Revenue Elasticity Research Articles

Analisis Penerimaan Pendapatan Asli Daerah (PAD) Ditinjau Dari Kontribusi PAD, Elastisitas PAD dan Kinerja Pajak Daerah Pada Pemerintah Kota Sibolga

This study aims to analyze the contribution of local revenue, the elasticity of local revenue and the performance of local taxes in the Sibolga City government. Local Own Revenue is the right of the local government which is recognized as an increase in the value of net assets obtained from local taxes, local levies, the results of the management of separated local assets and other legitimate local revenue. This research was tested on the sibolga city local government in 2018-2022. The data analysis technique used in this research is descriptive and quantitative analysis. The results of the analysis show that the contribution of local revenue tends to be unfavorable, the elasticity of local revenue tends to be elastic to gross regional domestic product and the performance of local taxes tends to be very effective.

The sales effects of Powerball and Mega Millions game redesign

ABSTRACT State lottery consortia in the U.S. substantially redesigned their largest jackpot games, Powerball and Mega Millions, to stimulate sales revenue for their member states. The odds of winning the jackpot in each game were lengthened to increase the probability of larger jackpots, the minimum jackpot was raised, and ticket prices were increased from $1 to $2. This paper estimates the demand for Powerball and Mega Millions using drawing-by-drawing aggregate U.S. sales revenue and advertised jackpot data from 2010 to 2019. Each game achieved a record-breaking jackpot of about $1.5 billion during this period. We find that each game’s redesign lowered the elasticity of sales revenue of the game with respect to the size of the game’s jackpot while significantly increasing the average size of the jackpot. We also estimate the impact of each game’s redesign on sales. Finally, we estimate cross-game effects of game redesigns and jackpots.

Empirical analysis of the market structure of the Hungarian bank market

This paper analyzes the market structure of the Hungarian bank market and the effects of the financial crisis of 2008 on it. With a static and a dynamic panel model we estimate the elasticity of total revenues with respect to changes in input prices so that we can determine the market structure based on the Panzar and Rosse methodology for the period between 2003 and 2020. We test the input price elasticity according to the balance sheet and profit and loss data of the top 13 companies. The results show that the Hungarian bank market was a monopolistic competition or a monopoly market in long run equilibrium. To see the effects of the financial crisis we use three subsamples, furthermore we estimate and test the H-statistic with a fixed effect model. During the examined period the level of factor price elasticity increased in time.

Local Productivity Spillovers

Using Canadian administrative data, this paper presents evidence of revenue and productivity spillovers across firms at fine spatial scales. Accounting for the endogenous sorting of firms across space, we estimate an average elasticity of firm revenue and productivity with respect to the average quality of other firms within 75 meters of 0.024. We find scant evidence that the average firm benefits from being surrounded by a greater amount of economic activity at this spatial scale. Sorting of higher-quality firms into more productive locations and higher average and aggregate quality peer groups is salient in the data. (JEL D22, D24, G32, L25, R11, R32)

Analysis of settlements with debtors based on the quality indicatorof turnover.

The aggravation of relations in the field of global finance, the change of international partners and disruption of international economic relations cause the need to strengthen payment discipline and accelerate payments, which is especially important in the context of the expansion of new associations of states. The consequences of the COVID-19 pandemic have also led to a reduction in the liquidity of organizations and increased the need for funds. Timely repayment of accounts receivable increases the availability of cash to suppliers, and the acceleration of settlements contributes to an increase in available funds, which makes it possible to use them additionally in commercial turnover. The purpose of the study was to improve the system of settlements (based on their turnover) with debtors and rational distribution of the terms of cash refunds using the matrix method. The existing systems for assessing financial and cash flows in settlements with debtors and the indicators used for this purpose do not always express the dependent relationship between the growth of sales revenue, the turnover of accounts receivable and the degree of its repayment. In this regard, the objective of the study was to improve the existing indicators of the analysis of accounts receivable. The article examines the methods of accounts receivable management integrated into the system based on a client- oriented approach. In the course of the work the methods of comparison, statistics, mathematical modeling were used. A system for tracking the balances of accounts receivable, comparing them with sales volumes and turnover indicators is proposed. The author formulated the concept of the cycle of accounts receivable circulation. It is revealed that the use of indicators of turnover of accounts receivable and sales volume do not accurately reflect the quality of repayment of accounts receivable, their interdependence and do not disclose the possibility of additional release of funds from settlements with debtors. To solve this problem, a new indicator has been introduced — the rate of repayment of receivables. An approach is proposed to substantiate the expediency and feasibility of accelerating payments based on the elasticity of revenue or proceeds from the sale of products, works and services to the rate of repayment of receivables. The results of the research were the creation of a system for tracking receivables balances and comparing them with sales volumes and turnover indicators, which can be useful for organisations selling products, works and services under credit agreement to accelerate cash receipts.

