The Journal of World Economy 2023, No.5
Evolution of the International Tax Governance System: Based on the Formation of Global Tax Treaty Network
Ma Haitao; Yao Dongmin; Meng Xiaoyu; Zhuang Lu
Abstract：Bilateral tax treaties are the most important tools for coordinating international tax cooperation and shaping the international tax governance system. This work analyses the evolution of the global bilateral tax treaty network from the perspective of overall characteristics, endogenous evolution mechanisms and external influencing factors. It does so through the construction of the global tax treaty network database, using the methods of social network analysis, regression analysis and Shapley value decomposition. Throughout the study, it is found that: first, since 1980 the global tax treaty network has shown a clear “core-periphery” structure, which has become increasingly stable, while the proportion of developing countries such as China in the core area has been increasing; second, the cumulative advantages of “the strong are strengthened” and the appeal of “what is capable is the best” are important endogenous mechanisms driving the formation of the global tax treaty network over different periods; third, the formation of the global tax treaty network is related to the economic and geographical characteristics of countries and the impact of these characteristics is becoming increasingly prominent. The findings of this study present policy implications for China’s deep engagement and enhanced presence in international tax governance.
Key words：international tax governance system, bilateral tax treaties, social network analysis
JEL codes：F01; F02; F23
Supply Chain Shocks and Enterprise Product Scope Adjustments
Chen Yongbing; Li Hui; Zhang Xiaoqian
Abstract：Quantitative assessment of supply chain shocks has become one of the most important issues in China’s economy. For this reason, this paper uses the natural experiment of China’s anti- dumping cases on intermediate goods and applies the staggered difference-in-differences (DID) method to examine the impact of supply chain shocks on enterprise product scope adjustments. Through the study, it is found that enterprises affected by supply chain shocks reduce their product scope and concentrate on the production of core products, while their output scale and productivity decrease. This conclusion is still valid after a series of robustness tests. Supply chain shocks also lead to increased enterprise production costs and reduced cost markups, squeezing profit margins and forcing enterprises to forego unprofitable marginal products. The heterogeneity analysis reveals that enterprises with strong operational capacity, lower financial dependency, and lower internal input adjustment costs are better able to withstand supply chain risks. While export market competitiveness and stable export relationships also help enterprises cope with supply chain shocks. Therefore, attention should be paid to the process of “creative destruction” within enterprises in the context of the supply chain, taking advantage of the large domestic market scale and avoiding the lock-in problem of intermediate inputs to cope with supply chain risks.
Key words：supply chain shock, imported intermediate, product scope, resource allocation
JEL codes：F13: F22: L25
Sectoral Distortions and Macroeconomic Fluctuation: Taking the Financial Crisis as an Example
Xu Xuechen; Tian Kan
Abstract：External shocks have a significant impact on macroeconomic fluctuation. With the restructuring of the global industrial chain, the production network effect is becoming increasingly prominent. First, this paper incorporates the production network into a general equilibrium model to analyze the impact of sectoral distortions on macroeconomic volatility. Then, based on China’s 2007 input- output data, it calculates the amplification effect of China’s production network on financial distortions during the financial crisis. The study finds that the impact of sectoral distortions on macroeconomic performance is manifested in the total efficiency wedge and the total labor wedge. Key sectors in the production network exert a greater influence on the total labor wedge, while their impact on the total efficiency wedge is relatively small. The results suggest that the production network generated approximately a fivefold amplification effect during the financial crisis. This paper emphasizes the important role that production networks and key sectors play in macroeconomic volatility and provides theoretical support for improving the reliability of domestic systemic circulation from the industrial and financial perspectives. This in turn presents practical value based on the requirements of the current era of safeguarding the new development pattern with a new security structure.
Key words：production network, sectoral distortions, financial distortions, network amplification effect
JEL codes：E32; L16; O12
Economic and Welfare Effects of Property Tax Reform: A Quantitative Study Based on a Heterogeneous Agent Model
Li Bo; Wang Xiao
Abstract：Understanding the role of property tax in macro-economy and its heterogeneous impact on households is essential for property tax reform in China. This paper evaluates the reform of property tax by constructing an overlapping generations (OLG) model of heterogeneous agents with an incomplete market. To this end, a series of numerical experiments are implemented to analyse the potential property tax reform. The results show that the long-term effect of property tax reform is to optimise households’ asset structure, stimulate consumption, lower housing prices and significantly boost the real economy. The welfare of poor households improves the most, while the welfare of rich households improves the least in the long-term. However, the imposition of the property tax leads to a sharp fall in housing prices and a sharp increase in rents, while wealthy groups with more housing assets may even suffer welfare losses in the short-term. The impact of property tax reform on the housing market and the macro-economy weakens when there is an exemption. Households are more determined to purchase housing in the critical area, and the poor may more easily acquire a house, which is accompanied by a relative decline in consumption.
Key words：property tax, heterogeneity, overlapping generations (OLG) model, welfare analysis
JEL codes：H20; H31; R21
Spatial Spillover of Environmental Policy and Urban Energy-Directed Technological Change
Dai Yongan; Zhang Xiao
Abstract：Technological change in favour of energy conservation is key to achieving China’s goal of carbon peak and neutrality. Based on a model of directed technological change, this paper introduces the cost of interregional trade, constructs a bi-regional and multisectoral heterogeneous enterprise model and mathematically deduces the spatial spillover mechanism of the exogenous environmental policy shock on energy-directed technological change, breaking it down into “enterprise research and development effect” and “enterprise migration effect”. Empirical evidence is provided via an evaluation of pilot policies for low-carbon cities using the spatial difference-in-differences (SDID) method. The results reveal that pilot policies for low-carbon cities can promote energy-saving directed technological change and have a non- linear U-shaped spillover effect. Analysis of the mechanism indicates that the low-carbon pilot policies have a significant impact on research and development and migration behaviour of enterprises, with significant spatial variations in policy spillover effects. Subsidies for research and development and environmental protection sanctions play an undeniable role. This research extends existing studies on the spatial spillover mechanisms of environmental policy and provides useful insights into achieving global environmental objectives.
