Fiscal Effects Research Articles

Estimated Fiscal Effects of Medicare Advantage’s Quartile Payment System

This economic analysis estimates fiscal effects of the quartile adjustments made to Medicare Advantage payments as part of the Patient Protection and Affordable Care Act.

The fiscal effects of cross-prefectural border municipal mergers: evidence from Japan using the synthetic control method

ABSTRACTThe purpose of this paper is to investigate whether social connectedness can mitigate the fiscal common pool problem in municipal mergers, as many studies have primarily focused on whether this problem occurs. I employ the synthetic control method by using higher-level government borders to identify the moderating effects of social connectedness. The findings reveal that subordinate partners in cross-prefectural border mergers significantly reduce their bonds and construction expenses just before the mergers. Merger partners with strong incentives to merge do not create fiscal common pool problems, which is the opposite of previous studies. The result might imply the potential effectiveness of merger support policies that prioritize social connectedness.

The fiscal effects of armed conflicts in Africa

AbstractThis study examines the impact of armed conflicts on the fiscal capacity of African governments. It made use of a data set covering 1997–2021 for 50 countries, as well as the system dynamic generalized method of moment estimation technique. The results show that, in the short run, conflicts undermine tax revenue, mount pressure on military expenditure, and force governments to rely more on mineral resource rents for their fiscal needs. As conflicts persist, this fiscal feature changes to a pattern that reflects a decline in mineral resource earnings and an increase in tax revenue. The impact on public health expenditure also changes from an increasing to a decreasing pattern, whereas the positive impact on military expenditure and external borrowing persists over time. The findings suggest that African countries in conflict can address their fiscal challenges by observing these patterns and putting in place policies that protect public resources (e.g., the adoption of digital financial technology protocols to facilitate remote revenue collection and strategic protection of mineral resource‐endowed zones from insurgents' control). Overall, enhancing government effectiveness and strengthening the institutions of governance is important to facilitate a quick return to normalcy in the event of conflict and to prevent future conflicts.

Uncertainty and the effectiveness of fiscal policy in the United States and Brazil: SVAR approach

AbstractThe article analyses the interference of uncertainty on the effectiveness of fiscal policy. This issue is investigated through the lens of a Structural Vector Auto Regressive (SVAR) model for the United States and Brazil. Imposing government spending shocks, the models highlight a positive effect on economic activity. The results suggest Keynesian effects on consumption and GDP. To assess the effects of uncertainty, the models use two indices: the Economic Policy Uncertainty Index (EPU) and the World Uncertainty Index (WUI). The findings indicate that the fiscal effects are considerably less intense when uncertainty reaches high levels, consistent with the Real Options approach. The results suggest that agents are more cautious when the high‐uncertainty overshadows the outline of the economic scenario. In this sense, uncertainty disturbs agents' decisions and decreases consumption, investment and economic activity.

EVALUATION ANALYSIS OF SAMOSIR REGENCY GOVERNMENT PERFORMANCE EVALUATION VIEWED FROM FINANCIAL REPORT INFORMATION

This research aims to evaluate the financial performance of regional governments at several levels, including Regional Financial Autonomy Level, Fiscal Decentralization Level, PAD Effectiveness Level, PAD Efficiency Level, Regional Fiscal Effectiveness Level, Regional Fiscal Efficiency Level, and BUMD Contribution Level. This quantitative descriptive study examines the regional financial statistics of Samosir Regency from 2013 to 2020. Economic scale analysis is the data analysis method used. The findings show that the average value of Financial Autonomy Level is still meagre (6.93%); The level of Regional Financial Dependency is very high (91.65); The level of Fiscal Decentralization (6.30%) is deficient; PAD has an effectiveness rating of very effective (100.74%); 0.78% shows that PAD efficiency is very efficient. 115.41% is fiscal effectiveness; regional fiscal efficiency is quite effective (3.36%); the BUMD contribution of 6.40% is minimal. Keywords : Financial Performance, District Government, financial Information.

