Changes In Revenues Research Articles

The bidder exclusion effect

AbstractWe introduce a new, simple‐to‐compute test of independence of valuations and the number of bidders for ascending button auctions with symmetric, conditionally independent private values. The test involves estimating the expected revenue drop from excluding a bidder at random, which can be computed as a scaled sample average of a difference of order statistics. This object also provides a bound on counterfactual revenue changes from optimal reserve pricing or bidder mergers. We illustrate the approach using data from timber auctions, where we find some evidence that bidder valuations and the number of participants are not independent.

Budget Tax Revenues and Losses from External Labor Migration in Russia

One of the reasons behind declining budget revenues can be external migration. This article aims to describe the methodology for estimation of tax losses and revenues from international labor migration for specific types of taxes. Changes in personal income tax revenues are estimated by using the data on the number of labor emigrants (immigrants) for specific occupations, nominal gross monthly wage of employees in this occupation in Russia, standard child tax deductions and the corresponding personal income tax rate for residents (non-residents). Changes in VAT and excise tax revenues caused by the current trends in labor migration are estimated in accordance with the structure of household consumption. The amount of tax revenues (and losses) is calculated as the product of the sum of VAT and excise tax payments made by one member of a household per year when buying goods, works and services on the territory of Russia, and the number of emigrants (or immigrants). The research uses the data provided by Rosstat, Federal Tax Service of Russia and the Analytical Centre under the Government of the Russian Federation for 2012–2017. The conclusion is made that international migration has a negative impact on the tax revenues of the country’s consolidated state budget. Although, throughout the whole of the given period, the balance of additional revenues from VAT, excise taxes and the personal income tax (PIT) on earned income and budget losses from these taxes remained positive, in absolute terms, this balance decreased significantly. Trends in international labor migration affected the balance of tax losses and revenues. Therefore, the government’s attempts to target international labor migration by reforming the tax legislation seem quite reasonable: the upcoming tax reforms will include the introduction of the concept ‘centre of vital interests’ as the second criterion of residence and equalization of the PIT rate for tax residents and non-residents. The proposed methodology can thus prove to be an effective tool for the Federal Tax Service of Russia to estimate the resulting changes in tax revenues as well as other changes related to labor migration processes.

Potential Tax Reforms and Kuwait Economic Growth

The objective of this study is to identify whether tax reforms are viable in Kuwait in order to create more government income from sources other than oil. The study examines the relationship between the changes in tax revenues, changes in oil revenue and changes in GDP in Kuwait using time series data from 1998 to 2015. The Augmented Dickey-Fuller (ADF) is used to check for the existence of a unit root. The cointegration test is applied to test for long term relationships between variables using the General Least Square (GLS) method of estimation. The results of the tests find that the impact of changes in tax revenues on changes in the GDP of Kuwait is insignificant. Therefore, Kuwait’s government could rationally implement tax reforms to have incremental sources of income other than oil revenue. Moreover, it is argued that the government might consider implementing broad based consumption taxes and value added taxes into the tax structure Kuwait, and to invest the revenues from those taxes in productive policies, to induce long term economic growth.

Tax Cuts Starve the Beast! Evidence from Germany

This paper empirically evaluates how fiscal policy reacts to changes in the government's fiscal situation. Utilizing panel data from the German states covering the period from 1992 to 2011, we assess to what extent exogenous changes in tax revenues affect total public revenues, aggregate public expenditure as well as specific sub-categories of government spending. Applying the narrative approach pioneered by Romer and Romer (2010), we construct a measure of exogenous tax shocks, allowing us to identify the causal effect of tax changes on fiscal policy. Our findings indicate that tax changes trigger expenditure adjustments into the same direction after 2 to 3 years, specifically with respect to spending on governmental administration, health expenditures and spending on infrastructure.

