Tax Administration Reform and Taxpayer Compliance in India

This paper evaluates effects on tax compliance of simple reforms in personnel policy in the Indian income tax administration. Taxpayers voluntarily disclosing higher incomes are currently assigned to special assessment units. To avoid this, high income taxpayers have an added incentive to understate their incomes. Empirical evidence consistent with this hypothesis is found. It explains spillover effects of enforcement efforts across assessment units. We incorporate these spillovers in estimating revenue effects of increased support staff. The results imply significant compliance gains would accrue from expanded staff employment and changes in assignment procedures for staff and taxpayers.     

United States Trade Balance Announcements: The Nature of its Data Revisions

This paper examines the nature of the data revisions in the monthly United States trade balance announcements made by the Commerce Department. Previous work in this area have considered agent reactions to only the preliminary trade balance announcements on various asset prices and have not taken into account the revised figures of the previous month's trade balance announcement. Since Ghosh and Lien (1995) found that the revisions in the data announced by the government are taken into account by the agents, it leads us to further investigate the nature of these revisions. This paper uses the econometric approach described in Mankiw, Runkle and Shapiro (1984) and Mork (1990) to analyze whether the revisions in the US trade balance announcements represent measurement errors, efficient forecast errors, or inefficient forecast errors. Using the generalized method of moments estimation procedure the researcher finds that the preliminary announcements of the trade balance data are better characterized as observations of the true series measured with error rather than as efficient forecasts. The results are of interest to the users of these preliminary US trade balance announcements since it suggests to them that they could use statistical procedures to estimate the underlying value and thus obtain more efficient estimates of these government announcements.     

Productivity,Wages and Human Capital

Journal of Quantitative Economics - The present paper considers cost-sharing contracts in the presence of firm-specific training and examines the optimal wage profiles in a hierarchical firm. Our...     

Intermediate goods and the optimum tariff structure under neutral tariff retaliation

Zusammenfassung Zwischenprodukte und die optimale Zollstruktur bei der Anwendung neutraler Vergeltungsz?lle. — In dieser Arbeit werden neutrale Vergeltungsz?lle als solche definiert, bei denen die Wirkung auf das Realeinkommen des anwendenden Landes in einem Zwei-L?nder-Fall gleich Null ist. Hiervon ausgehend wird das Realeinkommen des Inlandes in bezug auf nichttarif?re Variable, wie z. B. die relativen Weltmarktpreise, maximiert. Die beschr?nkten Optimall?sungen ergeben Z?lle, von denen die optimale Struktur der Importz?lle auf Zwischen- und Fertigprodukte abgeleitet wird. Bei dieser ganz untraditionellen Betrachtung der Gegenmas Bnahmen im Zollbereich ergibt sich, da\ manchmal eine ann?hernd lineare Tarifstruktur optimal ist, bei der die S?tze für Endprodukte h?her als die für Zwischenprodukte sind, und da\ au\erdem beide Arten von Zolls?tzen im Inland von den Zolls?tzen sowohl auf Zwischen- als auch auf Fertigprodukte im Ausland abh?ngen k?nnen.

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Résumé Les produits intermédiaires et la structure de tarif optimum sous la révanche neutre tarifaire. — En définissant la révanche neutre tarifaire comme l–effet associé de revenu réel de nul concernant le revenu du pays de référence en contexte du commerce entre deux pays et en l–utilisant comme supposition, cet article maximise le revenu réel du pays de référence en correspondant aux variables nontarifaires comme par exemple les cours relatifs du marché mondial. Ces solutions d–optimum restreintes précipitent ses tarifs desquels nous dérivons la structure optimum des tarifs imposés sur les importations des produits intermédiaires et finis. En utilisant cette approche tout à fait non-traditionelle à la révanche tarifaire cet article trouve qu–en quelques cas une structure de tarif à peu près préliminaire est optimum avec des taux sur les produits finis plus hauts que des taux sur les produits intermédiaires et aussi que chacun des taux tarifaires du pays de référence peut dépendre des deux sortes de tarifs en étranger, des produits intermédiaires aussi bien que des produits finis.

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Resumen Bienes intermedios y la estructura de la tarifa óptima bajo una represalia tarifaria neutra. — Definiendo la represalia tarifaria neutra como aquélla que tiene un efecto de ingreso real nulo sobre el ingreso del país de referencia en un contexto de dos países que comercian entre ellos y, utilizando esta definición como supuesto, se maximiza en el presente trabajo el ingreso real del país de referencia con respecto a las variables no tarifarias tales como los precios mundiales relativos. La solución óptima restringida determina las tarifas, de donde se deriva la estructura óptima de tarifas sobre sus importaciones, tanto intermedias como de bienes finales. Utilizando este enfoque poco tradicional para la represalia tarifaria, se encuentra en el presente trabajo, que en algunos casos, una estructura tarifaria aproximadamente lineal es óptima, con tasas para los bienes finales más altas que aquéllas para los bienes intermedios y, que también cada tipo de tasas tarifarias del país de referencia puede depender de ambos tipos de tasas en el extranjero, para bienes intermedios como también para bienes finales.

     

Estimation of multiple poisson means: A compromise between maximum likelihood and empirical bayes estimators

For estimatingp(⩾ 2) independent Poisson means, the paper considers a compromise between maximum likelihood and empirical Bayes estimators. Such compromise estimators enjoy both good componentwise as well as ensemble properties. Research supported by the NSF Grant Number MCS-8218091.     

A Note on Production Efficiency in Oligopolistic Trade Models

In a two‐country segmented markets model with homogeneous product Cournot oligopoly we show that production efficiency improves in the free‐trade regime compared to autarky, if autarky price in each country is lower than both the post‐trade prices—which holds, for example, when preferences are identical. The result holds irrespective of the demand structure, number, and cost distribution of firms in the two countries. The improvement in production efficiency lowers average cost of production which, for some parameterizations, gives rise to higher aggregate profits for all countries in the free‐trade regime (compared to autarky). Though free trade (zero tariffs) improves production efficiency from autarky (prohibitive tariffs), freer trade is not always associated with greater production efficiency.     

Imperfect Asset Substitutability and Current Account Dynamics

In this paper, we present a model of the current account. The model has two variants, one in which assets are perfectly substitutable in investors' portfolios, and another in which they are not. We examine the responses of these two variants of the model to standard shocks, and show that under imperfect substitutability, a valuation effect comes into play. We focus on the external accounts, and examine the role and strength of these valuation effects. Additionally, the imperfect substitutability case allows us to examine the model's response to an exogenous change in investors's portfolio preferences. The model in this paper provides a framework for understanding the experience of the dollar's real value and of the US current account over the last decade.     

The economics and politics of output volatility: evidence from Indian states

Employing data for 1981–2009, this paper examines the factors influencing the volatility of state output, using India as a case study. The analysis appears to suggest that high income states exhibit relatively higher output volatility. At the state-level, the proximate determinants of a decline in output volatility can be traced to financial deepening, government expenditures and institutional quality. Also, state-level political factors are also found to play an important role. In addition, at the macroeconomic level, monetary policy considerations are observed to be the most important factor impacting output volatility.