Holger Kächelein Libri

Political Business Cycles (PBC), introduced by Nordhaus (1975), refer to the manipulation of economic conditions by governments to gain electoral advantage through fiscal and monetary instruments. Governments may increase public expenditures and improve the production/supply of certain goods before elections to boost growth and reduce unemployment. In Albania, the electricity supply, controlled by the publicly run KESH (Korporata Energjitike Shqiptare), has been characterized by instability and systematic interruptions, impacting households and businesses reliant on electricity for heating and cooking. This creates an incentive for the government to leverage electricity provision as a means to impress voters ahead of elections, alongside traditional expenditure strategies. This paper investigates the consumption, production, and import of electricity in Albania, hypothesizing that electricity consumption may rise above normal levels before elections and contract afterward. Using a modern econometric approach, specifically ARMA modeling, we aim to determine if elections significantly explain changes in electricity production, alongside historical data and random error terms.

The paper analyzes under which conditions a partial tax cooperation will be welfare enhancing within the cooperating regions. Starting from the standard symmetric tax competition model, subgroups of regions can form tax cooperations and thereby increase their relevant market share. As the noncooperation regions react to the tax change in the bloc, the welfare outcome relative to the symmetric case is ambiguous. Complementary to a more general theoretical approach, a simulation is also used to clarify the limits of welfare enhancing partial tax coordination of a subgroup of regions. In the used structure, only if regions are very large, tax rates are complements. However, the case of welfare loss due to a partial tax harmonization is mainly limited to the case of a single cooperation

The paper extends the familiar standard tax competition model for the possibility of cross-border commuting by introducing an additional level of jurisdictions. For separating the impact of landownership and cross-border commuting different schemes of landownership are considered. It will be shown that the possibility of cross-border commuting increases the problem of tax competition since an additional indirect fiscal externality arises via the potential reallocation of labor. The resulting change in the supply of publicly provided goods depends crucially on the considered structure of landownership respectively on the aim of the local policy makers. If the tax burden can be exported via external possession of land, the undersupply of publicly provided goods will be reduced and in the extreme case, an oversupply may arise