Analisis Penerimaan Pajak Restoran terhadap Pendapatan Asli Daerah dan Produk Domestik Regional Bruto di Kota Banjarmasin

This study aims to determine the effectiveness of the restaurant tax, the contribution of the restaurant tax to local revenue, and the elasticity of the restaurant tax on GRDP in Banjarmasin from 2011 to 2020. This research makes use of descriptive and quantitative research methods. The data is secondary from the Central Statistics Agency and BPKPAD. The results showed that the extent of the effectiveness of restaurant tax revenues was categorized as very effective, with a mean of 112.85%. In the meantime, the contribution of restaurant tax to local revenue remains less significant, with a standard of 14.27%. The elasticity of restaurant tax revenue on GRDP has a standard of -79.25%, which is classified as inelastic, meaning that every 1% change in GRDP can lessen the realization of restaurant taxes using -79.25.

Fines, nonpayment, and revenues: evidence from speeding tickets

Abstract We estimate the effect of the level of fines on payment compliance and revenues collected from speeding tickets. Exploiting discontinuous increases in fines at speed cutoffs and reform-induced variation in these discontinuities, we implement two complementary regression discontinuity designs. The results consistently document small payment responses: a 10% increase in the fine (i.e., the payment obligation) induces a 1.2 percentage point decline in timely payments. The implied revenue elasticity is about 0.9. Expressed in absolute terms, a one-dollar increase in the fine translates into a roughly 60-cent increase in payments collected within 15 days (JEL H27, H26, K42).

The Open Monopolistic Competition Models: Market Equilibrium and Social Optimality

We study the monopolistic competition model of Dixit–Stiglitz–Krugman with additive separable utility and transport costs of “iceberg types”. The production costs are not necessary linear. We study two concepts: market equilibrium and social optimality. There are well-known facts in the closed economy under monopolistic competition: (1) “in market equilibrium, the elasticity of revenue equals the elasticity of total costs” and (2) “in social optimality, the elasticity of utility equals the elasticity of total costs”. Moreover, earlier Prof. Sergey Kokovin (HSE University, Russia) generated the idea that (3) “the search for equilibrium is equivalent to the problem of optimization, but revenue, not utility”. For the case of several countries, it turns out that facts (1) and (2) and prediction (3) remain mostly true.

Firm revenue elasticity and business cycle sensitivity

We show that it is not necessary to have price and quantity data separately in order to study firm responses to business cycle shocks. We explain that revenue elasticities, which measure the response of firm revenue to input changes and combine price and quantity data, are sufficient to understand business cycle amplification. We present theory to show that higher revenue elasticity firms generate greater business cycle amplification. We use US data to measure revenue elasticities at the firm level, and we show that higher revenue elasticity firms respond more to business cycle shocks, consistent with our theory. We conclude that trends towards lower revenue elasticity firms implies weaker business cycle amplification over time.

The Hungarian insurance market structure: an empirical analysis

This paper analyzes the market structure of the Hungarian insurance market, which operated as a monopoly market until 1986. After the regime change this sector started to develop rapidly. But the Hungarian insurance market has a strong oligopolistic character, and thus raises an interesting question as to how close the market is to a state of perfect competition. Based on the Panzar and Rosse (J Ind Econ 35:443–456, 1987) methodology we estimate the elasticity of total revenues with respect to changes in input prices, so that we can determine the market structure. The estimation of input price elasticity is made with a static and a dynamic panel model. According to research the structure of the Hungarian insurance market significantly differs from the perfect competition case between 2010 and 2019. The market is in long-run equilibrium, and the hypothesis of the monopoly case cannot be rejected. The market structure of a sector is important for modelling phenomena and new regulations effectively, which is relevant for insurance and competition supervision in the protection of customers.

