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32. Who Pays Sin Taxes? Understanding the Overlapping Burdens of Corrective Taxes
- Author:
- Christopher Conlon, Nirupama Rao, and Yinan Wang
- Publication Date:
- 07-2022
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- “Sin taxes”—or excise taxes on particular goods that society deems harmful—are popular in the United States. Federal, state, and local governments levy taxes on alcohol and tobacco with the dual and sometimes conflicting goals of curbing consumption and raising revenue. For many of these products, taxes represent a large share of the overall price. In New York City, a 1.75L bottle of vodka might sell for as little as $11.99 of which $7.97 is tax; and a $13.00 pack of cigarettes includes $6.86 in taxes.
- Topic:
- Tax Systems, Economic Policy, and Consumer Behavior
- Political Geography:
- North America and United States of America
33. The Welfare Effects of Time Reallocation: Evidence from Daylight Saving Time
- Author:
- Joan Costa-i-Font, Sarah Fleche, and Ricardo Pagan
- Publication Date:
- 07-2022
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- More than 70 countries around the world currently observe daylight saving time (DST) to reduce energy demand. However, recent studies have shown that DST does not save energy and may actually increase electricity consumption. Furthermore, opponents of DST argue that even a one‐hour time change can have long‐term consequences for individuals. DST transition has been linked to increased risks of car accidents, heart attacks, and depressive symptoms in studies. According to our findings, the spring DST transition has a negative impact on individuals’ welfare, specifically a decrease in life satisfaction. Investigating a broad range of outcomes, we show that this decline in life satisfaction can be explained by a decrease in sleep following the transition and an increase in time pressure, which significantly affect individuals’ physical and emotional health in subsequent days.
- Topic:
- Economic Policy, Time, Well-Being, and Daylight Saving Time
- Political Geography:
- Global Focus
34. The US–Italy Economic Relations in a Divided World
- Author:
- Adriana Castagnoli
- Publication Date:
- 05-2022
- Content Type:
- Working Paper
- Institution:
- Istituto Affari Internazionali
- Abstract:
- In 2021, bilateral trade returned to the sustained pace it had prior to the Covid pandemic. Direct investment also grew – crucially, not just Italian investment in the United States but the other way round too. While Italy’s economic ties with Russia and China remain potential hotspots, Rome has never questioned its Atlantic orientation. Nevertheless, possible austerity policies following sanctions against Russia could spread social discontent that populist parties can exploit for consensus purposes in the 2023 general election, rekindling anti-Americanism rooted in different segments of Italian society.
- Topic:
- Foreign Policy, Foreign Direct Investment, Economic Policy, Trade, and Energy
- Political Geography:
- Russia, China, Italy, and United States of America
35. Can adjustment costs in research derail the transition to green growth?
- Author:
- Laura Nowzohour
- Publication Date:
- 05-2021
- Content Type:
- Research Paper
- Institution:
- Centre for International Environmental Studies, The Graduate Institute (IHEID)
- Abstract:
- Adjustment costs are a central bottleneck of the real-world economic transition essential for achieving the sizeable reduction of greenhouse gas (GHG) emissions set out by policy makers. Could these costs derail the transition process to green growth, and if so, how should policy makers take this into account? I study this issue using the model of directed technical change in Acemoglu, Aghion, Bursztyn, and Hemous (2012), AABH, augmented by a friction on the choice of scientists developing better technologies. My results show that such frictions, even minor, materially affect the outcome. In particular, the risk of reaching an environmental disaster is higher than in the baseline AABH model. Fortunately, policy can address the problem. Specifically, a higher carbon tax ensures a disaster-free transition. In this case, the re-allocation of research activity to the clean sector happens over a longer but more realistic time horizon, namely around 15 instead of 5 years. An important policy implication is that optimal policies do not act over a substantially longer time horizon but must be more aggressive today in order to be effective. In turn, this implies that what may appear as a policy failure in the short-run | a slow transition albeit aggressive policy | actually re ects the efficient policy response to existing frictions in the economy. Furthermore, the risk of getting environmental policy wrong is highly asymmetric and `robust policy' implies erring on the side of stringency.
- Topic:
- Climate Change, Economics, Environment, Economic Growth, Green Technology, Economic Policy, Renewable Energy, and Sustainability
- Political Geography:
- Global Focus
36. Reforming European Economic Policies
- Author:
- Olivier Marty and Damien Ientile
- Publication Date:
- 03-2021
- Content Type:
- Policy Brief
- Institution:
- Robert Schuman Foundation (RSF)
- Abstract:
- Despite the European Union's ambitious response, the current crisis is a stark reminder of a nagging problem: the challenge, in practice, to the principles and concepts governing major European economic policies. This situation can be seen in monetary policy, budgetary rules, trade policy, competition, the European budget and the structure of the euro zone. It fuels resentment between Member States and populations and, paradoxically, it encourages economic divergence. It is also undermining the legibility and credibility of European action in the eyes of the public. It therefore would seem advisable to reform the European economic framework in a pragmatic rather than radical way.
