Advanced Search

Interesting (and no doubt controversial depending on your political persuasion) analysis of effects on economy of government's treatment of taxation and national debt. Essentially, article argues that government should spend any surpluses on tax reduction to stimulate growth (reduced revenues partially being offset by taxes from the higher base).

IT bristles as Washington tries to define its role in regulating the Internet and the technology industry

ABSTRACT: A sizeable literature has argued that the growth effects of changes in flat rate taxes are small. In this paper, we investigate the relatively unexplored area of the growth effect of changes in the tax structure, in particular, in the progressivity of taxes. Considering such a tax reform seems empirically more relevant than considering changes in flat tax rates. We construct a general equilibrium model of endogenous growth in which there is heterogeneity in income and in the tax rates. We limit heterogeneity to two types, skilled and unskilled, and posit that the probability of staying or becoming skilled in the subsequent period depends positively on expenses on "teacher" time. In the production sector, we consider two sources of growth. In the first, growth arises as a purely external effect on account of production activities of skilled workers. In the second, a portion of the skilled workforce is used to work in research and other productivity enhancing activities and is compensated for it. Our analysis shows that changes in the progressivity of tax rates can have positive growth effects even in situations where changes in flat rate taxes have no effect. Experiments on a calibrated model indicate that the quantitative effects of moving to a flat rate system are economically significant. The assumption made about the engine of growth has an important effect on the impact of a change in progressivity. Quantitatively, welfare is unambiguously higher in a flat rate system when comparisons are made across balanced growth equlibria; however, when the costs of transition to the higher growth equilibrium is taken into account only the currently rich slightly prefer the flat rate system.

Although focused on a time-sensitive issue, this article offers some insight into some serious and important issues regarding the role of a central bank in peculiar economic circumstances. Some of the proposed solutions are very thought-provoking. Also an interesting profile of Masaru Hayami, governor of the Bank of Japan and some of the history of the current troubles with Japan's economy.

Growth economics has emerged because of the growing recognition that the economic models created in the Industrial Age dominated by commodity goods production no longer adequately explain growth in an economy powered by knowledge and innovation.

While Keynesian and supply-side economics focused in an almost Newtonian way on adjusting the demand or supply of capital and labor to keep the economy in equilibrium, growth economics is focused on a different set of questions related to how the New Economy creates wealth: are entrepreneurs taking risks to start new ventures; are workers getting skilled and are companies organizing production in ways that use those skills; are companies investing in technological breakthroughs and is government supporting the technology base (e.g., funding research, training scientists and engineers); are regional clusters of firms and other institutions fostering innovation; are we avoiding protecting companies against more innovative competitors; are research institutions transferring knowledge to companies; and are policies supporting the ubiquitous widespread adoption of the Internet and other advanced information technologies?

Under the old economic policy model, it was not clear that there was a role for government in economic policy beyond managing the business cycle and protecting intellectual property rights. Growth economics makes it clear that government policies can boost long-term income growth. It recognizes the conservative insight that free markets, competition, and innovation boost growth. But it also recognizes the liberal insight that government investments, particularly in science, technology, education, and skills, can provide a foundation upon which productivity growth depends. And finally, growth economics recognizes that fiscal discipline underlies all of this.

We the people of the United States have a hard time keeping our finances in order. Our corporations may practice the world's most rigorous financial reporting (some recent debacles notwithstanding), but our government does not. Agencies with such lofty responsibilities as establishing justice, ensuring domestic tranquility, and providing for the common defense have a hard time even producing a financial statement. Those that do produce one often fail their audits.

A new book by Harvard Business School professor David A. Moss explores government's under-appreciated role as risk manager in everything from disaster relief to Social Security. How did this role evolve into something today that touches on almost every aspect of economic life?

Uncle Sam runs the fastest-growing IT market today. Here's the way for hungry vendors to set up shop.

Editor's Note: there is also a good section for non-IT folks which explains how to sell your products through the GSA online catalog.

Electronic government can provide faster, more convenient, and more accurate services that will improve the lives of the people.

Americans expect results from their business, government, and nonprofit organizations. We also expect information about the performance of those institutions: Who's in charge? How is money spent? And what have they accomplished? In the business world, the demands imposed by lenders and investors -- and, of course, the Securities and Exchange Commission -- force companies to disclose precise details of their operations -- earnings, expenses, performance, and levels of executive compensation relative to peer groups.

Yet when it comes to 39 percent of the national economy -- the nearly $3 trillion consumed by government and social sector organizations -- Americans have few instruments for collecting information and comparing results. For all the talk of reinventing government and strengthening the social sector, there is still no way to systematically gather and disclose information about their performance.

Note: Older EBF articles are not currently online. I'm not sure if this is temporary or permanent. If you click you will be taken to the Archive.org site to find an archived copy.

---

Throughout the 1980s and 1990s conventional wisdom increasingly had it that the 'commanding heights' should be controlled by the private sector. Privatisation flourished almost everywhere - and where it didn't, 'market driven' solutions have been widely employed to deliver public services.

But what have we learnt from privatisation? Has it been a success - or were expectations overblown?
Is the public sector really lagging in most respects?
Is it more important for infrastructure (energy, transportation, telecoms) to be reliable or profitable?
What is the contribution to European economic development of so-called Public-Private Partnerships (PPPs)?
Have the boundaries between state and business become clearer, or more blurred?

These are just some of the questions addressed by a distinguished panel of business people, academics, advisers and policymakers in EBF's summer debate.