We use quasi-random local variation in the number of young men who died as a result of World War I to estimate the impact of this demographic shock on innovation and structural change in France. Our analysis shows that excess mortality led to an increase in patenting activity in counties with high pre-war education levels, driven predominantly by innovations in labor-saving technologies. Our estimates imply that an additional 6,000 patents were filed in the 15 years following the war, amounting roughly to the average annual number of patents filed pre-war. We find a positive association between war-related mortality and wage growth as well as with the adoption of machines in the agricultural sector, providing additional evidence that incentives to escape labor scarcity are driving the innovation response to mortality.

We examine the optimal mix and timing of R&D support policies using France's comprehensive system of tax credits, age-based incentives, and direct grants. Matching French tax returns with administrative R&D expenditures and patent data, we investigate which policy combinations improve firm performance and innovation quality across the firm lifecycle. We exploit age eligibility thresholds using regression discontinuity design, comparing firms around the 8-year cutoff for Young Innovative Enterprises (JEI) and Young University Enterprises (JEU) schemes. Preliminary results suggest the 2004 JEI/JEU introduction increased patent applications by approximately 20 patents and improved citation quality for eligible firms. Our analysis reveals policy complementarities between different R&D support instruments and identifies when such support yields the highest returns.

To what extent do the risks of starting and running a business lead to resource misallocation? Individuals face a variety of risks when starting a business---a key one is the difference in earnings relative to staying in salaried employment. Starting a business may offer a higher probability of faster earnings growth, but can also increase the probability of very low earnings realizations. We provide novel evidence on the earnings dynamics of business owners compared with employees using rich administrative data from the UK. We complement these findings by implementing a new survey to elicit the risk preferences and constraints faced by potential and current business owners. Informed by these findings we develop and estimate a model of occupational choice to quantify the extent to which earning risk discourages entrepreneurship and study the different ways policy can alleviate these risks.

This paper examines how innovation activity affects firm survival, scale, productivity, and market position trajectories by comparing first-time patenting firms with otherwise similar firms that never patent, using an event-study design. We further distinguish between granted and rejected patent applications to separate the returns to innovation from those attributable specifically to patent approval. Firms with granted patents exhibit substantially lower exit rates, roughly 15 percentage points lower than unsuccessful applicants, indicating large extensive-margin effects. Beyond survival, granted patents are associated with pronounced intensive-margin responses: firm scale growth, measured by revenue, value added, and wage bills, is approximately 25–30 log points higher. Firms with rejected patent applications also grow faster than non-patenting peers. In contrast, we find no systematic effects on firm productivity or the capital-labor mix, suggesting that post-innovation growth is driven by the expansion of existing activities. However, we observe an increase in the share of high-skill STEM-educated workers among successfully patenting firms, suggesting that these firms invest in building their future innovation capacity. Finally, we document significant gains in industry-level market shares among successfully patenting firms.

We show that the promised production efficiency of an ideal VAT is sensitive to its practical, administrative choices. We study the response of exports and zero-rated domestic sales to delays in refunds of VAT credits in South Africa. Although South Africa officially issues refunds immediately, delaying these refunds were a key part of the "State Capture" episode between 2015 and 2018. We find that smaller exporters and sellers of zero-rated domestic goods of all sizes, increase their output by 20 percent once refunds were issued promptly. Our findings suggest that timely VAT refunds are crucial to preserving production efficiency in a VAT and that tax administrations can meaningfully affect these delays even if \emph{de jure} they are required to be paid immediately.

We study the impact of adopting the value-added tax (VAT) on countries' tax revenue performance. Applying an event-study design and using panel data for 74 countries that introduced a VAT between 1986 and 2015, we estimate that adopting the VAT increases the tax-to-GDP ratio by about 0.7 percentage points on average. The effect is larger, up to 2 points of GDP, for low- and middle-income countries, in particular those located in Africa. The increase in VAT revenue more than offsets the decline in other indirect taxes—particularly trade taxes—consistent with VAT adoption replacing more distortionary sources of revenue, while income tax revenue remains broadly unchanged following adoption.

In this paper I use Czech administrative tax data from 2015-2023 to study whether there are differences between compliance behavior of firms and self-employed individuals at the VAT registration threshold. I apply the novel diffuse bunching framework of Anagol et al. (2025) to analyze whether bunching responses are motivated by a tax notch, fixed costs of VAT registration or optimization frictions. I find that their underlying revenue elasticity with respect to the tax rate is similar (around 0.24), suggesting comparable responses to tax incentives. However, the two groups differ substantially in their perceived fixed costs of VAT registration and their ability to choose optimal revenue. I find that self-employed individuals face 3 times higher fixed costs of registering to the VAT. I also find that firms exhibit much lower optimization frictions than self-employed individuals.

This paper presents a simple model in which a multinational enterprise operates in multiple non-haven jurisdictions where it has real economic activity and shifts paper profits to a tax haven. In this setting, we introduce a Global Minimum Tax (GMT) and analyse its consequences for the allocation of real economic activity and for profit shifting. The GMT is binding not only in the tax haven, but also potentially in other low tax jurisdictions. These jurisdictions are negatively affected in terms of capital allocation, but the resulting increase in tax revenues may offset this loss, which would lead to a net welfare gain. Unconstrained jurisdictions may gain or lose depending on their relative effective tax rates. Since the reform creates winners and losers, we examine its welfare implications under the assumption of no tax competition among jurisdictions and derive the conditions under which the GMT leads to a global welfare improvement.

This paper investigates the global minimum tax (GMT) in a model of tax competition between asymmetric countries. We consider both profit shifting and real responses of multinational enterprises, and highlight the role of the substance-based income exclusion. The GMT reduces true tax rate differential and benefits the large country, while the revenue effect is ambiguous for the small country. In the short run where tax rates are fixed, the GMT reduces the small country’s revenue if profit shifting costs are low and increases it otherwise. In the long run where countries adjust tax rates, the minimum rate binds the small country only if it is low. With the rise of the GMT rate, countries set tax rates below the minimum to boost investments. A moderate GMT rate raise both countries’ revenues and large country’s welfare. It may reduce small country’s welfare if the welfare weight of private income is high.

The Global Minimum Tax (GMT), implemented in 2024, represents a significant change in the international tax system. This paper uses a difference-in-differences framework to assess its short-term impact, including on effective tax rates, investment and employment. Based on group-level Orbis data, the analysis finds that in the first year after the introduction of the GMT, relatively low-taxed MNEs experienced a statistically significant increase in their effective tax rates of 1.7 percentage points. However, this increase was not accompanied by a reduction in investment or employment. Heterogeneity analyses suggest that the effects on effective tax rates are driven by MNEs which were more likely to have engaged in tax planning and MNEs with higher profit-to-substance ratios. The point estimates in terms of ETRs suggest that the GMT resulted in an increase of EUR 79bn-109bn in tax revenue globally in the first implementation year, equivalent to 2.4-3.4% of global CIT revenue.

The OECD/G20 Base Erosion and Profit Shifting (BEPS) project represents the most ambitious attempt to curb multinational profit shifting through international coordination. Using firm-level country-by-country reporting data for 2300 large multinational groups between 2016 and 2023, we examine the impact of both BEPS and the anticipated effects of the global minimum tax. We document two main findings. First, BEPS coincided with only modest changes in multinational tax outcomes: effective tax rates in profit-shifting hubs increased slightly and reported economic substance—particularly employment—expanded, but the concentration of profits in low-tax affiliates remained largely unchanged. Second, simulations of the global minimum tax indicate a more substantial and targeted impact. Average effective tax rates increase by about 1.6 percentage points, with the largest effects concentrated in offshore investment hubs prone to profit shifting. We estimate additional global corporate tax revenues of roughly 100 billion.

We study how regulatory risk affects housing markets in the aftermath of rent control. In Berlin, a stringent rent cap introduced in 2020 was repealed in 2021, but continued political debate over expropriation and further intervention kept housing policy uncertain. Using micro-level listing data and a difference-in-differences-design comparing Berlin to other major German cities, we show that Berlin's price-rent ratio remained 10–15 percent below its pre-intervention trend three years after repeal. To interpret this persistence, we develop a model in which institutional investors face greater exposure to future regulation, predicting lower asset prices, reduced institutional ownership, and partial crowding-in by private investors. Consistent with these predictions, housing policy uncertainty rose sharply after repeal, and large housing companies reduced their Berlin portfolios, accepted lower sale prices, and sharply cut construction. We conclude that credible threats of future intervention can depress housing valuations and reshape market structure even absent binding regulation.

We examine the incidence of property taxation in urban rental markets in Spain using novel administrative microdata that link taxpayers to their real estate holdings. Leveraging cross-municipality variation in property tax parameters, we estimate the pass-through to rents and the effect on vacant rental supply. Our results show that landlords raise rents by approximately €0.85 for every €1.00 increase in their property tax liability. This effect is concentrated in long-term residential leases and is amplified at contract renewal, where stricter rent-control provisions limit rent updating in ongoing contracts. Pass-through is also disproportionately higher among small-scale and low-educated landlords. In addition, we find that property tax hikes lead to a modest increase in the supply of vacant units, but only in the commercial segment. These findings underscore the role of property taxation in shaping housing affordability.

In many countries commercial property taxes are an important source of local revenue, yet little is known about their real effects on firms. Using Finnish administrative microdata that allow exact measurement of firm-level property tax payments, we exploit more than 1,000 municipal tax rate changes in an event study design to estimate the real effects of property taxation. Firm-level property tax payments respond nearly one-for-one to statutory rate changes, while the underlying tax base is relatively inelastic. We find that higher property taxes reduce total capital stock by lowering building investment. In contrast, firm scale measures show limited average responses, and entry effects are modest. These results suggest that commercial property taxes are revenue-efficient but distort firms’ capital composition.

