an analysis of default risk in mobile home credit abstract there are approximately us 22 billion in outstanding receivables and an active secondary market for mobile home credit in the united states this important segment of the financing industry shares some attributes with traditional home mortgage financing and other attributes with consumer credit in this paper we draw on the mortgage literature to postulate the determinants of default risk for mobile home loans using multivariate logit models we investigate the relevance of payment history loan terms borrower characteristics economic conditions and legal constraints in analyzing loan defaults and delinquencies payment history emerges as the overwhelming factor in predicting the likelihood of default

are future taxes discounted in this paper i examine empirically the question of whether or not the public recognizes the future taxes implied by current deficitfinanced expenditures as discussed by barro 1 it seems that such recognition does not occur but that by a new hypothesis presented here the aggregate economy behaves much as if it did this alternative hypothesis relies on the widely accepted efficient markets and permanent income hypotheses and it requires considerably less sophistication and information on the part of the average economic agent than does barro s hypothesis

institutional competition versus centralization quo vadis europe lots of steep and sometimes blind bends with harsh speed limits and frequent detours but still it has been one that has attracted more and more traffic after a successful period of shaping a customs union and a free trade area following the treaty of rome 1957 europe became infected with euro sclerosis in the seventies owing to an increased intensity of national regulation especially in the labour market the constructionist approach to harmonization from above slowed down the speed of integration almost to a halt only the change of two fundamental rules revitalized the european integration process namely the introduction of majority voting in the ec council and the mutual recognition of national regulations brought about by the 1979 ruling of the european court with the single european act and the launch of the internal market programme europhoria blossomed finally leading to the maastricht treaty which aimed to be the masterpiece of european integration only very recently the danish no and the unconvincing approval by the french voters cooled off hopes for a united states of europe signalling that european integration is at the crossroads once again

public capital and long run costs in u k manufacturing a model of u k manufacturing production that incorporates the inputs of public as well as private capital is specified and estimated the model is then used to measure the contribution of public capital to productivity growth over the period 1966 to 1990 it is found that before 1980 the public and private capital contributions were of comparable magnitude after 1980 the contribution of public capital declined significantly copyright 1993 by royal economic society

the road to growth measuring the tradeoffs between economic growth and ecological destruction summary roads bring significant economic benefits that are vital for development but they are often also the precursors to deforestation and other adverse environmental impacts this paper examines the road induced tradeoffs between economic growth deforestation and biodiversity loss in the democratic republic of congo drc decades of conflict have left the drc s transport infrastructure among the sparsest and most dilapidated in the world most of the provincial capitals are unconnected to the capital city and improving road connectivity could lead to a significant boost in trade and economic growth at the same time the drc is also home to the second largest rainforest in the world the iconic congo forests are a trove of ecological value some monetizable and most that is not so the destruction of the drc s forests will have significant environmental ramifications we provide empirical estimates of the economic benefits of improving market access and reducing transportation costs we then estimate a forest destruction function to assess the impact that new or improved roads have on forest clearing in addition a novel biodiversity index is developed to identify forests of high biodiversity significance two simulations are performed to quantitatively demonstrate the impacts of road improvement projects in terms of increased gdp forest loss and biodiversity that are put at risk to our knowledge this is the first study to jointly examine the economic benefits and ecological risks to infrastructure investments it is envisioned that the methods employed here can be used to guide future infrastructure investments toward designs which have a large economic impact while minimizing ecological risks

credit risk measurement developments over the last 20 years abstract this paper traces developments in the credit risk measurement literature over the last 20 years the paper is essentially divided into two parts in the first part the evolution of the literature on the credit risk measurement of individual loans and portfolios of loans is traced by way of reference to articles appearing in relevant issues of the journal of banking and finance and other publications in the second part a new approach built around a mortality risk framework to measuring the risk and returns on loans and bonds is presented this model is shown to offer some promise in analyzing the risk return structures of portfolios of credit risk exposed debt instruments

new tests of the life cycle and tax discounting hypotheses abstract we first test a version of the permanent income consumption function recently suggested by barro the results support the theory except that consumption expenditures show sensitivity to transitory income next we use the consumption model to test the tax discounting hypothesis which is strongly supported this support for tax discounting disagrees with results from some earlier studies using more traditional specifications of the consumption function however we show that when certain obviously inadequate estimation procedures are corrected the traditional models also support tax discounting this uniform support for tax discounting suggests that the sensitivity of consumption to transitory income is not due to liquidity constraints

