Now showing 1 - 10 of 49
  • Publication
    Hops, Skip and a Jump: The Regional Uniqueness of Beer Styles
    (University College Dublin. Spatial Dynamics Lab, 2023-06-12) ; ; ;
    Perhaps more than any other product, beer evokes its place of origin. Part of what makes every pint of Guinness or stein of Paulaner so memorable is what sets them apart and gives them their unique "taste of place." This chapter explores the geographical differentiation of beer. To do so, we collect data on regional beer recipes, styles, and ingredients from a homebrewing website. We then employ Evolutionary Economic Geography (EEG) methods and create weighted co-occurrence networks for the ingredients within each style. We use these networks to identify which ingredients are most important to each beer style, measure a style’s robustness, and compare differences between geographically close and distant styles. While previous literature focuses on the related diversification of regions, we use these methods to examine the differences within the same product and across many regional styles and flavours. Combining the EEG methods with this unique ingredients dataset, we show that almost all beer styles rely on only a handful of key ingredients. Yet some regional beers are more robust than others due to readily available substitute ingredients in their region. Likewise, we demonstrate that styles originating in close geographic proximity are more similar in their use of ingredients.
      110
  • Publication
    Tariff Evasion, the Trade Gap, and Structural Trade
    (University College Dublin. School of Economics, 2022-12) ;
    While it is well-recognized that there are differences in the trade values reported by exporters and importers, a literature has emerged linking this trade gap to tariff evasion. These efforts, however, lack a structural theoretic underpinning and limit their product-level investigations to a small number of countries. Our first contribution is to provide a structural model of endogenous tariff evasion, one which then highlights the importance of both tariffs and border enforcement. Our second contribution is to use a global, product-level dataset from 2002-2019, the analysis of which is consistent with our model’s predictions.
      53
  • Publication
    The Impact of Special Economic Zones on Electricity Intensity of Firms
    (University College Dublin. School of Economics, 2016-10) ; ;
    In light of concerns over the environmental impact of Special Economic Zones located in developing countries, where environmental regulation is weak, we analyse the electricity intensity of firms in SEZs. We use firm level data from Africa and Asia, and we find that SEZ firms have higher electricity intensity as opposed to non-SEZ firms. If they also face higher fiscal, financial or environmental regulations, the electricity intensity of firms in SEZs increases by a greater rate as opposed to non-SEZ firms. As such, establishing SEZs may have significant environmental implications.
      439
  • Publication
    A Negotiation-Based Model of Tax-Induced Transfer Pricing
    (University College Dublin. School of Economics, 2014-07) ;
    We present a new model of tax induced transfer pricing as an alternative to the oft-used concealment model. Inspired by interviews with practitioners, we consider a large multinational firm which is audited by the tax authority in the high-tax location. When this country adjusts the transfer prices proposed by the firm, the low-tax location may dispute this decision and initiate negotiations. Since negotiations are costly, the high-tax location sets a transfer price that prevents the low-tax location from entering negotiations. We compare this model's predictions to those of the concealment model. The negotiation model replicates the predictions on the tax rate effects on transfer pricing, while adding new predictions. Profit shifting is expected to fall in the high-tax country's bargaining power and to rise in firm profits and domestic firm ownership in both countries. Most importantly, profit shifting occurs even if tax enforcement is perfect. We analyze the effects of an introduction of a common consolidated corporate tax base with formula apportionment and conclude that the negotiation model may change the perspective on such a policy. Specifically, strong countries with large bargaining power may find this reform unappealing.
      280
  • Publication
    Learning or Leaning: Persistent and Transitory Spillovers from FDI
    (University College Dublin. School of Economics, 2016-02) ; ;
    Using firm-level data for Jordan, we estimate the extent to which growth spillovers from foreign direct investment (FDI) to local firms stem from persistent learning externalities (i.e., they endure even after foreign investment leaves as knowledge has been transferred to local firms) or from transitory effects (e.g., demand increases which evaporate following disinvestment). We find that they have a significant transitory nature, with employment and capital growth declining when FDI falls, particularly in downstream industries supplied by locals. This suggests that if FDI-attracting policies are intended to promote sustainable growth, it may be more effective to attract and retain FDI via long-term structural policies, for instance, through low corporate tax rates rather than temporary tax holidays or through policies that strengthen the domestic absorptive capacity and linkages between foreign and local firms.
