Supply-side Economics in the People's Republic of China's Regional Context: A Quantitative Investigation of Its VAT Reform

2008 ◽  
Vol 7 (2) ◽  
pp. 96-121 ◽  
Author(s):  
Fan Zhai ◽  
Jianwu He
Keyword(s):  
Overlapping Generations ◽  
Value Added ◽  
Welfare Effects ◽  
Supply Side ◽  
Welfare Gains ◽  
Quantitative Investigation ◽  
Announcement Effects ◽  
Republic Of China ◽  
Regional Impacts ◽  
National Implementation

The People's Republic of China (PRC) has now decided to shift its value-added tax (VAT) from production-based to consumption-based. This transition is currently piloted in the three provinces of the northeast PRC, and is expected to be extended to the whole country in the coming 2 or 3 years. Using a two-region dynamic general equilibrium model with overlapping generations, this paper investigates the macroeconomic and welfare effects of the VAT transition in PRC. The distribution effects between generations are also analyzed to get a sense of public opinion toward the reform. We put special emphasis on the pace of reform by analyzing the pre-announcement effects and the inter-regional impacts of tax reform that began in one pilot region. The simulation results suggest large welfare gains from the VAT transition. However, the pilot reform in the northeast provinces, which delays the national implementation of consumption-based VAT, would involve substantial transitional costs for the rest of the PRC.

scholarly journals Fiscal Consolidation: Welfare Effects of the Adjustment Speed

2020 ◽  
pp. 39-67
Author(s):  
Miguel Fonseca
Keyword(s):  
Incomplete Markets ◽  
Overlapping Generations ◽  
German Economy ◽  
Welfare Effects ◽  
Fiscal Consolidation ◽  
Welfare Gains ◽  
Overlapping Generations Model ◽  
Distribution Of Wealth ◽  
Adjustment Speed ◽  
Fiscal Consolidations

This article studies the response of social welfare to fiscal consolidations, by focusing on a less debated characteristic of fiscal plans: the speed of deleveraging. A neoclassical overlapping generations model is calibrated to the German economy, and a sequence of reductions of the same size in the debt‑ to GDP ratio are simulated considering different adjustment periods. Welfare gains are found to be larger in slow, delayed fiscal consolidations, due to the presence of incomplete markets. It is also found that the aggregate welfare response depends on the distribution of wealth and the type of fiscal instrument used.

Transitioning to a higher retirement age with exponential and quasi-hyperbolic discounters in mixed economies

2020 ◽  
Author(s):  
Sarah Lynne Salvador Daway-Ducanes
Keyword(s):  
Overlapping Generations ◽  
Hyperbolic Discounting ◽  
Welfare Effects ◽  
Retirement Age ◽  
Tax Rate ◽  
Welfare Impacts ◽  
The Social ◽  
Welfare Implications ◽  
Pension Benefits ◽  
Exponential Discounting

Abstract This paper analyses the macroeconomic and welfare effects of a higher retirement age within a dynamic overlapping generations framework, wherein exponential discounting and sophisticated quasi-hyperbolic discounting agents coexist in ‘mixed economies’. The transitional dynamics of economic aggregates depend on the proportion of QHD agents, and the extent to which reducing the social security tax rate mitigates crowding-out effects on savings and enables both lower pension contributions and higher pension benefits. Welfare impacts across agent types and cohorts differ accordingly: QHD agents employ the higher retirement age as a commitment mechanism to mitigate the adverse welfare implications of present-biasedness.

scholarly journals The importance of evaluation of economic determinants in public procurement processes in Slovakia in 2010–2016

2017 ◽  
Vol 8 (3) ◽  
Author(s):  
Andrea Tkacova ◽  
Beata Gavurova ◽  
Jakub Danko ◽  
Martin Cepel
Keyword(s):  
Negative Impact ◽  
Public Procurement ◽  
Value Added ◽  
Supply Side ◽  
Economic Determinants ◽  
Goods And Services ◽  
Limit Orders ◽  
Survey Sample ◽  
The Impact

