Katarzyna Kopczewska

Efficiency of Regional Public Investment: An NPV-Based Spatial Econometric Approach

Abstract This paper develops a new methodology of spatial econometric modelling for regional public investment in local economies. The approach, based on the financial concept of net present value of cash flows, can be applied in the analysis of regional public investment with long-term financial inputs and outputs. With local public revenues related to spending in the model, one can observe economies of scale of investment with possible saturation effects and a marginal investment multiplier, explaining the extent to which public investment costs translate into public revenues. The main advantage of the proposed model is to behave counter-cyclically due to accumulation over the periods and to cover multi-period investments as well as postponed effects. This paper gives an example of public investment efficiency in Polish NUTS-5 municipalities regions.

The price for subway access: spatial econometric modelling of office rental rates in London

ABSTRACT The relative location of commercial properties as the distance to the metro station as well as its absolute location as the address in the Central Business District (CBD) is expected to influence its valuation. We apply the advanced spatial econometric methodology, based on micro geo-located data, to the office rental transaction data from London in 2015. We use different spatial information on the local and global neighbourhood in order to estimate the spatial hedonic valuation model and test the strength of spatial spillovers and location effects on office fees. For offices in London in 2015, geographical factors may raise the price by 50%, as every next 100 m to the metro cost an additional 0.7 ₤ per ft2 per year and the CBD location raises the cost for ca. 20 ₤ per ft2 per year.

Toolkit – Empirical Analysis of Cluster- and Distance-Based Data. Comparison of Efficiency

This chapter uses the real case data to compare efficiency of different measures of concentration, agglomeration and specialisation. It reviews both cluster-based and distance-based measures. Statistical analysis of measures values shows their inter-relations. One can find out that underlying benchmark distribution of the measures pre-determines the results, which appear to be group convergent. This chapter shows how to use indicators and interpret them in looking for specialisation, on the basis of Polish case dataset.

Distance-Based Measurement of Agglomeration, Concentration and Specialisation

This chapter reviews in encyclopaedic way the existing cluster-based measures, popularly called concentration and specialisation indices, calculating them on the same data table. Using simple example it gives the way of its calculation and interpretation. Chapter compares the measures in terms of their construction, ways of calculation and results obtained. Last part of the chapter compares the results and proves that even though there are plenty of indices, in fact one can use representative indicators for given groups, as the other measures converge.

Spillover Effects of Taxes on Government Debt: Spatial Panel Approach

It is claimed that tax policy is neither time- nor space-independent due to cross-border tax base mobility that induces spillovers. In other words, fiscal shocks in one country are supposed to have impact on fiscal policies in other countries. This paper verifies this question in two ways. Firstly, a theoretical model is introduced to analyze effects of tax rates adjustment on government debt. Secondly, an empirical spatial econometric study is performed to evaluate impact of capital, labour and consumption taxes on public debt in 34 European countries in 2002-2011. We found strong spatial spillovers. Our results show the consumption tax rate and, to a lesser degree, the capital tax rate significantly affect the sovereign debt, and that the global relations play a leading role (i.e. dominate the local ones) in shaping fiscal policy.

Optimal Fiscal Policy in an Open Economy with Capital Income Shifting and Consumer Cross-Border Purchases

The paper presents a fiscal policy model integrating tax avoidance, the complexity of tax systems and the fiscal solvency hypothesis within the traditional framework of tax competition. Furthermore, we take into account: taxation of consumption, possibility of capital income shifting and foreign goods purchases (untaxed in the destination country). We conclude that if fiscal policy is by no means unfettered the equilibrium can be allocation efficient, provided that the marginal rate of substitution between private and public goods is one. The changes in public debt affect tax rates in equilibrium differently: positively for the consumption tax rate and negatively for the labor tax rate. The change of the capital tax depends on the level of economic internalization. This approach is especially useful during a solvency crisis and can be applied to predict tax rates’ adjustment when the bonds issuance decreases or public debt accelerates.

Dynamic Model of Fiscal Solvency: Comparative Dynamic Analysis

Tax revenues and the issuance of debt are interdependent because governments are afraid of becoming insolvent. Therefore the long-term tax policy involving: adjustment of capital taxation, taxation of explicit consumption and the issuance of bonds ensures solvency and hampers capital tax competition. Applying long-term dynamic model of capital and consumption taxation, the revenue maximizing government can obtain the equilibrium with reasonable tax rates. The equilibrium solution fulfills simple solvency constraint imposed on bonds issuance and takes into account the possibility of capital income shifting and the limited taxation of consumption. The two tax rates, the levels of capital and consumption are driven by: capital income shifting parameter, explicit consumption and the intertemporal preferences. The interdependences in equilibrium between variables and selected parameters are provided with numerical simulation, as well as the behavior of variables in time after the changes of equilibrium parameters. The solution predicts positive level of bonds in long-term equilibrium and taxation rates positively dependent on the abundance of tax bases. The latter are strongly affected by the value of income shifting parameter and explicit consumption parameter.