Fiscal outcomes, current account imbalances, and institutions in Europe: Exploring nonlinearities

We analyze the fiscal outcomes associated to the current account imbalances within Europe. We hypothesize that the effects of current account imbalances on fiscal variables within the European Union are nonlinear and that the nonlinearity is modulated by the quality of governance. We use data on 28 European Union countries from 2000 to 2019, apply a Panel Smooth Transition Regression (PSTR) approach and proxy governance by measures of corruption. We find evidence of a nonlinear relationship: the fiscal effects related to current account imbalances are differentiated among European countries. On the one hand, we find a positive elasticity of fiscal balance to current account balance when the quality of institutions is low. This suggests that in countries with high corruption, a deterioration of the current account results in a degradation of fiscal balance and an increase of debt. On the other hand, we find a negative elasticity of fiscal balance to current account balance when the quality of institutions is high. This implies that in countries with low corruption, larger current account imbalances can be related to an improved fiscal balance and a lower debt. Robustness checks comfort our findings.

Paying for Free Lunch: The Impact of CEP Universal Free Meals on Revenues, Spending, and Student Health

Abstract The Community Eligibility Provision (CEP) of the Healthy, Hunger-Free Kids Act of 2010 allows school districts to provide free meals to all students if over 40 percent of them are directly certified as free-meal eligible. While emerging evidence documents positive effects on student behavior and academics, critics worry that CEP has unintended consequences for student weight, district finances, and instructional spending. We investigate these using school and district data from New York State and a difference-in-differences design. We exploit staggered CEP adoption, and explore differences between metro, town, and rural districts. We investigate potential mechanisms, including lunch and breakfast participation, and use event studies to assess pre-adoption trends and effects over time. We find that CEP increases total food expenditures, but spending per meal declines. Local food service revenues decline, but increased federal reimbursements more than compensate for local food revenues and expenditures changes. Indeed, while some worry that CEP crowds out education spending, we find no effect on instructional expenditures. Furthermore, CEP increases participation in school lunch and breakfast, but has no deleterious effect on weight outcomes and, instead, is associated with obesity declines in secondary grades. Rural districts experience larger impacts than metro and town districts, alongside some negative fiscal effects.

EXPLORING THE IMPACT OF FISCAL POLICIES ON ECONOMIC EFFICIENCY AND FISCAL EFFECTIVENESS: EVIDENCE FROM TAIWANESE LOCAL GOVERNMENTS

This paper utilizes network data envelopment analysis and the second-order cone programming approach to evaluate the performance of 20 Taiwanese local governments (which consist of 6 municipal governments and 14 non-municipal governments). We first explore the fiscal policies in local governments using non-parametric methods. Second, this study develops an innovative two-stage process to measure the effects of fiscal policies to economic efficiency and fiscal effectiveness of 20 local governments for from 2010 to 2016. Several findings are summarized as follows. (1) Non-parametric results reveal that current and capital expenditures, as well as tax and non-tax revenue of municipal governments, were higher than non-municipal governments. (2) The municipal governments have a higher economic efficiency level and fiscal effectiveness yearly and on average based on the two-stage efficiency scores. Overall, empirical results provide insights to local governments on the efforts to integrate resources that will exert a synergistic effect on governance performance. To mitigate economic problems arising from increasing fiscal deficits, it is recommended to implement forward-looking policies and allocate government funds wisely during the early expansion stage. This can be achieved by analyzing tax systems and adopting fiscal policies that boost tax revenue and enhance overall fiscal effectiveness.

Free Movement versus European Welfare States? Variations of the Fiscal Effects of EU Migrants across Welfare State Regimes

Strong claims have been made about the incompatibility between large-scale migration and advanced welfare states. The free movement of workers within the European Union (EU) offers an interesting case for the study of the fiscal effects of unrestricted labor migration in different types of welfare states This article therefore investigates the alleged tension between advanced welfare states and liberal migration policies by analyzing how the fiscal effects of EU migrants vary across European welfare state regimes. In contrast to arguments commonly made in public debates, we argue and explain why theoretical reasoning should lead us to expect limited differences in fiscal effects of EU migrants in different welfare states. The empirical analysis, covering twenty-nine countries during 2004–15, shows that the net fiscal impact of EU migrants in the different welfare state regimes of West European countries is positive, and we find no major differences in the fiscal impacts of EU migrants across Western regimes. These results from the EU case cast doubts on the claim that advanced welfare states are incompatible with large-scale immigration because of adverse fiscal effects, and on the idea that broad institutional characteristics of welfare states have substantial consequences for the fiscal impact of migration.