Research background: Public procurement is designed to efficiently spend public sector financial resources. This should lead to savings in public funds. Domestic and foreign studies point to the fact that sufficient competition on the supply side is the condition for achieving those savings. Slovakia currently belongs to a group of countries with low competition on the supply side of the tender. Every year, about 10,000 tenders will be made in Slovakia for 5 billion Eur. However, contracting authorities have difficulty with establishing the estimated contract value and defining non-discriminatory criteria. On the other hand, contractors lack the expertise to prepare tenders, specifications are often tailored to specific bidders or products, and the price criterion has a negative impact on the quality of the goods and services purchased. Purpose of the article: The aim of the study was to investigate the impact of selected efficiency determinants on savings in public procurement in Slovakia in 2010–2016. The number of bids, the subcontractor's participation, the narrower competition and the impact of the narrower competition and the expected price on the number of bids have been examined. Methods: The survey sample consisted of 800 randomly selected public procurement con-tracts from different sectors in 2010–2016. The contracts were split on the basis of the median estimate of the above-limit (409 contracts) and below-limit (391 contracts) contracts; the divestment value was the estimated price of 400,000 Euro (without the tax). Findings & Value added: The number of offers positively influences the creation of savings in public procurement, an average of 5-6%. The impact of a narrow competition was significant, which led to a decrease in savings of 3-4% compared to the open competition if the sample was 800 contracts and over 400,000 Euro (without the tax). For below-limit orders, this determinant was shown to be statistically insignificant. The size of the contract did not affect the number of successful candidates. Also, the negative impact of narrower competition on the number of tenders was demonstrated. These findings are in line with the presented research studies. In the future, we plan to perform sectoral analyses to verify the validity of the hypotheses under review based on the results of our research.

scholarly journals GROWTH AND WELFARE EFFECTS OF MACROPRUDENTIAL REGULATION

2018 ◽  
Vol 23 (8) ◽  
pp. 3140-3162 ◽  
Author(s):  
Pierre-Richard Agénor
Keyword(s):  
Systemic Risk ◽  
Overlapping Generations ◽  
Welfare Effects ◽  
Financial Supervision ◽  
Overlapping Generations Model ◽  
Macroprudential Regulation ◽  
Bank Monitoring ◽  
Investment Projects ◽  
Optimal Monitoring ◽  
Reserve Ratio

This paper studies the growth and welfare effects of macroprudential regulation in an overlapping generations model of endogenous growth with banking and agency costs. Indivisible investment projects combine with informational imperfections to create a double moral hazard problem à la Holmström–Tirole and a role for bank monitoring. When the optimal monitoring intensity is endogenously determined, an increase in the required reserve ratio (motivated by systemic risk considerations) has conflicting effects on investment and growth. On one hand, requiring banks to put away a fraction of the deposits that they receive reduces the supply of loanable funds. On the other, a higher required ratio raises incentives to save and mitigates banks' incentives to monitor, thereby lowering monitoring costs and freeing up resources to increase lending. In addition, it may mitigate the systemic risk externality associated with excessive leverage. This trade-off can be internalized by choosing the required reserve ratio that maximizes growth and welfare. However, the risk of disintermediation means that in practice financial supervision may also need to be strengthened, and the perimeter of regulation broadened, if the optimal ratio is relatively high.

Essays in applied economics

2019 ◽  
Author(s):  
◽  
Rebecca L. Whitworth
Keyword(s):  
Panel Data ◽  
Overlapping Generations ◽  
Value Added ◽  
Bond Market ◽  
Applied Economics ◽  
Corporate Debt ◽  
Overlapping Generations Model ◽  
Fiat Money ◽  
The Us ◽  
Value Added Modeling

This dissertation examines several themes in applied economics. Specifically, Essay 1 examines the dynamics in an overlapping generations model with three-period lived agents, fiat money, and credit, Essay 2 reviews literature on value-added modeling and discusses a paper previously published, Essay 3 concludes by examining efficiency in the US bond market. While Essay 1 examines dynamics and 2 reviews tools used in estimating panel data, Essay 3 combines elements of both-empirically evaluating the efficiency of the bond market by looking at the movement of prices through time. That is, deriving the integral over t of the bond spread. While opportunities for more work exists, this paper suggests that the US Bond Market (the market for corporate debt) is informationally efficient, though it takes longer to converge than previously reported in the literature.

scholarly journals Welfare Effects of Anti-Sprawl Policies in the Presence of Urban Decline

