The growth effects of tax rates in the OECD

This paper explores the merits of macro‐ and micro‐based tax rate measures within an open economy “fiscal policy and growth” model. Using annual data for 15 OECD countries we find statistically small, non‐robust long‐run growth effects of macro‐based average tax rates on capital income and consumption, but some evidence for average labour income tax effects. Changes in “micro” marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.     

Sustainable Development and Corporate Financial Performance: A Study Based on the FTSE4Good IBEX Index

The social and environmental aspects of business investment and financing are becoming increasingly important. Most studies on corporate social responsibility (CSR) focus on analysing the relationship between company performance in the financial and social fields. However, the results obtained have not been conclusive, mainly due to the variables used to measure CSR. In order to simplify its measurement, in this work we used an empirical analytical method to determine possible differences between the financial variables of firms considered to be socially responsible and those not considered to be such. The results obtained show that socially responsible corporations obtain higher profits for the same level of systematic risk and show greater sensitivity to market changes, leverage levels and company size. This pioneering study is the first to make use of the first, and at the present time only, Spanish sustainability index, the FTSE4Good IBEX. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

What Do OECD Countries Cut First When Faced with Fiscal Adjustments?

Following the present scale of fiscal imbalances in developed countries, significant fiscal consolidation will be inevitable in the coming years. Fiscal discipline will require cuts in government expenditure, leading to trade‐offs between different components of government expenditure. In this article, we explore the relationship between components of government expenditure and government size during the period 1970‐2007 for a sample of 25 developed countries to shed light on how fiscal discipline might influence public spending composition in the coming years. Using the Pooled Mean Group estimation we find that fiscal adjustments protect functions that have both a social and productive character, such as education and health spending. In addition, the most productive spending, that related to transport and communications, is also isolated from budgetary cuts. This result shows evidence of governments reacting to the voter's increasing realization that reducing productive expenditures harms long‐term economic growth by striking a balance between utility and economic‐growth‐enhancing expenditure.     

Monitoring credit risk in the social economy sector by means of a binary goal programming model

Monitoring the credit risk of firms in the social economy sector presents a considerable challenge, since it is difficult to calculate ratings with traditional methods such as logit or discriminant analysis, due to the relatively small number of firms in the sector and the low default rate among cooperatives. This paper introduces a goal programming model to overcome such constraints and to successfully manage credit risk using economic and financial information, as well as expert advice. After introducing the model, its application to a set of Spanish cooperative societies is described.     

Self-interest and fairness: self-serving choices of justice principles

We introduce non-enforceable property rights over a bargaining surplus in a dictator game with production, where the agent’s effort is differentially rewarded and subsequently determines the size of the surplus. Using experimental data, we elicit individual preferences over the egalitarian, accountability and libertarian principles and provide evidence to support the inability of these justice principles to individually account for the observed behavior. We show that the justice principle that can be used to explain dictators’ choices depends on whether dictators are paid more or less than recipients for their effort. Our findings suggest that dictators do employ justice principles in self-serving ways and choose in each context the justice principle that maximizes their financial payoffs.     

Random non-response in multi-character surveys

In the present investigation, we have made first shot to propose an alternative estimator of population total, in the presence of random non-response, for multi-characteristics by using probability proportional to size and without replacement (PPSWOR) sampling when the selection probabilities are poorly correlated with the study variables. The mean square error (MSE) expressions are derived for the proposed estimator. The behavior of the proposed estimator has been examined under super population model. An empirical study has also been carried out to look into the performance of the proposed estimator. The proposed estimator has been applied to real data set.     

Can migration reduce civil conflicts as an antidote to rent-seeking?

In this paper, I investigate whether access to migration reduces the positive effect of natural resources on the onset of civil conflicts shown in the literature. There is a negative and significant correlation between the interaction variable “migration rate-natural resources” and the probability of outbreak of civil wars, showing that the effect of natural resources is conditional on the migration rate. Simulations to quantify the marginal effects of the interaction term show that a migration rate equal to 6% or higher dampens the effect of natural resources on civil wars. To address the potential endogeneity problem in estimating the relationship between civil conflicts and migration, although I distinguish economic migrants from refugees, I also use an IV approach. In this respect, the negative effect of the two interacting variables on the probability of outbreak of civil wars remains robust after having instrumented the migration rate by using the gravity-based predicted emigration rate. Given the endogenous nature of the ratio of primary exports to GDP, in addition, the study directly utilizes the emigration rates as an alternate robust method to estimate the primary issue on civil conflicts. The results show that only the civil conflicts caused by natural resources are negatively impacted by emigration rates.     

Real Convergence and European Integration: The Experience of the Less Developed EU Members

This study aims at providing an assessment about real convergence across countriesand regions in the EU, focusing more specifically on the four cohesion EU members.The results show that in the course of the last few years a process of convergence hastaken place between the per capita income levels of the EU regions and also, to a largerextent, of the Member States. Nevertheless, advances in real convergence are largelydetermined by the growth strategy implemented by the countries themselves. Lastly,our study suggests that the Community's regional policy has played a significant rolein favor of real convergence between the Member States of the EU. One importantlesson to be drawn is that the accession is likely to contribute significantly to improvingthe possibilities of the current Central and East European countries (CEECs) candidatesin aligning their per capita income levels with those of the EU members.     

Migration outflows and optimal migration policy: rules versus discretion

We study the effects of more open borders on return migration and show that migrants are more likely to return to the origin country when migration rules are softened, because this implies that they could more easily re-migrate if return migration is unsuccessful. As a result, softening migration rules leads to lower net inflows than is generally acknowledged. We show that if government follows rules to shape the optimal migration policy, it will choose more open “borders” than were its behaviour to be discretionary. However, this requires an appropriate commitment technology. We show that electoral accountability may be a solution to the commitment problem. As a matter of fact, observed softer immigration rules in western countries suggest the effectiveness of such a mechanism.     

The role of ageing in the growth of government and social welfare spending in the OECD

Government expenditure as a share of GDP in the OECD rose at an annual growth rate of 1.02% in the period between 1970 and 1997. Government spending has increased most on functions particularly demanded by elderly population: social welfare, health and defence. Ageing is the main driving force of the growth of government spending, followed by relative prices and population. However, we also find that the other age groups react to ageing, thereby preventing increases in benefits per retired persons and that institutional reforms have been successful at reducing the impact of ageing on pensions in recent years.