Should before or after tax equilibria point elasticities be calculated when the Laffer effect is considered in a micro market?

2014 ◽  
Vol 41 (6) ◽  
pp. 754-770 ◽  
Author(s):  
Ahmet Özçam
Keyword(s):  
Demand Curve ◽  
Supply Curve ◽  
Demand And Supply ◽  
Content Type ◽  
Tax Rate ◽  
Tax Revenues ◽  
Turkish Government ◽  
Non Linear ◽  
Pass Through ◽  
Laffer Effect

Purpose – Traditionally, the Laffer effect has been discussed in the context of endogenous growth models or in the case of the labor market with respect to willingness to supply more labor given a tax incentive on wages. The paper adopts an inductive approach to discuss it in the context of a product's market, say automobile industry in Turkey. Design/methodology/approach – The author revisits the ad valorem tax model on a product and investigates how the elasticities of demand and supply and the tax rate are related to the Laffer effect. The author considers a special case where demand curve is non-linear and the supply curve is completely elastic. This specific model fits the practical case where the Turkish government expected the auto sellers to pass fully the temporary partial tax concession onto the consumers during the global crisis in 2009. Findings – The author showed that the demand elasticitiy must be calculated neither at the intersection of the initial equilibrium nor that of the final equilibrium points, but somewhere else. The author defined a pass-through coefficient which was different from the classical burden of tax concept, calculating the degree of pass-through of a tax decrease from firms to consumers. Moreover, the author found a one-way relationship between the overall tax revenues of the government and a single sector. Research limitations/implications – The case of tax revenues where both the demand and supply curves are non-linear and non-extreme must be solved. Practical implications – The author showed that the government's dual expectation of both boosting the economy, increasing employment and raising its tax revenues can sometimes be consistent given a usual upward sloping supply curve. In the case of a perfectly elastic supply curve, the tax revenues can even be higher with a higher level of equilibrium quantity. Social implications – The Turkish government aiming to support the production and employment in this leading export industry, may have expected this temporary tax decrease to be passed completely onto the consumers by the producers. However, this did not happen as producers’ prices to the consumers did not decrease as much as the amount of tax. This paper shows that the after tax elasticities and the current level of tax rate must have been compared. Originality/value – The author pointed out to the importance of being clear in explicitly indicating at which points the elasticities derived from some function (tax revenue function) of equilibria variables (price and quantity) must be interpreted. In this paper, doing many numerical calculations allowed us to notice the proper point of calculation of the demand elasticity, which is the after-tax price along the “no tax demand curve”. Moreover, a pass-through coefficient is defined which is different from the classical burden of tax concept.

scholarly journals Market Model with Positive Demand Curve Overthrows Marxist and Keynesian Model

2020 ◽  
Vol 9 (3) ◽  
pp. 59
Author(s):  
Alqi Naqellari
Keyword(s):  
Demand Curve ◽  
Supply And Demand ◽  
Market Price ◽  
Marxist Theory ◽  
Market Model ◽  
Supply Curve ◽  
Demand And Supply ◽  
Keynesian Model ◽  
Analysis And Synthesis ◽  
Macroeconomic Indicators

In this paper is analyzed the demand and supply side from the perspective of Marxist theory. The supply and demand side is both analyzed with their respective characteristics in capitalism, socialism and in a mixed economy. The possibilities of a macroeconomic equilibrium by considering the following concepts such as commodity, value, price, profit are analyzed. The aim of this paper is: to develop through a non-exhaustive analysis, the common features and differences between macroeconomic models of the aggregate market in the two systems, to build the aggregate market of a macroeconomic model by taking into account these characteristics and to emphasize its importance for the economy. In conclusion, differences between concepts related to macroeconomic equilibrium were identified. A new equilibrium model for the socialist and capitalist model was built. In centralized economies, demand and supply curve lies in a parallel curve with the X-axis, were domestic product is placed. In the market economy model, the demand and supply curve has a positive slope and stretch simultaneously over the market price line. They do not intersect with each other as in the Classical and Keynesian model. This market model applies to the economy. It allows governments, central banks, research institutions, universities, various researchers, etc. to analyze macroeconomic indicators. In this paper, the model is applied to the Albanian economy. In this paper, we used the methods of analysis and synthesis, comparison and description, the method of creating virtual market models, etc.