Our study investigates public opinion on the housing affordability crisis in Portugal through a nationally representative survey combined with an information provision experiment. Participants were asked to identify perceived causes of rising housing prices, assess their factual knowledge of the housing market and sociodemographic trends, and indicate their preferred policy solutions, carefully framed to reflect trade-offs. Half of the respondents were randomly assigned to receive official statistical information on these trends before indicating their policy preferences. The findings reveal significant heterogeneity in beliefs about the causes of the crisis, pervasive misperceptions regarding market trends, and a limited impact of information provision on policy preferences. These results underscore the challenges of addressing housing policy through informational interventions alone and highlight the need for strategies that integrate behavioral and contextual factors to foster informed public engagement.

The effectiveness of public shaming in motivating tax compliance is well documented for individuals, but less so for corporations. We analyze anticipatory effects of the EU's Directive on Public Country-by-Country Reporting (PCbCR) and its interaction with the Global Minimum Tax. PCbCR requires large multinational corporations to publicly disclose financial data from 2026; the latter imposes a "top-up" tax on undertaxed profits, which may itself become public. Listed firms with higher ex-ante exposure to public shaming (media, ESG) and voluntary disclosure activity recorded increases in their effective tax rates of 5-7 percentage points (pp) after the announcement of the reforms in 2021. In contrast, we find that banks, which are exempt from the Directive, recorded decreases in their tax rates of more than 6 pp. We point to changes in the media spotlight and NGO scrutiny to explain, in part, the heterogeneity in responses across industries.

We introduce a novel approach to analyze the role of international treaties for tax evasion, focusing on tax information exchange. First, we use a gravity model of bilateral Foreign Direct Investment to identify ‘investment anomalies’, which do not follow real economic determinants, and show that they are consistent with tax evasion patterns. We then add variables for tax information exchange to understand how these treaties are related to changes in tax evasion.

We find that Double Taxation Agreements are associated with more investment, likely including evasion, while tax information exchange is associated with an average -6% reduction in tax evasion, primarily driven by OECD Country-by-Country Reporting and the EU Directive 2011/16 with effects up to -13%. This demonstrates that Double Taxation Agreements should always be paired with tax information exchange and that the implementation of Country-by-Country Reporting should be further promoted to reduce tax evasion.

We study whether enforcement misperception arising from the opacity of tax audit systems is a feature or a bug of corporate tax compliance. Extending the seminal Allingham–Sandmo of tax evasion, firms can reduce tax liabilities via illegal evasion or legal but resource-costly avoidance. If managers overestimate audit intensity, they substitute from evasion toward avoidance rather than truthful reporting, leaving tax revenue largely unchanged while increasing deadweight costs (advisory fees, restructuring) and reducing penalty revenue. With a risk-averse manager facing personal liability, the model delivers a closed-form interior evasion choice and predicts a weaker response to perceived enforcement among more risk-averse managers. Empirically, we combine German firm survey data with administrative audit rates across German states and size classes to identify behavioral effects and quantify welfare losses.

How should governments design climate policies in the presence of inequality, uninsurable risk, and fiscal constraints? To address this question, we develop a climate-economy model with incomplete markets and idiosyncratic labor-income risk, where Ricardian equivalence fails and optimal long-run capital taxes are positive, leading to important inter-temporal wedges. We analytically show that the optimal carbon tax equals the social cost of carbon (SCC) adjusted for fiscal distortions. Calibrating the model to the U.S., we show that these adjustments are quantitatively negligible: high levels of household inequality, income risk, and fiscal distortions do not, in themselves, justify lowering climate ambitions. Welfare gains under the optimal policy come almost entirely from efficiency and environmental amenities, with almost no effect on redistribution and insurance, and are fairly evenly distributed across households.

Increasing climate risk is making property insurance unaffordable and unavailable. I study a novel Australian policy response: government-provided, mandatory, risk-based reinsurance for cyclone damage in home insurance. Public reinsurance reduces premiums by 21\% and increases insurance availability by 11\%. These gains are not a subsidy but arise from eliminating large pre-existing markups in private reinsurance and catastrophe bond markets, flowing primarily to insurers most constrained by tail-risk exposure. The markup reduction stems from neutralizing the high premium for spatially-correlated and ambiguous risk, with increased competition providing additional benefits. This demonstrates that insurance market dysfunction originates from frictions in tail-risk reinsurance markets, and that targeted, cost-neutral interventions in these upstream markets can restore affordability and availability in home insurance.

As climate-change uncertainty rises, societies increasingly rely on new technologies to adapt. While such measures can improve resilience, they may also foster maladaptation—private responses that reduce damages locally while imposing external costs on society.

We model a private agent that can invest irreversibly in a clean adaptation technology under stochastic climate risk. In a business-as-usual scenario, the agent instead relies on a lower-cost practice that partially mitigates climate impacts but generates a negative externality (e.g., intensive soil fertilizer use). Adopting the clean technology achieves comparable adaptation performance without these social damages. We characterize the privately optimal investment trigger and robustness choice, and then study policy design when the government can subsidize adoption. The optimal subsidy balances fiscal costs against avoided external damages and accounts for how subsidies affect both the timing and design of private investment, reducing the likelihood of widespread maladaptation.

This study explores an effective and well-balanced carbon pricing revenue recycling portfolio to guide policymakers. Using municipality-level data from Canada, we assess the impacts of carbon tax recycling schemes on economic performance, equity outcomes, and environmental effectiveness, and examine public acceptance of balanced schemes. We show that, among various revenue recycling options, distortionary tax cuts impose the smallest economic costs, green spending achieves the largest reductions in GHG emissions, and direct household transfers slightly increase income inequality despite being intended to improve equity. We also find that allocating a larger share to green investment best balances the triple dividends and public acceptability. These findings highlight the importance of designing a scheme that not only delivers triple dividends but also gains public support.

We study the roles of quantity and quality of public education in an OLG model where the working adult cares for her child's education as well as for her elderly parent's consumption, and spends time providing assistance to her parent. First, we identify the optimal quality-quantity mix that a parent chooses as a function of policy (school fees, income tax, pension). Then, we discuss the socially efficient determination of the policy tools. We find that school fees tend to reduce education quantity by boosting working time for both kids and adults, and generally favour the generation of working adults (even though they are the ones paying them), possibly at the expense of a negative impact on the well-being of the young and of the elderly. The opposite is true if education is mostly financed through the income tax. Overall quality is only moderately sensitive to changes in the policy mix.

We estimate the causal effect of per-pupil expenditure on special education identification rates in U.S. school districts. While prior work has examined how categorical funding formula design shapes identification decisions, no study has estimated whether overall district resource levels affect identification rates. Using an unbalanced panel of approximately 11,600 districts from 1991 to 2017, we instrument for per-pupil expenditure with the plausibly exogenous timing of court-ordered and legislative school finance reforms. An event-study analysis confirms these reforms increase per-pupil expenditure with no evidence of differential pre-trends. Our preferred IV estimate indicates a $1,000 increase in per-pupil expenditure raises the share of students identified for special education by approximately 1.1 percentage points, or 8 percent relative to the sample mean. Effects are larger in districts with higher proportions of Black residents, college-educated adults, and higher median incomes. These findings suggest resource constraints meaningfully shape local special education identification decisions.

For decades in many countries, women have attended university in greater shares than men. Yet, men are more likely to enroll in programs with higher returns to education, specifically, those related to STEM. In this paper we explore the effects of increasing tuition on overall enrollment by gender and on the selection of STEM programs by women. We find women consistently enrolled at higher rates than men between 1991 and 2020, with the gap widening over the period from 10 to 16 percentage points. Men were more likely to register in STEM fields. This STEM gap has remained stable in traditional STEM disciplines suggesting systematic gender differences in incentives and behavior, reflecting factors such as men’s stronger engagement with higher-paying non-university jobs, higher expected returns to traditional STEM fields for men, narrower earnings dispersion for women across fields, and gender differences in cost sensitivity and risk aversion.

Gender peer effects in schools are well documented, but it remains unclear whether they reflect classmates’ characteristics, such as gender composition, or endogenous peer effects, where students respond to their peers’ achievement and effort. We study gender-specific endogenous peer effects in mathematics achievement in the final year of compulsory school (grade 9), using Swedish register data with classroom identifiers. To identify endogenous peer effects, we build on methods that use variation in peer-group size. A practical limitation of this approach is that identification is strongest in smaller groups, whereas real-world classrooms are usually much larger. This mismatch may explain why previous applications have often produced weak or statistically insignificant estimates. By exploiting uneven gender composition across classrooms, we obtain smaller effective peer groups and estimate the model using conditional maximum likelihood. We find substantial endogenous peer effects in mathematics achievement: approximately 0.48 standard deviations for girls and 0.20 for boys.

This study aims to identify the main areas and objectives of smart city procurements and to determine the spatial and socio-economic factors influencing smart city development. Using data on all successful procurements in Poland in years 2017-2021, we propose a novel methodological approach to identifying smart city investments based on neural topic modelling (BERTopic).

We found that smart city development in Poland remains at an early stage, with a predominant focus on hardware and software purchases that support public services. That smart city investments are driven by municipalities’ financial capacity and size, residents' age and education levels, and the quality of the institutional environment. Although smart city investments are concentrated in major cities, we observe diffusion into surrounding metropolitan areas and into more peripheral regions.

This study provides valuable policy insights and demonstrates the potential of using micro-data and text-mining techniques to analyze local public investments.

We examine whether municipal childcare expansions generate net growth or merely reallocate childrearing households across municipalities. We study Japan’s Akashi City, which sharply expanded child medical-care and childcare-fee subsidies in the 2010s, widening benefit gaps with nearby municipalities. Using a Difference-in-Differences design—Akashi as the positive treatment group, adjacent wards in Kobe as the negative treatment group, and Himeji (a nearby city in a different commuting zone) as the control—we find preschool-related outcomes rise in Akashi but fall on the Kobe side; when the two treated areas are pooled, the average effect is indistinguishable from zero. A Geographic Regression Discontinuity design at the Akashi–Kobe boundary reveals a post-reform discontinuity, driven mainly by declines on the Kobe side near the border. Overall, the evidence points to cross-border spillovers and suggests that, at the broader Akashi–Kobe scale, Akashi’s gain may reflect a reallocation rather than a net increase.

