Person:
Hernandez Ore, Marco Antonio
Author Name Variants
Fields of Specialization
Macroeconomics and fiscal policy,
Economic growth,
Political economy
Degrees
ORCID
Departments
Western Balkans Country Management Unit
Externally Hosted Work
Contact Information
Last updated
January 31, 2023
Biography
Marco Antonio Hernandez Ore is Program Leader and Lead Economist for the Western Balkans at the World Bank, based in Vienna, Austria. He joined the World Bank in 2008 where previously he worked as a Senior Economist and Country Economist supporting a number of countries in Europe & Central Asia, Latin America, and Sub-Saharan Africa, through analytical and operational work. In his capacity, he supports governments in finding solutions to enhance macro-fiscal policy, financial sector development, trade and competitiveness, governance, and poverty reduction. Prior to joining the World Bank, Mr. Hernandez worked as an economist in the consulting firm Charles River Associates International based in Boston, and as a consultant at the Ministry of Economics and Finance of Peru. Mr. Hernandez holds a B.S. in Economics from the Massachusetts Institute of Technology and a Ph.D. from Oxford University.
Publication Search Results
1 - 9 of 9
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Publication
Honduras: Unlocking Economic Potential for Greater Opportunities
(World Bank, Washington, DC, 2015-10-26)Honduras is Central America’s second-largest country with a population of more than 8 million and a land area of about 112,000 square kilometers. The 20th century witnessed a profound economic transformation and modernization in Honduras. Honduras’ persistent poverty is the result of long-term low per capita growth and high inequality, perpetuated by the country’s high vulnerability to shocks. First, over the past 40 years the country has experienced modest growth rates marked by considerable volatility. Second, high levels of inequality have weakened the ability for growth to reduce poverty by limiting the extent to which a large segment of the population is able to fully access physical and human capital. Third, a large share of the population is vulnerable and exposed to regular shocks - both large and small which has exacerbated poverty by destroying or slowing asset accumulation. This systematic country diagnostic (SCD) explores the drivers of these development outcomes in Honduras, and reflects on the policy priorities that should underlie a development strategy focused on eradicating poverty and boosting shared prosperity. After identifying a number of critical factors affecting the country’s development outcomes, the SCD concludes that there is a need for a comprehensive agenda that tackles simultaneously the problems that have kept the country in a low development equilibrium for many decades, as well as emerging challenges that have the potential not only to prevent progress but also worsen the current situation. The SCD also argues that the policy agenda needs to be ambitious and move away from marginal interventions in order to move Honduras from a situation where its economic potentials are just potentials to another where they become actuals. -
Publication
Applying Behavioral Insights to Improve Tax Collection: Experimental Evidence from Poland
(World Bank, Washington, DC, 2017-06-01)Mobilizing domestic revenues efficiently is a priority for the Government of Poland, but it is not easy. There are numerous instruments that can be used to achieve this objective. Traditional measures to boost government revenues include changes to the tax legislation and reforms in the area of tax administration. Such measures can have a large fiscal impact, but are often politically challenging to design and negotiate, and can take time to implement. Behavioral interventions often focus on adapting existing systems and processes and can thus be implemented relatively quickly and at a low cost. Overall, they are an additional tool in the policy toolkit that country authorities have to improve tax compliance, and thus complement but do not substitute traditional measures to establish effective tax collection systems including changes in tax legislations and tax administration reforms. Behavioral interventions can also help the Tax Authority to align its strategy more accurately to taxpayer behavior. The Polish authorities were interested in applying insights from behavioral economics to their communications with taxpayers to see if making small changes could promote tax compliance. This paper summarizes the results of a randomized controlled trial (RCT) that used letters to remind taxpayers in Poland to pay their taxes. These taxpayers had declared their personal income tax (PIT) for the 2015 fiscal year but had failed to pay what they owed by the deadline, April 30, 2016 (i.e., taxpayers in arrears). The trial took place between May and August 2016 and covered a total of 149,925 individual taxpayers. -
Publication
Casting the Tax Net Wider: Experimental Evidence from Costa Rica
(World Bank, Washington, DC, 2016-10)The majority of firms in developing countries are informal, and encouraging them to register with the tax authority has proven challenging and costly. This paper argues that incomplete tax filing among registered firms constitutes an important intermediate form of informality, which can be tackled with much higher cost-effectiveness. Using a nationwide randomized experiment in Costa Rica, The paper shows that credible enforcement emails tripled the income tax filing rate and doubled the payment rate among previously non-filing firms. The treatment effect was even higher when the email listed examples of third-party reports of a firm's transactions, with the return on an email reaching US$ 19. It also shows that the intervention had no negative spillovers on other tax compliance dimensions, the treatment effects persisted in the medium term, and treated firms became more likely to file information reports about their suppliers or clients, thereby increasing the tax authorities' information set for future tax enforcement. -