Integrating stated preference methods for property valuations in housing markets

2019 ◽  
Vol 12 (3) ◽  
pp. 474-486
Author(s):  
Saverio Miccoli ◽  
Fabrizio Finucci ◽  
Rocco Murro
Keyword(s):  
Real Estate ◽  
Stated Preference ◽  
Demand Curve ◽  
Market Price ◽  
Housing Markets ◽  
Demand And Supply ◽  
Content Type ◽  
Potential Demand ◽  
Real Market ◽  
Contingent Valuation Methods

Purpose The study aims to propose an appraisal procedure based on the preferences stated by a sample of potential consumers and producers which makes it possible to obtain the hypothetical demand and supply curves and to estimate the most likely market value and transaction quantities for housing markets with unrevealed prices. Design/methodology/approach The procedure is divided into two steps: the first is aimed at selecting the alternatives that are most likely to meet the market’s preference by applying discrete choice (DC) analysis; the second makes it possible to estimate the potential demand and supply curves for the preferable alternatives singled out through DC analysis by using contingent valuation methods. Findings The results obtained considering only the hypothetical demand or the hypothetical supply differ by an average of 10 per cent from the actual sale price. Conversely, the values detected as the intersection of the hypothetical demand curve and the hypothetical supply curve, fall into variation margins that can be considered fully acceptable in real estate appraisal Originality/value As opposed to the applications performed in international real estate operations where reference is made solely to the potential demand estimate, the described procedure estimates the transaction value as the intersection between the hypothetical demand and supply curves, for the purposes of keeping account of the conditions that generally occur in the real market. Furthermore, it is possible to detect the incidence of the characteristics in market price formation, and to identify the market share of possible alternative assets and estimate the optimal quantity to be produced.

Domestic and imports sources of supply to the US shrimp market and anti-dumping duties

2016 ◽  
Vol 43 (6) ◽  
pp. 1039-1056 ◽  
Author(s):  
Akbar Marvasti ◽  
David W. Carter
Keyword(s):  
Time Series Data ◽  
Supply Curve ◽  
Series Data ◽  
Fuel Price ◽  
Content Type ◽  
Long Run ◽  
Technological Advances ◽  
The Us ◽  
Pass Through ◽  
Exchange Rate Pass Through

Purpose The purpose of this paper is to provide an economic analysis of the sources of supply to the US shrimp market. Design/methodology/approach The paper uses monthly time series data to estimate a simultaneous equations model with equations for domestic supplies from the Gulf of Mexico, imports, and prices. Findings Estimated long-run elasticities suggest that the domestic shrimp supply appears to be explained by seasons, diesel fuel price, hurricane activity, and shrimp price. The authors find evidence of a downward-slopping supply curve for the domestic harvesters that is likely to be temporary. Furthermore, anti-dumping duties have been ineffectual in curtailing imports produced by exploitation of natural shrimp biomass in developing countries and by technological advancements in aquaculture production. The authors also find evidence of a low exchange rate pass through. Finally, while domestic and import prices are not cointegrated, there is a two-way causality between them. Practical implications The authors found evidence that shrimp prices have fallen as import supply, due to technological advances in aquaculture, has risen faster than the US domestic demand over time suggesting a downward sloping supply curve. Also, the falling value of the US dollar has discouraged the imports, while the anti-dumping duties appear to have had little influence on the aggregate level of imports. Originality/value It provides a thorough investigation of the supply side of an important component of the US seafood market displaying the complexity of domestic producers’ reaction to falling prices, and ineffectual protectionism.

scholarly journals New evidence on corruption and government debt from a global country panel

2019 ◽  
Vol 46 (5) ◽  
pp. 1009-1027 ◽  
Author(s):  
Emmanuel Apergis ◽  
Nicholas Apergis
Keyword(s):  
Public Debt ◽  
Shadow Economy ◽  
Government Debt ◽  
School Enrollment ◽  
Smooth Transition ◽  
Gdp Per Capita ◽  
Content Type ◽  
Tax Revenues ◽  
Non Linear ◽  
Per Capita

Purpose The purpose of this paper is to explore the link between corruption and government debt through a regime-based approach. Design/methodology/approach The empirical analysis makes use of a panel of 120 countries, spanning the period 1999–2015. The study makes use of the Panel Smooth Transition Regression (PSTR) methodological approach, as well as two alternative measures of corruption. Findings The empirical results document that the relationship between corruption and debt is non-linear, while a strong threshold effect was present as well. Public debt appears to respond faster to a high corruption regime compared to a low corruption regime, while an increase in the size of the shadow economy, government expenses, the inflation rate, interest payments on debt and military expenditure all increased the debt to GDP ratio. By contrast, an increase in GDP per capita, the secondary school enrollment ratio and the ratio of tax revenues to GDP led to a fall in the debt to GDP ratio. The findings survive certain robust checks when the role of the 2008 financial crisis is explicitly considered, as well as when two separate country samples were considered, i.e. developed vs developing countries. Practical implications Governments should aim to control both corruption and the size of the shadow economy if they really wish to reduce any high levels of their public debt. As debt levels respond faster to high corruption regimes, it is necessary that measures to reduce corruption are complemented by higher GDP per capita growth rates, enrolment rates and higher tax revenues. Originality/value The novelty of the paper is that it investigates for the first time, to the best of the authors’ knowledge, the presence of non-linearity between corruption and government debt. It proposes non-linear panel cointegration and causality tests, as well as a non-linear panel error correction model that allows for smooth changes between regimes, hence, examining causal relationships in each regime separately.

