Ismael Sanz

THE TIMING AND PERSISTENCE OF FISCAL POLICY IMPACTS ON GROWTH: EVIDENCE FROM OECD COUNTRIES*

The literatures testing for aggregate short-run or long‐run growth impacts of fiscal policy use quite different methodologies. The former generally focuses on temporary fiscal ‘shocks’; the latter typically have no short‐run dynamics or assume homogeneity. We use regression methods that treat heterogeneous short‐run dynamics explicitly within a long‐run model. Results suggest that previously estimated ‘long‐run’ growth effects of fiscal policy are typically achieved quickly, consistent with results from short‐run models. In principle these short‐run effects ‘persist’; in practice regular fiscal policy changes in OECD countries mean that persistent increases or decreases in growth rates are rare.

Real Convergence and European Integration: The Experience of the Less Developed EU Members

This study aims at providing an assessment about real convergence across countriesand regions in the EU, focusing more specifically on the four cohesion EU members.The results show that in the course of the last few years a process of convergence hastaken place between the per capita income levels of the EU regions and also, to a largerextent, of the Member States. Nevertheless, advances in real convergence are largelydetermined by the growth strategy implemented by the countries themselves. Lastly,our study suggests that the Communitys regional policy has played a significant rolein favor of real convergence between the Member States of the EU. One importantlesson to be drawn is that the accession is likely to contribute significantly to improvingthe possibilities of the current Central and East European countries (CEECs) candidatesin aligning their per capita income levels with those of the EU members.

The growth effects of tax rates in the OECD: The growth effects of tax rates in the OECD

This paper explores the merits of macro and microbased tax rate measures within an open economy fiscal policy and growth model. Using annual data for 15 OECD countries we find statistically small, nonrobust longrun growth effects of macrobased average tax rates on capital income and consumption, but some evidence for average labour income tax effects. Changes in micro marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.

Does the composition of government expenditure matter for long-run GDP levels?

We examine the long-run GDP impacts of changes in total government expenditure and in the shares of different spending categories for a sample of OECD countries since the 1970s, taking account of methods of financing expenditure changes and possible endogenous relationships. We provide more systematic empirical evidence than available hitherto for OECD countries. Our results provide strong evidence that reallocating total spending towards infrastructure and education would be positive for long-run income levels. Increasing the share of social welfare spending (and away from all others pro-rata) may be associated with, at most, modestly lower long-run GDP levels.

Skill and support to globalization in the EU

Are individuals’ attitudes towards globalization consistent with the predictions of the Heckscher–Ohlin (HO) theory? Using newly available data from the Flash Eurobarometer 151b of the European Commission, we find that globalization preferences are significantly and robustly correlated with an individuals relative level of human capital, consistent with the HO theory. The impact of skill on globalization preferences is positive in skill-abundant EU countries and strongly negative in EU countries that are well-endowed with low-skill labour. This study is the first to find a robust and significant negative association between skill and support to globalization in low-skill-abundant countries.

Corporate Taxation and Productivity Catch-Up: Evidence from European Firms

Firms that lie far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to underinvest in their productivity. In this paper we explore how far higher rates of corporate taxation affect firm productivity convergence by reducing the after tax returns to productivity enhancing investments for small firms. Using data for 11 European countries we find evidence for such an effect; productivity growth in small firms is slower the higher are corporate tax rates. Our results are robust to the use of instrumental variable and panel data techniques with quantitatively similar effects found from a natural experiment following the German tax reforms in 2001.

An analysis of country medal shares in individual sports at the Olympics

ABSTRACT Research question: Several studies report modelling relating countries’ medal shares at the Olympics to population and per capita income (host status and political system are typically included as controls). This paper uses a similar model but disaggregates to the level of the individual sport to ask questions such as whether some sports have a less steep relationship with income levels than others and whether hosting effects are more pronounced in some sports than others. Research methods: Employing a random effects tobit model, data on medal shares are modelled across 15 sports at six editions of the Games (1992–2012). Marginal effects, calculated for the case of cycling, illustrate how far many poor countries are from reasonable expectation of achieving medals. Results and findings: Income is influential on outcomes in all sports, its effects most pronounced in sports with substantial requirements for specific capital equipment; the distribution of medals is less unequal in sports practised in multi-sports venues. Gains from hosting vary in magnitude, performance tending to be elevated most in sports with outcomes strongly influenced by judges. Implications: For poorer countries, the paper identifies a small group of sports on which it would be most realistic to focus resources. For Games organisers, who must decide which sports to include, it provides information relevant to the goal of spreading success more evenly across countries. For example, proposals to exclude wrestling are shown to have been potentially harmful to medal prospects of poorer countries.

An Estimation of the Advantage of Charter over Public Schools

This paper presents new evidence on the differences in quality and achievement of public, private, and charter schools by using the educational outcomes for the more than 1,200 schools of the Madrid region over the period 2005–2009. By applying an external test including three different areas, mathematics, writing, and language, the evolution of the achievement of the pupils in the three different types of schools, public, charter, and private, are analyzed. Our results show that charter and, especially, private schools attain better results than public schools and are more responsive to its academic evolution, both at a lower cost. Private schools do their best to converge to the leading schools in their district in the previous year, whereas public schools do not seem to do so. This result holds even after controlling for the number of immigrants in the school, the age of the school, and its size. Also, the results seem quite robust, since we tested the relevance of different variables such as immigration, socioeconomic status, and foreign students and we obtained results that support our main hypothesis.

Has European Integration Approximated the Composition of Government Expenditures

Globalization and growth-maximizing governments may cause countries to converge towards a similar composition of government expenditures. These convergent forces may be even more intensive in the case of EU Member States engaged in the European integration process. The results obtained, through calculation of a constructed dissimilarity index and by adapting the usual indicators of convergence (b, s and g-convergence), reveal that there has been an harmonization process. In addition, this approach of structures of government expenditures has been greater in the EU than in the Non-EU countries of the OECD. Nevertheless, EU member states are converging towards a different steady state composition of government expenditures.