Fiscal Model Research Articles

FISCAL POLICY CHANGES: OPPORTUNITIES AND RISKS FOR REGIONAL DEVELOPMENT

Purpose. Evaluation of recent fiscal initiatives in the context of ensuring a reasonable balance between the volume and sources of tax revenues, the distribution of such resources, and the maintenance of a necessary level of business activity in times of war or post-war recovery. The study also involves an analysis of the state and availability of alternative funding instruments for budgetary expenditures and an assessment of the impact of fiscal initiatives on taxpayers. Methodology of research. The setting goal was achieved through the use of such methods analysis of scientific literature, normative documents to study the situation with the payment and administration of taxes; comparison of revenues to the budgets by components and dynamics, sources of financing budget deficits; systematization and generalization of the literature on the possibility and risks of using certain proposed fiscal instruments. The study is based on the analysis of data from various sources, including budget indicators (income and expenditures by components, sources of financing the budget deficit), fiscal statistics (tax rates, number of taxpayers by types of taxes, tax debt), socio-economic indicators (demography, level destruction caused by military actions) and the legal framework. Findings. The article assesses the vulnerability of local budgets in the context of their own revenue sources during wartime conditions and the expected changes in fiscal policy have done. Key fiscal initiatives since the onset of the widespread Russian invasion are analysed, identifying limitations with the greatest impact on the formation of the resource base of local budgets. The study also explores opportunities for financing regional development projects through budgetary funds and analyses the existing fiscal model. Originality. The article introduces a new approach to examining the relationship between fiscal policy and regional development, taking into account contemporary trends and economic conditions. It elucidates the connection between fiscal initiatives and factors influencing economic development during conflict or recovery. Practical value. The proposed research results enable the evaluation of key risks and the adaptation of interaction models between fiscal entities to the challenges of the present and future. Also, and the relationship between fiscal initiatives and factors that determine economic development in conflict or recovery conditions is also explained. The research can be used by scientists to build models of minimizing losses for budgets and preventing losses of the local economy when forming fiscal policy in terms of the tax base, tax rates and powers. Key words: fiscal policy, taxes, government budget, local budgets, regional development, tax revenues, taxpayers.

EE659 Estimating the Economic Consequences of Migraine in Sweden: A Fiscal Model Using the Government Perspective of Costs

EE659 Estimating the Economic Consequences of Migraine in Sweden: A Fiscal Model Using the Government Perspective of Costs

Арабские завоевания. Взгляд из Египта

The reasons for the success of the Arab conquests present a complex problem. It is difficult to explain the victories of the Arab-Muslim troops, which had much less military-demographic potential than neighboring Eastern Roman Empire (Byzantium) and Sasanian Empire. The article is devoted to identifying the main causes of Egypt’s loss by Byzantium and its capture by the Arabs. Methods. The main research method was factor analysis, which allows to find out all the possible reasons for the success of the Arabs and the defeat of the Byzantines, to identify their internal relationship and hierarchy, classifying them into basic and situational ones. Analysis. The study analyzed the influence of the religious factor (Islam for the Arabs, the Christological schism for Egypt), the military potential of the Arabs and the Byzantines (the expected number of troops, the strategy and tactics of the warring parties, the motivation of the armies, etc.), the degree of the consolidation of the elites, public sentiment. Special attention was paid to the route of the Arabs, the role of Patriarch Cyrus (Mukaukus), two attempts to reconquist Egypt by the Byzantines, the system of administration and taxation of the Arabs on the conquered territory. Results. The main factor in the defeat of the Byzantines in Egypt can be considered the weak integration of this region into the Empire, as indicated by the unresolved religious issue (Chalcedonian schism), insufficient military contingent, weak social support for the central government, etc. The main reason for the success of the Arabs in conquering and keeping Egypt under their rule can be considered a “symbiosis” of two factors: 1) early Islam, which contributed to the consolidation of society and the elites, gave meaning for the motivation of the army, contributed to the establishment of the dhimma system, which provided Christian communities with autonomy in religious matters, and 2) the genesis of the Arab state, which passed at the same time and created real conditions for borrowing managerial and fiscal models, “natural” for the conquered territories.

