The regional impact of health care expenditure: the case of Italy

Decentralization invests the subcentral authorities of a country with autonomy in political and economic power the exercise of which may widen interregional divergence and inequality. This paper provides evidence demonstrating that in the case of Italy the central government's policies for rationalization and containment of the growth of health care expenditure in combination with decentralization in the administration and provision of health care have resulted in interregional inequality, aggravating the existing regional divergence.     

Persistence and determinants of income inequality: The Brazilian case

Latin America, which is a region known for its high and persistent income inequality levels, experienced a significant decline in income inequality since the second half of the 1990s. Brazil is a particularly interesting case in Latin America. While the country presented notable economic growth and improvements in income distribution in the early 2000s, Brazil continues to experience high levels of income inequality in comparison with other Latin American or advanced economies. This research contributes to the literature by examining the key drivers of income distribution and the degree of persistence of income inequality among Brazilian states. This research also improves upon previous works by using more recent and comprehensive data and addressing concerns regarding heterogeneity and endogeneity by using the system GMM estimation method. Our findings show that income inequality is highly persistent across Brazilian states and that government policies including income transfer programs made important contributions to reduce income inequality in Brazil. This study also shows that the decline in labor income ratios between different ethnic groups and the increase of the share of formal jobs in the labor market contributed to reduce income inequality.     

Environmental Policy in Developing Countries: A Dynamic Analysis

A dynamic model is constructed of the environmental policy formulation process in a stylized developing country (DC). The paper analyzes the employment and output effects of three pollution control policies. These policies embody different assumptions about the DC government's ability to commit to its announced course of action. The timepath of the government's policy variable is characterized. Optimality calls for an activist policy, irrespective of the length of time to which the government can commit to its announced policy. However, the effects of this activist policy depend fundamentally on the government's period of commitment.     

The impact of the Indonesian income tax reform: A CGE analysis

This study evaluates the impacts of Indonesia's recent income tax reforms on key macroeconomic variables, as well as the impacts on poverty and income distribution. It was found that the reductions in personal income tax and corporate income tax increase economic growth under a balanced budget assumption. The policy reforms also lead to a small reduction in the incidence of poverty. However, the policies also lead to an increase in income inequality because the tax cut is more beneficial to households in the highest income categories. It is recommended that future tax cuts should target the urban and rural poor.     

INCOME AND WEALTH INEQUALITY: EVIDENCE AND POLICY IMPLICATIONS

Drawing on the author's work, this lecture presents evidence on U.S. income and wealth inequality. It presents series for top income and wealth shares, and the distribution of economic growth by income groups. It discusses the mechanisms behind the evolution of U.S. income and wealth inequality from historical and comparative perspectives. It analyzes the role of public policy and in particular taxation in the evolution of inequality. (JEL D31, F66, J24)     

War finance and the baby boom

In this paper, I extend the Barro–Becker model of endogenous fertility to incorporate specific fiscal policies and use it to study the effects of the fiscal policy changes following WWII on fertility in the United States. The US government went through large changes in fiscal policy after the beginning of WWII. The marginal income tax rate for an average American jumped from 4% on average before 1940 to approximately 25% during the war and stayed around 20% afterwards. The government debt–GDP ratio jumped from approximately 30% on average before WWII to 108% in 1946 and then dropped gradually in the following two decades to about 30% again at the end of 1960s. I find that the dramatic increase in the marginal income tax rate was an important cause of the postwar baby boom in the US because it lowered the after-tax wage and thus the opportunity cost of child-rearing. I also find that the differential change in taxes by income was an important reason why the baby boom was more pronounced among richer households (as documented by Jones and Tertilt, 2008). Furthermore, I argue that the government's debt policy may also matter for understanding fertility choices because government debt implies a tax burden on children in the future and thus affects their utility, which is a key determinant of current fertility choice in the Barro–Becker model. The results of a computational experiment show that the US government's postwar debt policy also contributed to the baby boom, but its quantitative importance is relatively small.     

Economic Integration,Growth and Income Distribution

This paper constructs a two‐sector growth model with heterogeneous labour, to explore the impact of the economic integration on growth and income distribution. There are two sectors in each country, including the consumption‐good sector and the R&D sector. We suppose that the R&D sector produces new blueprints or ideas for these innovations, and hence provides the engine of growth. Assume that the talent's distribution of workers is the uniform distribution. We show that the economic integration will stimulate the developing countries' economic growth and then decrease its income inequality. In addition, we also demonstrate that if the growth rate of the advanced country rises after the integration, then income inequality of that will increase, and vice versa.     