This article explores the application of machine learning models to identify financial difficulties in Polish local governments from 2010 to 2023. Poland's current public finance monitoring is reactive and lacks effective forecasting, complicating early detection of fiscal risks. The study examined 2,375 municipalities using a dataset of 33 financial, demographic, and macroeconomic variables. Four classification models were compared: logistic regression, LASSO regression, Random Forest, and XGBoost. Results indicated that XGBoost performed best, achieving an ROC AUC of 0.837 and an average precision of 0.723. SHAP value analysis identified operating profit per capita from the previous year and debt indicators as key predictors. The study highlights that these machine learning models can aid audit institutions, such as Regional Audit Chambers, in developing modern early-warning systems, enabling auditors to concentrate resources on entities in genuine financial distress, despite the challenges posed by sudden regulatory changes.

This paper analyzes the local economic impacts of military troop deployments. We exploit variation from the historic large-scale US troop withdrawal from Germany triggered by the end of the Cold War, to estimate the effect on local labor markets and local public finances. We use administrative data to precisely quantify the size of the troop withdrawal at the municipal level. Using a synthetic difference-in-differences estimator, we find negative effects on local labor markets. The decrease in economic activity results in a reduction of revenues for affected municipalities. To balance decreased revenues, affected municipalities lower their expenditures, while increasing business and property tax multipliers. We estimate the cost per job to be USD 110,400 of US military spending. Our worker-level analysis reveals that workers displaced by the closure of a US military base have persistently lower employment rates 15 years after the withdrawal.

This paper extends the fiscal common pool model of public debt to include an economic crisis triggered by fiscal deficit. We consider a fragmented government in a two-period model. Interest groups determine government spending in the first period. The fiscal deficit is financed by public debts, the redemption cost of which is equally shared among groups in the second period. Our extension is that there are two states of the world in the second period: crisis state and normal state.

Regarding the relationship between public debt issued and the crisis probability, we consider three scenarios: zero-risk, low-risk, and high-risk scenarios. We show that in the high-risk scenario, three cases can arise: unique corner equilibrium (zero debt issuance), unique interior equilibrium (positive issuance) and multiple equilibria. We further show that as the number of interest groups increases, the combinations of economic growth and crisis losses that lead to multiple equilibria expand.

This paper investigates whether sovereign defaults in high-debt advanced economies can be attributed to a self-fulfilling mechanism, using the Greek debt crisis as a case study. Unlike models relying on the Method of Simulated Moments, we adopt a disciplined calibration strategy within a rigorous framework incorporating long-term bonds. We analytically characterize the "Crisis Zone" and demonstrate that the baseline model fails to replicate key moments, particularly spreads, because the welfare cost of temporary market exclusion is insufficient. To address this, we introduce two extensions: a partial default mechanism and a persistent state of liquidity dry-up. The extended model successfully replicates the high debt-to-GDP ratios and significant spreads observed in Greek data. Our findings suggest that the duration of market exclusion is a primary driver of default risk, implying that effective liquidity support must be credible in duration, not just in magnitude.

This paper examines whether sovereign debt restructuring contributes to fiscal sustainability and economic growth in lower-middle income countries (LMICs). Using a panel of 48 LMICs over 2000–2023, we estimate a Difference-in-Differences model complemented by an event study design to identify average and dynamic effects of restructuring episodes.

The results show that restructuring is associated with statistically significant improvements in GDP per capita growth, with gains emerging gradually in the post-restructuring period. Pre-treatment trends are statistically indistinguishable, supporting the identification strategy.

Heterogeneity analysis finds no significant variation in effects across institutional quality levels. Interpreted through a public finance lens, the findings suggest that restoring debt sustainability may relax binding fiscal constraints and support medium-term recovery in structurally fragile economies.

Keywords: Sovereign Debt Restructuring; Fiscal Sustainability; GDP Per Capita; Lower Middle-Income Countries.

A key conflict in sovereign debt restructurings is the distribution of debt relief among creditors, who demand that the losses they face are “comparable” to those of other creditors. The matter becomes more complex when the universe of creditors is heterogeneous. The subject of “comparable treatment” (CoT) across creditors is poorly defined in theory and practice, and noticeably absent from the economics literature. We aim to fill this gap by undertaking three goals. First, we develop an economic framework to define the problem of CoT and its key inputs: debt relief, creditor heterogeneity, and loss allocation rules. Second, we explore the economic principles behind different fairness criteria by considering social planners with varying objectives. Third, we examine how current criteria to assess CoT at policy institutions match these fairness rules.

This paper addresses the design of Pigouvian taxes aimed at the climate externality in conjunction with other tax and transfer instruments. The analysis is split into two steps:

First, the design of commodity-level carbon taxes, and second, the optimal recycling of the associated revenue. I show that the optimal pure carbon taxes differ from the benchmark of a Pigouvian tax, i.e., the marginal environmental damage. They are differentiated between commodities based on their carbon intensity, the behavioral effectiveness, and distributional concerns, i.e., the more emissions-intensive, elastic, and redistributionally unvaluable a good is, the higher the carbon tax on it. However, this policy is suboptimal if the planner has vertically redistributive preferences, and additional tax and transfer policies can increase welfare. If the tax system is sufficiently unrestricted, the Pigouvian benchmark is recovered through the interaction of the standard tax instruments with carbon prices.

I study how the speed of carbon-tax phase-in interacts with revenue recycling. Front-loaded taxes cut cumulative emissions earlier and meet climate targets with a lower peak tax, limiting future wage and GDP losses. But rapid implementation can raise short-run resistance: with household adjustment frictions, especially among low-income households, green technology adoption is delayed, so households face higher energy costs during transition. I quantify this trade-off in a heterogeneous-agent GE model with costly household electrification under financing frictions. I compute welfare by income and age across different recycling schemes in quantitative policy experiments and isolate the role of adjustment frictions. Rapid phase-in worsens short-run welfare, particularly for low-income households, because taxes rise before electricity-sector productivity gains materialize, causing deeper temporary wage declines. Over the long run, faster phase-in improves decarbonization, GDP, and aggregate welfare. Recycling matters: lump-sum transfers protect constrained households better than subsidies, without hindering future growth if introduced quickly.

Household net income is only a weak predictor of carbon footprints in the cross-section. We document this fact using a harmonized dataset linking environmentally extended supply-use tables to the European Household Budget Survey across 26 EU countries, in which emissions inequality is driven primarily by within-country variation. To recover the lifetime income-emissions relationship, we calibrate an overlapping-generations model with non-homothetic CES preferences, where households allocate consumption across five categories with distinct emissions intensities. Identification comes from the non-proportional consumption-income relationship, heterogeneity in consumption baskets, and variation in emissions intensities across goods. The calibrated model delivers the first quantification of the lifetime income-emissions relationship for EU households. Life-cycle consumption dynamics account for a substantial share of the attenuated cross-sectional gradient, implying that standard cross-sectional analyses significantly overstate the regressivity of carbon pricing.

A central question in public economics is whether motherhood penalties differ across the wage distribution. Standard theories predict larger penalties among high-wage women due to greater career interruptions and foregone earnings, while lower-wage women should experience smaller losses. Evidence from the United States, however, shows the opposite pattern. We examine whether this gradient persists in two egalitarian welfare states, Norway and Sweden, characterized by generous parental leave, subsidized high-quality childcare, and universal health care. Using population register data from 2016–2020, we compare mothers to childless women and estimate both the overall wage penalty and the marginal penalty per child across the income distribution. We find that motherhood penalties are most pronounced at the lower end of the wage distribution, while they are modest, and even reversed, at the top. These results challenge the welfare state paradox, suggesting that extensive family policies do not fully mitigate compounded disadvantage among lower-wage mothers.

Understanding the causes and consequences of homelessness is central to the design of effective social policies. This paper investigates the relationship between labor market shocks and housing instability by constructing a novel dataset that merges nationwide records of homeless shelter requests with individual-level administrative employment data in France. Leveraging mass layoffs, I document a sharp and persistent increase in the risk of homelessness following job loss. Conversely, exploiting quasi-random variation in housing shocks, I find that losing stable housing leads to a significant decline in subsequent employment and earnings trajectories among those with a recent work history. Together, these results provide evidence of a vicious circle between housing instability and labor market detachment, suggesting that the long-term costs of job loss are amplified by housing market frictions.

We develop a new framework to evaluate income distributions from the perspective of an opportunity-egalitarian planner. This planner faces a costly trade-off between treating people as equals and treating them unequally to equalize opportunities. The resolution of this trade-off depends on the extent of the planner’s inequality-of-opportunity aversion. We use this framework to derive social welfare and inequality measures that are governed by a single parameter capturing the planner's preferences. We bring these measures to the data and analyze inequality of opportunity in the United States. Concretely, we build on the recent literature on intergenerational mobility and study the robustness of its conclusions about time trends and spatial variation in unequal opportunities to assumptions about the planner's preference for equal opportunities. We show that many commonly held conclusions about trends and spatial variation in inequality of opportunity are sensitive to the assumed degree of inequality-of-opportunity aversion.

This paper examines how artificial intelligence reshapes subnational public finance through familiar channels posed by prior technological change. AI shifts income from labor toward capital and tax bases toward consumption and market-based allocation, raising issues like the recent discussion of the sales tax treatment of digital services. With respect to the use of AI, we argue that AI relaxes long-standing informational and administrative constraints in state and local taxation, enforcement, budgeting, and service delivery, while simultaneously strengthening scale economies. The ability to reduce costs at the depends critically on labor-intensive services such as K-12 education. At the same time, the use of AI may advantage larger jurisdictions because of the larger amounts of data that they have, but also potentially raising equity and transparency concerns and increasing the value of interstate cooperation to harness the scale advantages of having more data. AI amplifies— the classic trade-offs emphasized in fiscal federalism.