Effects of Fiscal and Monetary Policies, Energy Consumption and Economic Growth on CO2 Emissions in the Turkish Economy: Nonlinear Bootstrapping NARDL and Nonlinear Causality Methods

Governments use fiscal and monetary policies to direct the economy toward economic expansion. However, both policies could have impacts on the environment. The study investigates the effects of fiscal and monetary policy, energy consumption and economic growth on carbon dioxide emissions for the Turkish economy from 1978 to 2021 with novel nonlinear bootstrapping NBARDL and nonlinear NBVARDL for nonlinear causality testing. The methods are robust to degenerate cointegration. By differentiating between expansionary and contractionary fiscal and monetary policies, the results determined the presence of long-run cointegrated relationships between the analyzed variables and emissions. The positive effects of both economic policies on emissions cannot be rejected, which become particularly pronounced for expansionary policies in addition to emission enhancing effects of energy consumption and growth. The effects of contractionary monetary policy are also positive in contrast to a set from the literature. Nonlinear causality tests favor one-way causality from energy consumption and from growth to emissions. The one-way causality from energy consumption and economic growth to emissions suggest non-existent feedback effects, leading to concerns for the environment. Expansionary and recessionary fiscal policies have one-way causal impacts on energy, leading to further environmental degradation. The findings highlight the severity of environmental problems caused by economic policies. Important policy recommendations are generated.

Effects of Fiscal Variables on External Sector Deficit of Nepal with Reference to Indian Factors

The basic intent of this paper is to examine the effects of fiscal variables on trade and the current account deficit of Nepal considering the Indian factors. Using the time series data of 48 years of the study period from 1975 to 2022, Engle-Granger’s co-integration and error correction models are used to examine the fiscal effects on the trade deficit, and the ARDL model is used to examine the effects on current account deficit. The basic variables used in the analysis are government expenditure to GDP ratio, budget deficit to GDP ratio, trade deficit to GDP ratio, broad money supply to GDP ratio, trade openness, real exchange rate, and real per-capita Indian GDP. Data are taken from the Ministry of Finance, Nepal Rastra Bank, and World Development Indicators. The findings show that the government expenditure to GDP ratio and trade openness positively affect the trade deficit as domestic factors, while real per-capita Indian GDP positively affects the trade deficit as an external factor. Also, the budget deficit to GDP ratio has a positive effect, while the broad money supply to GDP ratio has a negative effect on the current account deficit as domestic factors. The real exchange rate is negatively and real Indian per-capita GDP are positively driving the Nepal’s current account deficit as external factors. This study identifies the real exchange rate with Indian rupees, Indian real per-capita GDP, and financial development as novel explanatory variables of current account deficit and therefore provides additional evidence on external deficit in the context of Nepal.

Effectiveness of Fiscal and Monetary Policies in Promoting Environmental Quality: Evidence from Five Large Emerging Economies

ABSTRACT Growing climate change concern invites policy responses from all corners. Governments and central banks in emerging market economies pose interests in environmental urgencies. This paper reexamines fiscal and monetary policies’ effects on environmental quality in five large emerging economies (Brazil, Russia, India, China, and South Africa) from 1990 to 2018. Effects of population, economic growth, and technology on CO2 emissions are also estimated. According to the Pooled Mean Group-Autoregressive Distributed Lag estimations, Panel Fully Modified Ordinary Least Squares, and Driscoll-Kraay estimations, expansionary fiscal and monetary policies significantly improve environmental quality. Technology also promotes environmental quality. However, economic and population growth degrade the natural environment in the long run. The paper also discusses potential policy implications.

Differential Fiscal Performances of Plausible Disaster Events: A Storyline Approach for the Caribbean and Central American Governments under CCRIF

Fiscal resilience against disasters is vital for the recovery in the aftermath of climate hazards. Without swift access to available funds for disaster relief, damages to human and the economy would be further exacerbated. How insurance may influence fiscal performance over time and can increase fiscal resilience for today and under a future climate has not been looked at yet in detail. Focusing on the Caribbean region and on the fiscal performance of governments after disaster events, we empirically analyze the effectiveness of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) regarding the reduction of short-term fiscal effects. We embed this analysis within a novel climate impact storyline approach where we produce past plausible events and investigate the usefulness of insurance under such events. The storylines were modified according to global and climate change related boundary conditions to address the issue whether the CCRIF is fit for purpose or will need to be adapted in the future. We found that both hurricane strikes and the CCRIF affect fiscal outcomes of Caribbean countries. Furthermore, there are indications that CCRIF can counteract the negative fiscal consequences over the short term period induced by the disaster. Our analysis should shed some light on the current discussions on how development related assistance can be structured to enhance climate resilience in highly exposed countries for both direct and fiscal impacts of disasters.