Accounts receivable management in transport organizations

In a crisis in the international settlement system, there is a need to strengthen payment discipline and accelerate payments. The consequences of the COVID-19 pandemic have also led to a reduction in the liquid means of transport organizations and also increased the problem. Acceleration of repayment of accounts receivable increases cash security. The methods of accounts receivable management integrated into the system based on a client-oriented approach are investigated. The proposed system allows you to track the balances of accounts receivable, comparing them with sales volumes and turnover indicators. The concept of the cycle of accounts receivable circulation is formulated. It is revealed that the existing indicators of turnover of accounts receivable and the volume of sales do not accurately reflect the quality of repayment of accounts receivable, the relationship between these indicators is not revealed. They do not disclose the possibility of additional release of funds from settlements with debtors. To solve this problem, a new indicator has been introduced – the rate of repayment of receivables. An approach is proposed to substantiate the expediency of accelerating payments based on the elasticity of revenue from the sale of transport services to the rate of repayment of receivables.

Ispitivanje elastičnosti PDV-a u zemljama Beneluksa

Value added tax is a significant tax form worldwide. The importance of this tax is manifested in the scope, stability and efficiency of revenue collection. With respect to macroeconomic conditions and challenges, fiscal authorities have to pay attention to the elasticity of VAT revenues. The paper is aimed at identifying VAT elasticity in the Benelux countries, as well as determining the main macroeconomic factors that affect the changes in VAT elasticity. Empirical results have shown the presence of VAT elasticity in the Benelux countries, as well as a statistically significant impact of gross domestic product, final consumption, unemployment, inflation, government expenditures and standard VAT rate on VAT elasticity for the period 2011-2022.

Determinants of Farm Revenue in Pakistan

Will small farm viability decline with the reduction of average farm size in Pakistan? This paper addresses the determinants of rural household and farm-related income. Using the 2001 PIDE Household Survey, the approach developed captures the potential interactions between farm returns and household, farm, and factor market characteristics (schooling, family size, land tenure and operational size, access to water, credit, and capital). Econometric results show: (a) returns to additional schooling and the revenue elasticity of operated acres increase with farm size; (b) medium and large farm renters would be willing to pay more than observed rents, implying an incentive to increase farm size at the prevailing rental values; (c) owneroperated farms, landowners who also leases in, and fixed rental tenants earn higher revenues than sharecropping tenants. The difference, however, between landowner/fix-renter income and sharecropper income varies with family and farm size, as well as water use. While these results favour farm size increase, the results also show that off-farm and non-farm income sources are relatively more important for small farmers, contributing to their viability. JEL classification: D13, Q12, Q15 Keywords: Pakistan, Land Markets, Rural Factor Markets, Revenue Function

Industry-specific analysis of the impact of changes in the macroeconomic environment on corporate profits and estimation of corporate tax revenue

This study aims to present a methodology and construct a model for estimating corporate tax revenue, which is one of the main revenues. There is a need for a new tax revenue estimation model to replace both the existing tax revenue elasticity values that have been adopted for estimating tax revenue and the method of directly estimating tax revenue without first analyzing the increase and decrease in the taxable amount. The author focuses on the estimation of corporate tax revenue. To do it, the author focuses on the taxable object, that is, corporate profits, and the corporation that records it (the profit-making corporation). In addition, it hypothesizes the factors that increase or decrease the declared income, which are GDP growth rate, inflation rate, unemployment rate, interest rate, and population, and hypothesizes how the influence of these macro-variables differs in each industry. The author estimates the declared profit for each industry. The author then estimates the corporate tax revenue by multiplying the declared income that the model estimated for each industry by the given tax rates. The result of this two-stage estimation method reveals that the accuracy of the estimation of this model is higher than the estimation values based on the conventional tax revenue elasticity. Furthermore, unlike the conventional tax revenue elasticity method, the author reveals that this model can accurately estimate (approximate) the actual increase in tax revenue in FY2020, when the economic growth was negative.

A Comparative Study of Social Media Marketing and Conventional Marketing – A Case Study

This study examines the relationship between government expenditure and government revenue in Nigeria, covering the period 1981 to 2019. The Johansen technique and the VECX model were employed as econometric techniques of data analysis. This study confirms the existence of a positive long-run relationship between government expenditure and government revenue and that the expenditure elasticity of revenue is greater than unity thus confirming fiscal sustainability in Nigeria. The long-run relationship between government expenditure and government revenue is further shown in this study, how it determines the nature of the impact of deficit financing (debt) on the economy, and that expenditure elasticity below unity is not desirable. Further, the result of the VECX-based granger causality revealed that the spend-revenue hypothesis of Peacock & Wiseman (1961) holds for Nigeria's economy both in the short and long runs. The federal government of Nigeria is thus advised to set targets for revenue mobilization and utilization as well as devise a way of expenditure spreading over the entire economy.