The impact of macroeconomic factors on income inequality: Evidence from the BRICS

In this paper we investigate how the evolution of income growth, real interest rates, and inflation have driven income inequality across a variety of countries with particular focus on the BRICS economies (Brazil, Russia, India, China, and South Africa) during the period 2001 to 2015. Our work suggests that, when central banks of the BRICS economies use monetary policy for macroeconomic stabilization, they need to consider the impact monetary policy changes have on the distribution of income in their nations. Our estimates reveal that the unintended consequence of policies that induce economic growth and higher prices is higher income inequality. We find that the positive relationship between the three macroeconomic variables and income inequality for the BRICS economies is stronger during the post-2008 period.     

Economic Reform and Corruption: Evidence from Panel Data

The notion that economic reform can reduce corruption remains prevalent in the policy agenda of international financial institutions, especially of the World Bank. Economic reforms have, therefore, been carried out throughout various parts of the world to improve the performance of the economies. Using data from 94 low‐ and middle‐income nations for the period 1996–2015, this study employs static and dynamic panel analysis to examine whether economic reform undertaken in accordance with the World Bank's reform programs negatively affects corruption. Our findings suggest that enhancing government effectiveness (i.e. independence of civil service from political pressure, provision of quality public services, effective policy formulation and the government's commitment to such policies) and improving public rights and civil liberties could be some of the most promising policies in terms of fighting corruption. The role of economic development and growth in real per capita income is also found to be significant in some of the specifications. However, the assertion that economic reform can reduce corruption is rejected in all the specifications. We rather find evidence that economic reforms negatively affect the ability of democracy to fight corruption, although on a slim margin. The central theme of the implications of our findings is that in combating corruption, social, institutional and legal means are far more important than economic means. The finding thus is compatible with the World Bank's effort in the later years to introduce governance and democracy as effective tool against corruption.     

Transactions technology and the time consistency of optimal policy

In a perfect foresight, continuous time model of the macro economy. Turnovsky and Brock (1980) have demonstrated that the government's choice of an optimal policy will be time inconsistent only if it is bound by a k% rule regarding the growth of nominal monetary balances. This result is shown to be invalid when bonds bear a liquidity yield. Under such circumstances, it is shown that all optimal policies are time inconsistent. The conclusion is that the liquidity properties of the government's financing instruments play an important role in determining the consistency properties of its optimal policies.     

TARIFF FORMATION IN A MULTIDIMENSIONAL VOTING MODEL*

The theory of endogenous trade policy formation argues that tariffs emerge from the political process. This occurs because of conflicting economic interests trying to redistribute income in their favor through the adoption of suitable trade policies. Mayer and Riezman (1987) questioned this view arguing that if individuals differ only in factor ownership they would always prefer some tax/subsidy policy to tariffs. Here we allow individuals to differ not only with respect to factor ownership, but also with respect to consumption preferences and income tax treatment. We show that tariffs might be the social decision even though nobody's individual preferences suggest tariffs as the best choice.     

The distribution of income in Sri Lanka in 1969–1970 and 1980–1981: A decomposition analysis

In 1977 the Sri Lankan government implemented a comprehensive policy of economic liberalization, removing many government controls on the economy and providing incentives for both foreign and domestic investment. The previous policies were often justified as necessary to maintain an equitable distribution of income. Income data from 1969–1970 and 1980–1981 surveys indicate that inequality has increased, but these data are shown to be unreliable for drawing conclusions on changes in the distribution of income. Expenditure data from the same surveys indicate that inequality has declined in the 1970's, both in the economy as a whole and within all sectors and ethnic groups.     

The Making of Pro‐Poor Growth

A system of three endogenous equations is used to estimate the determinants of poverty dynamics. The system incorporates: (i) the direct effect of growth and income inequality on poverty, (ii) the feedback effect of poverty on inequality and growth, and (iii) different channels through which economic policies can contribute to poverty reduction. Results suggest that countries tend to move towards one of two possible equilibria. The positive (virtuous) equilibrium is characterized by fast growth, decreasing inequality, and rapid poverty reduction. The negative (vicious) equilibrium involves slow (or even negative) growth, sharpening inequalities, and resilient poverty. The policy mix is critical in determining to which of the two equilibria a country converges.     

