Taxation is known to be the most cost-effective tobacco control measure available to governments throughout the world. Higher tobacco taxes are also referred to as 'win-win' policies because they generate extra government revenue while at the same time reduce long-term tobacco consumption. Many health professionals have therefore been advocating for higher levels of tobacco taxation on public h...

Though fiscal policies of central governments sometimes provide modest insurance against regional income shocks, this paper shows that pro-cyclical fiscal policy among provincial governments can easily overwhelm these stabilizing effects. We examine the cyclicality of budget items among provincial governments in eight federations, showing that own-source taxes are highly pro-cyclical and contra...

Many scholars contend that democracy has a significant and positive effect on the provision of public services. Alternately, the fiscal theory of the state predicts that if the state is beholden to the citizenry for revenue, it will have economic incentives to defer to citizens’ preferences and enact policies that benefit broad segments of society. I argue that the incentives to provide public ...

Theory predicts that strategically-determined tax rates induce negative externalities across countries in relative prices, the wealth distribution and tax revenue. This paper studies the interaction of these externalities in a dynamic, general equilibrium environment and its effects on quantitative outcomes of tax competition in one-shot games over capital income taxes between two governments t...

This paper discusses the need and scope for an active fiscal stabilization policy. It is argued that the effectiveness of fiscal policy as a short run stabilizer does not depend on the long run multipliers of (balanced budget) fiscal policies. To the extent that activity can be affected by aggregate demand in the short run, there is a case for a fiscal stabilization policy in terms of temporary...

This note presents a stylized model of monetary and fiscal policies in which policy regime evolves randomly according to a Markov chain. This simple model is designed to illustrate that well-defined and unique equilibria can exist even in such an environment. It also shows that under certain assumptions about policy behavior, tax disturbances can generate wealth effects in line with the fiscal ...

This paper studies optimal monetary and fiscal policies in an economy à la Lucas and Stokey (1983) and Lagos and Wright (2005) with multiple cash and credit goods. We show that optimal policies are in general time inconsistent due to insufficient number of instruments to influence future government decisions. There are two important cases where time consistency can be restored. First, if taxes ...

abstractaccording to public choice theory, the features of the tax structure effect on voters' perceptions from the tax burden, so they pay more cost for public goods, lower than the estimate. in this study has been investigated the relationship between tax and public expenditures in the iranian economy during 1360-1390 based on public choice theory to examine the level of government spend...

In this paper we study jointly optimal fiscal and monetary policies in a small open economy framework with capital and sticky prices. We consider the case of distortionary taxes on labor and capital, and no public debt. As in a closed economy set–up, in the steady state, the optimal inflation rate is zero, as well as the optimal tax on capital. The dynamic properties of optimal monetary and fis...

Using the fiscal datasets from 1993 to 2003 in China, this paper studies fiscal disparities and the equalization effects of fiscal transfers at the county level. The results indicate that there are huge fiscal disparities across regions, and this kind of inequality takes on a lasting upward trend. The persistence of fiscal inequality is very high, and also trends upward. Moreover, transfers fro...