A Game-Based Economic Model for Price Decision Making in Cyber-Physical-Social Systems

Cyber-physical-social (CPS) systems integrate Big Data Collectors (BDCs), Service Organizers (SOs) and users to build a unified data-centric computing framework. In CPS systems, BDCs leverage a vast variety of sensing devices to collect cyber-physical-social data, and report these data to SOs to orchestrate various services provided to users, thus offering a great potential for solving complex network tasks that are far beyond the capabilities of existing networks. However, due to the lack of an economic model to describe such complex data interactions, their applications are limited. So, a game-based economic model is proposed in this paper to make smart price decisions in CPS systems. Specifically, it has the following innovations: (a) The economic model gives a dynamic game income matrix which can accurately describe the revenue changes of BDCs in the game, so as to help BDCs select appropriate game parameters and strategies, and make BDCs competitive in the game. (b) The economic model can help SOs to make optimized data purchase price and service selling price based on data collection cost and competitor price analysis, so that SOs can have a better Quality of Service (QoS) and users attraction, and maximize the profit. Experimental results demonstrate that the proposed model can help BDCs and SOs find the most suitable game strategy and price adjustment principle, which has great significance in applications.

Turn Down for What? The Economic Value of Operational Flexibility in Electricity Markets

This paper explores how enhanced flexibility through lower minimum load levels (also called “turndown” limits) for coal- and natural-gas-fired power plants can impact operations and profitability. Using soft-linked capacity planning and unit commitment models, this research examines the economic value of this flexibility and variation across different regions, generation asset types, and market environments (e.g., level of renewable deployment). Model results suggest that lower minimum loads are most valuable for mid-merit units with intermediate capacity factors, policy conditions that rearrange the merit order (e.g., carbon pricing), regions and scenarios without seasonal layup of assets, and units that are more flexible than generators with otherwise similar characteristics. Lower minimum loads can increase operating hours, increase net revenues, and decrease startups and long-run maintenance costs. The scenarios in this analysis show that plant flexibility affects operations more than annual profitability, which may have a higher system value for integrating renewables than a private value for the flexible unit. For many plants, the modest changes in net revenues with lower minimums mean that the focus will likely be on making operational modifications to increase flexibility rather than on capital investments. Additionally, this analysis quantifies how revenues from ancillary services markets can boost the value of lower minimum loads, especially for efficient natural gas units, but total market size and depth are uncertain.

The impact of terrorism on European tourism

This paper estimates the influence of terrorist attacks on European tourism through the short-term post hoc response of the airline industry and passengers. We use a seasonally-adjusted ARMA-GARCH methodology on unique datasets that examine changes in tourism as measured by ASKs, seats filled and changes in both fares and revenues. Traffic flows are found to fall despite significant fare reductions; however, this response varies substantially based on the flight origin and ticket-type purchased. We found that business travel slows substantially due to duty of care legislation for corporate transport. While we found evidence indicating substantial airline fare reductions, in the majority of investigated cases this response was unable to mitigate substantial reductions in passenger demand and flows across varying ticket types.

Mathematical models of unshadowing the wages

The article addresses a social and economic phenomenon of shadow economy, which is typical for many countries and may result in a macroeconomic imbalance. The latter hinders the sustainable growth of the economy and leads to state budget losses. Shadow economy is penetrating into almost all sectors of the national economy. As shown in the paper, a high level of shadow economy is a threat to the national economic security of the country and a cause of declining its competitiveness. The findings confirm that measuring the impact of some factors of shadow economy on the economic security of the country is quite difficult. However, there are some factors for which mathematical models can be built to describe a correlation between economic indicators and a certain factor of shadow economy. Since salary expenses constitute a significant portion of enterprise’s basic expenses, it is important to build mathematical models for calculating the correlation between shadow salaries and tax rates.Thus, the purpose of the article is to examine mathematical models of the correlation between official and shadow salaries and tax rates. The developed mathematical models demonstrate that a reduction of tax rates is followed by changes in a shadow part of salaries. The article describes a number of cases when there are no changes in salaries and tax revenues, as well as cases of pay increase.The analysis finally suggests ways to increase salaries and techniques to de-shadow salaries. The authors use general scientific methods of generalization, comparison, analysis, and the method of mathematical modeling.