ANALISIS KEMANDIRIAN FISKAL, KETERGANTUNGAN FISKAL DAN EFEKTIVITAS FISKAL PROVINSI D.I YOGYAKARTA TAHUN 2018-2022

This study aims to analyze Fiscal Independence, Fiscal Dependence and Fiscal Effectiveness of the D.I Yogyakarta Province in the 2018-2022 period. The research is quantitative descriptive by observing the posture of the provincial budget. In the aspect of fiscal independence, an average value of 36.7 is obtained, including the category towards independence. In the aspect of fiscal dependence, the value tends to be > 50 with an average percentage of 62.9 percent, including in the very high category. In the aspect of fiscal effectiveness, the figure obtained was 104.39 percent, including the category of very effective fiscal implementation in the region. Based on the review in this study, which found fluctuating changes from year to year, it justifies the influence of the First-Generation Theory that the central government's intervention to the Provincial Government of the Special Region of Yogyakarta still has a significant influence on regional fiscal independence, dependence and effectiveness.

ANALISIS KEMANDIRIAN FISKAL, KETERGANTUNGAN FISKAL, DAN EFEKTIVITAS FISKAL PROVINSI KALIMANTAN UTARA PERIODE 2017-2022

This research study aims to analyze the aspects of Fiscal Independence, Fiscal Dependence, and Fiscal Effectiveness of the North Kalimantan Province for the 2017-2022 period. This research is quantitative descriptive research. The average is obtained in the fiscal independence section with a value of ≤0.28, categorized as starting toward regional budgetary independence. Then the fiscal dependence portion of the percentage value obtained is 74,60% which is classified as a very high level of regional fiscal dependence. Furthermore, the fiscal effectiveness portion of the figure obtained is 101,23%, which means it is very effective in implementing the regional Fiscal. Overall, the review of fiscal independence, dependability, and effectiveness proves that there are fluctuating changes every year. Then justifies the influence of the First-Generation Theory in the review studied that the central government's intervention in the regional government of North Kalimantan Province still has an effect in various aspects intended in this study in the form of independence, dependence, and its fiscal effectiveness with the period of the year under study.

Governments' accounts and pandemics

PurposeEarly evidence suggests that coronavirus disease 2019 (COVID-19) caused a sharp deterioration in fiscal accounts worldwide. This paper empirically assesses the fiscal impact of previous pandemics and epidemics.Design/methodology/approachUsing a large sample of 170 countries from 2000 to 2018, this study relies on Jordà's (2005) local projection method to trace pandemics' short- to medium-term dynamic impact on several fiscal aggregates.FindingsThis paper shows that (qualitatively) similar responses to those observed more recently with COVID-19 have characterized the effects of previous pandemics. While the fiscal effect has been economically and statistically significant and persistent, it varies; pandemics affect government expenditures more strongly than revenues in advanced economies, while the converse applies to developing countries. The author also finds that asymmetric responses depend on whether a country is characterized as a chronic fiscal surplus or deficit type. Another factor that generates an asymmetric fiscal response is the prevailing phase of the business cycle the economy was in when the pandemic shock hits.Research limitations/implicationsThis paper's findings provide a lower bound to what the current COVID-19 pandemic will inflict on countries’ fiscal situation. That said, the set of pandemics and epidemics used in this paper are geographically more concentrated and did not affect all countries in such a systemic and synchronized manner as did COVID-19 more recently.Originality/valueThis is the first paper to explore the fiscal side of this type of health-related shocks, as most of the literature has focused on the more traditional macroeconomic effects.

Baby boomers in Europe: demography, socioeconomic and health status, and oral health needs.

