Traditional tax audits are effective at raising revenue but are costly to scale. Can third-party auditors enhance compliance, or are they prone to collusion due to inherent conflicts of interest? We study a policy reform in India that introduced unanticipated changes in the revenue threshold for mandatory third-party audits. Using a combination of bunching and difference-in-differences methods on administrative data, we estimate that third-party audits can increase tax payments by around 45\%, on average. However, firms with income or expenses already subject to third-party reporting exhibit smaller responses to private audits, reflecting a lower scope for manipulation. Our findings suggest that extending third-party audit requirements to smaller firms below the current threshold may be a cost-effective approach to increasing compliance in low state capacity settings.

The compliance effect of tax agents in low-income countries has received little attention in the literature. This study asses their impact through matching analysis of the universe of CIT and VAT returns submitted in Uganda between 2019 and 2023. Tax agents’ impact, proxied by the presence of audit expenses, is confirmed as broadly positive. CIT returns prepared by agents show no difference in declared liabilities in the aggregate, and higher declared CIT liabilities in the case of small and medium taxpayers. Significant but small increases in total VAT declared are mediated by increases in reported input and output VAT. Taxpayers relying on agents’ services are also less likely to nil-file and more likely to file late, while a higher likelihood of audit selection does not lead to significant differences in audit adjustments. These results are robust to different specifications and an alternative definition of agents’ use based on survey data.

I estimate the effects of tax audits on firm direct and indirect tax evasion as well as non-compliance in Pakistan using the universe of tax returns filed by registered firms between TY2008-TY2021. I leverage 7 years of natural experiments, during which time Pakistan varied audit eligibility policies between full eligibility, in which all firms are eligible; parametric eligibility, in which only evasive firms are targeted and eligible; and risk-based eligibility, in which only non-compliant firms are targeted and eligible. Despite changes in audit eligibility, each policy retained random audit selection conditional on eligibility, which I leverage for identification. This context allows me to estimate the static and dynamic effects of tax audits on different populations of firms (i.e., evasive firms and non-compliant firms) and estimate heterogeneous effects of tax audits based on the size of firms. Additionally, I provide evidence on the effect of simply being eligible for an audit.

Making use of a rich administrative dataset on Ugandan firms’ tax filings covering the period 2013–2021, this paper investigates the impact of tax audits on voluntary compliance, contrasting the effect of one versus multiple audits. Using a matched Difference-in-Differences approach with similar unaudited firms as controls, and a stacked design to address staggered treatment timing, the analysis shows that among firms that consistently file taxes over the study period, audits induce higher value-added tax (VAT) liabilities. Crucially, this is entirely driven by firms receiving multiple audits, underlining the importance of repeated interactions with the tax authority for fostering compliance among this set of taxpayers.

In this paper, I estimate the valuation of flood risks in Sweden by looking at property sales. A hedonic price model combined with a distance defined difference-in-differences method is used to estimate the marginal change in property prices following increased salience in information regarding flood risks. The results reveal a robust effect on properties close to predicted floods from the sea. The willingness to pay for increasing the distance to the predicted flooded area is estimated to be between 0.1 and 0.2% per meter using a linear specification. When allowing the marginal effect to differ depending on the distance fo the risk area it goes from no effect inside and close to the risk area to 1% at a distance of 100 meters. This implies that the effect is driven by the sales of properties that have some distance, but are still very close, to areas at risk of flooding

We study the effect of the introduction of the Deutschlandticket (DT), a large-scale German policy intervention that substantially decreased the costs of commuting by public transport, on housing prices. We use the introduction of the DT and cross-sectional variation in the reduction of commuting costs (by commuting distance) in a continuous-treatment difference-in-differences (DiD) setting. Our analyses are based on detailed data on commuting patterns on a municipality-pair level and extensive data on rental offerings from three large online platforms for our analyses. We document a small increase in relative rents in municipality pairs with higher cost savings from the DT. The effect is driven by smaller apartments and by municipality pairs with more feasible public transport commutes. Further heterogeneity results suggest that commuters use the cost savings to pay higher rents in more attractive housing locations, which aggravates existing housing market pressure in urban areas.

