Reducing tax evasion is a priority for many governments. A growing literature argues that verifying taxpayer reports against third-party information is critical for tax collection. However, effectiveness can be limited when tax authorities face constraints to credible enforcement and taxpayers make offsetting adjustments on other margins. We exploit a policy intervention in which Ecuadorian fir...

We consider the joint effect of profit and Pigouvian taxation in a model of imperfect competition. We show that, when both profit taxation and Pigouvian taxation/subsidy are used, the former is no longer neutral. The two fiscal tools are substitutes, and for any profit taxation rate there exists a unique Pigouvian tax that entails the first best outcome as an equilibrium. Our analysis therefore...

The responsiveness of job creation to shocks is procyclical, while the destruction countercyclical. This new finding can be explained by a heterogeneous-firm model in which hiring costs lead lumpy employment adjustment. predicts that policies aim stimulate encouraging creation, such as subsidies, are significantly less effective recessions: these times when few firms near their thresholds and m...

This paper estimates the effects of exogenous changes in income and consumption taxes. The tax shocks are proxied with a narrative account liability United Kingdom. Income cuts have large on GDP, private consumption, investment. modest not statistically significant GDP its components. Shifting burden taxation from to is expansionary. Consistent conventional public finance theories, these result...

This paper studies the interaction between barriers to firm entry and distortions allocative efficiency in a standard model of dynamics. We derive strategy infer based on cross-country differences size distribution idiosyncratic distortions. The inferred resemble regulation-based indicators advanced economies but are substantially higher middle- low-income countries. Regulation-based cannot acc...

Taxes, Cigarette Consumption, and Smoking Intensity: Reply This paper shows that smoking intensity, i.e. the amount of nicotine extracted per cigarette smoked, responds to changes in excise taxes and tobacco prices. We exploit data covering the period 1988 to 2006 across many US states. Moreover, we provide new evidence on the importance of cotinine measures in explaining long-run smoking behav...

JEL classification: F15 F23 H25 H73 We set up a model of generalised oligopoly where two countries of different size compete for an exogenous, but variable, number of identical firms. The model combines a desire by national governments to attract internationally mobile firms with the existence of location rents that arise even in a symmetric equilibrium where firms are dispersed. As economic in...

This paper reviews the recent theoretical literature that analyses the European Union’s policy to eliminate preferential corporate tax regimes and the proposal to introduce a consolidated EU tax base with formula apportionment for the taxation of multinational firms. Since neither proposal includes a harmonisation of corporate tax rates, a core issue is how tax competition between member states...

We present a simple model of petroleum exploration and development that can be applied to study the performance of alternative tax systems and identify potential distortions. Although the model is a highly simplified, it incorporates many factors and some of the key tradeoffs that would influence an investor’s investment behavior. The model recognizes the role of enhanced oil recovery and treat...

The aim of this paper is to make a first step towards studying the role of social expenditure and its interaction with corporate taxation in determining the destination of foreign direct investment (FDI) flows. Using panel data for 18 OECD countries and measuring the extent of social welfare policies by the (public social expenditure)/GDP ratio, we find strong support for the conjecture that re...