Thomas Aronsson

The impact of regional public expenditures on the local decision to spend

This paper studies the hypothesis that local (municipal) expenditures in part can be explained by the expenditures of the regional (county) government. To accomplish this task, we derive and estima ...

Local public expenditure in Sweden a model where the median voter is not necessarily decisive

Abstract This paper deals with local public expenditures, and the analysis is based on cross-section data for the Swedish municipalities. Two models are estimated; one is the basic median voter model where the decisive voter is assumed to be the voter with median income, while the other is a more general statistical alternative. The statistical alternative nests the basic median voter model as a special case, which makes it easy to test the null hypothesis that the basic median voter model is the correct model, given that the alternative is the true general structure. Although our results indicate a rejection of the null hypothesis, the estimation results are, nevertheless, similar for the two models.

National product related welfare measures in the presence of technological change: Externalities and uncertainty

The purpose of this paper is to discuss under what conditions welfare can be measured by observables related to the national product (or Hamiltonian along the optimal trajectory). Under nonattributable technological or environmental change, welfare will depend on time itself, meaning that the Hamiltonian along the optimal trajectory will be a biased measure of welfare. This result will also hold if we make the time dependence of welfare endogenous, by replacing technological change will externalities that are not internalized during optimization. On the other hand, if we take the externalities fully into account, then the Hamiltonian will represent the appropriate measure of welfare. Similar results also hold in the case of uncertainty, where we show that a ‘generalized’ Hamiltonian provides a welfare measure, and that the deterministic measures are special cases of their stochastic counterparts.

Redistribution and provision of public goods in an economic federation

This paper concerns redistribution and provision of public goods in an economic federation with two levels of government: a local government in each locality and a central government for the economic federation as a whole. We assume that each locality is characterized by two ability-types (high and low), and that their distribution differs between localities. The set of policy instruments facing the central government consists of a nonlinear income tax and a lump-sum transfer to each local government, while the local governments use proportional income taxes and the transfers from the central government to finance the provision of local public goods. The purpose is to characterize the tax and expenditure structure in a decentralized setting, where the central and local governments have distinct roles to play, and also compare this tax and expenditure structure with the second best resource allocation. We show how the redistributive role of taxation is combined with a corrective role, since tax base sharing among the central and local governments gives rise to a vertical fiscal external effect. In addition, the central government does not in general implement the second best resource allocation with the instruments at its disposal.

Pollution tax design and `Green' national accounting

Abstract This paper concerns social accounting when pollution gives rise to a consumption externality. The purpose of the paper is to reconcile the willingness to pay technique as a means of collecting information, put forward in earlier studies, with the growth theoretical approach to social accounting. This is accomplished by designing approximations of Pigouvian emission taxes on the basis of currently available willingness to pay information. The paper analyses the welfare effects of these taxes as well as to what extent they can be used to measure (approximately) the value of depletion of environmental capital in the national accounts.

Social Accounting and Welfare Measurement in a Growth Model with Human Capital

This paper addresses social accounting and welfare measurement in an economy where human capital is an important factor in the economic system. Human capital accumulation depends on the time consumers spend in education. However, human capital is also a separate argument in the production function facing firms, which gives rise to a production externality. In a command optimum, where the externality is internalized, the authors show that an augmented net national product measure is the appropriate welfare indicator. They also discuss the tax-transfer system required for the decentralized economy to reach a command optimum. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

Nuclear Power, Externalities and Non-Standard Pigouvian Taxes

The external effects arising from the use of nuclear power are, in a fundamental way, related to uncertainty. In this paper we locate these external effects and derive a dynamic Pigouvian tax in order to make the decentralized economy support the command optimum. Another interesting result is that a small constant energy tax (which we interpret as a second best policy) can take the decentralized economy reasonably close to the command optimum.

Conspicuous Leisure: Optimal Income Taxation When Both Relative Consumption and Relative Leisure Matter

Previous studies on public policy under relative consumption concerns have ignored the role of leisure comparisons. This paper considers a two-type optimal nonlinear income tax model where people care both about their relative consumption and their relative leisure. Increased consumption positionality typically implies higher marginal income tax rates for both the high-ability and the low-ability type, whereas leisure positionality has an offsetting role. However, this offsetting role is not symmetric; concern about relative leisure implies a progressive income tax component, i.e., a component that is larger for the high-ability than for the low-ability type. Moreover, leisure positionality does not modify the policy rule for public good provision when the income tax is optimally chosen.

Income Taxation, Commodity Taxation and Provision of Public Goods under Labor Market Distortions

Income Taxation, Commodity Taxation and Provision of Public Goods under Labor Market Distortions

Green Accounting in Imperfect Market Economies

The idea of measuring the national welfare level by using the green NNP (net national product) has gained much attention lately. This paper summarizes the research on social accounting in imperfect market economies by putting the results into a unified framework. The main contribution of the paper is to relate the form of the national welfare measure to the functioning of the economic system and, therefore, to explicitly address the informational requirements implicit in social accounting.