We examine the impact of city council members with real estate backgrounds on housing supply in California between 1995 and 2019. Using candidate occupation data and a close-elections regression discontinuity design, we find that electing a developer increases approved housing units by 68% during their term, especially for multifamily projects. The effect operates primarily through discretionary zoning approvals and does not persist beyond the developer’s term, suggesting limited impact on broader regulatory reform. These findings offer new causal evidence on how policymakers’ professional backgrounds shape land-use decisions and contribute to a long-standing debate on the political origins of housing supply constraints.

This study investigates the impact of property taxation on housing supply using a comprehensive dataset of 22,913 property tax rate changes across German municipalities. Leveraging an event study approach, we identify significant negative effects of property tax increases on the property tax base, housing supply, and local population growth, with the strongest impacts observed in small and West German municipalities. Our findings underscore the distortive effects of property taxation on housing markets, indicating that higher property taxes may exacerbate housing shortages. Notably, as taxable property values in Germany remain fixed and independent of tax rates, our analysis isolates the extensive margin response of the property tax base—manifested through changes in housing supply—in reaction to tax hikes.

As populations age, the demand for housing is changing. In urban areas with a relatively fixed housing supply, older households "aging in place" can exacerbate housing shortages for younger families. This paper examines the impact of an aging population on the distribution of housing in Stockholm’s housing market. Using Swedish administrative data, I am developing an equilibrium model of the housing market where households exhibit heterogeneous preferences for housing characteristics and face mobility frictions. I will recover households’ willingness to pay for different characteristics and simulate counterfactual scenarios to quantify how an aging population affects the housing market. I will also assess whether elderly households remain in their homes due to their costs of leaving outweighing their costs of staying or a lack of suitable alternatives. Finally, I will evaluate policy interventions to improve the match between family and house size.

This paper analyzes how structural factors in Korean society influence birth rates using local government data. High private education and housing costs negatively impact birth rates, while rising public property values suggest income polarization affects childbirth. Over the past 20 years, efforts to boost household income—mainly through maternal employment—have also lowered birth rates, indicating a lack of synergy between work and family life.

To address this, the paper proposes a dual policy approach: The central government should focus on structural reforms, such as reducing income inequality and restructuring the labor market, to improve socio-economic conditions. Meanwhile, local governments should implement autonomous fertility support policies to attract residents and invest in employment and education infrastructure to curb population decline. This combined strategy aims to tackle both short-term and long-term challenges in South Korea’s fertility decline.

This study examines the intricate relationship between population aging and public expenditure, focusing on Indian states. The findings confirm that as elderly population expands, the demand for healthcare services, pensions, and welfare programs intensifies, placing a growing fiscal burden on state governments. However, the fiscal impact of aging is not uniform across states; it is most pronounced in demographically advanced regions experiencing accelerated aging transitions. These states face the dual challenge of rising expenditure obligations alongside constrained revenue-generation capacities, exacerbating fiscal imbalances within India's federal structure. The study highlights the urgent need for targeted fiscal policies and institutional reforms to address these challenges. Key strategies include revisiting intergovernmental fiscal transfer mechanisms to account for demographic disparities, enhancing the efficiency of public health and social security systems, and fostering economic growth to counteract the effects of a shrinking workforce.

We consider two types of family model, rather than a representative agent setting, in the semi-endogenous growth model of Jones (2022). The paper provides an economic explanation for why birthrates are declining. We show that in an economy consisting of non-cooperative families, the partners have a free-riding incentive when considering the supply of child-rearing effort and thus the growth rate of the population is smaller than that in an economy consisting of cooperative families. This makes family size smaller and reduces the growth rate of the economy. We find that the competitive equilibria of either type of economy cannot internalize the population externalities on technological progress. The socially-efficient solution internalizes population externalities, enhancing technological progress, but labor effort for child-rearing is greater than the competitive equilibrium solutions. Hence, child-rearing should be subsidized to realize the first-best population growth rate which internalizes externalities arising from technological progress.

