The Tax‐smoothing Hypothesis: Evidence from Sweden, 1952–1999

This paper tests Barro's (1979) tax‐smoothing hypothesis using Swedish central government data for the period 1952–1999. According to the tax‐smoothing hypothesis, the government sets the budget surplus equal to expected changes in government expenditure. When expenditure is expected to increase, the government runs a budget surplus, and when expenditure is expected to fall, the government runs a budget deficit. The empirical evidence suggests that the model provides a useful benchmark and that tax‐smoothing behavior can explain about 60 percent of the variability in the Swedish central government budget surplus.     

An incremental budgeting model of local public expenditure setting in the presence of piecewise linear budget constraints

This Paper develops and tests an incremental budgeting model of local government expenditure decisions using data on British local government. The model introduces two distinctive feautures into the incremental budegeting literature. Firstly, it takes explicit account of the availability of an independent source of revenue for jurisdictions (in this example, a local property tax). And secondly it shows how it is possible to develop satisfactory emperical models when budget constraints are only piecewise linear. The model is shown to perform well, both in explaining within-year variability in budgeting decisions, and in predicting subsequent budgets under revised budget constraints.     

关于编制国有资产经营预算的探讨

编制国有资产预算必须遵循支出,市场,数量和对应四个准则,收入方面划分为经营收益,资产转移,信用性,特许权和转移性收入,支出方面划分为资本性,费用性,债务性,转移性和其他支出。其预算平衡应特别注意公共预算结余转入,公共预算专项拨款,国有资产经营预算对社会保障预算的专项拨款和债务等几个问题,改革国家原有预算制度,建立新的国有资产经营预算的目的在于政府一般职能与资产占有,使用,经营职能分开。     

The Federal Budget: How Much Difference Do Elections Make?

This article examines the budget process as a selection of priorities and how these priorities change over time with changing economic circumstances. Labor governments spend more on health, employment creation schemes, on welfare housing but less on industry assistance and on assisted immigration. The rate of growth of expenditure on social security decreased sharply after 1975. The revenue section examines how different governments have restructured the tax system. Broadly, the McMahon government pursued mildly progressive tax policies, the Whitlam government strongly progressive tax policies. Fraser's tax policies were regressive (except for taxpayers with children), with the Hawke government's policies in this area being nearer to Whitlam than to McMahon. Grouping budgets into election, pre-election and post-election budgets provides interesting contrasts. In terms of current (1984–85) prices the 'average' election budget produces tax cuts of $2300 million and expenditure increases of around $1 600 million. The two budgets which preceded the loss of office by the two Liberal Prime Ministers produced particularly large outlay increases. The categories of outlays which show evidence of being used as election-bait are identified.     

地方政府财政支出的结构偏异——基于跨界公共事务的视角*

本文通过理论分析发现,我国地方政府不仅存在生产性支出偏好,还会在外部性和信息不对称等因素影响下,改变其对跨界公共事务的资金投入。在“量入为出”预算编制原则下,本文利用2010—2019年我国31个省级政府面板数据,实证分析了地方政府一般公共预算收入对跨地区民生性支出、跨地区生产性支出、地区民生性支出和地区生产性支出四类财政支出的影响。结果表明：在全国层面上,跨地区生产性支出受财政收入的影响最大,地区民生性支出次之。比较三类地区的结果发现,区域内政府竞争强度越高,地方政府对外部性的重视程度越强,因而当地用于跨界公共事务的资金会越少。从不同类型财政收入对财政支出的影响结果来看,只有间接税收入可以同时对三类地区财政支出产生显著影响。最后根据研究结论,本文提出了相应的政策建议。     

Tax and spend or spend and tax? An empirical investigation for Austria

The aim of this contribution is to discriminate between the rivallingspend and tax andtax and spend hypotheses in order to check empirically the relationship between government spending and taxation decisions in Austria. For that purpose, the authors estimate a tri-variate structural VAR Model of Austria's public sector that, besides expenditures and revenues, includes aggregate income as an additional variable. They implement impulse-response functions and frequency domain techniques in order to identify the causal relation between government outlays and receipts. The budget making process is interpreted as an error correction model which allows to estimate to what extent revenues and expenditures are adjusted whenever the government sees its long run budget constraint violate. The empirical findings strongly support the spend and tax view that budget decision-making is significantly dominated by the expenditure side in Austria.We are gratefully indebted to Peter Weiss and three anonymous referees for many valuable comments and suggestion.     