Publication
Behavioral Interventions in Tax Compliance: Evidence from Guatemala
(World Bank, Washington, DC, 2016-06)This paper presents results from a large (43,387) nationwide randomized controlled trial in Guatemala that used reminders to promote tax compliance. The trial varied the letter received by taxpayers (individuals and firms) who had failed to pay their income tax for the 2013 tax year. Taxpayers were randomly allocated to receive either no letter, the letter originally used by the Guatemalan Tax Authority, or four letter variants adapted using behavioral design. The study finds that although all letters increased the rate of declaration, only two of the letters were successful at increasing the rate of payment and the average amount paid per letter received. The best performing treatments were a deterrent message framing non-declaration as an intentional and deliberate choice, rather than oversight (designed to overcome status quo bias), and a social norms message that referred to the 64.5 percent of taxpayers that had already paid this tax (join the status quo). These two interventions increased the rate of payment as well as the average amount paid conditional on paying, overall more than tripling tax receipts. The paper estimates that if sent to all taxpayers in the sample, in 11 weeks the social norms letter would have generated additional tax revenues of approximately US$760,000, which is 36 times the cost of sending the letters. The effects are persistent and remain at 12 month follow up, suggesting the letters are effective in increasing revenue for the tax authority rather than just bringing tax receipts forward. -
Publication
Fiscal and Welfare Impacts of Electricity Subsidies in Central America
(Washington, DC: World Bank, 2017-10-11)Central American countries spend approximately one percent of their aggregate gross domestic product subsidizing residential electricity consumption. This amount is comparable with what these countries spend on education and social assistance. The pressure that electricity subsidies exert on government budgets is particularly high when international energy prices rise. Electricity subsidies also provide perverse incentives for the overconsumption of electricity as households do not pay the true cost of their consumption, which in turn reduces incentives to increase energy efficiency. This book answers key questions regarding residential electricity subsidies in Central America. In particular: How do the subsidy mechanisms function in each country? What are their fiscal costs? Are these subsidies good value for the money? How efficient are subsidies in reaching households in need, and what drives this efficiency? What are the reform options? The main message of this book is that there is considerable scope for improving the efficiency of electricity subsidies in Central America by better targeting them to low-income households. The book shows that electricity subsidies help reduce the burden of electricity costs on the lowest-income groups. However, the existing electricity subsidy schemes are very inefficient at targeting resources to low-income households, with the majority of government spending going to higher-income households. Indeed, most countries in the region have the opportunity to significantly reduce the fiscal costs of electricity subsidies without imposing significant costs on households, particularly poor households. Given the limited fiscal space in the region and the major needs of the countries in terms of social services and physical infrastructure, this study seeks to provide Central American policymakers with the analytical foundations necessary to assess the costs and benefits of their electricity subsidy mechanisms, and design effective reform strategies that reflect their unique circumstances and policy priorities. -
Publication
Taxation, Information, and Withholding: Evidence from Costa Rica
(World Bank, Washington, DC, 2016-03)This paper studies tax withholding on business sales, a widely used compliance mechanism which is largely ignored by public finance theory. The study introduces a withholding scheme, whereby the payer in a transaction collects tax from the payee, in a standard evasion model. If the taxpayer can fully reclaim the tax withheld, withholding is irrelevant to her evasion decision. If reclaim is costly, however, withholding establishes a compliance default. To show this empirically, the analysis exploits a ten-year panel of registration, income tax and sales tax records from 400,000 firms in Costa Rica, and over 20 million third-party information and withholding reports. The paper first documents the anatomy of compliance, providing novel measures of compliance gaps on the extensive, intensive and payment margins. It then shows that interventions leveraging the existing third-party information reduce these compliance gaps only marginally. Coverage by a withholding scheme, in contrast, is correlated with higher reported taxable income both across firms and within firms across time. Quasi-experimental estimations show that a doubling of the withholding rate leads to a 40 percent increase in tax payment among treated firms and a 10 percent increase in aggregate revenue. The mechanisms are incomplete reclaim of the tax withheld and reduced misreporting. -
Publication
Promoting Tax Compliance in Kosovo with Behavioral Insights