The Internet and Changes in the Media Industry: A 5-Year Cross-National Examination of Media Industries for 51 Countries

This study explores the effects of the Internet on changes in traditional media industries. Previous studies addressing the Internet’s effects on media industries have largely been conducted in a piecemeal fashion, with most tackling narrowly defined topics limited to individual media in specific countries. By taking a broader perspective on the Internet’s effects, this study examines changes in the aggregate revenue of all major media industries. Employing country-level, panel-data analysis of 51 countries from 2009 to 2013, the study shows that the Internet has led to a shift in the balance of revenue away from advertising and toward direct payments.

Spatial-temporal evolution and prediction of urban landscape pattern and habitat quality based on CA-Markov and InVEST model.

The change of urban landscape caused by human activities is one of the most important factors affecting terrestrial ecosystem. The distribution of urban landscape pattern has great impacts on the service function of regional biodiversity. To reveal the variation of landscape pattern and habi-tat quality in cities and its driving factors, we extracted landscape type information of Wuhan in 2005, 2010, 2015, and analyzed spatial-temporal evolution of landscape pattern using Markov transition model. The CA-Markov model was used to simulate the landscape pattern in 2020 under the natural growth scenario. The driving factor for landscape variation was analyzed using Logistic regression model. Combined with InVEST model, spatial pattern of habitat quality and its variation in three phases were calculated and evaluated. The simulated habitat quality in 2020 was obtained and its distribution characteristics were analyzed. The relationship between variation of landscape pattern and human activities was explored. The results showed that cultivated land and manufactured surface were the landscape types with highest variations between 2005 and 2015. The area of cultivated land continued to decline, with most of the area being transferred into manufactured surface. The area of manufactured surface continued to increase, most of which was transferred from paddy field and dry land. From 2005 to 2015, the habitat quality declined, with a large number of landscapes with high habitat quality level being changed to low habitat quality level. The overall index of habitat quality decreased and the biodiversity service function declined, indicating the degeneration of habitat quality. In 2015-2020, the evolutionary trend of landscape pattern and habitat quality would keep consistent with the past decade, with an increasing area of artificial surface, decreasing index of habitat quality, weakening biodiversity service function, and degenerating habitat quality. The most important factor accounted for the landscape pattern change in the study area was the changes in Gross Domestic Product (GPD) and regional fiscal revenue. Human socio-economic activities were the key driving force for the spatial variation of landscape and degeneration of habitat quality. Urbanization and land reclamation by filling lakes were the main reasons for landscape pattern variation in Wuhan.

Assessing the Technical Effectiveness and Economic Feasibility of Pest Management Through Structural Heat Treatment: An Entomological and Economic Analysis in Four Mills in Sicily (Italy).

Heat treatments (HTs) for pest control represent a promising, fast, and non-chemical method to disinfest commodities and structures with a significantly reduced environmental impact compared with the chemical approach. An entomological and economic study has been conducted to determine the technical efficacy and economic feasibility of HT in mills that produce flour and semolina in Sicily (Italy) where, for the first time, this technique has been applied. The results obtained from the entomological analysis demonstrated that this method provided a satisfactory level of control of the following insect species: Sitophilus oryzae (L.) (Coleoptera: Curculionidae), Rhyzopertha dominica (F.) (Coleoptera: Bostrichidae), Tribolium confusum (Jacquelin du Val) (Coleoptera: Tenebrionidae), Stegobium paniceum (L.) (Coleoptera: Anobiidae), and Ephestia kuehniella (Zeller) (Lepidoptera: Pyralidae). Moreover, using precautionary assumptions in terms of revenue and cost changes resulting from the adoption of HT, the economic analysis showed a good performance of the economic indices making this technique economically feasible for the mills. Overall, the results of this study demonstrate the technical and economic feasibility of HTs which ensure to Sicilian mills a reduction of environmental impact of production process and the subsequent increase of the competitive position in the agri-food markets of the processed products.

