Theodore A. Georgakopoulos

Harmonisation of commodity taxes : The restricted origin principle -- comment

Abstract This note shows that, within a model where tariffs have distorted the pre-tax situation, as in the one used by Berglas (1981), application of the restricted origin principle causes resource misallocation even when trade deflection takes place. This conclusion is different from the one derived from models where the pre-tax situation is Pareto optimal [e.g. Shibata (1967)], where trade deflection guarantees optimal allocation.

A short-run assessment of the effects of VAT on consumption patterns: the Greek experience

The short-run effects of value-added tax (VAT) on individual commodity prices, the consumer price index, and the allocation patterns of total consumption expenditures among groups of commodities in Greece are evaluated. The methodological approach used is based on the static almost ideal demand system (AIDS), which was estimated and tested for thirteen commodity groups using time-series data (1958–86). The FIML approach was used for the estimation of the AIDS. The model was simulated for the post-VAT period. The principal results indicate that VAT has changed the structure of prices and demand, altered the pre-VAT allocation of total consumption expenditures among the groups of goods and services and raised the overall consumer price index.

Trade deflection, trade distortions, and Pareto inefficiencies under the restricted origin principle

Abstract This paper shows that trade deflection is not the administrative aspect of the restricted origin principle, as suggested in the literature, but an important analytical issue that bears on resource allocation. When deflection is taken into account, trade distortions are avoided only when either domestic or, at least, border tax adjustment rates are equal in the member countries and trade balances are in bilateral equilibrium. The control of deflection via rules of destination causes trade distortions and sometimes Pareto inefficiencies. The paper further shows that when the VAT is calculated according to the credit method and trade is conducted by registered traders, trade distortions are prevented when tax rates are set in inverse relation to bilateral trade balances.

Tax rebating of exports and the balance of payments

Abstract Tax rebating has recently been given heavy emphasis as a means of improving a countrys balance of payments and recommendations have been made for the substitution of taxes that are fully rebated on exports for taxes that are only partly rebated or are not rebated at all. This paper gives the conditions under which tax rebating would improve a countrys balance of payments. It shows that whether tax rebating of exports improves the balance of payments or not depends upon the size of the price elasticity and of the import component of exports. It then shows that, with the available evidence concerning the size of the price elasticities and of the import components in a number of European countries, export rebating may harm rather than improve their balances of payments.

Economic Integration and Public Policy in the European Union

This collection of essays is a state-of-the-art analysis of key issues confronting the European Union. Identifying European economic integration as one of the defining features of modern international economics, the authors examine many aspects and consequences of this integration which remain as yet obscure and unexplored.

Aspects of the Public Sector in Greece: Postwar Developments and Future Prospects

Is the public sector large or small? Is it excessively or inefficiently large or is its size in line with allocative efficiency considerations? Should we go on nationalising more economic activities or start privatising activities and, if so, which ones? Is the public sector producing efficiently, in the sense of avoiding or minimising X inefficiencies? Is it producing the right mixture of goods and services or not? Is the public sector using the correct measure and choice of financial option to finance its activities, (for example, debt finance versus tax finance, or direct taxes versus indirect taxes)? Is the allocation of functions to each layer of government satisfactory or not? These are some of the questions that frequently crop up when talking about the public sector which will be addressed in this paper. Following a brief discussion of postwar developments, the present situation will be appraised, and future prospects outlined, and I will suggest where we must go in view of 1992 and 2000.

Trade Creation and Trade Diversion in Tax Unions and Customs Unions

The production effects of tax unions have recently been discussed and compared with the production effects of customs unions. The analysis of the production effects of tax unions, however, has been carried out within a complete specialisation model and under assumptions different from the corresponding assumptions employed in the analysis of the production effects of customs unions. As a result, some of the conclusions drawn from tax union analysis are not strictly comparable to those obtained from customs union analysis. This paper examines the production effects of tax unions within a noncomplete specialisation model and under assumptions similar to those employed in the theory of customs unions, and compares the results obtained in the two cases.