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  • Western Hemisphere x
  • Policy Objectives; Policy Designs and Consistency; Policy Coordination x
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Mr. David Amaglobeli, Mr. Valerio Crispolti, Ms. Era Dabla-Norris, Pooja Karnane, and Florian Misch
This paper describes a new, comprehensive database of tax policy measures in 23 advanced and emerging market economies over the last four decades. We extract this information from more than 900 OECD Economic Surveys and 37,000 tax-related news from the International Bureau of Fiscal Documentation using text-mining techniques. The innovation of this dataset lies in its granularity: changes in the rates and bases of personal and corporate income taxes, value added and sale taxes, social security contributions, excise, and property taxes are systematically documented. In addition, the database provides information on the announcement and implementation dates, whether the measures represent major changes, are part of a broader tax package, and phased in over several years. The paper also presents a range of stylized facts suggesting that information from this database is useful to deepen the analysis of tax policy changes for research and policy purposes.
Mr. Steven A. Symansky and Mr. Thomas Baunsgaard
This paper discusses how to enhance automatic stabilizers without increasing the size of government. We distinguish between permanent changes in the parameters of the tax and expenditure system (e.g., changes in tax progressivity) that will enhance the traditional automatic stabilizer, and temporary changes triggered by certain economic developments (e.g., tax measures targeted at credit and liquidity constrained households, triggered during a severe downturn). We argue that, with some exceptions, the latter are preferable as they can be implemented with lower disruptions in other fiscal policy goals (e.g., economic efficiency). Moreover, countries should also avoid introducing procyclicality as a result of fiscal rules, as these would offset the effect of existing automatic stabilizers.
Mr. Gauti B. Eggertsson and Mr. Eric Le Borgne
We propose a theory to explain why, and under what circumstances, a politician gives up rent and delegates policy tasks to an independent agency. We apply this theory to monetary policy by extending a standard dynamic "New-Keynesian" stochastic general equilibrium model. This model gives a new theory of central bank independence that is unrelated to the standard inflation bias problem. We derive several new predictions and show that they are consistent with the data. Finally, we show that while instrument independence of the central bank is desirable, goal independence is not.
Mr. Vito Tanzi
The globalization of economic activities that is characterizing many economies raises questions about the future of the nation state. This paper discusses this trend and shows that cross-frontiers spillovers have become more frequent and have increased the need for international agreements and international organizations to deal with them. It concludes that a continuation of current trends would increase the importance of subnational government while reducing (in the economic sphere) the importance of national governments.
Mr. Guillermo Calvo and Mr. Enrique G. Mendoza
This paper examines trade reforms of uncertain duration undertaken in economies subject to real foreign and domestic shocks. These reforms induce consumption and import booms regardless of whether they succeed or fail and of the degree of intertemporal elasticity of substitution. If tariff revenue is rebated, a recession follows the boom, but without rebates a boom or a recession may follow depending on the outcome of the reform. Consumption fluctuations reflect imperfect credibility and real shocks, and the credibility component depends on the mean and risk of real asset returns. Thus, observed booms are a noisy signal of imperfect credibility. Quantitatively, lack of credibility produces sizable consumption cycles, but generally smaller than those induced by real disturbances.