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International Institute of Public Finance

2007 IIPF Annual Congress

See Photo Page of the Congress
Congress report

Plenary session during the Congress's first day   

The 63rd IIPF Congress was held at the University of Warwick, UK, from 27 to 30 August 2007. Its keynote addresses dealt with Global Public Goods and Commons: Theoretical and Policy Challenges for a Changing World, but, as tradition dictates, outstanding papers on all areas of public finance were accepted.

The Opening Ceremony was headed by Michael P. Devereux (Oxford University), Chairman of the Local Organising Committee; Stuart Palmer, Deputy Vice-Chancellor of the University of Warwick, and Hans-Werner Sinn, President of the International Institute of Public Finance.

With an attendance exceeding 300 delegates from two dozen countries, the 63rd IIPF Congress reviewed 222 papers in 77 sessions spread throughout the four days from Monday through Thursday.

   Agnar Sandmo

But before the scientific program started, two Plenary Lectures were held. The first, delivered by Agnar Sandmo (Norwegian School of Economics and Business Administration), provided 'A Broad View of Global Public Goods'.

Examining the welfare economics of public goods, his paper sets out the conditions for global welfare maximization in the presence of public goods that benefit citizens of all countries in the world. Using a model of two countries, one rich and the other poor, he studies the conditions for global optimality in which the feasibility of international transfers of income is considered. The paper's emphasis is on public consumption goods, but it also considers the case of public production goods. It also discusses the case of global externalities as an extension of the theory of public goods, relating it to current policy discussions about the case for an international carbon tax.

Hans-Werner Sinn   
The second Plenary Session was devoted to a paper by IIPF President Hans-Werner Sinn. In a highly provocative presentation, he explained what he labels "the green paradox", according to which, under present circumstances, the more afraid the oil producers are of greening policies, the faster they will extract their oil and the faster the planet will grow warmer.

Starting with a review of the physics of temperature changes in the earth's atmosphere, he then delved into the chemistry of carbon dioxyde emission, its relation to fossil fuels, its effects on global average temperatures and the difficulties of disposing of it.

Next, he examined the optimality of some of the policies put forth to curb carbon emissions, using a dynamic optimization model. He quickly punctured the sunny assumptions regarding the effectiveness of fossil fuel demand-reducing approaches and the perversely counterproductive nature of some taxation models or of forcing the adoption of some alternative energy sources, showing that any unilateral action by some countries would just lead to greater consumption by others, with a next effect of zero reduction in carbon emissions: "The Kyoto Protocol can only work if no exceptions of opt-outs are allowed". In sum, he said, the only effective policies involve carbon sequestration and wide-ranging afforestation, emissions trading and the stabilization of property rights for resource owners.

   Scott Barrett
On the second day of the Congress, Scott Barrett (Johns Hopkins University) explored, in the plenary session for the day, the incentives to supply common public goods. Using a plethora of examples, ranging from a possible asteroid impact through measles and ozone depletion to global warming, he spelled out the difficulties of getting nations on board global initiatives that have clear but diffused benefits, with costs that are equally diffused. He drew a compelling comparison between international effectiveness in tackling ozone depletion and the (lack of) effectiveness in the approach to tackling global warming. It was quite a sobering exercise indeed.

The most difficult questions in this arena are, as he made abundantly clear, who decides in such globally encompassing issues, and how to enforce whatever has been decided. Sovereignty usually gets in the way, as do the problems of free-riding, mistrust and misplaced patriotism. In the end, the best strategy is to cooperate.

He has put all these ideas into paper in a highly readable book called "Why Cooperate?" (Oxford University Press).

Pierre Pestieau   

The third day's plenary session was devoted to examining the performance and prospects of the European welfare states through a lecture given by Pierre Pestieau (University of Liege). That most European welfare states are in need of reforms is fairly widely accepted. But to understand why reforms are important and how to institute them, it is necessary to have good measures of performance.

Distinguishing the concept of performance from that of efficiency, Prof. Pestieau presented a performance measure based on a multi-objective approach and on the best-practice frontier technique. He used this measure then to show how European states stand with respect to each other, and showed that some improvement and convergence have occurred in the past decade.

Many of his ideas are contained in his book "The Welfare State in the European Union" (Oxford University Press).

   Kai A. Konrad

On the Congress's last day, the keynote lecture for the plenary session was delivered by Kai A. Konrad (Free University Berlin and Social Science Research Center Berlin). Addressing the fact that a mobile tax base is in essence a global common, he examined the activities that countries use to attract and tax these mobile resources, not only those characterized as Bertrand competition, such as the tax rates, but also those non-price ones such as informative or persuasive advertising, branding, and educational policies that generate home attachment.

His thoughts and findings on the matter are explained in full in his paper "Mobile Tax Base as a Global Common".

The Congress ended with the awarding of the 2007 Peggy and Richard Musgrave Prize.


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