Blockchain Papers

Alexander Alexeev, David H. Good, Kerry Krutilla

No abstract is available for this record.

Lynette Louise Berger

No abstract is available for this record.

Markus C. Arnold, Florian Elsinger, Frederick W. Rankin

No abstract is available for this record.

Qichun Zhang, Shu‐Fang Li

Fiscal decentralization has been established in the People’s Republic of China (PRC), but crises emerge at the local government level due to remaining problems of the fiscal administration system of tax allocation and the impact of replacing the business tax with a value added tax. The PRC taxation system requires readjustment and local governments have begun to focus on innovative financing models. The main path to stable and sustainable government finances is to maintain the general public budget and the government fund budget. The present chapter shows that use of innovative fundraising and financing channels will lead to the upgrading of local government infrastructure and public services. Suggestions for enhancing local government fiscal stability and sustainability include: reducing the fiscal burden at the local level by standardizing and legalizing outlay establishing a modern taxation system; establishing a standardized and predictable transfer payment system by introducing block transfer payments and prioritized transfer payments as a basis for a stable growth mechanism for general transfer payments; promoting public–private partnership legislation to encourage participation of social capital and maximize the multiplier effect of public expenditure; and improving the mid-term budget and debt-annexed budget and establishing a government planning mechanism for investment and debt financing of major infrastructure construction projects.

Uma Shankar Prasad

The first Constituent Assembly (CA) was dissolved without producing the constitution. The Constitution of Nepal as Federal Democratic Republic was promulgated on September 20, 2015 by the second CA. The primary objective of this study is to review the modality presented in the new constitution on the natural resources, economic rights and revenue allocation and recommend some amendments. The study finds that the fiscal decentralization initiatives have not been successful in minimizing the political, social, economic, regional and ethnic inequalities inherent for nearly 240 years of a unitary system of governance in Nepal. The study recommends: VAT and income taxes will have to be collected concurrently at both the central and sub-national levels. Other taxes including excise duties will have to be collected by the sub-national governments which will support the expenditure responsibilities of the sub-national governments adequately in federal Nepal. Intergovernmental transfer modality has to be included in the constitution. A Federal Finance Commission (FFC) and the National Planning Commission will have to be constituted at the central level to make national level development plans and to make recommendations for additional grants and loans. A State Planning Commission (SPC) and a State Finance Commission can be established in each state to prepare state development plans and to deal with the transfers to be made to local bodies.

Jamie Boex, Ben Edwards

There is an extensive literature on the impact of fiscal decentralization on economic growth, development, and public sector effectiveness. However, the empirical literature on fiscal decentralization has exclusively focused on measuring the finances of elected or “devolved” local governments. Other types of decentralized expenditures, including deconcentrated and delegated expenditures, have been systematically excluded from measurement and analysis in the public finance and development literature. Our analysis considers the extent to which using devolved expenditures as a proxy for all devolved expenditures may have impacted the findings of the empirical literature. We collect comprehensive vertical expenditure profiles for health and education services in twenty-nine developing and transition countries and find that by exclusively focusing on devolution, previous analyses have overlooked two-thirds of local public sector expenditures. By excluding these “nondevolved” decentralized expenditures, the previous (often inconclusive) empirical analyses are likely to have suffered from omitted-variable bias.

Quan Li

Many developing countries use tax incentives to attract foreign direct investment, sacrificing immediate revenue from foreign capital, even though the effects of tax incentives on investment, growth, and revenue are empirically dubious. This leads to the puzzle of why states adopt tax incentives. Extant studies of tax incentive adoption overlook the fact that many countries have decentralized fiscal authority, allowing subnational governments to offer tax incentives. Public finance scholars argue that fiscal federalism intensifies tax competition among regions. Hence, drawing on the public finance scholarship, one may ask: Does fiscal decentralization lead to a race to the top among subnational governments and an oversupply of tax incentives in a country? This article argues that fiscal decentralization affects tax incentives in complex ways. When subnational governments are authorized to set tax policies, their politicians have economic and political incentives to engage in tax competition for mobile capital, providing more tax incentives in a country. However, the politicians are less likely to do so if they are held accountable and have to fund most expenditures through own-source tax revenues. An empirical analysis of over 50 developing countries in early 2000s produces robust supporting evidence. This research challenges both the view that fiscal decentralization is always beneficial and the view that horizontal competition invariably produces inefficiently low tax rates. The impact of fiscal decentralization on tax incentives and by implication, revenue mobilization depends on the design of the central–local government relations.

