Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
and economic freedom

Working Paper Series

The Working Paper series publishes original research related to IREF’s mission.
Every article also provides a non-technical Executive Summary.

Taxing Artificial Intelligence
By Julian Arndts and Kalle Kappner

Taxing Artificial IntelligenceWP 2019-05.

To Follow Or Not To Follow The Herd? Transparency And Social Norm Nudges
By Elena Kantorowicz-Reznichenko and Jaroslaw Kantorowicz

To Follow Or Not To Follow The Herd? Transparency And Social Norm NudgesWP 2019-04.

Greece’s Institutional Trap
By: Aristides N. Hatzis

Greece's Institutional TrapWP 2018-11. Executive Summary.

Hospital Budget Constraint(s) and Patients’ Mobility: Evidence from Lombardy
by Paolo Berta, Carla Guerriero, and Rosella Levaggi

Hospital Budget Constraint(s) and Patients' Mobility: Evidence from LombardyWP 2018-06. Executive Summary.

Aging Populations and the Size of Government
by Ryan H. Murphy and Meg Tuszynski

Aging Populations and the Size of GovernmentWP 2018-04. Executive Summary.

An Impossibility Result on Nudging Grounded in the Theory of Intentional Action
by Sergio Beraldo

An Impossibility Result on Nudging Grounded in the Theory of Intentional ActionWP 2018-01. Executive summary.

And Yet It Grows. Crisis, Ideology, and Interventionist Policy Ratchets
by Christian Bjørnskov and Martin Rode

And Yet It Grows. Crisis, Ideology, and Interventionist Policy RatchetsWP 2017-05. Executive summary.
Discussions on the optimal level of government intervention in the economy have become very intense in recent years, especially following the 2008 financial and economic crisis. The hardships produced by this temporal economic downturn have led to some very (...)

The political economy of state-owned lotteries
by Alexander Fink

WP 2017-04. Executive summary.
In many countries around the world, lottery services are provided by government-owned firms that are equipped with (regional) monopoly privileges. The official argument for lottery monopolies by state-owned firms as, for instance, in Germany regularly point to (...)

The Origins of Private Property
by Enrico Colombatto and Valerio Tavormina

WP 2017-03. Executive summary
• Property rights play a crucial role in economics: They define the very essence of this discipline, which studies how individuals exchange in order to enhance their welfare, subject to scarcity constraints.
• The recognition and enforcement of private property (...)

Climate change
What we know, what we don’t know. What to do and what not to do. By Francesco Ramella

WP 2017-02. Executive summary
The prevailing opinion among national governments and supranational institutions is that climate change science is settled and drastic cuts in the emissions of CO2 and other greenhouse gases will be necessary in the next few decades to prevent dangerous climate (...)

by Niclas Berggren and Christian Bjørnskov

WP 2017-01. Executive Summary
Since the financial crisis, government debt ratios have increased in many countries. Most studies indicate that there is a negative association between high medium- and long-term debt ratios and growth, although the exact magnitude of the relationship is being (...)

Efficiency and productivity of tax courts
by Roberto Ippoliti and Giovanni B. Ramello

WP 2016-04. Executive Summary
The key requirement for economic prosperity is the rule of law. In turn, a critical component of the rule of law is an effective judicial system, which is also responsible for the enforcement of contracts and for settling disputes in the presence of unexpected (...)

Tax policies in Poland, Slovakia, and Bulgaria: sitting on a ticking bomb or catching up with the West?
by Spasimir Domaradzki

WP 2016-03. Executive Summary
The paper has now been published and can be accessed here.
After the end of communism, the countries of Central and Eastern Europe shared very similar challenges. Despite the different patterns of transition, the dominant model of “catching up with the West” (...)

The confluence of ideas and interests in the process of rent destruction: the case of UK tax policy 1979-1997
by Philip M. Booth and John Meadowcroft

WP 2016-02. Executive Summary
Most of the literature on rent-seeking and the size of government expenditure has focused on the mechanisms through which policy-makers gather the necessary majorities to justify and expand the role of the state, and thus increase tax pressure.
By contrast, the (...)

Tax evasion, intrinsic motivation, and the evolutionary effect of a flat rate
by Fabio Lamantia and Mario Pezzino

WP 2016-01. Executive Summary
The traditional literature on tax evasion frames taxpayers’ choices in terms of rather basic cost-benefit analyses involving the expected monetary return to tax evasion. Briefly put, individuals take action by considering the probability of being caught and the (...)

Why Do Low Interest Rates Not Fuel Credit Growth in the New Member States of the EU?
by Andreas Hoffmann

WP 2015-03. Executive Summary
During the past five years, emerging markets have experienced a significant rise in the credit to the private sector. In the countries that have recently joined the European Union, however, borrowers have been suffering from a rather severe credit crunch. This (...)

