Cash-cum-in-kind transfers and income tax function

This paper investigates income tax revenues response to tax rate changes taking into consideration that cash-cum-in-kind transfers are used as a redistributive package to the community. First, we show that when cash and in-kind transfers are not tied to be substitute instruments, a marginal income tax increase may unambiguously decrease the quantity supplied of labor (and tax revenues therein). Next, we show that whenever the government chooses the optimum provision for the publicly provided good the tax revenue function has a negatively-sloped part with respect to tax rates except for one case. Last, we consider Brazilian data - PNAD - from 1976 to 2008 to test our theoretical implications. Our estimations suggest a weak evidence in favor of the existence of a La er-type curve for Brazilian income tax revenues data. Moreover, wend that the actual average income tax rate seems to be below the estimated optimum level. In a shorter sample from 1996-1999, we nd evidence that labor supply decreases with tax rate when cash and in-kind transfers are in play. Using a pseudo-panel from the same shorter sample, we try to estimate the elasticity of taxable income, following Creedy and Gemmell (2012) and Saez et al. (2009). We explore a small tax reform between 1997 and 1998 that a ected only the higher income tax bracket, and evidence that Brazil is on the revenue reducing side of the La er Curve, at least for individuals in the higher income tax bracket.

Fracking, China and the Global Economy

We develop an intertemporal model of the international economy, where tradeable intermediate goods are produced with capital, labor and hydrocarbons, and used in the production of non-tradeable consumption and investment goods. The model is calibrated to 176 countries, grouped according to their characteristics. We conduct simulations about key events that are currently reshaping the world e.g., fracking and China's new model of development. The model reproduces closely the recent fall in oil prices and delivers results about the impact on global output and consumption, but also about the propagation to different countries through terms of trade and capital accumulation.