EconPol Working Paper Series

Cover of EconPol Working Paper 29

(Un)Intended Effects of Preferential Tax Regimes: The Case of European Patent Boxes

Marko Koethenbuerger, Federica Liberini, Michael Stimmelmayr

Patent boxes have become an increasingly popular tax instrument in the European Union and the US to attract mobile tax bases of multinational enterprises (MNEs) as well as to foster productivity. This paper shows that MNE affliates that can benefit from the preferential regime report 8.5 percent higher profits. The profit change splits up into a profit shifting and a productivity effect in proportions 2/3 and 1/3. Surprisingly, the profit shifting effect includes an unintended, reversed profit shifting out of the affiliate. Contrary to expectation, the overall tax base adjustment might lower tax revenues collected from MNEs.

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Cover of EconPol Working Paper 28

Balanced-Budget Fiscal Stimuli of Investment and Welfare Value

Cesare Dosi, Michele Moretto, Roberto Tamborini

Is a fiscal stimulus of investment a viable complement to, or substitute for, monetary policy? The authors of this working paper show that, under a balanced-budget stimulus, investment acceleration may come at the expense of decreased total welfare and that where uncertainty is higher about private returns a net efficiency loss is more likely. However, the risk of such negative outcome strongly declines when the government spending is balanced by taxing both private and public returns on investment.

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Cover of EconPol Working Paper 27

Current Account Imbalances and the Euro Area: Alternative Views

Ronny Mazzocchi, Roberto Tamborini

The Euro area is caught in a "maze of peculiar regulations" and referring to current account imbalances (CAI) as a catch-all indicator of financial efficiency may lead to seriously misplaced policies, according to Ronny Mazzocchi (European Parliament) and Roberto Tamborini (University of Trento), the authors of this latest EconPol working paper. The paper examines the controversial points about the causes, meaning and consequences of CAI, and discusses the alternative policy prescriptions that emerge.

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Cover of EconPol Working Paper 26

Your Vote is (no) Secret! How Low Voter Density Harms Voter Anonymity and Biases Elections in Italy

Mauro Caselli, Paolo Falco

The density of voters in polling regions limits the secrecy of voting and can affect the outcome of Italian elections, with the same impact on countries with a similar voting mechanism. In the first study to analyze the link between voter density and election bias, authors Mauro Caselli (University of Trento) and Paolo Falco (University of Copenhagen) examined all municipal elections conducted in Italy from 1989 to 2015. They found that lower voter density significantly increases the probability of re-election for an incumbent in a municipal office, while in areas with a higher number of voters the probability of re-election for an incumbent falls.

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Cover of EconPol Working Paper 25

Taxation and Public Spending Efficiency: An International Comparison

António Afonso, João Tovar Jalles, Ana Venâncio

This EconPol paper evaluates the relevance of the taxation for public spending efficiency in a sample of OECD economies in the period 2003-2017. It finds that inputs could be theoretically lower by approximately 32-34%; the Malmquist indices show an overall decrease in technology and in TFP. Crucial for policymaking, the authors find that expenditure efficiency is negatively associated with taxation, more specifically direct and indirect taxes negatively affect government efficiency performance. The same is true for social security contributions.

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