temporary contracts employment protection and skill a simple model abstract we construct a theoretical labor market that incorporates skill differences across workers to identify under which conditions temporary contracts are a way to access to permanency firing costs and unemployment benefits increase the threshold productivity above which workers access to permanency

finite lifetimes and the effects of budget deficits on national saving abstract even though realistic deficit policies shift sizable tax burdens to future generations the assumption of an infinite horizon is a good approximation for analyzing a deficit s short run saving effect on individuals who are neither liquidity constrained nor myopic recent u s experience casts significant doubt on these assumptions however and appears difficult to reconcile with the ricardian equivalence proposition that the timing of taxes does not affect national saving recent deficits have coincided with reduced national saving and a substantial increase in the share of gnp devoted to consumption

does infrastructure investment stimulate building supply the case of the english regions ball m and nanda a does infrastructure investment stimulate building supply the case of the english regions regional studies policies to improve infrastructure to stimulate regional growth remain common this paper investigates whether increases in infrastructure investment in the english regions lead to subsequent rises in new commercial and residential property using time series modelling both physical roads and harbours and social infrastructure education and health impacts are investigated hardly any infrastructure effects with respect to commercial property investment were found which raises doubts about whether extra infrastructure creates employment though some impact was related to residential building overall these results raise doubts about the supposed direct effects of infrastructure policies on regional jobs and growth

can transport infrastructure change regions economic fortunes some evidence from europe and china abstractcan transport infrastructure change regions economic fortunes some evidence from europe and china regional studies claims and counterclaims about the likely impact of new transport infrastructure on a region s economic performance have existed for centuries going back to the early days of canals and railways high speed rail hsr as a new type of infrastructure has just over 50 years of existence the persistent debate is questioning the power of hsr in reducing economic disparities between cities and effecting economic transformation the paper goes beyond macro modelling looking to more disaggregated approaches of the structural changes two regions one in europe and one in china are compared to gain insights for future research and practice

electoral uncertainty fiscal policy and macroeconomic fluctuations abstract in this paper we study the link between elections fiscal policy and aggregate fluctuations the setup is a stylized dynamic stochastic general equilibrium model incorporating both technology and political re election shocks the latter are incorporated via a two party model with elections the main theoretical prediction is that forward looking incumbents with uncertain prospects of re election find it optimal to follow relatively shortsighted fiscal policies and that this hurts capital accumulation our econometric estimation using u s data finds a statistically significant link between electoral uncertainty and policy instruments and in turn macroeconomic outcomes

the effects of public capital on the productivity of the italian regions this article investigates the role played by public capital in increasing the productivity levels in italy for construction of the regional series for the public capital stock over the period 1996 to 2003 the study benefits from the use of the rich dataset on public expenditure recently published by the italian ministry of economy we have estimated panel production functions with the inclusion of traditional factors and also intangible inputs like research and development r d expenditure human capital hk and social capital sk the results point out that public capital has a positive and significant effect on production moreover the effects of all production factors vary considerably between the two macro areas of the country namely centre north and mezzogiorno more specifically while private capital is more effective in the south labour exhibits an elasticity much higher in the centre north with respect to the mezzogiorno the disaggregation of the public capital stock into functional cat

news shocks in the data olympic games and their macroeconomic effects we examine the macroeconomic effects of bidding for the olympic games using panel data for 188 countries during the period 1950 2009 our findings confirm that economies react to news shocks investment consumption and output significantly increase 9 to 7 years before the actual event in bidding countries hosting countries also experience significant increases in investment consumption and output 5 to 2 years before the hosting of the games mapping the olympics into a macroeconomic model we show that we can match our empirical findings if we assume that an olympic bid represents news about increases in government investment

linking local business with global growth opportunities the role of infrastructure infrastructure is instrumental when it comes to linking local businesses with their global growth opportunities this paper shows that by making this link the transport network can act as a catalyst for regional economic growth using a novel approach we find that firms in regions with a more developed transport infrastructure are better placed to benefit from positive growth opportunities than those in regions with a less well developed transport network this advantage is most pronounced in times of economic slack making a better transport network a key ingredient for economic recovery it is against this background that the recent slowdown in infrastructure investment in europe is worrisome but it is through this channel among others that the substantial ramp up of activity by the european investment bank is expected to foster growth and enhance competitiveness in europe

competition for jobs in a growing economy and the emergence of dualism we aim to explain the rising share of short term employment in europe using a matching model with growth we find that a slow down in growth of labour productivity leads to the emergence of temporary short term jobs that explains their increasing share in total employment lower growth rates also shift the beveridge curve to the right and weaken the bargaining position of workers these effects generate a relation between growth and unemployment which can be negative when the adverse effect of growth on wage setting dominates over its positive effect on labour demand in addition higher population growth increases the share of temporary jobs and unemployment finally the often blamed firing costs are found to be neutral when there is no floor on wages