2011 ◽  
Vol 40 (3) ◽  
pp. 439-450 ◽  
Author(s):  
Antonio M. Bento ◽  
Sofia F. Franco ◽  
Daniel Kaffine
Keyword(s):  
Urban System ◽  
Welfare Effects ◽  
Urban Decline ◽  
Welfare Gains ◽  
Optimal Development ◽  
Suburban Sprawl ◽  
Lump Sum ◽  
City Core ◽  
The City

This paper extends first-best analysis of anti-sprawl policies, such as development taxes, and examines the welfare effects of development taxes in the presence of urban decline at the city core. We find that anti-sprawl policies generate several important feedbacks within the urban system, generating additional welfare gains and affecting the level of urban decline and suburban sprawl. Further, the optimal development tax exceeds the (first-best) Pigouvian level, irrespective of whether or not revenues are returned lump-sum to all landowners or earmarked for urban decline mitigation.

scholarly journals A Sequential Analysis of the Welfare Effects of Mobile Phones in Africa

2018 ◽  
Vol 37 (2) ◽  
pp. 279-290
Author(s):  
Jeffrey James
Keyword(s):  
Mobile Phones ◽  
Public Transport ◽  
Sequential Analysis ◽  
Analytical Framework ◽  
Welfare Effects ◽  
Welfare Gains ◽  
African Countries ◽  
The West ◽  
Welfare Impact ◽  
Fixed Line

The main purpose of this article is to assess the welfare effects of situations in which either mobile phone devices or SIM cards (or both) are not owned by relatively poor inhabitants of African countries. The task is pursued in a sequential analytical framework where effects at different stages of the process influence the welfare impact at later stages. Much of the analysis is conducted in different institutional circumstances from those found in the West (notably sharing and renting). Perhaps the main result of the analysis—backed by ample empirical evidence—is that the fewer are the alternatives to mobile phones as forms of communication (e.g., public transport), the greater tend to be the gains from this technology. In the particular case of leapfrogging, the fewer are fixed-line phones, the more do mobiles yield gains to poor users, whether these be individuals or actual countries. It is thus the context in addition to the technology that determines the differential welfare gains.

The Economic Impact of Tourism in Israel: A Multi-Regional Input—Output Analysis

1997 ◽  
Vol 3 (4) ◽  
pp. 341-359 ◽  
Author(s):  
Daniel Freeman ◽  
Esther Sultan
Keyword(s):  
Spatial Distribution ◽  
Economic Impact ◽  
Value Added ◽  
The Other ◽  
Input Output ◽  
Output Analysis ◽  
Input Output Analysis ◽  
Regional Impacts

Tourism has become one of the main export services in Israel in the last five years. The objective of this study was to estimate the comprehensive contribution of tourism to the economy of Israel and its spatial distribution. The study measured the impacts (multipliers) on three levels: direct, indirect and induced. A multi-regional input–output (MRIO) model was used in this research because of its capability to evaluate the impacts of inter-regional interdependencies simultaneously with those of sectoral ones. The results were expressed as multi-regional input–output multipliers. The authors conclude that the sum of the value-added from indirect output was 4% of GDP, and that from induced impacts was 7% of the GDP. There were differences in the impacts within and outside the regions. The analysis of multi-regional impacts through the use of MRIO enabled the authors to estimate simultaneously the magnitude of the impacts within the region, the related impacts in other regions, and the feedback impacts due to the other regions' demand.

OPTIMAL FISCAL POLICY WITH LAND FINANCING IN CHINA

2017 ◽  
Vol 23 (07) ◽  
pp. 2649-2674
Author(s):  
Shen Guo ◽  
Zheng Jiang
Keyword(s):  
Fiscal Policy ◽  
Value Added ◽  
Substantial Part ◽  
Welfare Gains ◽  
Ramsey Problem ◽  
Tax Rate ◽  
Special Instrument ◽  
Optimal Fiscal Policy ◽  
Conventional Instrument ◽  
The Government

This paper examines China's optimal fiscal policy in a general equilibrium model, in which the government finances its budget through both a special instrument, an implicit tax on the residential land, and a typical conventional instrument, the value-added tax (VAT). By solving a Ramsey problem, we find that (i) the optimal policy suggests a much lower land tax rate than the existing rate in China, and (ii) a substantial part of debt stabilization should come through an adjustment in the VAT rate, instead of relying on land financing. Switching from the existing policy to the Ramsey policy generates significant welfare gains.

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