We evaluate the welfare effects of the Global Minimum Tax (GMT) on corporate income using a multi-country macroeconomic model. The GMT aims to reduce harmful tax competition and profit shifting. While it can boost welfare by increasing tax revenues, it may also raise firms' capital costs, potentially contracting the economy. Our model, which includes 27 EU Member States, the US, the UK, Japan, and a tax haven, provides a quantitative welfare assessment of a 15 percent GMT implementation. We explore two scenarios: In the first, additional corporate income tax (CIT) revenues are distributed to households, resulting in mixed welfare outcomes across countries and a slightly positive global impact. In the second, revenues are returned to firms through lower CIT rates, enhancing economic activity by reducing capital costs. This scenario generally improves welfare, increasing global welfare. A 16 percent GMT rate is found to maximize global welfare.

This paper explores how the Digital Service Tax (DST) affects a digital platform serving two customer groups linked by a network effect. The platform maximizes after-tax revenues from three sources: retail sales, advertising, and profit shifting. The DST falls on advertising revenue and prompts the platform to focus on the untaxed side of the market (retail) by raising the transfer price on the retail good. This dampens competition in the retail market and raises consumer prices while lowering ad prices. More profits are also shifted in response to the DST. However, we show that if the network externalitiy is sufficiently strong, these results may be reversed.

Analysis of the international network of double tax treaties reveals a large potential for tax avoidance. Developing countries are, on average, not more likely to suffer from tax revenue losses than other countries. Yet, this average masks the fact that several countries, such as Bangladesh, Egypt, Indonesia, Kenya, Uganda and Zambia, are vulnerable to substantial potential losses of withholding tax revenue by treaty shopping. The analysis combines tax parameters of more than a hundred countries with an algorithm from network theory, which simulates the tax minimizing behaviour of multinational enterprises. We introduce the notion of potentially aggressive tax treaties. These are the key treaties in treaty shopping routes, that may lead to substantial tax revenue losses in developing countries. Moreover, the treaty partners are often in a prime position to top-up tax undertaxed profits of developing countries that offer tax incentives to attract investment, thus nullifying the incentive effects.

The paper focuses on the effects that the introduction of the Global Minimum Tax (GMT) has from the perspective of developing countries. We introduce a model with two asymmetric host countries for FDI that compete with each other for the location of multinational firms, and simultaneously fight profit shifting to a tax haven. The low-income country has the weaker enforcement technology to fight profit shifting. It therefore loses more revenue from profit shifting, but also becomes a more attractive location for multinationals. The GMT reduces both profit shifting and the location advantage of the low-income country. If tax competition for real investment is sufficiently severe, the introduction of the GMT reduces tax rates and tax revenues in the low-income country while tax revenues in the high-income country rise. Our results help explaining the reservations that several developing countries hold towards the GMT.

This paper analyses the distributional effects of fuel subsidy reforms in four countries of the Andean region: Bolivia, Colombia, Ecuador and Peru. We combine tax-benefit microsimulation techniques with input-output analysis to estimate the direct and indirect distributional effects of reducing to the point of fully removing such subsidies, and explore how recycling the proceeds towards greater social protection can alleviate the burdens placed on society. Our results shows that the removal of fuel subsidies has a negative impact on household income, particularly for those at the bottom of the distribution which increases poverty. Recycling the revenue saved from the removal of subsidies to enhance the generosity of existing social protection programs mitigates the increase in poverty but to different extents across countries. The latter reflects differences in targeting of current social protection programmes in the countries under study.

The increase in natural disasters has spawned the creation of multilateral risk management facilities that offer sovereign parametric insurance contracts that provide governments with budgetary support for infrastructure replacement and excess social protection payments that accumulate in the wake of hurricanes and droughts. While the argument for pre-arranged financing is compelling, there is a paucity of economic analysis concerning how much coverage a government should optimally purchased taking into account the fact that parametric insurance may over- or under-predict true losses. Using a formal model, we show that optimal insurance coverage is sensitive to the predictive accuracy of the parametric disaster index and the pricing of the insurance relative to its actuarially fair level. Using realistic parameters drawn from a scheme designed to insure Kenya’s social protection program for its drought-prone regions, we further show that while the optimal amount of insurance is positive, it is lower than typically imagined.