(World Bank, Washington, DC, 2019-03-01)As in many countries, tax collection is a development challenge in Kosovo. Kosovo is one of the poorest and youngest countries in Europe in terms of gross domestic product (GDP) per capita and both demographics and statehood. The lack of an independent monetary policy — given that Kosovo has adopted the euro as the national currency — means that ensuring the sustainability of fiscal policy is critical. However, limited tax revenues hamper the government's ability to address economic cycles. Between 2011 and 2017, total government revenue amounted to about 14 percent of GDP, below the average of 19 percent among countries in Europe and Central Asia. Unlike other countries, Kosovar government relies on taxes for more than 85 percent of its revenues. Mobilizing tax revenues is therefore critical. The Tax Administration of Kosovo (TAK) requested assistance from the World Bank and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to address this challenge using an evidence-based approach. To this end, the World Bank and GIZ applied behavioral insights to promote tax compliance among specific groups of taxpayers. Three experiments were designed, implemented, and evaluated in 2018 that involved sending behaviorally informed reminders using letters, e-mails, and short messaging service (SMS) messages to various groups of taxpayers to induce timely and honest declarations and payments. The short-term objective of these trials was to increase the number and timeliness of tax declarations. Simple, behaviorally designed messages were effective in inducing tax declaration. Messages helped raise the tax declaration rate by an average of around 3 percentage points during a period of between four and six weeks. Among personal income tax (PIT) declarations, this represents a 59 percent increase in compliance, equivalent to over 200 more annual tax declarations among participants. The likelihood of payment rose in many instances, and no significant difference was found in the amounts of taxes paid. Lessons from the tax experiments in Kosovo highlight the benefits of rigorous impact evaluation and the need to establish processes that help integrate tax collection functions and data systems. -
Publication
Lake Chad Regional Economic Memorandum: Development for Peace
(World Bank, Washington, DC, 2021-11-09)This report sheds light on the interlocked long-term territorial development challenges and the recently realized systemic risks affecting the Lake Chad region. It summarizes the findings of seven technical papers, each investigating different aspects of the interlinked challenges faced by the region. These studies are accompanied by complementary research on labor market and geospatial socioeconomic trends, as well as by a review of the thin literature on economic development across the region. In addition to presenting the main results of the technical papers, the report positions the findings in the broader context of an analytical framework depicting the feedback mechanisms between the region’s territorial development gaps and the self-reinforcing link to shocks, namely, violent conflict and climate change. This analytical framework is presented in Section 1.2. The rest of the report is structured as follows. Section 1.3 describes the main social and economic trajectories in the region. It reviews long-term demographic trends, suggesting. Section 1.4 argues that the low-growth, high-poverty equilibrium observed in the region is closely linked to the region’s economic geography. Section 1.5 discusses how the impact of climatic variation and violent conflict experienced in the region interlink with and exacerbate the territorial development challenges. Section 1.6 presents policy directions structured around four crosscutting themes: infrastructure, trade, governance, and natural resource management. The crosscutting nature of these themes encourages the exploration of potential synergies across challenge areas. The discussion in the section aims to inform policy-making efforts to strengthen territorial development and mitigate the impacts of conflict and climate change. Such endeavors can increase the likelihood of breaking free from the self-reinforcing negative mechanisms and boost the potential return of the region to a path of stability and inclusive economic development. -
Publication
Estimating Poverty Using Cell Phone Data: Evidence from Guatemala
(World Bank, Washington, DC, 2017-02)The dramatic expansion of mobile phone use in developing countries has given rise to a rich and largely untapped source of information about the characteristics of communities and regions. Call Detail Records (CDRs) obtained from cellular phones provide highly granular real-time data that can be used to assess socio-economic behavior including consumption, mobility, and social patterns. This paper examines the results of a CDR analysis focused on five administrative departments in the south west region of Guatemala, which used mobile phone data to predict observed poverty rates. Its findings indicate that CDR-based research methods have the potential to replicate the poverty estimates obtained from traditional forms of data collection, like household surveys or censuses, at a fraction of the cost. In particular, CDRs were more helpful in predicting urban and total poverty in Guatemala more accurately than rural poverty. Moreover, although the poverty estimates produced by CDR analysis do not perfectly match those generated by surveys and censuses, the results show that more comprehensive data could greatly enhance their predictive power. CDR analysis has especially promising applications in Guatemala and other developing countries, which suffer from high rates of poverty and inequality, and where limited fiscal and budgetary resources complicate the task of data collection and underscore the importance of precisely targeting public expenditures to achieve their maximum antipoverty impact.