We investigate whether providing politicians with low-cost access to peer information influences fiscal behavior, exploiting an Italian program that allowed mayors to access detailed municipal expenditure data via a restricted website. By tracking digital activity, we construct a directed network of peer monitoring. We find that participating mayors are younger, more educated, and govern larger municipalities. Exploiting network intransitivity to address the reflection problem, we demonstrate that digital transparency fundamentally alters fiscal competition. Within the network, strategic interaction in property tax setting is conditional on electoral incentives, driven primarily by mayors eligible for re-election. Conversely, municipalities outside the network exhibit geographic correlation unrelated to term limits. These findings suggest that digital platforms facilitate sophisticated, reputation-based yardstick competition, demonstrating that transparency tools influence politician behavior even prior to public disclosure.

This paper models theoretically and tests empirically the hypothesis that the decision about the location of a public bad within a multi-tiered structure of government can be driven by strategic electoral considerations exploiting the heterogeneous migration responses to the location of the public bad by voters of different ideologies - a sort of mobility-based gerrymandering. As long as the average utility loss from living close to the public bad is larger for progressives than it is for conservatives, conservative and progressive central governments will pursue opposite strategies. The former locate the public bad in an electorally tight region to induce exit of progressive voters and gain the region to the conservative party, while the latter attempt to spread progressive voters out of safe and towards electorally tight regions. An application to waste treatment plant locations across Italian municipalities returns evidence in support of the model’s main hypotheses.

In July 2017, Lithuania moved toward flexicurity by significantly increasing the generosity of unemployment insurance (UI) while simultaneously decreasing firing costs. We use administrative data on all Lithuanian workers to quantify labor market effects of i) the reform, which increased the potential benefit duration and the monthly benefit level by 50 percent, and ii) variation in severance pay. We find that the elasticity of the non-employment duration w.r.t. a proportional increase in both policy parameters is 0.4, and the elasticity of the benefit duration is 0.7, suggesting a substantial fiscal cost.

Finally, we find little evidence for a reform effect on re-employment wages.

What is the role of income in driving the choice to claim disability benefits, and how can broader benefit policy affect that? We study three UK reforms which cut non-disability benefits and find that each increased the number of individuals receiving disability benefits, with an elasticity of claims to incomes between -0.4 and -1.1. Our results provide causal evidence that disability benefits provide insurance against non-health related shocks. These effects have implications for the optimal level of non-disability benefit generosity, and the savings policymakers might hope to generate from benefit cuts.

Governments spend heavily on unemployment insurance (UI), yet research on entitlement length focuses almost entirely on the claimant's own job search. This paper asks whether the rest of the family adjusts labor supply when a member gets a longer UI entitlement. The added worker effect shows wives work more when husbands lose jobs, but whether entitlement length shapes this, or extends beyond couples, is unstudied. The net effect is theoretically ambiguous, as this paper's model shows. Using Dutch administrative data, I exploit sharp discontinuities in maximum UI entitlement duration in a regression discontinuity design. Longer entitlement raises actual benefit duration and delays unemployment exits. Spouses and adult children raise employment in response, while parents do not; spouses respond from the start of the spell, children near benefit expiration. Accounting for them raises the MVPF from 0.756 to 0.853. This is the first evidence on UI duration spillovers within couples and across generations.

This paper studies social insurance with imperfect eligibility screening, focusing on Unemployment Insurance during its expansion in 2020-21. We study the extent of imperfect screening by identifying anomalous payments using administrative tax data and UI policies, finding $214 billion in potentially-improper payments—concentrated in the Pandemic Unemployment Assistance (PUA) program—with half detectable ex-ante through improved data sharing. There is substantial geographic variation, and a border design shows this is partly due to state policy decisions. To assess implications for optimal policy, we first conduct simulations that replace PUA with means tested, lump-sum transfers, finding these transfers would have better insured against income losses at lower administrative cost. Second, we develop a model of opt-in versus automatic transfers that shows the targeting advantage of opt-in programs can reverse when ineligible recipients pass the benefit screen. Calibrated to 2020 UI, the model implies that shifting toward automatic transfers would have increased social welfare.

This paper evaluates the scope and coverage of the Common Reporting Standard (CRS), an international automatic exchange of information regime intended to eliminate bank secrecy and reduce cross-border tax evasion. We obtain new, aggregated CRS data from 26 countries, covering roughly 30% of the global amount reported by the OECD for the year 2022. We first show that cross-border financial wealth continues to be concentrated in tax havens. We then combine our aggregate CRS data with recent estimates of offshore financial wealth to estimate the coverage of the CRS. Our results suggest a coverage rate ranging from 38 to 93% for the subsample of countries we have the most granular data from, highlighting scope for improvement. However, we also show that the volume of data exchanged internationally has increased and improved in quality substantially over recent years, giving reason for longer-term optimism.

We combine information from foreign financial institutions reported to the French tax authority as part of the AEoI with data from a voluntary disclosure program and individual tax returns to document five new facts about French households’ foreign wealth. First, about 6.8% of French financial wealth was held abroad in 2021, with a substantial share concentrated at the top of the income distribution. Second, reported foreign accounts and foreign financial income have risen markedly since the endorsement of automatic cross-border exchange of financial account information. Third, this rise is entirely driven by taxpayers who did not report the existence of a foreign account before the transparency policy was announced. Fourth, participation in the voluntary disclosure program explains a large share of these dynamics, indicating that disclosures constitute a key margin of behavioural response to the policy change. Fifth, among disclosers, self-reported information closely matches information reported by foreign financial institutions.

This paper examines the role of professional tax advisors in a personal income tax system with relatively low complexity. Using population-wide administrative data from South Africa (2011–2018) and a matched difference-in-differences design, we estimate the causal effect of first-time tax preparer use on individual tax outcomes. We find that taking up a tax advisor leads to a persistent reduction in reported tax liabilities of about 3.6 percent, consistent with reduced information and compliance frictions and improved use of deductions and credits. Absolute tax savings rise strongly with income, while proportional effects are similar across the distribution. Higher-quality advisors generate larger effects, but the aggregate impact on tax progressivity and after-tax inequality remains modest.

This paper studies how administrative tax simplification affects tax burdens and behavior among recent migrants. We exploit Norway’s 2019 introduction of the Pay-As-You-Earn (PAYE) scheme, which allows eligible foreign workers to opt into a flat 25 percent withholding tax that eliminates filing requirements and deductions. Using population-wide administrative data and simulated counterfactual tax liabilities under the ordinary progressive system, we examine how PAYE reshapes effective tax rates and short-run outcomes. The reform strongly compresses the distribution of effective tax rates, generating a mass point at the statutory rate. This compression is asymmetric: many low- and middle-income migrants pay more under PAYE, increasing average effective tax rates by 2.25 percentage points. Because participation is voluntary, remaining in PAYE reveals a willingness to trade higher taxes for simplicity. A regression discontinuity design around the eligibility cutoff shows sharp tax differences but no short-run effects on employment, earnings, or migration outcomes.

This paper investigates whether tax and regulatory incentives for micro-firms in Europe hinder economic growth and productivity. We motivate the analysis by Europe’s persistent productivity gap and the widespread use of policies favoring very small firms. While reduced tax rates and simplified regimes may ease entry, theory suggests they can also distort firm growth incentives. Using firm-level data from the EU-wide CompNet database, we construct a composite index of micro-firm tax incentive intensity across countries. We find a non-linear relationship between incentives and the share of micro-enterprises. Moderate support is associated with a lower prevalence of micro-firms, consistent with policies facilitating early growth. Beyond a threshold, however, stronger and more discontinuous incentives correlate with a higher and more persistent concentration of micro-firms, alongside weaker aggregate productivity growth. The results highlight trade-offs between supporting micro-entrepreneurship and fostering firm dynamism.

This paper studies whether size-dependent public support distorts firm growth. We focus on Korea’s SME policy framework, where eligibility for a wide range of tax incentives, fiscal subsidies, and regulation changes discontinuously at revenue thresholds. We provide the theoretical analysis in which firms may optimally restrain expansion to preserve preferential treatment, implying bunching at the threshold. Using Korean firm-level panel data during 2018-2023, we test these predictions by comparing the growth rate of firms close to the SME–MME threshold with those farther away. Firms near the cutoff exhibit a statistically significant reduction in revenue growth of about 1.0–2.7 percentage points, along with slower employment growth by 0.9-1.3 percentage points. The findings suggest that size-contingent support policies can unintentionally discourage firm expansion.

This paper investigates the drivers of imperfect take-up by exploiting a threshold-based corporate tax cut targeting small firms in China. Using comprehensive administrative data, we document the striking puzzle that only 45 percent of eligible firms claim tax benefits. We employ a fuzzy regression discontinuity design and find that claiming the tax relief significantly increases external tax consulting costs. These costs act as a hidden “entry fee” that deters small firms from participating in even straightforward rate-cut policies. We further rule out audit risk and administrative approval barriers as alternative mechanisms. Despite this compliance friction, we find that for participating firms, the tax savings relax financial constraints, leading to a significant increase in investment in eligible fixed assets. Our findings highlight that reliance on paid intermediaries severely limits the transmission of tax policy to small businesses.

In this paper, we calculate the excess profits of energy and fossil fuel companies in the EU during the energy crisis on 2022-2023. A windfall tax on these profits was adopted, which we find could have generated €73.8 billion, nearly three times the officially reported collection. We document evidence for an avoidance response by large multinationals shifting profits to jurisdictions where the windfall profits tax was not in force. Using Czech country-by-country reporting data, we calculate the potential revenue of a permanent extension of the excess profits tax under different scenarios.

This paper explores how digitalization in the corporate sector can boost tax revenue collection. finding that stronger firm digitalization is associated with higher tax revenues across countries and also higher tax paid across firms. The cross-country estimates illustrate that a one-standard-deviation increase in firm digitalization is associated with an increase in tax-to-GDP by up to 3 percentage points, conditional upon the level of digitalization of tax administration. Firm digitalization significantly improves tax compliance among high-risk taxpayers, such as small and informal enterprises, particularly in the service sector. This indicates that digitalization not only broadens the corporate tax base but also plays a crucial role in improving tax compliance. Both country and firm-level analyses reveal a significant synergy between firm digitalization and GovTech, undescoring the importance of promoting both to enhance tax collection.