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.     

The economic analysis of lotteries

This paper considers policy issues arising in the design, regulation and taxation of lotteries, focusing on the market for an on-line lottery game. Demand determines who buys lottery tickets and in what quantities. The design of lotteries affects the terms on which tickets are supplied.
UK data suggest that its lottery may be priced too high to maximize lottery revenue – more revenue might be raised if the proportion of sales allocated to tax and other levies were smaller.
Having established the positive economics of lotteries, the paper then assesses their welfare implications. Pari-mutuel lotteries enjoy scale economies and, as natural monopolies, are invariably run either by government agencies or a regulated licensee. I estimate consumer surplus and identify the excess burden that arises from existing (over)taxation of lotteries. The large price elasticity of demand implies that revenue raised from the lottery is raised very inefficiently. Moreover, the demand for lottery tickets is inferior (and there is some evidence that such games are contagious and addictive). So using lotteries as a vehicle for raising revenue is extremely regressive. Finally, I consider other policy implications: induced effects on charitable giving and on other forms of gambling; the impact on the government budget; perceptions of risk; and distributional considerations.     

THE IMPACT OF GOVERNMENT DEFICITS ON PERSONAL AND NATIONAL SAVING RATES

This study provides fresh evidence on the responsiveness of private consumption and, by implication, saving to government deficits. It focuses on consumption and saving from 1981 to 1989, a period during which the personal saving rate was characterized as surprisingly unresponsive to high federal budget deficits. The authors attempt to determine whether this experience is consistent with previous behavior. They also test whether this experience refutes the Ricardian Equivalence Proposition (REP), under which consumers incorporate the government's intertemporal budget constraint into their own.
The analysis involves estimating two consumer expenditure functions based on two measures of current income capable not only of explaining expenditure behavior during the postwar period but also of successfully forecasting out of sample into the 1981–1989 period. Only one model is consistent with the REP, but neither model indicates that high government deficits caused the drop in the national saving rate experienced during the 1980s. Both models predict similar short-run responses to shifts in the government deficit. The responses depend crucially on the mix of tax and expenditure changes used to achieve the deficit shift. Both consumption and saving are more responsive to changes in government expenditures on goods and services than they are to changes in taxes.     

Import Protection Bias

Rodrik (1995) notes that trade regimes tend to be biased towards import protection, while the standard political economy models either yield no prediction on the bias of the trade regime or predict, counterfactually, a bias towards the export sector. This constitutes an important shortcoming in the political economy of trade literature. In this paper, the Grossman and Helpman (1994 ) “Protection for Sale” model is extended by adding government expenditure. This expenditure may be financed via a combination of tariff revenue and a distorting wage tax. In addition to the government expenditure, export subsidies need to be financed either via tariff revenue or a distorting wage tax. With this addition, plausible values of the model's parameters yield import protection bias.     