The Political Economy of IMF Conditionality: A Common Agency Model

The paper models the relationship between an aid‐providing international financial institution (IFI) and an aid‐receiving government whose economic policy choices are influenced by a domestic interest group. Two assistance schemes are evaluated: conditional aid in which the IFI makes assistance contingent on less‐ distorting economic policies and unconditional aid which is provided without such conditions. Conditional aid is shown to raise welfare of the receiving country and the world as a whole relative to unconditional aid. The paper also examines how conditional and unconditional aid schemes are influenced by the IFI's opportunity cost of providing assistance and the receiving government's political dependence on a domestic interest group.     

Reexamination of Economic Growth, Tax Policy, and Distributive Politics

The paper examines the relationship between economic growth, tax policy, and distribution of capital and labor ownership in a one‐sector political‐economy model of endogenous growth with productive government spending financed by a proportional tax on capital income. The analysis shows that inequality in wealth and income can be positively or negatively related to the optimal tax rate. In either environment, higher inequality leads to a lower after‐tax return to capital, thereby reducing the economy's growth rate.     

Income inequality in China: causes and policy responses

The phenomenal economic growth in China has been accompanied by a rapid increase in income inequality. This paper reviews the historical trends and patterns of income inequality in China, discusses the potential causes underlying rising income inequality, and applies the functional distribution of income approach in understanding China’s income inequality. This analytical approach highlights how rising return to capital relative to wage incomes can be an important source for increasing income inequality in China. The paper provides the evidence which shows that the rapid economic growth in China has been relying on a model that pays high returns to various kinds of capital including financial capital and real estate, while the ownership of capital is very unequal. This finding prompts us to rethink about the causes of China’s income inequality and to formulate appropriate policies based on the new way of understanding this pressing issue of income distribution in China.     

The Convergence Analysis of Chinese Regional Inequality

Based on the convergence theory, this paper discusses Chinese regional economic inequality among 30 provinces, which are divided into three groups, that is, Traditional Advanced Regions group, New Advanced Regions group and Less Developed Regions group. It is verified that regional income growth does not present absolute beta convergence or sigma convergence, but presents conditional beta convergence from 1978 to 2003. Those economic policies of reform and opening-up to the outside world are provided with regionally heterogeneous characteristics and are powerful enough to influence regional performance in growth.     

Income inequality and economic growth in an open economy

Income inequality has a strong impact on fiscal policy when majority voting enables those individuals with less-than-average income to decide on tax rates. This study analyzes the impact on economic growth of income inequality in an open economy where tax revenues are partially used for international transfers. In any case, income inequality is harmful for growth. In an economic union, positive effects of international integration raise the growth rate as long as net transfers do not grow proportionally. In a political union, unionwide voting makes distributive politics depending on the union's median voter. In this case, additional output growth on aggregate level is a necessary, but not sufficient condition for a majority of voters to accept union membership.     

收入差距对我国经济增长的影响

经济增长和收入差距之间的相互影响,值得深入研究。伴随着我国的改革开放和经济的快速增长,居民收入差距日益拉大。如果说改革开放的早期,“允许一部分人先富起来”的政策推动了经济增长的话,那么,收入差距的进一步扩大对后来的经济增长却产生了一些不容忽视的负面影响。把收入差距控制在一个合理的范图之内应成为我国经济持续发展过程中一个重要课题。     

碳税再循环分配效应演化博弈研究

促进企业低碳生产和消费者绿色消费,是在社会经济高质量发展条件下实现碳达峰、碳中和目标的充分保障。构建由地方政府、企业和居民多主体构成的碳税再循环系统,结合当前中国国民收入水平和低碳经济发展状况,利用三方演化博弈理论研究多主体策略选择的演化过程,并应用Python程序设计语言对整个演化过程进行数值仿真,探究地方政府不同的补贴策略、产品的收入需求弹性和需求价格弹性等变量对碳税再循环分配效应的影响。研究结果表明：在低碳补贴和收入补贴策略之间,地方政府实施前者更能够促进居民绿色消费和企业低碳生产,但实施后者有利于改善收入不平等问题,同时产品的收入需求弹性和需求价格弹性差异也会影响地方政府碳税返还政策的效果。