The ZIRP Trap - why low interest rates are a tax on recovery
by Philipp Bagus

WP 2015-02. Executive Summary
Western central banks have been pursuing unconventional monetary since at least 2008. Is there a way of ending them?
The authors identify the winners and losers of these policies, compared a world without them. How much are the relevant parties better/worse (...)

The Effect of Tax progressivity on the quality of entrepreneurship
by Mina Baliamoune-Lutz and Pierre Garello

WP 2015-01. Executive Summary
Does progressive taxation on corporate income discourage entrepreneurship? At first glance, the answer seems in the positive, since as tax pressure on business increases, business activities become less profitable and, therefore, less attractive. On the other (...)

The Case for Systemic Banking Reform
by Gordon Kerr

WP 2014-01. Executive Summary
Bailouts have created a problem of moral hazard. This has exacerbated, rather than relaxed, the decline in integrity in banking that is the subject of this paper. Evidence of this decline is increasingly apparent. Year end 2012 provisioned and suffered fines and (...)

The effects of fiscal decentralization on working hours: does it matter which government level taxes and spends?
by Alexander Fink

WP 2013-07. Executive Summary
The traditional argument in favour of decentralization focuses on tax competition and on the quality of public expenditure. In a sentence, it is argued that a decentralized environment enhances the policymakers’ accountability and thus restrains abuse. The (...)

A comparative study of training in the private and public sectors: Evidence from the UK and the USA
by Fabio Méndez and Facundo Sepúlveda

WP 2013-06. Executive Summary
There is a vast literature that documents the benefit of training, both for the employee (whose productivity and wage rate increase) and for the employer (who can absorb technological advances by employing highly skilled personnel, and gain in competitiveness). (...)

Legitimacy and The Cost of Government
by Niclas Berggren, Christian Bjørnskov and David Lipka

WP 2013-05. Executive Summary
Although it is generally agreed that government size has a negative impact on economic growth, it is also manifest that the intensity of this causal relationship varies across countries and over time. It is usually argued that these differences can be explained (...)

Projecting State Pensions
by Kevin Dowd

WP 2013-04. Executive Summary
The critical situation of most state-pension schemes plays a key role in explaining the public-finance crises that characterize many West-European countries. Although most observers refrain from advocating full privatization, it is now widely accepted that (...)

Effects of taxation on European multi-nationals’ financing and profits
by Stefan Lutz

WP 2013-03. Executive Summary
International restructurings by globally acting enterprises have become a common occurrence in the wake of accelerating globalization and have led to increasing global relocations of economic activities. Besides resource cost and infrastructure, the taxation (...)

The Welfare State and The Individual Responsibility
by Sergio Beraldo, Massimiliano Piacenza and Gilberto Turati

WP2013-01. Executive Summary
This working paper explores the notion of personal responsibility by considering people’s attitude towards redistribution. In particular, the authors run a controlled experiment by offering a representative group of people the possibility of choosing a proportional (...)

Identifying the Determinants of Judicial Performance: Taxpayers’ Money Well Spent?
by Stefan Voigt and Nora El-Bialy

WP 2013-02. Executive Summary
Update (Nov’14): The paper has been accepted for publication in the European Journal of Law and Economics.
There is no doubt that the judiciary plays a crucial role in economic performance. Laws can be more or less friendly towards entrepreneurship, production (...)

When the Lights Go Out: Europe in an Age of Austerity
by Vani K. Borooah

WP 2012-03. Executive Summary
Update Jul’14: The paper has been published by Palgrave Macmillan and is available on Amazon.
The European crisis is not behind us and easy solutions do not readily present themselves. Some of the causes of the crisis may be regarded as temporary while others (...)

Fiscal Decentralization in Weak Institutional Environments: Evidence from Southern Italy
by Sergio Beraldo, Massimiliano Piacenza and Gilberto Turati

WP 2012-02. Executive Summary
The quality of the institutional environment is a crucial issue in understanding the effective outcome of fiscal decentralization initiatives.
However, there has been so far very little work on the subject. In this paper we contribute to fill this gap by (...)

Fiscal Rules vs. Political Culture as Determinants of Soft Budget Spending Behaviors
by Jean-Michel Josselin, Fabio Padovano and Yvon Rocaboy

WP 2012-01. Executive Summary
Update: The paper was published in 2013 as "Grant legislation vs. political factors as determinants of soft budget spending behaviors. Comparison between Italian and French regions" in The European Journal of Comparative Economics.
This paper analyses (...)

