We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.

Evolution and Rationality Some Recent Game-Theoretic Results. Identification and Estimation of Local Average Treatment Effects

Unequal Democracy: The Political Economy of the New Gilded Age

Extending McCallum's (1995) result, based on a gravity model of 1988 trade flows, that a typical Canadian province trades 22 times more with other provinces than with US states of similar size and distance, this paper asks how Quebec trade patterns compare with those of other provinces The results, based on revised data for 1988, 1989 and 1990, show that while the typical province trades more than 20 times as much with other provinces as with comparable US states, for Quebec the multiple is even greater Thus trade between Quebec and the United States appears to be an even less viable alternative to interprovincial trade for Quebec than it is for the rest of Canada The implications of these results for international economics are considerable, as they show that trade linkages within a national economy are far greater than previously imagined If these results are confirmed, they imply that the fabric of national economies is far tighter than that of the global trading system, even for countries operating without substantial trade barriers

Do National Borders Matter for Quebec's Trade?

This text aims to provide a survey of the state of knowledge in the broad area that includes the theories and facts of economic growth and economic fluctuations, as well as the consequences of monetary and fiscal policies for general economic conditions.

Handbook of macroeconomics

In this paper, I review and assess what we have learned about what motivates individuals to pay – or to not pay – their legally due tax liabilities. I focus on three specific questions. First, what does theory say about what motivates tax compliance? Second, what does the evidence show? Third, how can government use these insights to improve compliance? I conclude with some suggestions – and some predictions – for future research.

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What motivates tax compliance

En este articulo utilizamos variacion geografica plausiblemente exogena en la reduccion de la demanda interna causada por la Gran Recesion en Espana para documentar la existencia de una robusta relacion causal negativa a nivel de empresa entre cambios provocados por la demanda en las ventas internas y en los flujos de exportaciones. Las empresas manufactureras espanolas cuyas ventas internas se redujeron en mayor medida durante la crisis experimentaron un mayor incremento en sus flujos de exportacion, incluso una vez que se controla por sus determinantes de oferta, tales como sus costes laborales. Esta relacion negativa entre cambios en las ventas internas y cambios en los flujos de exportacion provocados por cambios de la demanda ilustra la capacidad de los mercados de exportacion para compensar el impacto negativo de shocks de demanda locales. Los resultados presentados en el articulo se racionalizan a traves de un modelo estandar de exportaciones con heterogeneidad de empresas que permite la existencia de costes marginales de produccion no constantes. Utilizando una version de este modelo estimada de manera estructural, concluimos que las respuestas a nivel de empresa a la caida de la demanda interna en Espana podrian explicar alrededor de la mitad del espectacular incremento de las exportaciones de bienes en Espana (el denominado «milagro exportador espanol») en el periodo 2009-2013.

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Venting out : exports during a domestic slump

This paper analyzes the effects on tax compliance of monitoring the information trails generated by firms’ activities. We exploit quasi-experimental variation generated by a Large Taxpayers Unit (LTU) in Spain, which monitors firms with more than 6 million euros in reported revenue. Firms strategically bunch below this threshold in order to avoid stricter tax enforcement. This response is stronger in sectors where transactions leave more paper trail, implying that monitoring effort and the traceability of information reported by firms are complements. We calculate that there would be substantial welfare gains from extending stricter tax monitoring to smaller businesses.

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Under the radar : the effects of monitoring firms on tax compliance

