This paper shows that delegation of monetary policy to a weight-conservative central banker is optimal, although the government can also use an inflation contract, an employment target, an inflation target or any combination of these to control the central banker. The key feature of our model is...

It is well known that it may be possible to attain a Pareto-efficient allocation in an economy with consumption externalities by the imposition of suitable excise taxes and subsidies, although the imposition of such taxes may not be sufficient. In addition, the structure of these Pigovian excise...

This paper considers the optimal taxation of savings intermediation and payment services in a dynamic general equilibrium setting, when the government can also use consumption and income taxes. When payment services are used in strict proportion to final consumption, and the cost of...

This paper provides a legal and economic analysis of the European Commission's recent proposals for reforming the application of VAT to financial services, with particular focus on their 'third pillar', under which firms would be allowed to opt in to taxation on exempt insurance and financial...

This paper explores the causes and consequences of the remarkable rise of the value added tax (VAT), asking what has shaped its adoption and, in particular, whether it has proved an especially effective form of taxation. It is first shown that a tax innovation, such as the introduction of a VAT,...

This paper investigates whether OECD countries compete with each other over corporation taxes, and whether such competition can explain the fall in statutory tax rates in the 1980s and 1990s. We develop a model in which multinational firms choose their capital stock in response to an effective...

This paper proposes a general framework for analysing commodity tax competition under destination and origin principles, based on three possible tax spillovers: the consumer price spillover, the producer price/terms of trade spillover, and rent spillovers. A model is presented which can be...

This paper studies the relationship between fiscal decentralization and electoral accountability, by analysing how decentralization impacts upon incentive and selection effects, and thus on voter welfare. The model abstracts from features such as public good spillovers or economies of scale, so...

The completion of the European Union single market has rendered the previous system of destination taxation, in which exports were tax-exempt and then taxed at the importing country's rate, unsustainable due to the accompanying abolition of border controls.