Abhinayan Basu Bal

The author examines the current treatment of Bitcoin in numerous EU and non-EU countries, and analyses the opinion of the Advocate General in a Bitcoin case that is currently pending before the European Court of Justice.

Thomas J. Bossert

An 1998 article on decentralization focused on the element of choice as the major issue of decentralization—granting authority and responsibility for choice to administrative and elected officials at peripheral levels of organizations and governments—and introduced the concept of “decision space” to describe the range of choice allowed to local authorities for different functions (financing, service delivery, human resources, governance). This approach was based largely on principal agent theory focusing on how central authorities can circumscribe local choice by establishing rules over choice and by providing incentives for making choices that would achieve central objectives. This chapter reviews this approach and discusses its evolution in empirical studies, first focusing on defining the formal decision space (in Ghana, Uganda, Zambia, and the Philippines) and then expanding to surveys that assess the actual or informal decision space that officials reported they were able to exercise (Nicaragua and Morocco). In a more recent phase of research, the author has now expanded the scope of study to examine two additional concepts—institutional capacity to make good decisions, and accountability to elected local officials—and the interaction among decision-space, capacity, and accountability. Preliminary findings on studies using this approach in Pakistan and India are presented. In conclusion, the importance of refined definitions of decentralization to assessing what form will be most effective in achieving policy makers’ objectives is reviewed.

Young-Aa Ryoo, Pildoo Kim

No abstract is available for this record.

Benjamin W. Akins, Jennifer Chapman, Jason M. Gordon

A Whole New World: Income Tax Considerations of the Bitcoin Economy

Clemens Thiele

Ein schwedisches Finanzgericht hat dem EuGH ein Vorabentscheidungsersuchen zur Mehrwertsteuerpflicht beim Handel von Bitcoins vorgelegt. Die Fachwelt sowie Online-Händler erwarten sich davon eine unionsweit verbindliche Klärung der Frage, ob für eine virtuelle Währung wie Bitcoins Umsatzsteuer entrichtet werden muss. Der folgende Beitrag versucht eine erste Standortbestimmung aus ertrag- und umsatzsteuerrechtlicher Sicht.

XU Lv-mi

The relationship between fiscal decentralization and economic growth is an important research field of financial subjects. Most domestic empirical researches on the relationship between fiscal decentralization and economic growth focus on the decentralization of the cen tral and provincial governments, while less empirical analysis has been done on the relationship at lower-provincial level.Based on the panel data of the counties and cities of Fujian province during the period of 2003-2010,this paper conducts an empirical analysis of the relationship between the local economic growth and the four fiscal decentralization indicators, i.e. the tax revenue decentralization, the fiscal revenue decentralization, the fiscal expenditures decentralization and the degree of fiscal self-financing at lower-provincial level. The results show that the tax revenue decentralization, the fiscal revenue decentralization and the improvement of the fiscal self-sufficiency rate at lower-provincial level can play a significant role in promoting the local economic growth; while the fiscal expenditure decentralization has no significant effect on local economic growth. Based on these empirical results, this paper offers such suggestions as promoting tax revenue decentralization, having a multi-dimensional understanding of the fiscal decentralization, and making an in-depth study of the system and humanity factors underlying the fiscal decentralization.

Makrolog

No abstract is available for this record.

Aleksandra Bal

No abstract is available for this record.