Regional Growth, Debt Thresholds and Subnational Sustainability

Aim: To examine the nexus between subnational debt sustainability and regional economic growth. Method: The study employs dynamic panels by Arellano-Bond and the kink model to estimate debt thresholds by Seo and Shin. Results: The study finds a positive association between subnational debt and regional GDP growth, which differs by type of debt. The fiscal intergovernmental architecture of federal system in Mexico results in lower debt thresholds compared to national thresholds. Recommendations: Fiscal, regulatory and normative rules on bank debt should aim to provide the right incentives to encourage regional growth. Limitations: Results from a small sample are a first approximation to the regional debt-growth nexus in Mexico. The lack of updated and consistent data for longer horizons on subnational public finance limits the generalization of the findings. Originality: The study helps to understand the effect of increasing debt on regional GDP growth in centralized fiscal systems and the differential effect by type of financing. Conclusions: Highly centrally regulated fiscal models with limited revenue autonomy could engender soft budget problems and create financial management inefficiencies.

Synergy of state support and novel approaches to implementing the diversification strategy by defense industry companies

The study’s aim is to identify the features of interaction between state structures and companies of the military-industrial complex (DIC) in the course of diversification. Many scientific papers devoted to various aspects of this process show the need for its comprehensive study. Russian publications comment on certain aspects of these interactions. However, the approaches and initiatives of the dominant corporations of the military-industrial complex to carry out diversification, being supported by the state, have not yet fallen on the radar of analysis. The author focuses on solving the problem of removing institutional barriers that hinder the scale and direction of diversification. Also, the study updates new solutions for an active policy of stimulating and expanding the production of civilian products. The author identifies the specifics and advantages of unconventional methods in defense companies. The methodological basis of the work is an institutional approach using a structural and logical analysis. The author highlighted the research methods for using of systematization, grouping, comparative analysis. The paper reflects the results of monitoring relevant approaches to implementing the diversification strategy in state defense corporations. The research showed that it has to increase the share of civilian production for the successful implementation of plans as well as to change the fiscal model for the development of the defense industry to an investment-motivational one. The findings and results obtained indicated scientific novelty and may interest in leading defense companies in order to adjust their strategies, as well as to state agencies in the formation of state policy in defense industry diversification.

Inclusive Growth and Climate Change Mitigation Programs and Policies in the ASEAN: Fiscal Implications

Abstract Addressing urgent global climate change and inequality issues has been a major challenge for the ten AMS (ASEAN Member countries) given the diversity and local agendas with divergent political, economic, and social objectives. While regional policy frameworks prioritise harmonisation and inter-regional integration outcomes over national inequality and climate change policy goals, governments typically address the latter through discretionary policy add-ons that lead to policy fragmentation and competing fiscal goals that interfere with intermediate development plans. To achieve the aspired inequality outcomes (Regional Framework and Action Plan, ASEAN Declaration, 2013) and the ratified global climate targets (Paris Treaty 2015) simultaneously, such policy outcomes and commitments to collaborative policy action will need to be aligned within an integrated policy framework at the regional or global level, and externalities of economic activity internalised into a sustainable and inclusive fiscal model. Focusing on policy design, integration and evaluation aspects, this paper tests the hypothesis that, given the urgency of these issues, the ASEAN governments devised corrective and preventive measures to systematically mitigate these externalities through intervention at the policy level and multilateral coordination at the regional and global levels to achieve pro-green and pro-equity policy outcomes with a net social surplus. Adopting a qualitative methodology, this study conducts a structured literature search and subsequent document analysis, using advanced text mining techniques to extract, contextualise and map policy-relevant themes by geopolitical scope, policy intent and outcomes. Literature evidence confirmed that the ASEAN Member States have recognised and acknowledged the urgency of climate change and inequality challenges, and that these governments intervene at the local policy level and also engage in multilateral discussions, which lack formal commitment and transparency. This study could not produce literature evidence of a systematic approach by these governments internalising mitigation mechanisms into the fiscal policy frameworks to achieve the aspired inclusive and sustainable outcomes - by design, rather than discretionary policy add-ons - and thus, the hypothesis was rejected. Keywords: Sustainable fiscal policy, inclusive growth, climate change mitigation, policy integration, multilateral intervention, document analysis.

