Month: May 2025

Soumyanetra Munshi (Indian Statistical Institute) will present “Lobbying and Enforcement: An Economic Exploration” on May 26th, 2025, at 10:30 AM, in room QA405.

Abstract:

The government allocates resources to its various departments, one of which is supposed to enforce law on another. The non-enforcing department works in close proximity with an industry that is organised into a lobby and gives campaign contributions to the representatives of the ruling party forming the government. Moreover, the enforcement department utilises the government funds to improve its enforcement mechanism to detect violations in the non-enforcing department. Under such interdependencies and interactions, this paper presents a theoretical framework to study the effect that lobbying and enforcement have on the allocation of resource. Lobbying shifts the marginal benefit of the non-lobby group, whereas enforcement changes the very nature of marginal benefits of both the groups. Enforcement, without lobbying, substantially distorts allocation away from the non-enforcing group, whereas lobbying is somewhat able to check that distortion.

Evgeniya Dubinina (Charles University) will present “Online Cash Register Policy in Russia: Impact on Firm Profits and Exit Decisions” on May 19th, 2025, at 10:30 AM, in room QA405.

Abstract:

To improve tax compliance, the Russian government required small firms to use online cash registers (OCRs) for business-to-consumer transactions from 2017. While OCR policy aims to increase transparency, the implementation of OCRs raises fixed costs for small and middle firms, potentially driving them to adopt various coping strategies, such as shifting to the shadow economy, exiting the market, underreporting profits, overstating costs, or a combination of these. Using the TWFE and Regression Discontinuity in Time techniques, I estimate the effects of the OCR policy on reported profits, profits tax, and firms’ exit decisions. Exogenous variation for causal inference is possible thanks to different years of policy implementation (2017, 2018, 2019). I find that tax revenues increased. However, the effects vary by tax regime, with no significant revenue changes for some. Furthermore, the number of firms declined following the policy’s implementation.