Tax smoothing in a business cycle model with capital-skill complementarity

This paper undertakes a normative investigation of the quantitative properties of optimal tax smoothing in a business cycle model with state contingent debt, capital-skill complementarity, endogenous skill formation and stochastic shocks to public consumption as well as total factor and capital equipment productivity. Our main finding is that an empirically relevant restriction which does not allow the relative supply of skilled labour to adjust in response to aggregate shocks, signi cantly changes the cyclical properties of optimal labour taxes. Under a restricted relative skill supply, the government fi nds it optimal to adjust labour income tax rates so that the average net returns to skilled and unskilled labour hours exhibit the same dynamic behaviour as under fl exible skill supply.

Measuring Tax Complexity

This paper critically examines a number of issues relating to the measurement of tax complexity. It starts with an analysis of the concept of tax complexity, distinguishing tax design complexity and operational complexity. It considers the consequences/costs of complexity, and then examines the rationale for measuring complexity. Finally it applies the analysis to an examination of an index of complexity developed by the UK Office of Tax Simplification (OTS).

The role of education in equity portfolios during the recent financial crisis

Using a panel of 38 economies, over the period 2001 to 2010, we analyse the link between diversification in equity portfolios and different facets of education. We find that traditionally used measures of education play an important role in reducing equity home bias. After separating countries according to their level of financial development, we find that less developed economies tend to benefit more from an improvement in the level of education compared to their more developed counterparts. We also find that the beneficial effect of education is more pronounced during the most recent financial crisis, especially for economies with less developed financial markets.

Disputes, Debt and Equity

We show how the prospect of disputes over firms’ revenue reports promotes debt financing over equity. These findings are presented within a costly state verification model with a risk averse entrepreneur. The prospect of disputes encourages incentive regimes which limit penalties and avoid stochastic monitoring, even when the lender can commit to stochastic enforcement strategies. Consequently, optimal contracts shift away from equity and toward standard debt. For a useful special case of the model, closed form solutions are presented for leverage and consumption allocations under efficient debt contracts.

Education and the local equity bias around the world

Using a panel of 38 economies, over the period 2001 to 2010, we analyse the link between different facets of education and diversification in international portfolios. We find that university education, mathematical numeracy, in addition to financial skill, play an important role in reducing home bias. After separating countries according to their level of financial development, we find that less developed economies with more university graduates, or with higher level of mathematical numeracy, have lower level of local equity bias compared to more developed countries. We also find that the beneficial effect of education is more pronounced during the most recent financial crisis, especially for economies with less developed financial markets.

Evaluation of the molluscicidal property of Euphorbia splendens var. Hispolii (N.E.B.) (Euphorbiaceae): 2. Investigation in lotic habitat

The latex of Euphorbia splendens var. hispolii in 12 ppm concentration (12 mg/l) caused 100% mortality for a Biomphalaria tenagophila population in a lotic habitat after 9 hr of dripfeed application. For sentinel snails, in cages placed at the water surface and buried under 0.10 m, the mortality rates varied with the distance from the application point and were: 100% (0 m); 92.6% (50 m) and 94.7% (100). No lethal effects were observed for the other living species in this habitat (Pomacea haustrum and Poecilia reticulata).

Activation of HTLV-I transcription in the presence of Tax is independent of the acetylation of CREB-2 (ATF-4).

We have previously demonstrated that the bZIP transcription factor CREB-2, also called ATF-4, trans-activates, in association with the viral protein Tax, the human T-cell leukemia virus type I (HTLV-I) promoter. In this study, we have examined whether CREB-2 acetylation affects transcriptional activation mediated by Tax. We present evidence that CREB-2 is acetylated in vitro and in vivo. CREB-2 is acetylated in two regions: the basic domain of the bZIP (from amino acid residue 270 to 300) and the short basic domain (from 342 to 351) located downstream from the bZIP. We also demonstrate that CREB-2 is acetylated by p300/CBP but not by p/CAF. Moreover, replacement of lysine by arginine in the basic domains decreases the trans-activating capacity of CREB-2. However, in the presence of Tax, the HTLV-I transcription remains fully activated by these CREB-2 mutants. Although we cannot totally exclude that the mutations could also affect CREB-2 structure and activity independent of acetylation, our results suggest that activation of the viral promoter in the presence of Tax is independent of the CREB-2 acetylation.

Is the Spanish Inheritance and Gift Tax incompatible with the free movement of workers and capital?: The reasoned opinion of the EU Commission IP/10/513

The aim of my speech is answering to the question if the Spanish Inheritance and Gift Tax is incompatible with the free movement of workers and capital. We are going to pay special attention to the European Commission’s request to Spain to change its Inheritance and Gift Tax provisions for Non-Residents or Assets held abroad. In order to answer to the question mentioned above five points will be explained. At first place I am going to describe the infrengement procedure established in the Article 258 that the EU Commission can follow when a Member State doesn’t comply with Community Law. At second place, we are going to explain what is the content of the EU Commission delivered on 5th of may 2010 regarding the spanish Inheritance and Gift Tax. Then, we will analise what establishes the Community Law regarding the freedom of workers and capital and how they are understood by the EU Court of Justice in similar cases. Finally, we are going to provide possible amendments that Spain could undertake.

Jurisdictional immunity in tax haven countries

El següent projecte conté informació sobre què són els paradisos fiscals, els seus avantatges, i on s'ubiquen. També s'analitza el procés que algú ha de seguir per anar a un paradís fiscal i avalua com la gent rica i les grans empreses operen els seus negocis a través dels paradisos fiscals i prenen avantatge d'ells reduint les seves obligacions fiscals de manera significativa. El projecte també considera la qüestió del secret bancari, que ha estat un gran conflicte entre els països en els darrers anys.