Does lifting the objective-price constraint in revenue recognition increase the value relevance of earnings and revenue?

Purpose This paper examines how managerial discretion and judgment in revenue recognition affect earnings and revenue value relevance. Specifically, the purpose of this paper is to assess the impact of lifting the objective-price constraint in revenue recognition on the value relevance of earnings and revenue by examining firms’ contemporaneous returns-earnings/revenue relation before and after the implementation of Accounting Standards Update (ASU) 2009-13. In addition, this paper examines how the change in earnings value relevance is conditioned by agency costs, corporate governance, information environment, and audit quality. This paper further examines whether earnings, revenue, and accruals quality change after the objective-price constraint is lifted. Design/methodology/approach This paper employs a difference-in-differences research design to examine whether earnings and revenue value relevance are enhanced or lowered more for a list of 107 US firms that applied selling price estimates in revenue recognition under ASU 2009-13 than for a list of 107 matched US firms that did not apply selling price estimates. Sub-sample analyses are employed to examine how agency costs, corporate governance, information environment, and audit quality condition the change in value relevance. Additional analyses examine the changes in earnings, revenue, and accruals quality using accruals, revenue accruals, discretionary revenue, absolute abnormal accruals, earnings/revenue predictability, and smoothness. Findings The empirical results suggest that lifting the objective-price constraint in revenue recognition improves earnings and revenue value relevance for positive earnings and that the effect of information usefulness dominates that of managerial opportunism. Change in the earnings value relevance is conditioned by the level of corporate governance, information environment, and audit quality. Evidence of no significant reduction in the earnings/revenue/accruals quality corroborates the main findings. Research limitations/implications The findings lend support to the new revenue standard (ASU 2014-09) that continues the use of the estimates of selling price in revenue recognition. Originality/value This study provides some of the first evidence that managerial judgment exercised in revenue recognition through the use of selling price estimates (i.e. lifting the objective-price constraint in revenue recognition) enhances earnings and revenue value relevance while such benefit does not come at a cost of reduced earnings/revenue/accruals quality.

The Instruments for Forecasting Budget Effects of the Tax Stimulation of Innovation Activities

The principles underlying the long-term solvency of the government through creating the necessary preconditions for the innovation-driven development of the national economy are studied. Dynamic series on change in revenues and expenditures of consolidated budget, and budget losses caused by tax exemptions over 2013–2017 in Ukraine are analyzed. It is found that the revenue shortfalls caused by the preferential taxation of company incomes are hardly predictable. A comparative analysis of the structure of budget losses caused by preferential income taxation of companies in 2014–2017 demonstrates the limited character of support for innovation activities at company level. This support could be observed only in the aircraft industry in 2014 and 2017. According to the results of the survey of innovation activities at non-innovating companies of Ukraine, performed in 2012–2014 and 2014–2016, the limited internal funds or private capital and the limited access to government assistance in innovation were significant factors discouraging companies from decisions in favor of innovation projects or innovation activities.
 The conclusion is made that the tax policy of the government, apart from seeking for stable balance of the budget, needs to create stimuli for capital formation and effective performance of companies and, consequently, the accelerated economic development. Absence of an innovation tax credit in Ukraine and appropriate instruments for assessing its budget effects has dramatic negative consequences for company performance and macroeconomic competitiveness. 
 Econometric models for tax stimulation of innovation activities at company level are constructed, enabling to select approaches to the innovation tax credit policy and the tax credit intensity, in order to enhance the potential of the national economy to develop by innovation factors. Considering the real budget capacities in Ukraine, the results of computations of budget effects of innovation tax credit (by the first or the second proposed model and by the given alternative options of tax credit amounts) can be used in selecting options of tax stimulation of innovation activities of companies.