An analytics-based decision support system for evaluating the fiscal health of academic programs

Academia’s business model is significantly different than most other businesses. The underlying fiscal unit is the academic program. The fiscal model is complex when balancing full-time students attending with flat-rate tuition or per credit and faculty members who may teach in multiple programs and may have other administrative or scholarship duties. This study presents an analytics-based Decision Support System (DSS) for academic programming and fiscal health. The proposed model computes, without averaging, the operating/direct contribution margin of academic programs. The model uses descriptive analytics to provide information for predictive analytics—such as developing business cases for the new program(s), diagnostic analytics for sensitivity analysis—such as a “what if” analysis of program data and/or a faculty hiring rubric, and prescriptive analytics—such as interactive forecasting for choosing the best alternative courses of action. The model takes the guesswork out and allows academic officers to convert data into knowledge and insight for effective decision-making and academic programming.

A Framework for the Assessment of Fiscal Consequences of Global Trade Wars

The article is devoted to topical issues of assessing the consequences of trade wars for the fiscal space of third countries. The main preconditions and causes of the trade conflict between the United States and China were studied. The main models for assessing the consequences of global trade wars were analyzed. Particular attention is paid to the global integrated monetary, fiscal and global trade models, which are based on the principles of general economic equilibrium and are widely used to assess the economic consequences of global challenges, including trade wars. It was found that the global integrated monetary and fiscal model, other macroeconomic models were aimed at determining the economic consequences and effects and cannot be directly used to assess fiscal risks and likely budget losses due to global trade wars. The aim of the article is to deepen the principles of assessing the fiscal consequences of trade wars in the conditions of uncertainty in foreign economic policy and directions of restructuring of the world value chains. The economic consequences of the conflict and the channels of their spread to third countries were identified taking into account the deepening globalization processes. The direct and indirect dependence of exports and imports, GDP, investments, factor productivity level and tax revenues on changes in foreign trade, tariff increases, increasing uncertainty in world trade in the short, medium and long term is highlighted. The estimates obtained by different models are summarized. The fiscal consequences of the trade conflict between the United States and China for Ukraine as a country with a small, open and predominantly commodity economy were quantified. The inclusion in fiscal risks of probable losses of foreign trade from global trade wars, arising due to various reasons, which may decrease the tax revenues or increase the expenditures on the public support of enterprises, is justified. Changes in the methodology for assessment of fiscal risks are proposed, enabling to estimate the cost impact of fiscal risks on the public budget of Ukraine. Proposals for improvements in the statistical monitoring of business activity of enterprises, to form an appropriate information base for monitoring foreign economic activities, assessing fiscal risks and making decisions to ensure the sustainability of public finance and public support for enterprises in the conditions of global trade wars, are substantiated.

Discrete Fourier Transform (DFT)-Based Computational Intelligence Model for Urban Carbon Emission and Economic Growth

Economic development leads to the widespread use of energy, which results in carbon emissions. In order to determine the correlation between different urban carbon emissions and fiscal growth, a coupling and coordination model of urban carbon emissions and economic growth based on discrete Fourier transform (DFT) is constructed. According to the coupling and coordinated development characteristics of economic growth and carbon emissions, the evaluation index system of the regional economy and carbon emissions is constructed. This paper examines the proportion of primary energy consumption and the influencing factors of carbon emission in a city and constructs the economic growth computational intelligence model and urban carbon emission model. The coupling degree among economic growth, carbon emission, and energy consumption is studied; the coupling standard between economic growth and energy consumption carbon emission is determined; and the carbon emission factor under the method of DFT is introduced. The coupling coordination model between economic growth and carbon emission is constructed, and the interaction mechanism between carbon emission, economic development, and environmental protection is determined. The experimental findings demonstrate that when energy consumption intensity and carbon emission are relatively low, the model’s change in the trend of coupling coordination index is comparable with the real/actual condition and the model is more reliable.