Digital monitoring technologies promise “automated enforcement,” but in many low-capacity states, compliance cannot be mandated—firms must be induced to opt in. We study what such reforms deliver when participation is voluntary, and enforcement credibility is limited. Using administrative panel data matched to transaction level device records from a real-time reporting program in Pakistan, we track both selection into integration and the dynamic effects of adoption. Take-up is sharply selected: adopters are firms already more engaged with the tax system before integration. Conditional on adoption, reported activity and tax payments rise immediately but fade within months, consistent with learning about the authority’s ability to sustain follow-up. Finally, incentive design shapes the reform’s equilibrium effects: linking preferential rates to restrictions on input-credit claims shifts reporting away from inputs documentation, weakening the self-enforcing VAT chain. The results highlight credibility and design—not technology alone—as central to digital state-building.

Do standard fiscal policy tools work for state-owned enterprises (SOEs)? We address this question by exploiting a bonus depreciation policy in China as a quasi-natural experiment. Using a staggered difference-in-differences design on national tax survey data, we find that while private firms increase investment by 11% in response to the tax incentive, SOEs show no reaction on average—a result that holds even for the most financially constrained firms and those with high shares of private capital. However, we find that SOE investment is activated through a political channel: local SOEs increase investment only when their controlling governments face pressure from growth slowdown, revealing a dual mechanism for fiscal stimulus: market-based for private firms and political for state-owned firms.

Multinational enterprises (MNEs) organize diverse business functions across  jurisdictions, yet evidence on how taxation shapes these location choices is limited. We exploit a new micro-level  Country-by-CountryReporting (CbCR) dataset that identifies individual MNE affiliates and their functions, overcoming the constraints of previously aggregated data. The microdata reveal new descriptive patterns in the global  organization of production and enable more precise analysis of how functions such as manufacturing, R&D, holding activities, and internal finance respond to tax environments. Our results provide the first micro-based evidence on the tax sensitivity of MNE business functions, offering new insights for international tax policy.

How does higher education shape social mobility in countries where elite colleges are public and tuition-free? Using linked microdata spanning several decades, we follow Brazilian high school graduates through college and into the labor market to study income segregation, mobility, and the distributional incidence of public spending. We show that elite public colleges have relatively low mobility rates, despite high returns, because they enroll few disadvantaged students. Using college-level financial data, we document that per-student government transfers are much higher at elite publics, yielding a highly regressive pattern of public expenditure in higher education: the top 10% receive 6.75 times as much as the bottom 10%. Finally, exploiting differential exposure to a nationwide affirmative-action reform, we quantify causal effects on income composition in each college tier. We find that, in the absence of the policy, the top 20% would have increased its share of total government spending by 14%

Job displacement generates large and persistent income losses. This paper examines how different public policy designs mitigate the consequences of job loss in Uruguay. Using matched employer-employee records, we combine difference in differences and RDD designs to estimate both the effects of job displacement and the insurance value of two policies: (i) a traditional contributory unemployment insurance program and (ii) a non-contributory conditional cash transfer program that is widely available to poor households. First, we document sharp earnings declines following displacement and incomplete recovery even five years later. We then compare the insurance value of alternative policies. We show that access to the non contributory cash transfer program provides an effective alternative to UI for vulnerable and middle income workers facing layoffs. In particular, access to the cash transfer is associated with faster earnings recovery and improved medium run labor market outcomes.

We study how firms adjust to more generous paid sick leave. Exploiting a 2011 Uruguayan reform that gradually raised the benefit cap, we implement a difference-in-

differences design with employer–employee data, comparing firms with pre-reform exposure measured by the share of workers eligible for higher benefits. More-exposed firms experience a large increase in sick-leave incidence among eligible workers, with little change in spell duration. Earnings growth is 1–6% lower, while employment rises by 3% relative to less-exposed firms.

We study how an expansion to paid maternity leave affects women’s labor market trajectories in an economy with substantial informality. Our setting is Chile’s 2011 reform that extended maternity leave from 12 to 24 weeks based on a child’s date of birth. The reform creates quasi-experimental differences in incentives to participate in formal employment around childbirth. We combine administrative birth records with longitudinal social security data and government social registry, where we observe

workers’ formal and self-reported employment and earnings, to track women’s employment before and after the birth event. Using an event-study framework, we analyze dynamic adjustments in both labor force participation and the allocation between formal and informal work, allowing for anticipatory responses when eligibility depends on prior contributions. The analysis provides new evidence on how contributory maternity benefits shape employment trajectories around childbirth in high-informality environments.

We consider the optimal taxation of capital if government is allowed to differentiate taxes on the basis of an asset’s risk class. We separately consider wealth taxes and the joint taxation of both wealth and capital income. We find that taxes on normal returns (be it wealth or income taxes) should be higher for risk-bearing assets if individual risk aversion is declining with earnings ability. We show that the insurance motive to tax excess returns to risky assets does not interfere with the redistributional motive to differentiate taxes on normal returns. However, a tax on excess returns is shown to also have a redistributive role in our setting, as long as taxes on normal returns are differentiated.

The answer is: we should tax capital income, because taxes on capital income impose a non-distorting tax on the risk premium, whereas taxes on wealth do not. This conclusion is derived by analyzing taxes on capital income and wealth in a Merton-Samuelson multiple-period portfolio model with safe and risky assets. Tax reforms are analyzed where taxes on capital income are increased and taxes on wealth are lowered. Such reforms are unambiguously welfare improving with idiosyncratic risk and also welfare improving with aggregate risk if public goods provision is not too inefficiently large. Optimal taxes on capital income and wealth are also derived. Taxes on capital income are used to tax the risk premium, while (negative) taxes on wealth should ensure intertemporal efficiency, which would boil down to a tax a rate of return allowance, joint with a tax on capital income.

Recently, there have been calls for the introduction of a wealth tax. However the major concern is that a wealth tax induces evasion. This paper theoretically characterises the optimal wealth tax in a general equilibrium model with tax evasion and financial frictions deriving a new optimal tax formula consisting of three components. First, a redistribution term, reflecting the welfare gains from transferring resources toward agents with lower. Second, a general equilibrium-effects term. Third, a behavioural-effects term including the key elasticity of evasion with respect to taxes which depends on the curvature of the evasion costs and on the extent to which hidden wealth can be collateralised. The numerical exercise quantifies two main results. First, the higher the share of hidden wealth that cannot be collateralised, the lower the elasticity of evasion. Second, as the share of hidden wealth that cannot be collateralised increases, the planner chooses a higher tax rate.

Entrepreneurial taxation differs from standard Mirrlees income taxation because the entrepreneur’s effort is an input into her own production. As a result, taxing entrepreneurial income distorts not only effort but also the firm’s production plan and the demand for other inputs. This paper studies optimal nonlinear taxation when entrepreneurs differ in privately observed skill and the government observes only entrepreneurial income and capital. I derive conditions under which production efficiency with respect to capital is desirable and when a second-best capital tax (or subsidy) should accompany the income tax to offset incentive-driven distortions. With effort-augmenting skill and weak separability, a production-side analogue to Atkinson–Stiglitz implies that capital should not be taxed when capital demand does not vary across types at a given income. With capital-augmenting skill, the sign of the optimal capital instrument depends on technology curvature: declining capital elasticities favor a capital subsidy.

Standard optimal tax models typically ignore reference-dependent behavior induced by institutional thresholds. This paper incorporates loss aversion into a Mirrlees optimal income tax framework to analyze how such exogenous reference points, unlike social comparisons, alter optimal redistribution. I show that institutional loss aversion calls for globally higher marginal tax rates and a quantitatively large expansion of the lump-sum transfer. To accommodate behavioral bunching at the reference point, I employ an ironing approach and derive a modified optimal tax formula that remains valid in the presence of a mass point. Simulations calibrated to the U.S. economy imply that the optimal lump-sum transfer increases by 19-32% and yield welfare gains equivalent to 5.8-7.5% of consumption. These results are robust under both paternalistic and non-paternalistic welfare criteria.

Standard optimal tax formulas treat the equity-efficiency tradeoff as independent of how taxation reshapes social comparisons. When aspirations are socially determined, reforms that shift the income distribution move individuals' reference points, creating additional welfare and revenue effects beyond the classic labor-leisure margin. I embed endogenous aspirational thresholds in a Mirrleesian model and derive sufficient-statistics formulas for optimal linear and nonlinear income taxes. The key new statistic is an aspiration elasticity: the response of taxable income to a change in aspirations, which governs whether higher aspirations motivate or frustrate effort. Using a U.S. online information-provision experiment with hypothetical choice scenarios, I estimate this elasticity to be 0.10-0.25 and find that aspirations predominantly motivate across the income distribution. Consistent with these estimates, standard formulas can overstate optimal progressivity. The framework also characterizes when pay-transparency policies raise welfare by correcting misperceptions and increasing the salience of reference incomes.

This paper studies optimal income taxation with endogenous wages and extensive-margin labor supply, focusing on how production structure and profit-share heterogeneity shape optimal tax policy. We show that if the production function exhibits CRS, profit is fully taxed, or profit shares are uncorrelated with social marginal welfare weights, the classic extensive-margin optimal tax rule continues to hold despite endogenous wages. By contrast, under DRS without full profit taxation and with heterogeneous profit shares, the optimal rule must incorporate general equilibrium effects operating through both wages and profits. Numerical simulations based on generalized CES production functions indicate that negative employment tax rates are often optimal for low-income workers, and that redistribution strengthens as decreasing returns become more pronounced and profit shares become more unequal. Overall, optimal employment tax design depends not only on wage inequality and labor supply responses, but also on the distribution of profit shares across worker types.

The optimal tax literature ignores that, across the world, redistribution towards the poor mainly happens via welfare transfers with take-up rates far below 100%. This paper provides the first comprehensive analysis of tax-transfer systems composed of mandatory income taxes and optional transfer programs. We develop a theoretical model that (a) allows for heterogeneity in productivity and take-up costs and (b) accounts for responses at the take-up margin and both margins of labor supply. We derive empirically applicable formulas that specify (i) conditions for the existence of Pareto-improving reforms of taxes, transfers, or both, (ii) the inverse optimum weights of transfer recipients and non-recipients that make an observed safety net optimal, (iii) the optimal tax rates and transfer phase-out rates. We apply these formulas to show that the tax-transfer system of Germany and Sweden are inefficient: There exist transfer reforms that make all recipients better off while increasing net tax revenue.