An Application of a Johansen Cointegration Test and a Vector Error Correction, (VEC) Model to Test the Granger Causality between General Government Revenues and General Government Total Expenditures in Greece

In this article, we are investigating the effects of macroeconomic variables in terms of natural logarithmic yearly returns of general government revenues and general government total expenditures of Greece. We have applied a Vector Error Correction model, (VEC) a Granger causality and Johansen cointegration test to check for long – term relationship between general government revenues and general government total expenditures. By using a (VEC), model we have found that 62% of the disequilibrium or error term or speed of adjustment towards long-run equilibrium is corrected each year by changes in general government revenues. Error term accounted as 56% of the disequilibrium or speed of adjustment towards long – run equilibrium is corrected each year by changes in general total government expenditures. The speed of adjustment is not too fast for both variables. Moreover, we have found statistically significant long – run relationship between the general government revenues and general government total expenditures by using Johansen cointegration test. Finally, at the 5% significance level, we have found significant causality that the natural logarithmic yearly returns of the general government expenditures is a Granger causality of the natural logarithmic yearly returns of the general government total revenues and not vice versa. The data that we have used are natural logarithmic yearly returns starting from 01/01/1980 to 01/01/2018, which total to 39 observations. The data was obtained from the Statistical Department of the International Monetary Fund.

The Moderating Effect of Disclosure Quality on Changes in the Cost of Debt: Evidence from Municipal Credit Rating Downgrades

We examine whether municipal market participants' sensitivity to changes in local home values varies with the quality of local governments' financial reports. We find the credit ratings and bond yields of governments that are required to comply with GAAP are less sensitive to changes in local home values than similarly-affected governments that are not required to comply with GAAP. These governments do not experience different changes in net revenues ex post. The results are pronounced when the change in home values generates the most uncertainty (i.e., the change is adverse). The results are also stronger after GASB 34 increased the quality of GAAP-compliant issuers' financial reports. We conclude that market participants are less sensitive to signals about the local economy when local governments are required to provide high-quality disclosures.

The Short and Long Run Effects of Selected Variables on Tax Revenue - A Case Study

The main objective of this article is to empirically examine the short and long-run relationship between real tax revenue and real local government expenditure as well as investigate the relationship between real sales tax revenue and real individual tax revenue and selective variables in Washington, D.C. for the period ranging from 1984-2015. The study uses the Johansen co-integration techniques as well as the bivariate and multivariate vector error correction model (VECM). The results indicate that there is a unidirectional and one-way causality running from real local government expenditure to the real DC’s tax revenue in the short and long-run, but not vice versa. The finding indicates that DC’s tax revenue changes local government expenditure. As a result, budget deficits can be avoided by implementing policies that stimulate DC’s tax revenue. The Granger-causality test shows that DC resident employment does affect real individual tax in the short and long-run, simultaneously. The Granger-causality test shows that DC resident employment, household’s population and stock of housing does affect real sales tax revenue in the short and long-run simultaneously. Furthermore, the results of the impulse response function (IRF) indicate that household’s population and stock of housing are the major short-run effect on the real individual income tax and real sales tax revenue.

Do Local Governments Represent Voter Preferences?: Evidence From the Affordable Care Act on Local Government Support for Hospitals

Local governments participate in the health care system as both a patient care provider and third-party payer. In doing so, local governments represent the majority of the public health service economy, outspending state governments about $3-to-$2 on hospitals. Using data from the Census of Governments from 2006 to 2015, we employ a difference-in-difference framework to study the effect of the state decision to expand Medicaid on their local governments’ fiscal decisions. We find that local governments in areas that voted for Obama in the 2012 presidential election responded to their state's Medicaid expansion by increasing expenditures on hospitals, whereas those that voted for Romney reduced hospital expenditures and used the savings to reduce property taxes. This finding is not driven by an urban/rural distinction. We then extend this analysis to determine (1) the extent to which observed changes in local government financing are affected by changes in hospital revenue; and (2) assess the effect of these changes in local government funding on the finances of surrounding hospitals. We rule out the possibility that changes in local government spending are a response to hospital competition and find evidence that hospitals in Medicaid expansion states observed increased profits, following the expansion. This paper provides evidence on the responsiveness of local governments to the preferences of their voters under incentives introduced by the Affordable Care Act (ACA).