Periodic, Quasi-Periodic and Phase-Locked Oscillations and Stability in the Fiscal Dynamical Model with Tax Collection and Decision-Making Delays

In this paper, we consider the complex dynamics of a fiscal dynamical model, which was improved from Wolfstetter classical growth cycle model by Sportelli et al. The main work of the present paper is to study the impact of fiscal policy delays on the national income adjustment processes using a dynamical method, such as double Hopf bifurcation analysis. We first use DDE-BIFTOOL to find the double Hopf bifurcation points of the system, and draw the bifurcation diagrams with two bifurcation parameters, i.e. the tax collection delay [Formula: see text] and the public expenditure decision-making delay [Formula: see text]. Then we employ the method of multiple scales to obtain two amplitude equations. By analyzing these amplitude equations, we derive the classification and unfolding of these double Hopf bifurcation points. And three types of double Hopf bifurcations are found. Finally, we verify the results by numerical simulations. We find complex dynamic behaviors of the system via the analytical method, such as stable equilibrium, stable periodic, quasi-periodic and phase-locked solutions in respective regions. The dynamical phenomena can help policy makers to choose a proper range of the delays so that they could effectively formulate fiscal policies to stabilize the economy.

Formation of Long-Term Fiscal Sustainability of Kazakhstan Using the Rule Structural Budget Balance

The purpose of the study is to substantiate the potential of using the results of modeling potential GDP and estimating the output gap to comply with fiscal rules that are adequate for the corresponding economic cycle of the economy of Kazakhstan. The methods of economic, statistical, graphical, system, functional analysis, economic and mathematical modeling are applied. To achieve this goal, the analysis of Kazakhstan’s fiscal stability was carried out based on the assessment of Kazakhstan’s potential GDP and the calculation of output gaps, which were carried out based on the dynamic series method of the reported real GDP in 2005 prices for 1991-2019 using the Hodrick-Prescott filter (CP) using the EViews 10 econometric package. The current mechanism for using the output gap indicator in Kazakhstan’s fiscal policy does not have sufficient flexibility. For a timely response of the budget system to changes in the economic situation in the country or abroad, considering the output gap, it is important to introduce an automatic adjustment system that can eliminate contradictions and inconsistencies when making macroeconomic policy decisions by the main regulator and the government of the country. To do this, there is a need to revise the existing fiscal policy based on building a system of new budget rules on countercyclical principles. The proposed alternative fiscal model with the introduction of the rule on the structural balance of the budget is aimed at ensuring long-term fiscal stability, which does not allow for a pro-cyclical policy.

Potential GDP Modeling and Output Gap Estimation as a Basis for Countercyclical Fiscal Policy in Kazakhstan.

This paper identifies key risks of the public sector in Kazakhstan. Methods for modeling potential output and output gap in international research practice and their application in countercyclical fiscal policy are considered. The potential output of Kazakhstan is retrospectively analyzed using the Hodrick–Prescott (HP) filter. Periods of the procyclical budgetary policy are identified. It is proposed to introduce a fiscal model of the structural budget balance, to target a zero output gap in the short term, and to increase the potential output through structural reforms.

Policy asymmetries and fiscal sustainability: evidence from Nigeria

PurposeThis study examines and compares different specifications of the fiscal policy rule in the fiscal sustainability analysis of Nigeria.Design/methodology/approachThis is methodologically achieved by estimating the baseline constant-parameter and Markov regime switching fiscal models. The asymmetric autoregressive distributed lag fiscal model is also employed to substantiate the differential responses of fiscal authorities to public debt.FindingsThe baseline constant-parameter fiscal model provides mixed results of sustainable and unsustainable fiscal policy. The inconclusiveness is adduced to instability in primary fiscal balance–public debt dynamics. This makes it necessary to capture regime switches in the fiscal policy rule. The Markov switching estimations show a protracted fiscal unsustainable regime that is inconsistent with the intertemporal budget constraint (IBC). The no-Ponzi game and debt stabilizing results of the Markov switching fiscal model further revealed that the transversality and debt stability conditions were not satisfied. Additional findings from the asymmetric autoregressive model estimation show that fiscal consolidation responses vary with contraction and expansion in output and spending, coupled with downturns and upturns in public debt dynamics in both the long and short run. These findings thus confirm the presence of asymmetries in the fiscal policy authorities' reactions to public debt. Further, additional evidences show the violation of the IBC which is exacerbated by the deleterious effect of the pro-cyclical fiscal policy response in boom on the improvement of the primary fiscal balance.Originality/valueThis study deviates from the extant literature by accommodating time variation, periodic switches and fiscal policy asymmetries in the fiscal sustainability analysis of Nigeria.

