Two Papers For You

First, Miron, Dills and Summers offer up this provocative paper (provocative, anyway, to anyone who works on crime) entitled "What Do Economists Know About Crime?" Answer? Not a damn thing.

In this paper we evaluate what economists have learned over the past 40 years about the determinants of crime. We base our evaluation on two kinds of evidence: an examination of aggregate data over long time periods and across countries, and a critical review of the literature. We argue that economists know little about the empirically relevant determinants of crime. Even hypotheses that find some support in U.S. data for recent decades are inconsistent with data over longer horizons or across countries. This conclusion applies both to policy variables like arrest rates or capital punishment and to less conventional factors such as abortion or gun laws. The hypothesis that drug prohibition generates violence, however, is generally consistent with the long times-series and cross-country facts. This analysis is also consistent with a broader perspective in which government policies that affect the nature and amount of dispute resolution play an important role in determining violence.

Second, this is unlike me, because sex and drugs appears nowhere in the paper, but teaching macroeconomics to undergraduates does weird things to my head, which is why I think this paper caught my eye.

We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy. The results are robust to the inclusion of controls for other tax rates, quality of tax administration, security of property rights, level of economic development, regulation, inflation, and openness to trade.

So now i can say to someone that taxes levied on mid-size domestic reduces aggregate investment by firms and entrepreneurial activity. Good to know, since that's basically what I would hope to be true, otherwise my degree isn't worth the paper it's printed on, but now at least I have a number and a study I can tell the students later this semester when I talk to them about investment and economic growth.