Asymmetric impact of exchange rate pass-through into employees' wages in sub-Saharan Africa: panel non-linear threshold estimation

2020 ◽  
Vol 47 (7) ◽  
pp. 1629-1647
Author(s):  
Idris Abdullahi Abdulqadir ◽  
Soo Y. Chua
Keyword(s):  
Exchange Rate ◽  
Threshold Value ◽  
Sub Saharan Africa ◽  
Threshold Regression ◽  
Content Type ◽  
Non Linear ◽  
Marginal Propensity ◽  
Sub Saharan ◽  
Pass Through ◽  
Exchange Rate Pass Through

PurposeThe purpose of this article is to investigate the asymmetric impact of exchange rate pass-through (ERPT) on employees' wages via consumer prices in 15 major oil-exporting countries from sub-Saharan Africa over the period 1996-2017 using the panel threshold regression model.Design/methodology/approachThe methodology used in this article was built on non-linear panel threshold regression models developed by Hansen (1996, 1999) threshold regression. The authors first tested for the existence of threshold-effect in ERPT and wage nexus using 1,000 bootstrap replications and 400 grid searches to obtain an optimal threshold. We also estimated that asymmetric ERPT on employees' wages reacts differently when the inflation-threshold exceeds beyond a 15.12% threshold level.FindingsOur findings showed that asymmetric ERPT is incomplete and indicates that an increase by one standard deviation in real exchange rate causes a decline in employees' wages by 2.69%.Research limitations/implicationsThe policy implications of our results are drawn from the significant threshold estimates. However, a significant threshold value of 15.12 is an inflation-threshold estimates that split our 330 observations into the lower (upper) regimes. Further, an inflation rate beyond the threshold value is likely to have an asymmetric ERPT on employees' wages in the 15 major oil-exporting sub-Saharan African (SSA) countries.Practical implicationsThe practical implication of the study is when ERPT exceeds the threshold, the effect of real exchange rate variations is passed on to employees' wages. It is widely believed that labor productivity increase with increased minimum wages. Nevertheless, there is contention as regards the effects on employment and poverty. As rising goods prices make the minimum wage increased homogeneous of degree zero.Social implicationsConsiderable increased ERPT on imported goods reduces employees' wages purchasing ability from import-dependent countries through import prices. Once it has documented, this also reduces welfare via deteriorations of marginal propensity to consume (MPC) and marginal propensity to savings (MPS).Originality/valueThis article integrates labor purchasing power into the analysis of ERPT using non-linear dynamic panel heterogeneous threshold regression. It extends the Hansen (1996, 1999) dynamic panel threshold models to exchange rate pass-through in SSA economies.

2. Markets

2021 ◽  
pp. 13-27
Author(s):  
Ariel Ezrachi
Keyword(s):  
Price Elasticity ◽  
Demand Curve ◽  
Market Price ◽  
Product Market ◽  
Competitive Market ◽  
Supply Curve ◽  
Product Price ◽  
Demand And Supply ◽  
Meeting Point ◽  
Cross Price Elasticity

‘Markets’ examines markets, looking at demand and supply. The demand curve provides information on how the demand for a given product changes with its price, while the supply curve illustrates the correlation between the product price and quantity available for a given period. The meeting point between the two, in a competitive market, represents the market price. The market price is affected, among other things, by the nature of the product in question, by the availability and price of substitutions (cross-price elasticity), by changing consumer needs and preferences, by innovation, and by consumers’ level of income. There are two types of markets relevant here: the product market and the geographical market.

scholarly journals A Corpus-based Study of Bubble Metaphor in the American Real Estate Market

2018 ◽  
Vol 5 (2) ◽  
pp. 34
Author(s):  
Guihang Guo ◽  
Zhaohui Wang
Keyword(s):  
Real Estate ◽  
Demand Curve ◽  
Supply And Demand ◽  
Real Estate Market ◽  
Supply Curve ◽  
Housing Bubble ◽  
Demand And Supply ◽  
The Real ◽  
The Real Estate ◽  
The Real Estate Market

The study aims to find whether the concept of metaphorical “BUBBLE” can assist us in understanding thephenomena of US housing bubble appearing from 2001 to 2007. With the node of “housing bubble”, the researcherssearch the collocates of it and dig into the context of highly frequent collocates. The study finds: 1)the collocates of“housing bubble”, mainly categorized in “v+N”, “n/adj+N” and “N+v”, reflect the 5 stages of housing bubbledevelopment and the context explains the cause and effect of housing bubble in every stage; 2)the maincorrespondences of BUBBLE metaphor have been concluded in the real estate market; 3)the combination of bubblemetaphor and orientation metaphor can explain the demand and supply curve of real estate. As a result, it can assistbusiness English teachers in teaching the supply and demand curve of the housing bubble.

