐bust cycles. These results are in line with those of other emerging markets and developing economies and robust to different model specifications and estimation strategies.     

空间外部性视角下的地方政府支出策略互动模式

运用空间面板计量方法研究了分税制改革以来中国地方政府支出的策略互动模式。结果表明,基本建设、文教科卫和预算外支出具有显著的空间自相关性,表现出策略互补,行政管理支出则由于地方财力情况的差异形成策略替代,效益外溢性、财政竞争机制和标尺效应在其中交替发挥了主导作用。财政收支分权对支出策略互动模式的影响效果并不一致,扩张支出分权将加剧以基建支出为主的地方政府竞争。财政分权的改革方向是使地方政府在一定程度上拥有收入自主权,中央适当上收具有强烈区域外溢性的公共品供给责任,降低地方非正式收支自主权,从制度层面营造地区间协调有序的竞争关系。     

EU fiscal stance vulnerability: Are the old members the gold members?

This paper investigates the effect of aggregate shocks on the fiscal stance of the EU, and of its old (OMS) and new (NMS) member states over a business cycle. The fiscal stance is measured by the government deficit. To study the impact of aggregate shocks, we use impulse responses derived from a pooled structural vector autoregression model estimated on annual panel data. We find that the fiscal deficits of OMS could be vulnerable to discretionary changes in government expenditures and revenues. In contrast, the fiscal stance of NMS shows vulnerability to GDP shocks, because the increase in revenues after a positive GDP shock is often outpaced by greater expenditure increases in NMS. The estimated fiscal vulnerabilities stem from disproportionate policy responses concerning government expenditures and a lacking discipline to control pro-cyclical fiscal spending. Our findings for the EU thus support application of fiscal rules focused on government expenditure rather than other fiscal variables.