      132
  • Publication
    Negotiated Transfer Prices
    (University College Dublin. School of Economics, 2015-11) ;
    The predominant model of tax induced transfer pricing is based on the assumption that profit shifting is due to insufficient enforcement. However, evidence shows that the firms responsible for most profit shifting are also among the most frequently audited. We present an alternative model based on negotiations that avoid costly, yet uncertain, formal proceedings (e.g. court procedures). This model predicts that profit shifting increases in the tax gap even though enforcement is perfect. Further, it suggests that current efforts to streamline international tax law may have the unintended effect of increasing profit shifting.
      173
  • Publication
    The Heterogeneous Impact of Brexit: Early Indications from the FTSE
    (University College Dublin. School of Economics, 2017-05) ;
    The UK's decision to leave the EU is surrounded by several studies simulating its potential effects. Alternatively, we examine expectations embodied in stock returns using a two-part estimation process. While most firms' prices fell, there was considerable heterogeneity in their relative changes. We show that this heterogeneity can be explained by the firm's global value chain, with heavily European firms doing relatively worse. For firms with few imported intermediates, this was partially offset by a greater Sterling depreciation. These changes were primarily in the first two days and highly persistent. Understanding these movements gives a better understanding Brexit's potential effects.
      916
  • Publication
    The Impact of Protection on Observed Productivity Distributions
    (University College Dublin. School of Economics, 2017-02) ;
    As is well established, one prediction of the heterogenous firms literature spearheaded by Melitz (2003) is that trade liberalization, by increasing import competition, drives less productive domestic firms from the market. This increases average productivity of the domestic economy via the “selection effect”. In addition, it has the potential to affect the skewness of the observed productivity distribution, i.e. the gap between the productivity of the median firm and average productivity. We examine these predictions empirically using data on 28 sectors across 99 countries. On the whole, we find that higher protection levels lower average productivity and drive a larger wedge between mean and median productivity. This latter suggests that policy decisions based on mean outcomes may arrive at different conclusions than those based on median voters.
      205
  • Publication
    The Effect of Tax Treaties on Market Based Finance: Evidence using Firm-Level Data
    (University College Dublin. School of Economics, 2018-10) ;
    Tax arbitrage is often cited as a potential motive for the substantial growth and complexity of market based finance. Tax treaties are an important feature of the international tax system and can be used to reduce the tax burden on cross-border capital flows. Using an EU firm-level dataset and a number of alternative tax treaty measures, this paper investigates the importance of tax treaties on the investment decisions of a large sample of non-bank financial institutions. The novel dataset includes conduits such as special purpose entities which are often used to channel cross-border investments. Our results show that tax treaties influence the extensive margin of non-bank financial FDI with conduit related investments particularly sensitive to international taxation.
      194
  • Publication
    Learning to Tax ?- Interjurisdictional Tax Competition under Incomplete Information
    (University College Dublin. School of Economics, 2015-09-22) ;
    We present a multi-period model in which countries set source-based taxes without having precise information how their and their neighbours' tax rates affect the tax base. Countries can learn from past experience and from observing their neighbours' outcomes and/or tax policy choices. We consider the sequence of Markov perfect equilibria and show that the beliefs become more precise over time and, eventually, correct. The precision of beliefs in a given period increases in the number of observed countries. In equilibrium, tax rates are inefficiently low if the value of learning is positive and the pace of learning increases in the level of tax rates (because higher tax rates trigger larger tax base effects which helps learning); in the presence of fiscal externalities, tax rates are too homogeneous (because variance in tax policies enhances learning). If, due to fiscal externalities, the value of learning is negative, the opposite may be true. From the viewpoint of empirical measurement, the model generates time patterns that look as if countries react to each other even if there are no fiscal externalities. We conclude that the existing evidence may therefore be inconclusive with regard to the existence of tax competition.
      318