Key words：pilot policies for low-carbon cities, energy-directed technological change, spatial difference-in-differences (SDID)
JEL codes：Q58; O13
Market Access Control and Corporate Total Factor Productivity: Evidence from the Negative List
Zhang Kuan; Lei Zhuojun; Li Houjian
Abstract：This paper takes the market access negative list management system pilot policy as a quasi-natural experiment in market access deregulation and constructs a staggered difference-in- differences (DID) model to investigate how market access regulation affects corporate total factor productivity (TFP). The study finds that the implementation of the negative list management system is conducive to promoting the improvement of corporate TFP, and this conclusion remains robust after conducting a series of robustness tests, such as excluding major policy interferences in the same period, alleviating the identification of independent variables, and considering unobservable factors. The core mechanism for the market access negative list management system to improve corporate TFP is enhancing the efficiency of factor allocation to the market and promoting competition in the product market. Regarding the improvement of the factor market allocation efficiency channel, the increase in corporate TFP is mainly due to the correction of capital factor market distortion and financial market inhibition by the market access negative list management system. The heterogeneity test reveals that the positive impact of the market access negative list management system on corporate TFP is most evident in enterprises with severe market segmentation, a high local protection level and high institutional transaction costs. The research in this paper suggests that reducing administrative barriers to market access plays a significant role in promoting the high-quality development of the Chinese economy and provides a theoretical basis for accelerating the construction of a unified national market.
Key words：negative list, market access, total factor productivity (TFP), market distortion
JEL codes：D20; H00; O10
New Media for Government Affairs and Trust in Local Governments: Local Governments Opening Micro-Blog Accounts
Liu Bofan; Zhao Yulan; Liang Pinghan; Zhang Jun
Abstract：This paper adopts machine learning algorithms to collect and organise operational information from the Chinese county-level government’s official micro-blog accounts. Comparing four rounds of data from China Family Panel Studies (CFPS) surveys conducted between 2012 and 2018, it explores how the government’s official micro-blog accounts affect residents’ level of trust. The study finds that following the opening of official micro-blog accounts by county-level governments, residents’ level of trust in local officials increases significantly by 11.63% compared to the average. The more micro-blog posts the county-level government publishes, the greater the degree of residents’ trust in local officials. Heterogeneity tests, mobile shared instrumental variable tests, and parallel trend tests support this result. This research provides new evidence in response to the cutting-edge issue of how government social media platforms affect political attitudes and enriches the relevant mechanisms for studying the use of government digital applications in influencing trust in government from the perspective of “technological empowerment”. County-level governments can use official micro-blog accounts to alleviate information asymmetry and improve their trust levels, and also retweet higher-level micro-blog government posts to increase trust levels.
Key words：government’s official micro-blog accounts, trust in government, government information disclosure, machine learning, difference-in-differences (DID) model
JEL codes：D82; H11; P26; Z13
Moral Hazard in In-Kind Transfers: Evidence from Medical Savings Accounts in China
Ta Yuqi; Huang Wei; Lei Xiaoyan
Abstract：In-kind transfers that are limited to spending on specific goods can lead beneficiaries to discount the value of funds, resulting in distorted consumption and efficiency losses. Such a moral hazard effect must be seriously taken into consideration when the government chooses to redistribute in kind, rather than in cash. Taking the medical savings accounts (MSAs) of the Urban Employee Basic Medical Insurance (UEBMI) in China as an example, and based on UEBMI administrative data (over 20 million) on a prefecture-level city in western China from 2012 and 2016, this paper employs dynamic difference-in- differences (DID) method to analyze moral hazard in MSAs. Results show a significant drop in expenses and visits on outpatient care and drugstore purchase after MSAs balances are depleted. This means that UEBMI enrollees in fact undervalue MSA funds and subjectively perceive higher healthcare prices after depleting their MSA balances, thereby reducing their healthcare consumption. This clearly indicates a moral hazard problem in MSAs and suggests that active reform measures are needed to reduce the misuse of funds.
Key words：in-kind transfers, employee medical insurance, medical savings accounts, moral hazard
JEL codes：H51; I13; I18
Uncertainty, Belief Bias and Misbehavior: Experimental Evidence from Nudging
Chen Yefeng; Lu Lu; Wang Xue; Dai Binru; Luo Jun
Abstract：Since belief bias exacerbates misbehavior in situations of uncertainty, this paper explores the influence of uncertainty change on misbehavior and analyzes the nudging methods for suppressing it, as well as their mechanisms in the context of taking from charity. The paper characterizes uncertainty with risk and ambiguity, proposing two nudging methods called “ex ante choice” and “consequence visibility” respectively, and uses them separately and in combination to explore effective methods for deterring misbehavior. The results indicate that an increase in uncertainty aggravates belief bias, leading to more misbehavior; the two nudging methods can weaken the effect of belief bias and cause misbehavior to decrease when applied separately. However, when combined, the additive inhibition effect of the nudging methods is found to be no better than that when applied separately. This is due to the exposed self-interest nature of certain subjects, which makes them selectively refer to self-serving nudging information for decision making. Therefore, in order to inhibit misbehavior more effectively, the appropriate nudging method should be chosen carefully.
Key words：uncertainty, belief bias, misbehavior, nudging
JEL codes：C91; D81; D83