The Role of State Fiscal Policy in State Economic Growth

Do state policy makers have the ability to affect a state's rate of economic growth? This article examines one possible source of growth and per capita output level disparities by studying the role that state taxation and public expenditure decisions play in fostering economic development. Using pooled annual U.S. state‐level data from 1972 to 1998, a fixed‐effects model is employed to examine the effects of changing tax rates on both state per capita output levels and growth rates. The results indicate that higher tax rates negatively influence short‐run state economic growth, which lowers state output levels. However, long‐run growth is unaffected by changes in state tax rates, even after adjusting for the effects of initial per capita output levels, state expenditures, and aid from the federal government. Nor do changes in state public spending rates and federal aid permanently alter state growth rates, implying that state fiscal policies have only transitory effects on state growth. (JEL H71, O40, R11)     

THE DECLINE OF CHINA'S BUDGETARY REVENUE: REASONS AND CONSEQUENCES

The decline of the government revenue share in GDP has become a major concern for Chinese policy makers and many economists. This article analyzes the reasons and the consequences of low government budgetary revenue in China. It is argued that lowered corporate tax rates, small tax bases, and tax evasions are the main reasons for the decline of government revenue share in GDP. Low budgetary revenues have resulted in low budgetary expenditures and growing budget deficits, stimulated the expansion of extra-budgetary and off budgetary revenues, and made the privatization of state enterprises more difficult. This article also discusses policy options for China.     

经济发展、老龄化与政府债务累积的加速效应

本文基于世界63个经济体1996—2016年的面板数据,运用静态、动态门槛回归模型研究了老龄化对政府债务规模的加速效应。研究表明,从长期来看,老龄化不仅能对政府债务产生显著的正向冲击,而且对于相对发达的经济体而言,老龄化对政府债务累积的影响更大。文章政策含义是,为了减缓加速效应,一方面我们需要通过提高全要素生产率、优化税收结构、完善国有资本划转等方式保持政府收入稳健增长,另一方面需要打破养老支出刚性,使其增长幅度与经济增速和政府收入增速相匹配。     

The growth impact of discretionary fiscal policy measures

This paper looks at the impact of discretionary fiscal policy on economic growth for a sample of 18 EU countries over the period 1998–2011. The main novelty of this paper is the use, on the revenue side, of a dataset of fiscal measures based on the yield of actual legislative and budgetary measures, rather than approximations, such as changes in cyclically-adjusted variables. Using static and dynamic panel data techniques, we find that fiscal consolidation generally has a negative impact on growth in the short run, although some specific budget categories are not found to be statistically significant. In general, expenditure-based measures are found to have a slightly lower detrimental effect on growth compared to revenue measures, although the difference is not statistically significant. Among expenditure cuts, reductions in government investment and consumption are found to be growth reducing. Among revenues, indirect tax increases are found to have a particularly strong negative impact. Dynamic specifications suggest that consolidation reduces growth mainly in the year of fiscal adjustment, while future growth rates are affected only through the usual time persistence. Non-linear specifications indicate that spreading out consolidation may reduce the negative impact on growth slightly, and there is weak evidence that this is especially the case for revenue-based adjustment.     

我国财政政策非线性效应的 实现机制及动态特征研究

本文基于财政调整时期的内生划分方法，采用STR模型对于我国1980-2012年间财政政策非线性效应的实现机制与动态特征进行实证分析，结果发现：一是我国财政政策非线性效应主要是经由消费渠道发生，而且是通过影响消费者预期产生。二是财政政策非凯恩斯效应在不同条件下与财政政策工具之间的搭配组合存在一定差异。其中，当基本预算余额/潜在GDP小于临界值-0045 0时，财政收入对居民消费需求存在非凯恩斯效应；反之，财政支出表现出一定程度的非凯恩斯效应。三是财政政策调整的幅度是居民消费需求非凯恩斯效应产生的重要因素，但财政政策调整的组成成分与政府的初始债务规模不是非凯恩斯效应产生的先决条件。本文研究结论不仅可以为政府制定财政政策提供理论依据与决策参考，还有助于改善我国财政政策实践的操作效率和运行效果。     

Majority Voting over Publicly Provided Goods, Redistribution, and Income Taxation

Federal, state, and many local governments make decisions that involve taxation, redistribution, and provision of public goods. Positive models to study these issues encounter the well‐known problem that majority‐voting equilibrium (MVE) may fail to exist in such multidimensional models. In this paper, with reasonable restrictions on preferences, I provide sufficient conditions for the existence of an MVE in a model with linear income tax and government expenditure policies that affect individual labor/leisure choices. My majority‐voting result takes account of the possibility that low‐skill individuals will drop out of the labor force under some tax and expenditure configurations.     

