We investigate the co-movements of fuel prices among France, Germany and Italy, using weekly data from January 3, 2005 to November 9, 2020 and making use of a time-frequency framework. Our wavelet ...coherence analysis indicates strong co-movements at medium and small frequencies, which are largely driven by the international oil prices. Further, when we implement a partial wavelet coherence method and control for the effect of crude oil prices, we notice that the co-movements diminish. They manifest themselves more strongly between France and Italy, and Germany and France whereas this is true only for a smaller extent between Italy and Germany. The fuel taxes negatively affect the price co-movements. At the same time, the co-movements of gasoline prices are stronger compared with those recorded by diesel prices. Our findings highlight the important role of international oil prices in driving fuel prices in the medium and long run, the heterogeneity of the European fuel tax systems, and the lack of a real cost competition relying on fuel price dynamics.
•We test the co-movements of fuel prices among France, Germany and Italy.•We use a time-frequency framework and the wavelet coherency approach.•We control for the effect of international oil prices applying the partial coherency.•The findings shows an important role of crude oil for fuel price co-movements.•Co-movements are negatively affected by the fuel tax systems in place.
Abstract
This paper uses a global dataset with information about 210,000 corporations in 142 countries to investigate whether tax avoidance by multinational firms is more prevalent in less-developed ...countries. The paper proposes a novel approach to studying cross-border profit shifting, which has relatively low data requirements and is therefore particularly well-suited for the context of developing countries. The results consistently show that the sensitivity of reported profits to profit-shifting incentives is negatively related to the level of economic and institutional development. This may explain why many developing countries opt for low corporate tax rates in spite of urgent revenue needs and severe constraints on the use of other tax bases.
Tax policies seen in developing countries are puzzling on many dimensions, given the sharp contrast between these policies and both those seen in developed countries and those forecast in the optimal ...tax literature. In this paper, we explore how forecasted policies change if firms can successfully evade taxes by conducting all business in cash, thereby avoiding any use of the financial sector. The forecasted policies are now much closer to those observed.
This study investigates the co-movements of gasoline and diesel prices in three European countries (i.e. Germany, France, and Italy) with different fuel tax systems in place. The methodology follows ...a time–frequency approach, allowing us to analyse the co-movements at different frequencies and moments in time. As a novelty, we study the impact of fuel tax systems and international oil price dynamics on gasoline and diesel price co-movement. Using weekly data spanning the period from January 2005 to June 2021, the wavelet coherence analysis shows co-movements between gasoline and diesel at all frequencies, as well as during specific periods, but stronger in the long run. This evidence is recorded across all three countries, regardless of their tax systems. However, in decoupling the effect of international oil prices, the partial wavelet coherence analysis shows co-movements emerging also in the short run, with them being stronger around the global financial crisis (2008–2009). Although gasoline taxes are generally higher than diesel taxes, the analysis highlights that fuel tax systems do not influence the co-movements of fuel prices. Thus, shedding new light on the co-movement between commodity prices is fundamental, particularly in light of the current international geopolitical scene.
•We show that a combination of governance and taxes explain a sizeable proportion of the levels and changes in debt maturity and leverage.•Firms in investors protected countries appear to set optimal ...debt maturities to maximise tax shields gains and minimise the tax cost of their investors.•In contrast, in low protection countries, the debt maturities are relatively shorter and not strongly related to the tax factors.•Our findings suggest that investors prefer their firms to opt for low debt that is mainly short-term to mitigate debt overhang and risk-shifting problems than to gain taxes.
We provide a cross-country evidence on the impact of corporate and personal income taxes, and corporate governance systems on debt maturity structures and leverage using a comprehensive sample of 212,642 firm-year observations based on a sample of 19,573 firms from 24 OECD countries over the period 1990–2015. We find longer debt maturities, higher leverage, and, in a dynamic setting, a greater propensity to decrease short-term debt, in countries with high investor protection and where the potentials for debt tax shields and after-tax return of investors are high. Our results imply that when investors are protected, firms tend to have optimal debt maturities to maximise the gains from tax shields and minimise the tax cost of equity. In contrast, in low protection countries, investors prefer their firms to opt for low debt that is mainly short-term to mitigate the risk-shifting and debt overhang problems even if this entails forgoing the debt tax shields. Our results hold for various robustness checks including the hierarchical linear model specification, which corrects for a number of OLS biases.
We review the empirical literature on competition in source-based taxes on corporate income. Drawing an analogy to the competition models for the goods market indicates how evidence for the existence ...of tax competition can be provided, and highlights that tax competition can take many forms. With this in mind we classify the empirical literature, and highlight the importance of the measurement of tax rates and openness. Using measures based on the statutory tax system, there is evidence for tax competition mostly in the European Union. In contrast to the view of Gordon (1992) small countries appear to be the leader of the tax competition game.
Recent microeconometric studies of taxpayers' responsiveness to taxation have shown that intensive margin labor supply and earnings elasticities typically are modest and sometimes equal to zero. A ...common view is that long-run responses still might be large if micro-estimates are downward biased owing to optimization frictions. In this paper we estimate the taxable income elasticity at a very large kink point of the Swedish tax schedule using the bunching method. During the period of study the change in the log net-of-tax rate reached a maximum value of 45.6%. Interestingly, we obtain a precise elasticity estimate of zero for wage earners at this large kink. We also conclude by the means of numerical simulations that, even though the kink point we study is very large, income effects are unlikely to bias our estimates. The size of the kink allows us to derive tighter bounds on the long-run elasticity than previous studies. If wage earners on average tolerate 1% of their disposable income in optimization costs, the upper bound on the long-run compensated taxable income elasticity is 0.39.
Public versus private risk sharing Krueger, Dirk; Perri, Fabrizio
Journal of economic theory,
05/2011, Volume:
146, Issue:
3
Journal Article
Peer reviewed
Open access
Can public income insurance through progressive income taxation improve the allocation of risk in an economy where private risk sharing is incomplete? The answer depends crucially on the fundamental ...friction that limits private risk sharing in the first place. If risk sharing is limited because insurance markets are missing for model-exogenous reasons (as in Bewley (1986)
8) publicly provided risk sharing improves on the allocation of risk. If instead private insurance markets exist but their use is limited by limited enforcement (as in Kehoe and Levine (1993)
23) then the provision of public insurance interacts with equilibrium private insurance, as, by providing risk sharing, the government affects the value of exclusion from private insurance markets and thus the enforcement mechanism of these contracts. We characterize consumption allocations in an economy with limited enforcement and a continuum of agents facing plausible income risk and tax systems with various degrees of progressivity (public risk sharing). We provide conditions under which more publicly provided insurance actually reduces total insurance for agents (excess crowding-out), or under which more public insurance increases total insurance (partial crowding-out).
Why so many people pay their taxes, even though fines and audit probability are low, is a central question in the tax compliance literature. Positing a
homo oeconomicus having a refined motivation ...structure sheds light on this puzzle. This paper provides empirical evidence for the relevance of conditional cooperation, using survey data from 30 West and East European countries. We find a high correlation between perceived tax evasion and tax morale. The results remain robust after exploiting endogeneity and conducting several robustness tests. We also observe a strong positive correlation between institutional quality and tax morale.
Journal of Comparative Economics
35 (1) (2007) 136–159.
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