Three Essays on the Formation and Impact of Economic Policy

Introduction In my thesis I argue that economic policy is all about economics and politics. Consequently, analysing and understanding economic policy ideally has at least two parts. The economics part, which is centered around the expected impact of a specific policy on the real economy both in terms of efficiency and equity. The insights of this part point into which direction the fine-tuning of economic policies should go. However, fine-tuning of economic policies will be most likely subject to political constraints. That is why, in the politics part, a much better understanding can be gained by taking into account how the incentives of politicians and special interest groups as well as the role played by different institutional features affect the formation of economic policies. The first part and chapter of my thesis concentrates on the efficiency-related impact of economic policies: how does corporate income taxation in general, and corporate income tax progressivity in specific, affect the creation of new firms? Reduced progressivity and flat-rate taxes are in vogue. By 2009, 22 countries are operating flat-rate income tax systems, as do 7 US states and 14 Swiss cantons (for corporate income only). Tax reform proposals in the spirit of the "flat tax" model typically aim to reduce three parameters: the average tax burden, the progressivity of the tax schedule, and the complexity of the tax code. In joint work, Marius Brülhart and I explore the implications of changes in these three parameters on entrepreneurial activity, measured by counts of firm births in a panel of Swiss municipalities. Our results show that lower average tax rates and reduced complexity of the tax code promote firm births. Controlling for these effects, reduced progressivity inhibits firm births. Our reading of these results is that tax progressivity has an insurance effect that facilitates entrepreneurial risk taking. The positive effects of lower tax levels and reduced complexity are estimated to be significantly stronger than the negative effect of reduced progressivity. To the extent that firm births reflect desirable entrepreneurial dynamism, it is not the flattening of tax schedules that is key to successful tax reforms, but the lowering of average tax burdens and the simplification of tax codes. Flatness per se is of secondary importance and even appears to be detrimental to firm births. The second part of my thesis, which corresponds to the second and third chapter, concentrates on how economic policies are formed. By the nature of the analysis, these two chapters draw on a broader literature than the first chapter. Both economists and political scientists have done extensive research on how economic policies are formed. Thereby, researchers in both disciplines have recognised the importance of special interest groups trying to influence policy-making through various channels. In general, economists base their analysis on a formal and microeconomically founded approach, while abstracting from institutional details. In contrast, political scientists' frameworks are generally richer in terms of institutional features but lack the theoretical rigour of economists' approaches. I start from the economist's point of view. However, I try to borrow as much as possible from the findings of political science to gain a better understanding of how economic policies are formed in reality. In the second chapter, I take a theoretical approach and focus on the institutional policy framework to explore how interactions between different political institutions affect the outcome of trade policy in presence of special interest groups' lobbying. Standard political economy theory treats the government as a single institutional actor which sets tariffs by trading off social welfare against contributions from special interest groups seeking industry-specific protection from imports. However, these models lack important (institutional) features of reality. That is why, in my model, I split up the government into a legislative and executive branch which can both be lobbied by special interest groups. Furthermore, the legislative has the option to delegate its trade policy authority to the executive. I allow the executive to compensate the legislative in exchange for delegation. Despite ample anecdotal evidence, bargaining over delegation of trade policy authority has not yet been formally modelled in the literature. I show that delegation has an impact on policy formation in that it leads to lower equilibrium tariffs compared to a standard model without delegation. I also show that delegation will only take place if the lobby is not strong enough to prevent it. Furthermore, the option to delegate increases the bargaining power of the legislative at the expense of the lobbies. Therefore, the findings of this model can shed a light on why the U.S. Congress often practices delegation to the executive. In the final chapter of my thesis, my coauthor, Antonio Fidalgo, and I take a narrower approach and focus on the individual politician level of policy-making to explore how connections to private firms and networks within parliament affect individual politicians' decision-making. Theories in the spirit of the model of the second chapter show how campaign contributions from lobbies to politicians can influence economic policies. There exists an abundant empirical literature that analyses ties between firms and politicians based on campaign contributions. However, the evidence on the impact of campaign contributions is mixed, at best. In our paper, we analyse an alternative channel of influence in the shape of personal connections between politicians and firms through board membership. We identify a direct effect of board membership on individual politicians' voting behaviour and an indirect leverage effect when politicians with board connections influence non-connected peers. We assess the importance of these two effects using a vote in the Swiss parliament on a government bailout of the national airline, Swissair, in 2001, which serves as a natural experiment. We find that both the direct effect of connections to firms and the indirect leverage effect had a strong and positive impact on the probability that a politician supported the government bailout.

Tax Coordination Between Regions in Spain. The Role of the Courts

Overview of the Tax Coordination of the Regions in Spain from the point of view of the role of the Courts in developing the present system

Tax Coordination Between Regions in Spain - Role of the Courts

Análisis de la jurisprudencia constitucional española sobre la distribución de competencias tributarias entre los distintos niveles de gobierno.

Tax evasion, technology shocks, and the cyclicality of government revenues

This paper analyzes the behavior of the tax revenue to output ratio over the business cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding fine. Under the empirically plausible assumptions that the intertemporal elasticity of substitution exhibits a sufficiently small value and that productivity shocks are serially correlated, we show that the elasticity of government revenue with respect to output is larger than one, which agrees with the empirical evidence. This result holds even if the tax system displays flat tax rates. We extend the previous setup to generate larger fiscal deficits when the economy experiences a recession.

On finite unions and finite products with the D-property

We show that the product of a subparacompact C-scattered space and a Lindelöf D-space is D. In addition, we show that every regular locally D-space which is the union of a finite collection of subparacompact spaces and metacompact spaces has the D-property. Also, we extend this result from the class of locally D-spaces to the wider class of D-scattered spaces. All the results are shown in a direct way.