Atsuyoshi Morozumi's Books

Can a Government Enhance Long-Run Growth by Changing the Composition of Public Expenditure?

By: Mr.Santiago Acosta Ormaechea,Atsuyoshi Morozumi

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Can a Government Enhance Long-Run Growth by Changing the Composition of Public Expenditure?

By: Mr.Santiago Acosta Ormaechea,Atsuyoshi Morozumi

This paper studies the effects of public expenditure reallocations on long-run growth. To do this, we assemble a new dataset based on the IMF’s GFS yearbook for the period 1970-2010 and 56 countries (14 low-, 16 medium-, and 26 high-income countries). Using dynamic panel GMM estimators, we find that a reallocation involving a rise in education spending has a positive and statistically robust effect on growth, when the compensating factor remains unspecified or when this is associated with an offsetting reduction in social protection spending. We also find that public capital spending relative to current spending appears to be associated with higher growth, yet results are non-robust in this latter case.

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International Monetary Fund

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ISBN 10

1475560605

ISBN 13

9781475560602

The Value Added Tax and Growth: Design Matters

By: Mr.Santiago Acosta Ormaechea,Atsuyoshi Morozumi

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The Value Added Tax and Growth: Design Matters

By: Mr.Santiago Acosta Ormaechea,Atsuyoshi Morozumi

Does the design of a tax matter for growth? Assembling a novel dataset for 30 OECD countries over the 1970-2016 period, this paper examines whether the value added tax (VAT) may have different effects on long-run growth depending on whether it is raised through the standard rate or through C-efficiency (a measure of the departure of the VAT from a perfectly enforced tax levied at a single rate on all consumption). Our key findings are twofold. First, for a given total tax revenue, a rise in the VAT, financed by a fall in income taxes, promotes growth only when the VAT is raised through C-efficiency. Second, for a given VAT revenue, a rise in Cefficiency, offset by a fall in the standard rate, also promotes growth. The implication is thus that in OECD countries broadening the VAT base through fewer reduced rates and exemptions is more conducive to higher long-run growth than a rise in the standard rate.

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