espanolLa disponibilidad de una base de datos en el ambito de empresa que sea representativa del sector productivo de una economia a escala agregada es una condicion necesaria para realizar tanto analisis de politica economica como investigacion economica fiables en multiples areas. En este trabajo, se documenta la construccion de una nueva base de datos de empresas espanolas utilizando informacion detallada a escala microeconomica proporcionada por las empresas al Registro Mercantil y al Banco de Espana. La comparacion con los agregados que emergen de la Contabilidad Nacional sirve para ilustrar como la nueva base de datos de naturaleza microeconomica es capaz de replicar las tasas de crecimiento del producto, el empleo y la remuneracion de asalariados del sector privado. Utilizando las estadisticas ofi ciales del Instituto Nacional de Estadistica (INE), el analisis presentado muestra como la base de datos resultante cubre mas del 80 % de las empresas registradas en el censo del DIRCE en el periodo 2000-2013 y, de manera mas relevante, la base de datos es capaz de replicar la distribucion de empresas por tamano de la economia de mercado, excluyendo el sector financiero, de Espana. El mismo analisis de representatividad se realiza para el sector industrial, mostrando que este sector esta particularmente bien representado en la nueva base de datos. EnglishThe availability of a firm-level database that represents the productive sector of an economy at the aggregate level is a necessary condition to undertake both reliable policy analysis and economic research in multiple areas. In this paper, we document the construction of a new representative firm-level dataset for Spain using detailed micro-level information provided by firms to the Spanish Commercial Registry and the Bank of Spain. A comparison with National Accounts figures serves to illustrate that the new micro-dataset is able to replicate the growth rates of output, employment and wage bill of the private sector. Using official statistics from the National Institute of Statistics (INE), we show that the resulting dataset covers more than 80% of firms registered in the census over the years 2000-2013 and, more importantly, the resulting dataset replicates the fi rm size distribution of the Spanish non-financial market economy. The same representativeness analysis is done for the manufacturing sector indicating that this sector is particularly well-represented in the dataset.

Evaluating the macro-representativeness of a firm-level database: an application for the spanish economy

We exploit plausibly exogenous geographical variation in the reduction in domestic demand caused by the Great Recession in Spain to document the existence of a robust, within-firm negative causal relationship between demand-driven changes in domestic sales and export flows. Spanish manufacturing firms whose domestic sales were reduced by more during the crisis observed a larger increase in their export flows, even after controlling for firms' supply determinants (such as labor costs). This negative relationship between demand-driven changes in domestic sales and changes in export flows illustrates the capacity of export markets to counteract the negative impact of local demand shocks. We rationalize our findings through a standard heterogeneous-firm model of exporting expanded to allow for non-constant marginal costs of production. Using a structurally estimated version of this model, we conclude that the firm-level responses to the slump in domestic demand in Spain could well have accounted for around one-half of the spectacular increase in Spanish goods exports (the so-called `Spanish export miracle') over the period 2009-13.

Venting Out: Exports During a Domestic Slump

In modern tax systems, firms remit the majority of tax revenues raised by the government, which gives them opportunities to avoid and evade taxes by misreporting their activities. In this paper, we use a natural policy experiment to analyze how firms respond to different tax enforcement regimes. The Spanish Large Taxpayers’ Unit (LTU) monitors and enforces the taxation of companies
with operating revenue above €6 million, resulting in more frequent tax audits and more information requirements for those firms. We exploit this discontinuity in enforcement intensity to estimate the impact of low enforcement on tax reporting behavior, using a panel dataset of financial statements for 85% of Spanish firms in the period 1999-2007. We apply two different identification strategies. First, we find an excess mass of firms locating (“bunching”) just below the revenue threshold. Based on the number of bunching firms, we estimate that firms reduce
reported revenue by 1.4% to 7.5% to avoid falling in the high enforcement regime. Second, we run panel regressions with firm fixed effects and find that reported input costs do not respond significantly to the change in tax enforcement. This suggests that firms react to the enforcement discontinuity mostly by reporting lower revenues, without significantly distorting production.
The efficiency costs of tax enforcement are thus likely to be small because tax evasion constitutes a reallocation of income to tax-evading firms. A back-of-the-envelope calculation shows that the loss in tax revenue due to tax evasion by non-LTU firms is, however, significant. In
light of these results, we discuss potential reforms to improve tax enforcement policies.

David Lopez-Rodriguez

Papers

Venting out : exports during a domestic slump

Under the radar : the effects of monitoring firms on tax compliance

Evaluating the macro-representativeness of a firm-level database: an application for the spanish economy

Venting Out: Exports During a Domestic Slump

The efficiency cost of tax enforcement: evidence from a panel of spanish firms.