Zareh Asatryan, Lars P. Feld, Benny Geys

Recent theoretical research suggests that financing sub-national governments’ expenditure out of own revenue sources is linked to more responsible budgeting, because the financial implications of spending decisions then are internalized within a jurisdiction. We test this proposition empirically on a sample of 23 OECD countries over the 1975-2000 period, and find evidence in line with the hypothesis that greater revenue decentralization (measured as sub-national governments’ share of own source tax revenues in general government tax revenue) is associated with improved sub-national government budget deficits/surpluses. This finding is cross-validated with a novel, independent dataset consisting of all 34 OECD member states from 2002 to 2008.

Antonio Bellofatto, Martín Besfamille

We study the optimal degree of fiscal decentralization in a federation. Regional governments are characterized by their abilities to deliver public goods (administrative capacity) and to raise tax revenues (fiscal capacity). Two regimes are compared on efficiency grounds. Under partial decentralization, regional governments rely on central bailouts to complete local projects in financing needs. Under full decentralization, marginal financing is achieved via local capital taxes. We show that the presence of sufficiently low levels of administrative capacity is a necessary condition for full decentralization dominance. This condition may also be sufficient, depending on the projects' characteristics. Some extensions are presented.

S. Capaccioli

No abstract is available for this record.

Christian Thurow

No abstract is available for this record.

Paul Smoke

Ensuring adequate subnational revenue is a core concern of fiscal decentralization. Public finance principles for selecting and designing subnational revenue sources have been widely used during the prominent wave of decentralization efforts in developing countries over the past three decades. Available empirical literature, however, suggests that subnational revenue generation often fails to meet needs and expectations, even where normative advice has been or seems to have been followed. Are the principles inappropriate, or are they just poorly applied? This paper argues that both factors are often at play. Basic principles are valuable, but they can be challenging to use and do not cover certain critical factors. Even if the principles are relevant and well applied, implementation commonly faces powerful constraints. Yet despite unsatisfying performance, revenue system design remains substantially based on a conceptually narrow normative framework that lacks a sense of pragmatic strategy and is often overwhelmed in practice by contextual factors it fails to or only weakly considers.

Alejandro Drexler, Antoinette Schoar

We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers are on leave are less likely to receive new loans from the bank, are more likely to apply for credit from other banks, and are more likely to miss payments or go into default. These costs are smaller when turnover is expected, as in the case of maternity leave, or when loan officers have incentives to transfer information, as in the case of voluntary resignations. This paper was accepted by Wei Jiang, finance.

Abdu Muwonge, Robert D. Ebel

Provides the basic foundation for understanding intergovernmental finances by (1) discussing why getting municipal finance right remains key to achieving a nation’s broader goals of economic growth, macroeconomic stabilization, and, for some countries, national cohesion among diverse populations; (2) summarizing the key considerations of alternative governance structures, as well as fundamental questions related to what role municipalities should play in a country’s revenue and expenditure systems; and (3) examining the role of government-to-government grants policy and the tools for ensuring accountability between the various levels of government and between the municipality and its citizens. A strong correlation exists between decentralization and growth in gross domestic product (GDP), though findings relating to macroeconomic stability and the relationship between fiscal decentralization and public sector size remain mixed. Case studies from Nepal, Poland, Egypt, Bosnia and Herzegovina, Sudan, South Africa, and Saudi Arabia show the wide variety of decentralization models utilized world-wide.

María Cubel

The IEB research program in Fiscal Federalism aims at promoting research in the public finance issues that arise in decentralized countries.

Ulrich Karpen

EnglishThis paper looks at the Federal Republic of Germany in comparison with other federations in view of the basic federal idea and the distribution of competences and powers between federation and Lander. It sheds light on the tensions of decentralization and unitarization. Furthermore, the constitutional arrangements for financing federal and Lander levels are explained more in detail. And finally the paper raises a current issue: the German Finance Constitution in need of reform. francaisCet article se penche sur la Republique federale d'Allemagne, comparee a d'autres federations pour ce qui est de l'idee federale de base et de la repartition des competences et des pouvoirs entre la federation et les Lander. Il met en lumiere les tensions de la decentralisation et de l'unitarisation. En outre, il explique plus en detail les dispositions constitutionnelles relatives au financement au niveau federal et des Lander. Enfin, il souleve une question actuelle: la Constitution allemande des finances doit etre reformee.