Interjurisdictional competition is central to public finance, yet most empirical work studies a single policy instrument. This is at odds with fiscal federalism in practice, where lower-tier governments set multiple instruments simultaneously and interdependently. We study multi-instrument tax competition using German municipalities exploiting roughly 30,000 business tax and 37,000 property tax changes. Estimating a distributed lag model to identify policy response functions within and between municipalities and across tax instruments, we find strong evidence that business and property tax rates are strategic complements. Complementarities arise within municipalities, across municipalities within the same tax, and across municipalities across taxes. These results imply that standard within-instrument approaches can overstate the slope of the response function by attributing joint multi-instrument adjustment to strategic interaction in a single tax.

How do policies spread across jurisdictions when policymakers respond to potential competitors idiosyncratically? We develop a new approach to measuring network ties from policymakers’ revealed references and apply it to local business taxation in Germany. Using 3,982 policy narratives from 3,129 tax reform debates, we show that local politicians selectively invoke peer jurisdictions, with references varying by shared municipal characteristics and political ideology. We use these patterns to predict the network of policy interactions across Germany’s municipalities and combine it with plausibly exogenous tax reforms in selected municipalities to study tax competition. Tax changes propagate substantially through this network, including across state borders, with approximately 22 percent of an initial tax shock transmitted to exposed municipalities. These effects are larger than those found in previous studies using generic network structures, helping to reconcile conflicting evidence on the extent of local tax competition.

The literature in urban economics has highlighted the importance of urban amenities. This study shows that urban amenities also play a significant role in spatial tax competition. We incorporate urban consumption amenities into a spatial tax competition model in which regions compete for spatially mobile tax bases. In the model, consumers engage in cross-border shopping by purchasing goods in regions with lower tax rates. We find that the presence of urban amenities raises equilibrium tax rates not only in the region containing the city center but also in surrounding regions. This upward effect is heterogeneous across regions. Consequently, urban amenities mitigate tax competition and generally enhance the fiscal capacity of local governments. They may serve as an alternative to tax coordination or subsidies in addressing the inefficiency of low equilibrium tax rates under tax competition.

This paper studies optimal taxation when marginal contributions to an externality differ between urban and rural regions (non-atmospheric externalities), and individuals can migrate from rural to urban regions to earn higher wages. I show that when the government is constrained to set a uniform commodity tax across regions, the presence of externalities alters the structure of optimal redistribution. In particular, if, for example, urban residents impose higher marginal external damages, the optimal policy features more redistribution, relative to a benchmark without externalities. This additional redistribution reduces the attractiveness of higher urban wages and thus discourages migration into the urban region.

We analyse optimal fiscal policy in an overlapping generations model with endogenous labour supply and savings, and two consumption externalities: aspirations and habits. Aspirations cause each generation’s consumption to influence the utility of the next, while habits imply that higher early-life consumption reduces the perceived utility of consumption in old age. To implement the social optimum, the government uses a positive tax on wages, and a subsidy on investments, received by the old. An additional positive (negative) transfer to the young (old) is required to attain the optimum when there is under-accumulation of capital at the decentralised equilibrium. When there is over-accumulation of capital, the sign of the transfers becomes unclear, and the possibility that both are positive arises. Numerical exercises reveal conditions under which equal transfers to all individuals, a Universal Basic Income (UBI), can be optimal. Our results reveal when UBI can effectively enhance welfare.

This note examines whether heterogeneity of tastes invalidates Deaton's (1979) theorem in support of uniform commodity taxation. Building on Boadway and Cuff (2022), I consider an economy with a piecewise linear income tax and a population with heterogeneous skills and tastes. Uniform consumption taxes remain (i) efficient and (ii) Rawlsian optimal under heterogeneous tastes if conditional consumption demand and earnings are independently distributed. In special cases, this criterion translates into independence between (i) expenditure shares and earnings, (ii) expenditure differences and earnings, or (iii) skills and tastes.

We study the optimal taxation of corporate and dividend income when entrepreneurs can use retained earnings to reduce their tax burden. We show that eliminating dividend taxes while increasing the corporate income tax (CIT) to keep investment unchanged raises total tax revenue. Our simulations suggest net revenue gains of 0.1-0.4% of GDP. In an infinite-horizon model, the optimal policy sets dividend taxes to zero in every period. As the discount factor approaches one and when the planner values only workers' welfare, the optimal steady-state CIT converges to a standard inverse-elasticity rule.

This paper explores the effects of institutional debt limits on municipal borrowing in the United States. A theoretical analysis shows that forward-looking governments facing a debt limit take precautionary measures to preserve budgetary flexibility in the event of adverse shocks. Specifically, they plan lower deficits and rely on alternative debt instruments. We test these predictions using a panel of US municipalities, exploiting the design of state-imposed debt limits. Our results show that tight limits are reflected in lower levels of restricted debt and induce municipalities to shift borrowing toward unrestricted but more expensive debt instruments. These responses are concentrated among municipalities that have already exhausted a substantial share of their legal borrowing capacity; for these municipalities the limit also restrains total borrowing, indicating that substitution between restricted and unrestricted instruments is only partial.

While little is known about how a local government react to the fiscal shocks in advanced country, empirical evidence is lacking. This is because, in general, many fiscal shocks are endogenous. This paper examines the impact of donations via the Hometown Tax Donation system (HTD) on various local government expenditures. Under the HTD system, which is quite unique fiscal system, people can donate some portion of the tax payable to the place of residence to other municipalities. The most significant characteristic of the financial resources received by local governments through this fiscal system is their instability. It is difficult for the local governments to control the amount. According to our quantitative analysis (using panel data analysis with instrumental variables), the local governments may accumulate the donations in reserves for future needs while simultaneously increase specific expenditures such as welfare and sanitation costs.

We study how local governments respond to a large positive revenue shock when its persistence is uncertain. Exploiting quasi-experimental variation from BioNTech’s COVID-19 vaccine breakthrough, we show that German municipalities did not increase discretionary spending or public investment despite unprecedented business tax revenues. Instead, they reduced debt, accumulated reserves, and temporarily cut business and property tax rates. Firms hardly entered or relocated. Our results suggest that beliefs about persistence shaped policy and, together with fiscal oversight, led to reversal of tax cuts as revenues declined. Overall, tax policy is not only useful for attracting business but serves intertemporal expenditure smoothing.

Tax revenue fluctuations can threaten municipalities' fiscal stability, especially when shortfalls coincide with economic downturns. We study how exposure to tax revenue risk—the covariance between tax revenues and macroeconomic conditions—affects municipal borrowing costs and public investment. Municipalities with higher tax risk pay more to borrow: a one-standard-deviation increase in tax risk raises offering yields by 3 basis points and secondary-market yields by 7 basis points. These effects are robust to a border-discontinuity design and are strongest where alternative repayment capacity is limited. Greater tax risk, in turn, leads to sustained reductions in public investment.

This paper examines the selection into emigration among entrepreneurs and analyses how taxation and residence-permit-related moving costs affect the international mobility of business owners. We use a unique dataset that links business owners to their firms across national borders between Finland and Estonia using personal identifiers. Variation in tax differentials across countries and over time, as well as the introduction of e-Residency program in 2014 in Estonia, provide the main sources of identification. We first study selection into out-migration and document income trajectories of business owners and their firms around the time of cross-border mobility. We then analyze mobility patterns before and after the introduction of e-Residency and tax changes, and relate these to the income dynamics and firm performance outcomes identified in the trajectory analysis. We find positive selection into cross-border mobility by owner income rank. Additionally, we find suggestive evidence of policy changes affecting location choices.

Most empirical work treats firms as stand-alone units, yet economic control is exercised through ownership networks. If owners differ in their ability to monitor, allocate capital, or organize production, then firm performance may depend on who owns the firm. This paper studies whether owners are heterogeneous in their association with firm outcomes and whether tax policy distorts the allocation of corporate control. Using a novel registry-based panel covering the universe of German firm–person ownership networks from 2002 to 2024, I link 5 million firms to 7 million individuals and observe ownership portfolios and transitions at scale. I estimate an AKM-style decomposition to quantify persistent owner-specific components in firm performance. The results provide new evidence on owner heterogeneity and concentration of firm ownership.

This paper studies the effects of foreign ownership among Finnish firms on top incomes. The Finnish top 1\% share increased significantly in the 1990s foreign acquisitions of Finnish firms increased rapidly. We examine how this affected the distribution of incomes. We find that on average wages increase and especially the top earners of the acquired firms gain the most in incomes. Second, we observe a set of connected firms through share board membership that allow us to study the spillover effects of the foreign acquisitions. Intriguingly, we find almost as large spillover effect in the connected firms as the direct foreign takeover effect. The direct effect and spillover effect combined allow us to explain a substantial part of the increase in top 1% share that occurred in Finland from the 1990s.

Private pensions are the largest component of household wealth in the UK, and the vast majority of employees are automatically enrolled into workplace pension plans. Using employer-reported pension data linked to the population census, we document that Bangladeshi and Pakistani employees are around twice as likely to opt out of their workplace pension as employees from other ethnic backgrounds. Opting out means forfeiting employer pension contributions and tax subsidies, with potentially large financial consequences: we estimate that a typical Bangladeshi or Pakistani employee who consistently opts out would have around 60% higher retirement income if they instead saved in their workplace pension. These differences persist within firms and are not explained by economic differences across ethnic groups. Instead, we present a set of evidence pointing to the importance of Islamic religious beliefs in driving the higher opt-out rates, consistent with Islamic teachings on savings.