The UK’s Climate Change Act mandates an 80% cut in CO2 emissions by 2050 relative to 1990. Although emissions have already fallen by about 45%, further structural changes are essential for decarbonising the UK economy. This study examines the impact of this transformation on labour productivity, firm demographics and energy consumption. We assess the implications of the transition so far, as well as of the transformation ahead of us. Our investigation employs both empirical and structural approaches. The empirical strategy involves analysing aggregate data, progressing to the division level, and concluding with an examination of individual firm behaviour.

Results indicate that two sectors drove the decarbonisation so far, electricity production and manufacturing. Shifting from coal to gas and renewables reduced emissions in electricity production, while the shrinking of the manufacturing sector reduced emissions in the latter. Reductions in energy intensity and increases in energy efficiency broadly balanced each other out.

This paper argues that adaptation to climate change should be part of a holistic development strategy involving both private and public sector responses. Governments can prioritize public investment in adaptation programs with positive externalities, address market imperfections and policies that make private adaptation inefficient, and mobilize revenues for, and distribute the benefits of, adaptation. Although the choice of what should be done and at what cost ultimately depends on each society’s preferences, economic theory provides a useful framework to maximize the impact of public spending. Cost-benefit analysis, complemented by the analysis of distributional effects, can be used to prioritize adaptation programs as well as all other development programs to promote an efficient and just transition to a changed climate. While compensations may be needed to offset damages that are either impossible or too expensive to abate, subsidies for adaptation require careful calibration to prevent excessive risk taking.

Appropriate management of water requires greater policy coherence vis-a-vis macro-fiscal planning. This renewed emphasis calls for an improved analytical framing and strengthening of public sector capacities. The paper proposes an analytical framing of water resilience relevant to macro-fiscal planning termed ‘water value chain’ outlining channels through which water resilience affects the macroeconomy and a country’s fiscal position. Focusing on three major policy themes in the water value chain, namely: (i) management of water resources, (ii) ensuring adequate and reliable access, and (iii) enhancing the efficiency of water use, the paper further assesses public sector capacity building needs associated as identified in the IMF’s Climate Policy Diagnostic (CPD) and policy reforms being pursued under the IMF’s Resilience and Sustainability Facility (RSF).

Climate change leads to more severe periods of drought. Especially in drought prone regions as Ethiopia there are economic, environmental and social consequences. In this article we take a welfare economic perspective. There are welfare costs due to its direct cost, welfare costs related to risk aversion, and welfare costs related to the fact that drought might impact intertemporal variability.Then we focus on the equity aspect of drought. Increased drought has an impact on inequality as rich and poor households are impacted differently. We analyse the equity impact using the Atkinson Social Welfare Function and arrive at eight cost components: four efficiency related and four equity related. This information can be used to inform policymakers and to advise them which policy measures to take. It can inform about the welfare impact of different policy measures. We apply the approach to rural households in Eastern Ethiopia facing drought.

Zambia’s reliance on rain-fed agriculture makes its economy and population highly vulnerable to frequent droughts and irregular rainfall. This paper assesses the role of social protection, specifically the Social Cash Transfer (SCT) program, in mitigating drought-induced poverty and consumption declines. Using the MicroZAMOD microsimulation model and district-level rainfall data, we find that droughts significantly increase poverty and reduce household consumption, disproportionately affecting the poorest households. While the current SCT program provides some relief, reforms to eligibility criteria, particularly removing the household composition requirement, could improve targeting, expand coverage, and strengthen resilience against climate-related economic shocks.

Environmental regulations can reduce economic output when firms struggle to adopt cleaner production methods. We examine how public infrastructure can complement regulations by mitigating their economic costs. Using detailed firm-level data and a staggered difference-in-differences design, we find that sewage treatment plants (STPs) provided by local governments significantly enhance wastewater treatment among polluting firms. This infrastructure provision reduced firms’ production adjustments required for regulatory compliance, attenuating output losses by approximately 30%. To further analyze optimal policy design, we develop an equilibrium model that captures the joint decision-making of governments in providing STPs and firms in managing wastewater discharge. Our model also quantifies the social welfare gains from increased public goods provision, offering insights into effective water environmental governance.