Moderating role of patriotism on sales tax compliance among Jordanian SMEs

2020 ◽  
Vol 13 (3) ◽  
pp. 389-415 ◽  
Author(s):  
Ahmad Farhan Alshira'h ◽  
Hijattulah Abdul-Jabbar
Keyword(s):  
Tax Compliance ◽  
Arab Countries ◽  
Moderating Effect ◽  
Theory And Practice ◽  
Sales Tax ◽  
Deterrence Theory ◽  
Content Type ◽  
Tax Rate ◽  
Tax Audit ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of tax audit, tax rate and tax penalty on sales tax compliance and examine the moderating effect of patriotism on the associations between tax audit, tax rate and tax penalty with sales tax compliance among Jordanian manufacturing small- and medium-sized enterprises (SMEs). Design/methodology/approach In this study, 660 questionnaires were distributed by using systematic random sampling to manufacturing SMEs in Jordan, after which a total of 385 useable questionnaires were deemed suitable for analysis. Partial least squares structural equation modelling (PLS-SEM) was used to validate the measurement model and structural model and the predictive relevance of the study’s model. Findings The findings showed that tax audit and tax penalty were positively associated with the level of sales tax compliance, whereas tax rate was insignificantly associated with sales tax compliance. They also demonstrated the moderating significant effect of patriotism on the relationship between tax penalty, tax audit and tax rate with sales tax compliance. Research limitations/implications Tax authorities and policymakers in developing majority societies in developing countries and in other Arab countries, especially in Jordan may use the results to focus their interest on the formulation of policies founded on the outcomes of the study to strengthen eligible SMEs to comply to further boost their sales collections. Originality/value This study extends the deterrence theory in the context of sales tax compliance by proposing the moderating effect of patriotism in the deterrence theory on sales tax compliance among SMEs. Moreover, the suitability for the use of PLS-SEM as a statistical tool in investigating the extended deterrence theory with patriotism as a moderating variable as well as its implications for theory and practice was also discussed.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

Heat and mass transfer effects on MHD non-Newtonian fluids flow through an inclined thermally-stratified porous medium

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gladys Tharapatla ◽  
Pamula Rajakumari ◽  
Ramana G.V. Reddy
Keyword(s):  
Mass Transfer ◽  
Porous Medium ◽  
Velocity Profile ◽  
Heat And Mass Transfer ◽  
Newtonian Fluids ◽  
Transfer Effects ◽  
Content Type ◽  
Non Linear ◽  
Homotopy Analysis ◽  
Flow Through

Purpose This paper aims to analyze heat and mass transfer of magnetohydrodynamic (MHD) non-Newtonian fluids flow past an inclined thermally stratified porous plate using a numerical approach. Design/methodology/approach The flow equations are set up with the non-linear free convective term, thermal radiation, nanofluids and Soret–Dufour effects. Thus, the non-linear partial differential equations of the flow analysis were simplified by using similarity transformation to obtain non-linear coupled equations. The set of simplified equations are solved by using the spectral homotopy analysis method (SHAM) and the spectral relaxation method (SRM). SHAM uses the approach of Chebyshev pseudospectral alongside the homotopy analysis. The SRM uses the concept of Gauss-Seidel techniques to the linear system of equations. Findings Findings revealed that a large value of the non-linear convective parameters for both temperature and concentration increases the velocity profile. A large value of the Williamson term is detected to elevate the velocity plot, whereas the Casson parameter degenerates the velocity profile. The thermal radiation was found to elevate both velocity and temperature as its value increases. The imposed magnetic field was found to slow down the fluid velocity by originating the Lorentz force. Originality/value The novelty of this paper is to explore the heat and mass transfer effects on MHD non-Newtonian fluids flow through an inclined thermally-stratified porous medium. The model is formulated in an inclined plate and embedded in a thermally-stratified porous medium which to the best of the knowledge has not been explored before in literature. Two elegance spectral numerical techniques have been used in solving the modeled equations. Both SRM and SHAM were found to be accurate.

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