We offer new empirical facts and insights into the determinants, dynamics, and consequences of extreme poverty in an advanced market economy, based on a novel administrative data set from France’s largest food assistance charity that is unique in its comprehensive coverage of low-income households -- in particular of homeless individuals. First, extreme poverty is largely a transient phenomenon, but a very large fraction of households is at risk of falling into food and housing insecurity. Second, children and teens are vastly over-represented in food and housing insecurity relative to their share in the overall French population. Third, inflows are highly sensitive to local macroeconomic conditions and policies while outflows only depend on individual characteristics, with an especially strong duration dependence. Fourth, housing is a luxury good, with marginal propensities to consume and price elasticities equal to zero below a subsistence threshold.

Social scientists have long believed that income rank matters to people. Rank is not a fixed characteristic, however: we can choose whom to compare ourselves to, and we are big fish in some ponds, but smaller ones in others. We conducted an experiment that elicited the income rank beliefs of a representative sample of mid-career Finns in various reference distributions. Some had the rank in one distribution revealed to them at random, but others could choose what information to acquire. We characterize the choice of reference population and its implications for well-being. We find that almost half of respondents care most about rank within occupation, while fewer than six percent are interested in national rank. Instrumental motives predominate the choice of reference group. We compare the effects of information acquired by choice and received at random, and find little difference. Last, we show that information acquisition affects real behavior.

This study proposes two theoretical mechanisms of vertical policy diffusion grounded in local political risk management rather than central government coercion. According to the proposed theoretical framework, local tax policy choices stem from the interaction between central choice architecture and local political capital. Using a dataset covering 22 tax discount categories across all 256 Israeli municipalities from 1993 to 2025, we document over 1,000 tax increases executed by reducing discounts below the Maximum Discount Choice (MDC). Although the choice architecture was designed to encourage a 'race to the bottom', this study strikingly finds that most Israeli municipalities adopted MDC. Consistent with the central hypothesis of this study, higher political capital increases the likelihood of policy diffusion via unintended nudges compared to adopting the MDC, after controlling for population size, income per capita and budget deficit. Normatively, the adoption of policies misaligned with local characteristics departs from public welfare maximization.

In countries with robust informal labor markets, the required number of contributions to access a pension can influence formality. We study this phenomenon in the context of Brazil. We develop a theoretical life-cycle model that captures key dynamics of a contributory pension system design in a labor market with informality. Our analysis shows that the minimum years of required contributions play a central role in shaping the trade-off between higher immediate earnings in the informal sector and the accumulation of long-term pension through formal employment. Next, we examine how tightening eligibility criteria affects workers’ incentives to participate in the formal sector. We find heterogeneous responses: low-income workers, who derive greater short-term gains from informality, reduce formal participation and rely more heavily on the social pension, whereas middle-income workers increase formality to meet the stricter eligibility requirements. We find no impact for high-income workers who optimally choose to remain formal.

To boost retirement savings, many countries mandate worker contributions to pension accounts. This paper investigates saving responses to such mandates throughout the entire portfolio, leveraging detailed administrative tax data from Switzerland and a regression discontinuity design. I find that mandatory pension plans have limited effects on total savings, with an estimated crowd-out rate of 94%. Decomposing the saving response, I show that workers offset mandatory pension contributions by reducing private non-retirement savings, primarily in financial assets. By contrast, there is no substitution between mandatory and voluntary pension savings. Liquidity-constrained workers are less able to reduce private savings in response to mandatory contributions and therefore increase their total savings.

Elderly workers in developing countries face frictions, such as credit constraints, in retirement decisions that may not be as common among their counterparts in the developed world. In this study, we use regression discontinuity methods to show that a large fraction of urban males in Brazil (45 percent) react contemporaneously to pension eligibility by retiring. Because retirement is not required to receive the pension and the return to working does not change discontinuously at the eligibility cutoff, workers should not react contemporaneously unless optimization frictions, such as credit constraints, are at work. Secondly, we develop a model of retirement decisions that explores how pension incentives in the face of credit constraints can influence such decisions.

This paper investigates the firm-level consequences of labour supply shocks caused by the departure of older workers. We use comprehensive UK administrative data and leverage variation in statutory retirement ages and worker deaths. We find that firms respond to retirement primarily through external replacement rather than internal reorganisation or capital substitution, but that new hiring does not catch up. This leads to persistent contractions in workforce size and profitability. These negative effects appear driven by the loss of specific human capital, as adverse outcomes are concentrated among firms losing key workers.

We study the introduction of reduced dividend taxation for majoritarian shareholders

in Switzerland. We show that these tax cuts disproportionately benefited the very top of the income distribution and substantially reduced tax progressivity, lowering the effective personal income tax rate for the top 0.01% by about one third—from 28.5% to 19.8%. The reform also affects tax statistics, introducing a downward bias in measured top income shares and thereby distorting the assessment of income inequality in Switzerland.

We examine the effect of increasing dividend taxes on shareholders’ consump-tion using administrative data from Norway. Exploiting a large dividend tax increase, we show that higher dividend taxes lead to a persistent decline in con-sumption of owners of private firms as well as publicly traded firms. We also show that owners partially offset the consumption decline by reducing private savings. Firms, in turn, increase retained earnings but do not expand produc-tive investment. Instead, they accumulate financial assets, suggesting a realloca-tion of savings to the corporate level. Our findings highlight the consequences of dividend taxation on consumption and capital allocation.

This paper examines the behavioral responses of individual taxpayers to targeted tax benefits. We study a senior relief policy in Honduras that grants standard deductions to individuals aged 65 and older, leveraging a 2020 reform that expanded an existing deduction and automated benefit delivery. Using administrative records of personal income tax and a regression discontinuity design, we find that the expected reduction in tax burden is accompanied by behavioral responses: beneficiaries report 46.1% higher adjusted gross income. This discontinuity is driven by self-employed business owners and independent workers, who exhibit an almost 60% increase. We show that between 42-54% of the adjusted gross income response is explained by bunching at the threshold for positive taxable income, consistent with incentives to avoid withholding. We find no changes in real activity, suggesting that the responses reflect reporting adjustments rather than economic behavior. Our lower-bound estimate of evasion around the cutoff is 32.9%

We construct a new cross-country database on personal income tax deductions using standardized case studies for 44 countries. We document substantial heterogeneity in the availability and effective use of deductions across countries. Housing-related deductions account for the largest reductions in taxable income and disproportionately benefit higher-income taxpayers. We also show that larger tax savings from deductions are associated with lower hours worked but higher employment rates. While the overall number of deductions is unrelated to progressivity, housing-related provisions significantly reduce progressivity. Our findings highlight how the composition of tax expenditures shapes redistribution, labor supply, and tax system design.

This paper studies retirement planning using unique administrative data from Sweden's national pension dashboard. These data allow us to observe forward-looking planning behavior directly by capturing when individuals simulate their future pension outcomes. We find that engagement increases sharply with age and peaks close to the retirement margin, indicating that many individuals postpone planning until decisions become imminent. It is also unevenly distributed: individuals with higher education and higher disposable income are substantially likelier to use the dashboard, both in terms of access and intensity. Planning further responds to major life events, with transitions such as widowhood, entry into unemployment, and large income changes associated with higher engagement. Finally, pre-retirement engagement is associated with a greater tendency to combine continued work with pension claiming.

This paper examines the determinants of shadow economy size with a focus on

institutional quality, using data from 165 countries for 2020-2023. We propose two proxies for institutional quality: novel indicator Value Added Tax revenue performance (VAT revenues as a percentage of GDP), and the Government Services Efficiency index (GSE). By using VAT revenue performance, we extend the existing literature beyond its conventional focus on VAT standard rates. We estimate regression models in which the size of the shadow economy is related to VAT revenues as a share of GDP, the VAT standard rate, trade openness, GDP per capita and GSE. Overall, we found that VAT revenue performance is a valid proxy for institutional quality at the cross-country level. We empirically confirm that both VAT revenue performance and GSE serve as reliable proxies for institutional quality.

We study the pass-through and distributional incidence of Value Added Tax (VAT) exemptions on food in a lower-income country with very high informality. Exploiting the unanticipated removal of VAT on selected items, we combine administrative data, a monthly census of supermarket prices, web-scraped online prices, and a nationally representative monthly phone-survey panel. Using difference-in-differences, we estimate pass-through from price changes for exempt versus non-exempt items and measure incidence using household expenditure, quantities, and purchase locations. Pass-through is complete in formal supermarkets in central urban areas, but price reductions are limited elsewhere. This spatial heterogeneity is strongly correlated with local store competition. VAT exemptions are highly regressive: for each dollar of foregone revenue, only five cents reach the poorest quintile, reflecting lower purchases from formal stores in urban areas, greater subsistence, and lower consumption. Compared to forecasts from 237 economists, we show experts misjudge pass-through and overstate benefits for the poor.

Reliable estimates of undeclared work in Germany are scarce, yet they matter for tax and social security policy. Using two large-scale surveys (n=3,988) of the German general population and recipients of transfer benefits specifically, we elicit the prevalence of the supply and demand of undeclared work via direct questions, a crosswise model and a list experiment. We document substantial heterogeneity across sociodemographic groups that are in line with economic theory: Opportunity and incentives shape the decision to work undeclared. The self- and marginally employed as well as transfer recipients who face high effective marginal tax rates are particularly likely to work undeclared. The potential, especially for envelope wages, is substantial. We describe patterns of undeclared work in detail. The crosswise model consistently yields higher prevalence estimates for both supply and demand than direct questioning. We discuss assumptions and challenges when implementing list experiments.

We build a dynamic quantitative spatial model with mobile households and endogenous fertility to analyze the efficiency of equilibrium fertility choices and city size distribution. City size affects the economy through three channels: a larger city population increases productivity, affects amenity levels (positively or negatively), and increases the cost of child care. We find that the competitive equilibrium is inefficient due to the intergenerational externality and excessively large cities have excessively low fertility rates. We calibrate our model to German county data and find that the resulting welfare losses amount to 14% of income.

We investigate how fertility relates to work from home (WFH) in the post-pandemic era, drawing on original data from our Global Survey of Working Arrangements and U.S. Survey of Working Arrangements and Attitudes. Realized fertility from 2023 to early 2025 and future planned fertility are higher among adults who WFH at least one day a week and, for couples, higher yet when both partners do so. Estimated lifetime fertility is greater by 0.32 children per woman when both partners WFH one or more days per week as compared to the case where neither does. The implications for national fertility rates differ across countries due mainly to large differences in WFH rates. In a complementary analysis using other U.S. data, one-year fertility rates in the 2023-2025 period rise with WFH opportunities in one's own occupation and, for couples, in the partner's occupation.