The Impact of Tax Control on Tax Revenues: An Aggregate Metric Analysis of the Case of Albania

Tax administration constantly monitors taxpayers through tax control to meet the legal obligations of the tax field. The main purpose of this function is to advise taxpayers and maintain operational control through continuous monitoring. Motivated by the importance of tax control, this paper aims to provide an empirical contribution to the analysis of tax control’s effects on the level of tax revenues. The database obtained in the analysis is both quantitative and qualitative according to the evidence of direct operational controls performed on businesses. The variables analysed are total tax revenues from value added tax (VAT), profit tax, personal income tax (PIT), withholding tax, etc.; tax control variables and macroeconomic variables. The methodology used in this paper is based on linear models with many variables as well as statistical tests to find the potential levels and equilibrium, elasticity and structural estimation of tax revenues. The findings of this paper provide a focused contribution on current issues for tax control policymakers, as well as other public entities, and they make an academic contribution to the legal and economic interpretation of the importance of tax control.

The production approach to markup estimation often measures input distortions

The production approach recovers markups using the output elasticity for a variable and undistorted input. We show using the revenue elasticity for a variable input recovers that input’s wedge. Our result has two implications. First, in the canonical setting with CES demand and monopolistic competition, past research using the production approach with revenue data should be recast as evidence of input, rather than output, distortions. Second, future research can use the production approach with revenue data to study input distortions, provided researchers can measure inputs in physical units. A promising application pertains to labor market distortions.

How competitive is the Syrian banking sector? Empirical evidence from ‘pre/post’ war Syria

AbstractThis paper investigates the degree of market power in the Syrian banking sector over the period 2005–2016 where research on competitive conditions does not exist. The degree of competitiveness is assessed based on the revenue elasticity to input prices approach and is related to a set of market indicators. To test whether the Syrian crisis has altered the competitive conditions over the years of the sample, I divide the full sample into two subsamples, namely the pre‐crisis years (2005–2012) and the crisis years (2013–2016). The results suggest that banks in Syria earn their interest and total revenue under conditions of monopoly. I find that the trend of market structure—characterized by a monopoly—in the pre‐crisis years continues over crisis years. My findings provide robust evidence that a collusive behaviour among banks is in operation in the banking sector of Syria. The difficult penetration into/exit from the market has led to the existence of a profit‐curb mechanism for the Syrian banks, hence, an upward shift in the marginal cost curve will be associated with a reduction in revenue as a result of the optimal condition for these banks which act as monopolists.

Estimating excise tax revenue elasticity and buoyancy for tobacco products and alcoholic beverages: evidence from Greece

ABSTRACT The aim of this paper is to estimate excise tax revenue elasticity and buoyancy for tobacco products and alcoholic beverages in Greece, for the period 2000–2020. To this end, we employ core and more extended error correction models. Overall, our empirical results do not confirm the appropriateness of the unity assumption. Policy measures seem to affect excise tax revenues in the long run mostly through the tax-to-base relation. In most cases, excise tax revenues seem to have a larger reaction to changes in the tax base in the short run, which could be associated with different asymmetric effects, in particular the crisis/adjustment and the COVID-19 lockdown effects. Our findings indicate several differences in excise tax revenue elasticity and buoyancy between the two product categories, suggesting that individual product categories should be examined separately for a more precise estimate of tax revenue sensitivity. This implication may assist policy makers to effectively design the related tax policies, especially during abnormal periods like the COVID-19 pandemic, and derive more accurate tax revenue forecasts.

Are tax revenue elasticities consistent with a balanced government budget? An analysis and implications for six CEE countries

Tax revenue elasticities are an important parameter in the management of the revenue side of the government budget as they provide information about the impact of economic growth on tax revenues and fiscal sustainability. A growing number of empirical studies have estimated such elasticities or buoyancies for different countries using various methods. This paper follows a novel approach of deriving tax revenue elasticities that are consistent with a balanced budget for six Central and Eastern European countries using data over the period 1995-2019. These derived elasticities were then compared to actual estimates reported in other studies. The main conclusion from this comparison is that, for most cases considered, tax revenues were responsive enough to economic growth to support fiscal sustainability.