The European countries are aging fast. Baby boomers in Europe constitute a diverse population group with several differences in life events and living conditions. The fiscal effects of the aging of European population have led to changes in policies and legislation that largely affect the lives of baby boomers necessitating an increase in their working lives. Furthermore, reforms are planned in the existing health and long-term care systems. Although some baby boomers in Europe face chronic medical conditions, the majority perceive their general health as good or very good. However, approximately one quarter have reported unmet needs for medical care, mainly due to cost or long waiting lists with large variability among different countries. The oral health of baby boomers has improved compared to previous generations particularly related to tooth loss. However, older groups in many countries face an increase in dental caries and periodontal disease. Some baby boomers may enter very old age with many natural teeth, functional impairment, limited ability to perform oral hygiene and an increased demand for more complex dental care as well as domiciliary care. However, in contrast to medical care, dental expenses in Europe are mainly financed with out-of-pocket payments while domiciliary dental care is rarely provided leading to unmet dental care needs for the most vulnerable individuals. Educational interventions for all healthcare professionals, as well as formal and informal carers and the public are required, and appropriate policies and legislations are needed to promote the oral health of the aging European population.

Do public account financial statements matter? Evidence from Japanese municipalities

Many governments are introducing business-like accounting systems. This paper examines the fiscal effects of compiling business-like financial statements on the expenditures of local governments in Japan as a complement to cash-based reporting. Using the variation in the deadlines for compiling new statements given by the central government in a difference-in-differences instrumental variable approach, we found that business-like financial statements have limited effects on municipalities’ expenditures but have short-run effects on social assistance expenses. This might be a part of the reconstruction of their expenditure structure.

Fiscal effects of exchange rate devaluation and capital flows to emerging countries

In the assessment of governments’ fiscal performance, exchange rates play some roles while capital movements could serve as determinant of fiscal discipline. This study examined the effects of exchange rate devaluation, and capital inflows, on budgetary spending, and the interactions among the variables using the Bayesian vector autoregression (BVAR) and sys-generalized method of moments (GMM) estimators with 1,184 panel observations. The study covers 37 emerging nations. The variables had a co-integrating connection, demonstrating a long-run link between the variables studied. Having executed the Gibbs sampling for simulation efficiently, our Markov Chain Monte Carlo (MCMC) simulation converged appropriately. The sampling efficiency parameter is equal to 0.96257, close to 1. The Monte Carlo standard errors (MCSE) are extremely low at 0.000 with an implication of adequate precision in the BVAR model estimation. The results disclose that a 1 percent devaluation shock compressed fiscal spending by 0.56 percent and a shock to capital inflows stimulated 0.99% growth in fiscal spending. The 95 percent credible interval suggests a considerable size of effects on devaluation and capital flows. Accordingly, managing the exchange rate can be a valuable tool for managing capital shortage in Africa. Rather than increase government spending, governments should concentrate on revenue generation by utilizing an effective exchange rate policy to influence the national pattern of product diversification.

Формування доходів місцевих бюджетів за умов бюджетної децентралізації

The article is aimed at defining the peculiarities of formation of revenues of local budgets of Ukraine under current conditions and providing proposals for further increase of financial capacity of local self-government bodies. The article highlights the methodology for calculating the tax autonomy of local self-government bodies, focuses on the need to strengthen the financial potential of territorial communities. The structure of the revenue side of local budgets of Ukraine during 2013–2022 is studied. It is found that under the conditions of decentralization, the highest share in the structure of local budget revenues belongs to tax revenues, their share has increased from 33.36% in 2015 to more than 60% in 2020–2022. In connection with the reform of the model of the State financial support for the healthcare sector, the medical subvention, which was credited to local budget revenues, was repealed. The implementation of this affected the reduction of the fiscal importance of inter-budgetary transfers – their share in local budget revenues decreased by more than 10 percentage points. Personal income tax revenues are characterized by the largest fiscal effect among tax revenues. The full-scale military invasion in Ukraine in 2022 led to a significant increase in the number of military personnel, which, together with an increase in the level of their monetary support, affected a significant increase in personal income tax revenues. Local taxes and fees are a certain indicator of fiscal autonomy of local self-government bodies, and given the above, it is important to realize their fiscal potential. The average value of the share of local taxes and fees in local budget revenues of Ukraine during 2013–2022 comes to 22.70%, and there is a tendency to increase the values of this indicator. The article substantiates proposals to increase the fiscal significance of property tax. In particular, this concerns the filling of the State register of real rights to real estate and the State land cadaster; timely and regular normative monetary valuation of land; transfer of certain functional powers regarding the administration of property tax (formation and sending of tax notices on tax payments; introduction of payment accounting) to local self-government bodies; improvement of institutional mechanisms of interaction between local institutions and tax authorities.