Urbanisation is transforming population health, yet globally comparable evidence on adult health differences between urban and rural areas remains limited. We analysed repeated cross-sectional data from the Gallup World Poll (2006–2023), covering 2.4 million adults in 167 countries. Using weighted linear probability models, we compared self-reported health within country and year.

Across most countries, urban residents reported better health than rural residents, with a consistent gradient from rural areas to villages, suburbs, and large cities. The positive urban–rural gap appeared across demographic and national contexts and persisted within income quartiles, although income–health gradients within places were larger. The gap widened over time and was only modestly reduced after adjusting for age, education, and income. These findings indicate a durable spatial health gradient alongside substantial socioeconomic inequality within settlements.

Accurate gestational dating is central to obstetric decision-making: it determines preand post-term classification, guides induction at clinical thresholds, and can shape important perinatal health outcomes for human capital formation. This paper examines Sweden’s implementation of ultrasound-based gestational dating standardization (UTS) and whether a technology intended to improve pregnancy dating inadvertently introduced sex-specific measurement error that shifted management at the post-term cutoff. The mechanism is straightforward: fetal-size reference charts used for ultrasound dating are typically sexneutral, but female fetuses are, on average, slightly smaller at a given actual gestational age. Estimating the causal effect of being dated by UTS is challenging because early ultrasound usage was not randomly assigned. I address this with an instrumental-variables strategy that exploits hospital-level practice intensity using the Swedish Medical Birth Register linked to administrative records. I study immediate neonatal outcomes, delivery practices, and longer-run humancapital proxies measured through standardized school grades.

Housing assistance in the U.S. has shifted from public provision toward subsidized provision through private markets. This paper studies how private provision may affect targeting by examining conversions of public housing through the Rental Assistance Demonstration (RAD). RAD allows housing authorities to convert their public housing to project-based contracts in order to leverage financing for renovations, often accompanied by a transfer of ownership or management to private entities. We use nationwide administrative data on public housing tenants and a difference-in-differences design that leverages plausibly exogenous variation in the timing of conversions to study impacts of RAD on targeting between 2014 and 2023. We provide suggestive evidence that there is targeting of relatively lower-income residents at conversions with non-profit managers compared to for-profit managers, potentially through the channels of waitlist priorities for new admissions and self-selection of households moving out with vouchers rather than for-profit managers pursuing terminations.

This paper examines the market-level effects of a universal childcare subsidy introduced in Poland in 2024. Exploiting the nationwide rollout of a childcare voucher in a system with predominantly private provision and low pre-reform enrollment, I use novel monthly administrative data covering all providers to estimate causal effects on fees, capacity, and enrollment. The voucher increases enrollment by 8 percent and capacity by 10 percent within fourteen months, primarily through the entry of new establishments. Effects vary across markets: enrollment rises most in rural areas and in towns and suburbs, while in cities the reform mainly induces reallocation from public to private providers. Although private providers enter low-coverage markets, they do not expand into pre-reform “childcare deserts.” The increase in municipalities with at least one provider is driven entirely by public provision. The voucher also accelerates expansion initiated by an earlier supply-side program, highlighting differences between demand- and supply-side instruments.

The present study explores the impact of the birth of half-siblings in stepfamilies on the likelihood of child support payments by non-resident parents for children residing in these families. In particular, we focus on married stepfamilies that cannot receive assistance from state child support enforcement agencies. This setting provides an intriguing environment to study non-resident parents’ behavior in the absence of state involvement.

We use German administrative tax data from 2010 to 2020 and an event-study approach that exploits variation in births within stepfamilies over time. The results show that the arrival of a new child increases the likelihood that non-resident parents fulfill their child support obligations by approximately 4.9 percentage points (18.2%) in the same year. This effect persists for the subsequent two years before becoming insignificant. Overall, the findings suggest that compliance with child support obligations varies within this institutional environment.

Inter-municipal cooperation (IMC) offers the scale economies of larger jurisdictions while preserving local political autonomy, yet the literature has assessed it almost entirely through expenditure efficiency, overlooking state capacity and tax enforcement. We investigate whether pooling administrative functions through IMC reduces the municipal property tax gap in Italy. Using official tax gap estimates and an Inverse Probability Weighting (IPW) approach, we find significant heterogeneity. In the Center-South, where administrative capacity is lower, cooperation on core fiscal-administrative functions is associated with an approximately 6.3 percentage-point reduction in the tax gap, consistent with a catch-up mechanism. Conversely, the marginal effect in the more compliant North is statistically zero. A counterfactual simulation estimates that extending cooperation to untreated municipalities in the Center-South could recover approximately 290 million EUR annually. These findings highlight the value of targeted incentives aimed at low-capacity jurisdictions, where the potential to strengthen enforcement and maximize revenue recovery is highest.

This study evaluates whether asymmetric fiscal decentralization improves local revenue management in Korea. Jeju Special Self-Governing Province gained enhanced authority over local taxation under the Jeju Special Act in 2006. Using panel data for Korea’s upper-tier local governments (1996–2023), we apply the synthetic control method to estimate causal effects on the local tax ratio, tax collection rate, and accumulated arrears-to-total revenue ratio. The local tax ratio falls in 2006–2012 but rises thereafter, increasing by about 4.6 percentage points on average in 2013–2023 and significant at the 10% level. In contrast, collection and arrears indicators show no statistically significant improvement. Revenue autonomy can raise own-source revenue capacity, but improvements in revenue administration appear to require complementary accountability mechanisms.

Governments channel substantial fiscal policy through tax expenditures rather than through visible public spending, despite the well-known inefficiencies of tax expenditures. We argue that the politically relevant margin is not aggregate fiscal cost, but fragmentation into numerous legally distinct provisions, which reduces salience and weakens budget scrutiny. We develop a political-economy model with a rent-seeking firm, a vote-maximising politician, and a Treasury with enforcement capacity, micro-founding structural opacity as a function of the number of provisions. The model predicts that stronger Treasury enforcement unambiguously reduces fragmentation, while its effect on aggregate revenue foregone is theoretically ambiguous. Using a cross-country panel dataset from the Global Tax Expenditures Database and an instrumental-variables strategy based on the cultural substitution between exclusive family ties and generalised trust, we find that higher social capital significantly reduces the number of provisions but has no systematic effect on aggregate revenue foregone.

We study whether the effects of public demand depend on recipient firms' fundamentals. Using quasi-random variation in Italian public works allocation, we compare firms receiving similar public resources but differing in cost efficiency. More cost-efficient recipients experience about 70 percent higher productivity growth over three years, with stronger effects for smaller firms, larger awards, and local or lower-screening public bodies. Gains operate through business expansion: private revenues rise by 74 percent more, with no clear effects on borrowing, long-term debt, fixed investment, or future public activity. Simulations imply productivity gains of about 5 percent in the construction sector.

What drives domestic sovereign bond yields in Emerging Market and Developing Economies (EMDEs)? This paper shows that fiscal policy expectations are central to domestic yields, with effects amplified by the sovereign--bank nexus. A tractable Fiscal Theory of the Price Level framework explains why fiscal shocks affect domestic but not external bond yields. Following Laubach (2009)'s approach, a 1 percentage point increase in expected primary deficits raises 10-year domestic yields by about 36 basis points, rising to 50 basis points in countries with elevated bank exposures to sovereign debt. In contrast, external bond spreads respond mainly to global risk factors. These findings highlight the role of fiscal expectations and domestic financial structure in shaping sovereign borrowing costs in EMDEs.

This paper investigates whether AI adoption has induced structural changes in the determinants of Indian sovereign bond yields across the maturity spectrum. Using monthly data from 2000 to 2025 and autoregressive distributed lag (ARDL) models augmented with an AI dummy variable and slope interactions on expected inflation and broad money (M3) growth, we identify significant regime shifts. Results indicate that in the post-AI period, longer-maturity yields exhibit markedly reduced sensitivity to expected inflation and money supply growth. This dampening is statistically significant, with interaction terms largely offsetting baseline positive elasticities. By contrast, short-term yields (91-day Treasury bills) show heightened inflation sensitivity in the AI era, while intermediate yields display mixed patterns. These findings are consistent with theoretical predictions that AI-driven productivity gains could lower equilibrium real interest rates and weaken traditional monetary transmission channels at the long end of the yield curve.

This paper studies the effects of fiscal shocks on the dynamics of public debt and other fiscal and macroeconomic variables. The data are annual and cover all the members of the European Union from 2001 to 2024. The fiscal shocks are identified using orthogonalised forecast errors computed from European Commission forecasts, and the impulse responses are generated using local projections. Primary balance shocks lower government debt measured in per cent of GDP, but the effect is gradual and is initially modest. There are large differences in how revenue and expenditure measures affect the stock of public debt. Revenue shocks have gradual and statistically insignificant effects, while primary expenditure shocks have fast, relatively large and statistically significant effects. The effects on the public debt stock differ because the resulting fiscal reactions are different for revenue or spending shocks.

This study examines the tension between rising public debt and climate finance mobilization in developing economies. Analyzing eight African and Latin American nations (2000–2023) using system generalized methods of moments, we investigate how economic structure mediates the climate-debt trap. Findings reveal a non-linear debt-to-growth relationship, with a significant threshold at 60% of GDP. Beyond this point, debt severely impedes growth, particularly in resource-rich nations. We identify a climate-debt trap where high public debt erodes the growth benefits of debt-creating climate loans; conversely, non-debt-creating grants remain fiscally resilient. By integrating non-linear thresholds with structural classifications, this paper finds the trap is conditional on economic type. We reject one-size-fits-all hypothesis, recommending tailored strategies: international financial institutions should prioritize grants for debt-vulnerable, resource-rich nations while utilizing loans for diversifying economies. This novel framework provides a roadmap for ensuring sustainable growth amidst escalating climate and fiscal pressures.