ROLE OF OIL PRICE IN FISCAL CYCLICALITY IN SAUDI ARABIA

Testing cyclicality of fiscal policy is pertinent in any country to observe its type of cyclicality with the business cycle. In the oil abundant economy, oil price and trade openness may also play a role in determining the fiscal policy cyclicality. This research probes the role of economic growth, trade openness, and oil price on government consumption growth to verify the type of cyclicality in Saudi Arabia from 1971 to 2018. The cointegration test of Pesaran (2001) is utilized to test the cyclicality hypothesis with augmented critical bound statistics developed by Kripfganz and Schneider (2019). We corroborate the long and short-run relationships in the fiscal model of Saudi Arabia. Further, procyclicality is proved in the long run and countercyclicality is corroborated in the short run with a one-year lag effect. Moreover, government revenue has a positive effect on expenditure. However, oil prices and trade openness could not affect government spending. Keywords: Fiscal Cyclicality, oil price, trade openness, government consumption, economic growthJEL Classifications: E62, Q41, P33, O43 DOI: https://doi.org/10.32479/ijeep.10700

Public finance in postulates of economic schools: genesis of theories

The article aims to study the genesis of public finance theories in the context of social development due to the need to determine the role of the state in providing social services and the efficiency and quality of public goods. The need for research is generated by two aspects: the dependence of the state and vector of public finance development on the historical and political conditions of state development; the need to develop tools, institutions, and procedures in the context of expanding state participation in the provision of social services to the population. Theoretical aspects of determining public and private goods and their place in the theory of public finance are substantiated. The public and private goods are compared and their essential characteristics are revealed. The key features of public goods (non-competitiveness, non-exclusion, indivisibility) are highlighted. The article addresses the peculiarities of scientific approaches to the issue of financing the manufacture and providing public goods to representatives of various scientific schools and trends (classical political economy, fiscal exchange models, theory of economic sociodynamics, libertarian theory, institutional economic theory, new classical macroeconomics, etc). The experience of developed countries in the historical context clearly indicates that despite the diversity and differences of national economic models focusing on different schools of economic theory, there is a constant gradual strengthening of the role of the state in social development. Emphasis is placed on changing the role of the state in modern conditions of forming new priorities and implementing the Sustainable Development Goals that ensure the development of human capital and provide the population with quality public goods. The article substantiates that in modern conditions, the issues of social services efficiency as a guarantee of human capital development, their maximum proximity to consumers, the role of the state and public administration system in the social sphere, and balancing the public finance system in ensuring social and economic progress are increasingly relevant.

The issue of sustainability in a highly centrally regulated fiscal model of local governments: an empirical study

Purpose This study aims to assess the sustainability of local governments in a highly centrally regulated fiscal model. Design/methodology/approach This paper uses a novel approach, a broad data set of almost 3,200 local governments and network methods. This paper analyses financial data from annual reports and other socio-economic sources using cluster analysis. Findings Even in this model, local governments show significant differences in terms of long-term sustainability. Investments do not compensate for the depreciation of tangible assets at a significant part of local governments. A specific type of soft budget constraint can be noticed. Heads of local governments do not “play” for subsequent ad hoc bailouts by the central government, but rather engage themselves in political competition for development subsidies. A further finding of this study is that shrinking populations itself does not explain the differences in local governments’ financial management. Research limitations/implications Further directions of research include the application of an extended approach to sustainability that gives an account of the availability and quality of local services, as well as aims to identify the qualitative social characteristics (success criteria) of the local government financial management. Practical implications The findings can be useful for policymakers, state audit offices, auditors, voters, users of public services and other stakeholders. Social implications The paper argues in favour of moving away from the financial balance in its narrow sense to a long-term and broader term of financial sustainability. Originality/value The findings provide new empirical evidence about the accounting-based measurement of financial sustainability in local governments.