Tax Expenditures on Health in Australia: 1960–61 to 1988–89

Commonwealth government tax expenditures arise because departures from the tax structure produce favourable tax treatment of particular types of activities or taxpayers. Such tax concessions can be used in the same way as direct expenditures to give effect to government policies, and in fact are often used as substitutes for direct expenditures. Although estimates of tax expenditures on health in more recent times are readily available, this form of subsidisation of the health sector has not been used heavily since the introduction of Medicare in 1984. It is for the period spanning the 1960s and the 1970s, when tax expenditures were a much more important source of health care finance, that consistent estimates are lacking. This article presents estimates of the revenue cost of income tax concessions for health in Australia over the period 1960–61 to 1988–89 and integrates these estimates into the currently available health expenditure statistics. It is concluded that failure to allow for tax expenditures on health when analysing public expenditures on health in Australia can lead to misleading conclusions about the net fiscal impact of changes in the Commonwealth's health expenditure policy. In particular, the fiscal effect of introducing Medihank in 1975 is significantly lower if account is taken of changes to tax concessions on health occurring at the same time. Likewise, the net cost of the introduction of Medicare in 1984 is overstated by measures based on direct outlays alone.     

POTENTIAL STATE‐LEVEL CARBON REVENUE UNDER THE CLEAN POWER PLAN

In 2015, the U.S. Environmental Protection Agency issued the Clean Power Plan under which each state can set a mass‐based target to meet its assigned electric power sector carbon dioxide emission reductions. If it proceeds, states can design policies to meet those requirements and also raise revenue via a carbon tax or cap‐and‐trade program with auctioned permits. We calculate each state's potential revenue and demonstrate its significance. In 13 states, carbon revenue could replace all of corporate tax revenue. In addition, we collect budget projections from six key states to determine if and how carbon revenue can substantially reduce deficits. While such revenue is not free money, we discuss its advantages over use of distortionary taxation. Finally, we consider distributional aspects and potential external fiscal effects on federal revenue. (JEL H2, H3, H7, Q5)     

The estimation of British local government expenditure decisions under a piecewise linear budget constraint

In the light of the reforms that have affected local government finance in Britain, the empirical analysis of local government responses to the changes in the grant system has become a topical subject because of its policy implications. Barnett et al.proposed different models to predict the likely impact of the reforms on local government expenditure but never tested ofr the validity of the functional form used in their model. The main reason for this omission is related to the piecewise nature of the budget constraint faced by local authorities which complicated the estimation techniques and restricted the choice of the functional forms that could be used. The presented here tests for the validity of the functional form using data for the three fiscal years that preceded the poll tax reform, namely 1986–87 to 1988–89 and suggests specific tests to compare the parameters obtained using different models. The main conclusion of the analysis is that only the behaviour of metropolitan districts is consistent with utility maximization.     

THE FISCAL POLICY RESPONSE TO PUBLIC DEBT IN DEVELOPING COUNTRIES

Theoretical models on fiscal sustainability hypothesize that indebted governments can lower their current debt by generating future primary surpluses, ceteris paribus. While both developed and developing countries struggle with the issue of debt stabilization, the latter, in particular face heightened sensitivity from creditors, which provides them an impetus to respond more strongly to stabilize their debt. Based on a panel of 53 developing countries, we examine the fiscal response of these countries to changes in their debt‐to‐gross domestic product ratio. We find evidence of a positive relationship between the debt and primary surplus and that countries adjust along both the revenue and expenditure margins at roughly the same rate. (JEL E62, H50, O11)