Independent but accountable: Walsh contracts and the credibility problem
In: Discussion paper series 1387
In: International macroeconomics
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In: Discussion paper series 1387
In: International macroeconomics
In: CESifo Working Paper No. 9215
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In: CESifo Working Paper Series No. 6872
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In: CESifo Working Paper Series No. 6913
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In: Games, Band 6(4), S. 637-676
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Working paper
In: Mathematical social sciences, Band 65, Heft 1, S. 10-20
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Working paper
In: Mathematical social sciences, Band 56, Heft 1, S. 144-147
In: University of Leicester, Department of Economics Working Paper No. 08/11
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Working paper
In: Bulletin of economic research, Band 59, Heft 3, S. 197-229
ISSN: 1467-8586
ABSTRACTIn a federation with n≥ 2 regions the relative optimality of five regimes – autarky, centralization, unregulated devolution, regulated devolution and direct democracy – is examined. Public policy consists of redistribution and regional public good provision. Regional incomes are uncertain and correlated. Estimates of the usefulness of regional public goods are uncertain and the federal government's estimates are noisier relative to those of regional governments. The optimality of each regime is influenced by four margins – regional insurance, coarseness of federal information, internalization of spillovers and raiding the commons. Regulated devolution is the only regime that is capable of producing the constrained first best level of public goods. Federal insurance under direct democracy can be inadequate relative to that under a utilitarian federal government. An increase in the number of regions allows better risk pooling but also greater opportunities for raiding the commons.
In: Journal of Economic Behavior & Organization, Band 64, Heft 1, S. 171-192
Using actual probabilities of audit and penalty rates, the return on evasion is 91–98%. So why do not most of us evade? Existing analysis, based on expected utility theory (EUT) is unable to explain this. Furthermore, and contrary to intuition and the bulk of evidence, EUT predicts that evasion should be decreasing in the tax rate (Yitzhaki puzzle). We apply Tversky and Kahneman's [Tversky, A., Kahneman, D., 1992. Advances in prospect theory: cumulative representation of uncertainty. Journal of Risk and Uncertainty 5, 297–323] cumulative prospect theory to tax evasion. We show that prospect theory provides a much more satisfactory account of tax evasion including an explanation of the Yitzhaki puzzle. This also provides independent confirmation of prospect theory.
In: The Manchester School, Band 74, Heft 6, S. 645-669
ISSN: 1467-9957
The neglect of administrative issues is a serious limitation of optimal tax theory, with implications for its practical applicability. We focus on an important class of administrative problems, namely that the tax bases are measured with some error. We also consider the full set of tax instruments. We find that consumption taxes can perform the 'social insurance role of taxation', a role previously ascribed only to income taxes. A combination of income and consumption taxes can hedge income and measurement‐error risks better, relative to the imposition of either type of tax alone. The optimal tax rate is increasing in the precision with which the corresponding tax base is measured. The taxpayer engages in precautionary savings in response to income uncertainty and measurement problems. Differential commodity taxes tailored to the measurability characteristics of the different tax bases dominate uniform commodity taxes. However, as an economy becomes large, optimal taxes converge to uniform (or flat rate) taxes.
In: Mathematical social sciences, Band 52, Heft 1, S. 99-108
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Working paper
In: University of Leicester, Department of Economics Working Paper No. 05/23
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