Estimating the government public economic benefits attributed to investing in assisted reproductive technology: a South African case study.

Limited resources and high treatment costs are arguments often used in many public health systems in low- and middle-income countries to justify providing limited treatments for people with infertility. In this analysis, we apply a government public economic perspective to evaluate public subsidy for in-vitro fertilization (IVF) in South Africa. A fiscal model was developed that considered lifetime direct and indirect taxes paid and government transfers received by a child conceived by IVF. The model was constructed from public data sources and was adjusted for mortality, age-specific educational costs, participation in the informal economy, proportions of persons receiving social grants, and health costs. Based on current proportions of individuals receiving social grants and average payments, including education and health costs, we estimate each citizen will receive ZAR513,165 (USD35,587) in transfers over their lifetime. Based on inflated age-specific earnings, we estimate lifetime direct and indirect taxes paid per citizen of ZAR452,869 (USD31,405) and ZAR494,521 (USD34,294), respectively, which also includes adjustments for the proportions of persons participating in the informal economy. The lifetime net tax after deducting transfers was estimated to be ZAR434,225 (USD31,112) per person. Based on the average IVF investment cost needed to achieve one live birth, the fiscal return on investment (ROI) for the South African Government is 5.64. Varying the discount rate from 4% to 7%, the ROI ranged from 9.54 to 1.53, respectively. Positive economic benefits can emanate from public financing of IVF. The fiscal analytic framework described here can be a useful approach for health services to evaluate future public economic benefits.

Estimating the Fiscal Consequences of National Immunization Programs Using a "Government Perspective" Public Economic Framework.

Infectious diseases can impose considerable mortality and morbidity for children and adult populations resulting in both short- and long-term fiscal costs for government. Traditionally, healthcare costs are the dominant consideration in economic evaluations of vaccines, which likely ignores many costs that fall on governments in relation to vaccine-preventable conditions. In recent years, fiscal health modeling has been proposed as a complementary approach to cost-effectiveness analysis for considering the broader consequences for governments attributed to vaccines. Fiscal modeling evaluates public health investments attributed to treatments or preventive interventions in the case of vaccination, and how these investments influence government public accounts. This involves translating morbidity and mortality outcomes that can lead to disability, associated costs, early retirement due to poor health, and death, which can result in lost tax revenue for government attributed to reduced lifetime productivity. To assess fiscal consequences of public health programs, discounted cash flow analysis can be used to translate how changes in morbidity and mortality influence transfer payments and changes in lifetime taxes paid based on initial health program investments. The aim of this review is to describe the fiscal health modeling framework in the context of vaccines and demonstrate key features of this approach and the role that public economic assessment of vaccines can make in understanding the broader economic consequences of investing in vaccination programs. In this review, we describe the theoretical foundations for fiscal modeling, the aims of fiscal model, the analytical outputs, and discuss the relevance of this framework for evaluating the economics of vaccines.

Demographic Transition and Pension Reforms

The Global Integrated Monetary and Fiscal model (GIMF) is a multi-region, forward-looking, DSGE model developed at the International Monetary Fund for policy analysis and international economic research. This paper documents the incorporation of demographic features into the model. The analysis presented illustrates how these new features enable the model to estimate some of the macroeconomic consequences of changing demographics.

How does China's land finance affect its carbon emissions?

In the past two decades, land finance, a phenomenon of the financing arrangement based on land development, has gradually become a fiscal model that profoundly affects China's economic development. Based on the theory of fiscal decentralization and environmental federalism, this study employs a specially designed two-stage regression method to capture both direct and indirect (through economic development and industrial structure) influences of land finance on carbon emissions. Using the provincial panel data for the period of 1998–2016, the empirical results indicate that the direct influences are dominant, and the total impact of land finance on carbon emissions is non-linear and is dependent on the level of Gross Domestic Product (GDP) per capita. After 2003, the total effect is that carbon emissions increase continuously along with the economic development. To balance economic development and environmental protection and to enhance sustainable development, the traditional style of land finance should be changed as soon as possible.