Tax Structure and Entrepreneurship
by Mina Baliamoune-Lutz and Pierre Garello

WP 2011-01. Executive Summary
The paper was subsequently published in 2013 in Small Business Economics.
Numerous, and often conflicting, principles guide the design of a tax structure. One of those principles is that taxation should promote growth, or at least should hamper it as little as (...)

A comprehensive test of yardstick competition exploiting an italian natural experiment

Do fiscal decisions of incumbent mayors affect their probability of being re-elected? Do they consider the fiscal decisions of the neighboring mayors when they face an election? And do these strategic interactions remain stable over time, or do voters become more/less alert of, and incumbent (...)

The Past and Future of Biofuels

The global use of modern biofuels for transport is relatively recent and underwent rapid growth since the turn of this century. However, its performances in economic, energetic and environmental terms have recently been seriously questioned. Large-scale production of this renewable energy seems (...)

Database on Tax Competition on Italian Municipalities

Fiscal strategic interaction is a recurrent topic of recent economic literature. This short paper describes a database created as an instrument to analyze such interactions between Italian municipalities in local tax rate setting. The focus is on ICI tax rate (ICI = Imposta Comunale sugli (...)

European Tax: Good or Bad?

Super Size It? A Rationale Against Feeding the Leviathan - Julia Toser
The threat of fiscal harmonization - Massimiliano Trovato

"Taxing wealth - what for?"

"An Economic Rationale for the Net Wealth Tax - Does It Exist?"- Jan Schnellenbach
"Taxonomy of Wealth Taxes" - Philipp Bagus
"Because that’s where the money is!" - Daniel Pellerin

Tax and Justice

Taxation and Justice : A classical Liberal Perspective - Petra Orogvanyiova
From taxation to Justice - Pierre Bessard
Taxation and Justice - Daniel Pellerin

Public Debt, Public Spending & Economic Growth

Public Spending and Growth by Patrick Minford and Jiang Wang
L’endettement de l’Etat: stratégie de croissance ou myopie insouciante ? - Pierre Garello, Vesselina Spassova (french and english versions available)

Taxation and Economic Growth

Taxation and Economic Growth: Reconciling Intuition and Theory - Dalibor Rohá?
Taxation, Individual Incentives and Economic Growth - Alex Robson

An Economic Rationale for the Net Wealth Tax - Does It Exist?

Abstract: This paper surveys possible motivations having a net wealth tax. After giving a short overview over the state of wealth taxation in OECD countries, we discuss both popular arguments for such a tax, as well as economic arguments. It is argued that classical normative principles of (...)

Because that’s where the money is !

Abstract : When serial bank robber Willie Sutton was apprehended at last, someone asked him why he had robbed so many banks: “Because that’s where the money is,” Sutton famously replied. The idea of taxing wealth, whatever its merits, seems to suggest itself as naturally. One may well doubt (...)

Taxonomy of Wealth Taxes

Abstract: Wealth taxes are portrayed as being fair, and a rather painless way to increase funding for strapped government programs. So then, why should we consider wealth taxes? To what extent are these taxes a matter of justice and to what extent are these taxes a matter of economics? Are (...)

Understanding the mechanisms of taxation and public transfers which prevail in our contemporary economies

The model presented in the paper leads us to predict that the level of redistribution will be all the more important where the jurisdictions have been able to shelter themselves from tax competition and have suppress any possibility for an individual or a group of individuals to (...)

Aaron Director’s Law of Public Income Redistribution: A Reappraisal through the Median Voter Model

The median-voter hypothesis has been central to an extensive literature on the relationship between income inequality and public income redistribution. Knowing that the real-world market income distributions are skewed to the right, a majority of individuals earns an income that is strictly (...)

Still a Director’s Law? On the Political Economy of Income Redistribution

By drawing on the median voter model, George Stigler (1970) provided a theoretical basis for the alleged empirical regularity found by Aaron Director that income redistribution runs from the poor and the rich to the middle classes. The median voter model is however only applicable to describe (...)

Tax Compliance as the Result of a Psychological Tax Contract: The Role of Incentives and Responsive Regulation

A psychological tax contract goes beyond the traditional deterrence model and explains tax morale as a complicated interaction between taxpayers and the government. As a contractual relationship implies duties and rights for each contract party, tax compliance is increased by sticking to the (...)

Index of Fiscal Decentraliation

Debates on the future of uropean integration usually centre on "what o do next?" Deepening or widening? Or both. The idea that perhaps we have gone far enough is not often explored. One area where it is almost taken for granted that "Europe must progress" is in taxation. Ever since the (...)

The Dynamics of Fiscal Federalism

Abstract : Just as it would be misleading to say that western economies are freemarket economies, it would be far from the truth to say that this region of the world is one in which intense tax competition is taking place. This state of affairs mirrors the opinion prevailing among national as (...)

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