Endogenous growth, asymmetric trade and resource dependence

Bretschger, Lucas; Valente, Simone

doi:10.1016/j.jeem.2012.01.008

Cited by 13 publications

(21 citation statements)

References 22 publications

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“…Bretschger and Valente (2012) build this theoretical model to show that the world equilibrium is characterized by a balanced growth path that is consistent with the empirical evidence for oil-trading economies: productivity gaps are compensated by terms-of-trade dynamics implying constant relative incomes between the two economic areas. 1 In the present paper, we extend the analysis of Bretschger and Valente (2012) in three ways, namely studying (i) the welfare e¤ects of domestic resource taxes, (ii) the 1 Persistent productivity gaps are a robust …nding of the empirical literature. In endogenous growth models, one possible justi…cation is limited capability of absorbing foreign innovations due to technological requirements (see e.g.…”

Section: Introductionmentioning

confidence: 54%

“…Therefore, an increase in h increases Home's share of world expenditures through a decline in~ h whereas variations in f leave expenditure shares una¤ected. This result hinges on the asymmetric structure of 1 2 The intuition is that variations in h or f induce o¤setting variations in physical output quantities and in physical output prices such that the ratio between the values of the two countries' output is unchanged (Bretschger and Valente, 2012). These opposite price-quantity movements appear explicitly in expressions (36)-(37) below.…”

Section: The Rent-extraction Mechanismmentioning

confidence: 98%

“…The model comprises two countries, called Home and Foreign and indexed by i = h; f , and follows the structure developed in Bretschger and Valente (2012 the existence of monopoly rents in intermediates' production, and knowledge spillovers enhancing the productivity of R&D …rms over time.…”

Section: The Modelmentioning

confidence: 99%

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Productivity Gaps and Tax Policies Under Asymmetric Trade

Bretschger

Valente

2016

Macroecon. Dynam.

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Abstract. We build a two-country model of endogenous growth to study the welfare e¤ects of taxes on tradable primary inputs when countries engage in asymmetric trade.We obtain explicit links between persistent gaps in productivity growth and the incentives of resource exporting (importing) countries to subsidize (tax) domestic resource use. The exporters'incentive to subsidize hinges on slower productivity growth and is disconnected from the importers' incentive to tax resource in ‡ows -i.e., rent extraction. Moreover, faster productivity growth exacerbates the importers'incentive to tax, beyond the rentextraction motive. In a strategic tax game, the only equilibrium is of Stackelberg type and features, for a wide range of parameter values, positive exporters'subsidies and positive importers'taxes at the same time.

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Section: Introductionmentioning

confidence: 54%

Section: The Rent-extraction Mechanismmentioning

confidence: 98%

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Productivity Gaps and Tax Policies Under Asymmetric Trade

Bretschger

Valente

2016

Macroecon. Dynam.

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“…In this respect, a number of empirical studies present cross-country evidence suggesting that specialization in resource production and exports is negatively correlated to domestic productivity (Lederman and Maloney, 2007). In particular, oil-exporting countries exhibited persistently slower growth in labor productivity but constant income levels relative to oil-importing countries during the last four decades, a plausible reason being the compensating e¤ects of terms of trade (Bretschger and Valente, 2012). In this paper, we argue that persistent gaps in productivity growth in ‡uence the policymakers'incentives to distort trade and may provide new rationales for both the rent-extracting taxes and the defensive subsidies that we observe in the real world.…”

Section: Introductionmentioning

confidence: 76%

International Resource Tax Policies Beyond Rent Extraction

Bretschger

Valente

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe study the incentives of sel…sh governments to tax tradable primary inputs under asymmetric trade. Using an empirically-consistent model of endogenous growth, we obtain explicit links between persistent gaps in productivity growth and the observed tendency of resource-exporting (importing) countries to subsidize (tax) domestic resource use. Assuming uncoordinated maximization of domestic welfare, national governments wish to deviate (i) from ine¢ cient laissez-faire equilibria as well as (ii) from e¢ cient equilibria in which domestic distortions are internalized.The incentive of resource-rich countries to subsidize hinges on slower productivity growth and is disconnected from the typical incentive of importers to tax resource in ‡ows -i.e., rent extraction. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence.

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“…Long's (2011) recent survey paper emphasizes the fundamental strategic aspect of this literature as well as Bergstrom's (1982) connection with contributions on tariffs. Bretschger and Valente (2012) have further analyzed the impact of domestic taxes on income shares and productivity differences.…”

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confidence: 99%

Optimum Tariffs and Exhaustible Resources: Theory and Evidence for Gasoline

Daubanes

Leinert

2012

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractDomestic consumption taxes on oil products largely differ across countries, ranging from very high subsidies to very high taxes. The empirical literature on the issue has highlighted the role of revenue-raising (Ramsey commodity taxation) and externalitycorrection (Pigovian taxation) motives for national taxation. Isolatedly, the theoretical literature on non-renewable-resource taxation has emphasized the role of the optimumtariff dimension of excise taxes which reflects countries' non-cooperative exercise of their market power. This paper reconciles these two strands by comprehensively addressing the issue. First, we propose a multi-country model of national taxation with oil -modeled as a polluting exhaustible resource -and some regular commodities. Domestic welfare is maximized with respect to domestic taxes under a revenue-collection constraint. The optimal domestic tax on oil consumption not only consists of a Ramsey inverse-elasticity term and of a Pigovian term, but also of an optimum-tariff component. In fact, resource exhaustibility implies a form of supply inelasticity that magnifies optimum-tariff arguments. Second, based on a multiple regression using a data set with a large number of countries, we test the power of the optimum-tariff tax component in explaining national gasoline taxes. We find strong evidence that this component plays a crucial role in countries' taxation of gasoline.JEL classification: Q38; F12; H20; H70

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Endogenous growth, asymmetric trade and resource dependence

Cited by 13 publications

References 22 publications

Productivity Gaps and Tax Policies Under Asymmetric Trade

Productivity Gaps and Tax Policies Under Asymmetric Trade

International Resource Tax Policies Beyond Rent Extraction

Optimum Tariffs and Exhaustible Resources: Theory and Evidence for Gasoline

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