- Topic:
- Reform, Budget, Economic Policy, and Trade Policy
- Political Geography:
- Europe
37. The effect of recent technological change on US immigration policy
- Author:
- Björn Brey
- Publication Date:
- 02-2021
- Content Type:
- Working Paper
- Institution:
- Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
- Abstract:
- Did recent technological change, in the form of automation, affect immigration policy in the United States? I argue that as automation shifted employment from routine to manual occupations at the bottom end of the skill distribution, it increased competition between natives and immigrants, consequently leading to increased support for restricting low-skill immigration. I formalise this hypothesis theoretically in a partial equilibrium model with constant elasticity of substitution in which technology leads to employment polarization, and policy makers can vote on immigration legislation. I empirically evaluate these predictions by analysing voting on low-skill immigration bills in the House of Representatives during the period 1973-2014. First, I find evidence that policy makers who represent congressional districts with a higher share of manual employment are more likely to support restricting low-skill immigration. Second, I provide empirical evidence that representatives of districts which experienced more manual-biased technological change are more likely to support restricting low-skill immigration. Finally, I provide evidence that this did not affect trade policy, which is in line with automation having increased employment in occupations exposed to low-skill immigration, but not those exposed to international trade.
- Topic:
- Economics, Immigration, Economic Policy, Automation, Technocracy, and Skilled Labor
- Political Geography:
- United States
38. The Economic Impact of Political Instability and Mass Civil Protest
- Author:
- Samer Matta, Michael Bleaney, and Simon Appleton
- Publication Date:
- 01-2021
- Content Type:
- Working Paper
- Institution:
- Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
- Abstract:
- An extensive literature has examined the economic effects of non-violent political instability events. Nonetheless, the issue of whether economies react differently over time to such events remains largely unexplored. Using synthetic control methodology, which constructs a counterfactual in the absence of political instability, we estimate the output effect of 38 regime crises in the period 1970-2011. A crucial factor is whether crises are accompanied by mass civil protest. In the crises accompanied by mass civil protest, there is typically an immediate fall in output which is never recovered in the subsequent five years. In crises unaccompanied by protest, there are usually no significant effects. Furthermore, this paper provides new evidence that regime crises (with and without mass civil protest) have heterogeneous (country-specific) effects on output per capita.
- Topic:
- Economics, Political Economy, Regime Change, Political stability, Economic Growth, Protests, Economic Policy, and Civil Unrest
- Political Geography:
- Global Focus
39. RCEP Is Not Enough: South Korea Also Needs to Join the CPTPP
- Author:
- Jeffrey J. Schott
- Publication Date:
- 07-2021
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- The benefits of the Regional Comprehensive Economic Partnership (RCEP) for South Korea are limited and need to be supplemented by more comprehensive agreements that deepen Korea’s ties to strategic allies in the Asia-Pacific region. RCEP's most important achievement is its new regional content rule that will encourage deeper integration of supply chains across the 15 markets, a key benefit for Korean industries invested in the region. But Schott notes that the pact also has significant limitations. To complement RCEP, he recommends that South Korea move forward with two other trade negotiating priorities, membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and upgrading the Korea-US Free Trade Agreement (KORUS), the latter aimed at encouraging US reengagement in the Asia-Pacific integration pact.
- Topic:
- Markets, Treaties and Agreements, Partnerships, Regional Integration, and Economic Policy
- Political Geography:
- Asia and South Korea
40. Industrial Policy Implementation: Empirical Evidence from China’s Shipbuilding Industry
- Author:
- Panle Barwick, Myrto Kalouptsidi, and Nahim Bin Zahur
- Publication Date:
- 08-2021
- Content Type:
- Policy Brief
- Institution:
- The Cato Institute
- Abstract:
- Industrial policy has been widely used in developed and developing countries. Examples include the United States and Europe after World War II; Japan in the 1950s and 1960s; South Korea and Taiwan in the 1960s and 1970s; and Brazil, China, India, and other developing countries more recently. Industrial policies are now back in the spotlight in developed countries, such as Europe and the United States. Designing and implementing industrial policies is a complicated task. Governments seeking to promote the growth of selected sectors have a wide range of policy tools at their disposal, including subsidies on output, provisioning loans at below‐market interest rates, preferential tax policies, tariff and nontariff barriers, and so on. They must also choose the timing of policy interventions and whether to target selected firms within an industry.
- Topic:
- Government, Industrial Policy, Economic Policy, and Shipbuilding
- Political Geography:
- China and Asia