The Long-Term Impact of Disaster Loans: The Case of Small Businesses after Hurricane Katrina

The US government provided $2.6 billion of small business administration (SBA) disaster loans to individuals and businesses in Mississippi after Hurricane Katrina in 2005. However, existing literature has not fully explored the firm-level effects of post-disaster loan aid, specifically, the effect on small businesses. The objective of this article is to examine whether SBA disaster loans played a significant role in the performance of small businesses after Hurricane Katrina. Data from a sample of 287 small businesses in Mississippi that were operating before Hurricane Katrina and still operating in 2013 were used in the analysis. Two hypotheses were tested: (1) small business owners that received SBA disaster loans have higher revenue change compared to before Katrina than those who did not receive the loan; (2) small business owners that received SBA disaster loans perceived their businesses to have higher revenue than before Katrina. Receiving a SBA disaster loan played a positive and statistically significant role in determining the actual revenue change and owners’ perception of revenue.

Impact of pricing and transit disruptions on bikeshare ridership and revenue

Bikeshare operators routinely explore options to improve ridership and revenue by studying interaction among pricing, service and operations. The objective of this research is to study the impact of introducing a new $2 fare for single-trip on revenue and ridership at Capital Bikeshare (CaBi) in the metro Washington DC region. The single-trip fare (STF) at CaBi is one of the three fare products aimed at casual users—the other two being 24-h pass and 3-day pass. STF was introduced inconjuction with SafeTrack, which is a major Metrorail track maintenance program intiated by the Washington Metropolitan Area Transit Authority. The impact analysis of STF includes studying the influence of SafeTrack on CaBi ridership. The analysis was based on revenue and ridership data before and after the implementation of STF and weather data for the region. The results showed that the first-time casual members increased by as much as 79% immediately after the introduction of STF, along with an overall increase in ridership. Jurisdiction-level analysis indicated a statistically significant increase in casual user ridership for identical 12-month periods before and after the introduction of STF. However, the analysis indicated that the impact of STF on revenue from casual users before and after STF at jurisdiction-level was inconclusive. As would be expected, the launch of STF, which is a casual fare product, did not impact ridership and revenue of monthly and annual registered members. Sensitivity analysis of ridership to rail transit disruptions due to SafeTrack indicated that there was a statistically significant increase in ridership by registered members and casual users at the CaBi stations affected by SafeTrack. The concurrency of STF launch with SafeTrack may have played a role in this increase. For, the new fare product created an opportunity for commuters to try CaBi as an alternative travel mode at an affordable price that is compatible with transit fare during transit service disruptions. However, the analysis did not present any evidence on the sustained nature of CaBi ridership increase attributable to SafeTrack. The methods used in this research are helpful for bikeshare operators to model changes in ridership and revenue from attributable to pricing structure.

Fiscal policy and aggregate demand in the USA before, during, and following the Great Recession

We examine the direct effect of federal and subnational fiscal policy on aggregate demand in the USA by introducing the Fiscal Effect (FE) measure. FE can be decomposed into three components. Discretionary FE quantifies the effect of discretionary or legislated policy changes on aggregate demand. Cyclical FE captures the effect of the automatic stabilizers—changes in government taxes and spending arising from the business cycle. Residual FE measures the effect of all changes in government revenues and outlays which cannot be categorized as either discretionary or cyclical; for example, it captures the effect of the secular increase in entitlement program spending due to the aging of the population. Unlike other approaches, FE is a bottom-up approach that allows for differential effects on aggregate demand depending on the type and length of the policy change. Thus, FE is arguably the most detailed and comprehensive measure available of the stance of US fiscal policy in relation to aggregate demand. We use our new metric to examine the contribution of fiscal policy to growth in real GDP over the course of the Great Recession and current expansion. We compare this contribution to the contributions to growth in aggregate demand made by fiscal policy over past business cycles. In doing so, we highlight that the relatively strong support of government policy to GDP growth during the Great Recession was followed by a historically weak contribution over the course of the current expansion.