efficient urbanisation economic performance and the shape of the metropolis the influences of urban form and transport infrastructure on economic performance show up in several contemporary policy debates notably sprawl versus compact city and in the developing world the future of mega cities this paper probes these relationships using two scales of analysis at the macro scale an econometric analysis using data across 47 us metropolitan areas reveals that employment densities and urban primacy are positively associated with worker productivity suggesting the presence of agglomeration economies congested freeways are shown to be a consequence of strong economic performance an intrametropolitan analysis using data on sub districts of the san francisco bay area generally reinforces the findings of the macro scale analysis in the bay area labour productivity appears to increase with size of labour marketshed and high accessibility between residences and firms higher employment density and well functioning infrastructure also contribute positively to economic performance

accommodating public expenditure policies the case of fast growing asian economies abstract it is widely believed that the exceptional economic performances of the east asian economies are attributable as much to the visible hand of the state as to the invisible hand of the market this paper analyzes the experiences of japan south korea singapore and taiwan in implementing a key instrument of state intervention namely public expenditure policy the analysis shows that these economies could achieve high standards of physical and social infrastructure even with relatively low spending the key features of complementary spending policy include emphasis on macroeconomic stability cost effective spending involvement of private sector in providing quasi public goods minimum distortions in the labor markets and human resource development to achieve a broad based development

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

the perverse effects of partial labour market reform fixed term contracts in france we argue that the effects of a partial reform of employment protection by allowing firms to hire workers on fixed term contracts may be perverse the main effect may be high turnover in entry level jobs leading to higher not lower unemployment even if unemployment falls workers may be worse off going through many spells of unemployment and entry level jobs before obtaining a regular job considering french data for young workers since the early 1980s we conclude that the reforms have substantially increased turnover without a substantial reduction in unemployment duration if anything the effect on their welfare appears to have been negative

the politics of infrastructure a number of recent studies attempt to measure the productivity of public capital some estimates indicate that government investments are a potential well spring for economic progress while others indicate that public infrastructure has a negligible effect on private sector output this article investigates political institutions and processes underlying the decisions for public infrastructure spending we apply the framework of strategic models of fiscal policy and develop an empirical model to analyze the substantial differences in public capital across american states institutions such as term limits citizen initiative and budgeting procedures were significant determinants of state public capital stocks and the flow of new public investments during the 1980s the results further suggest that political conditions such as legislative stability and voter volatility are systematically related to infrastructure differences across states

urban economic growth in china theory and evidence this paper analyses the relationship between per capita gdp growth and investment foreign direct investment labour force growth government expenditure and urban infrastructure based on the data

scale congestion and growth this paper explores the relationship between aggregate and relative congestion returns to scale and economic growth aggregate congestion reduces the effective productivity of capital relative congestion reduces the effective productivity of labour both forms of congestion adversely affect the equilibrium growth rate although their relative effects depend upon aggre gate returns to scale the two forms of congestion have contrasting effects on the transitional dynamics relative congestion retards the rate of adjustment aggregate congestion accelerates it the externalities generated by congestion and non optimal expenditure can be fully cor rected both during the transition and in steady state by a time invariant income tax the role of public expenditure as an instrument of economic growth has been a major policy issue as governments throughout the world design stimulus packages as in japan and face difficult choices to meet the emu criteria in europe empirical research investigating the impact of public investment on the productivity of private capital and output was stimulated by aschauer 1989a b who found the effects to be strongly positive the nature of public investment is however diverse in general public goods vary extensively in terms of the nature of their services spanning the range between the polar cases of pure private and pure public goods but the treatment of public expenditures in formal growth models is limited barro 1990 and futagami et al 1993 treat government expenditure as a pure pub lic good and in so doing they fail to take account of the congestion typically associated with public goods however as barro and sala i martin 1992 have argued almost all public services are characterized by some degree of congestion so that the pure public good should be viewed as only a bench mark these considerations suggest that congestion is an important consider ation in assessing the effect of public expenditures on economic growth attempts to analyse the effects of congestion on economic growth have been limited in various dimensions drawing on the public goods literature edwards 1990 proposes a number of specifications of congestion two notions particularly relevant in a growth context are relative congestion and aggregate absolute congestion the former specifies the level of services derived by an individual from the provision of a public good in terms of the usage of his individual capital stock relative to the aggregate capital stock aggregate congestion sometimes called crowding indicates how aggregate usage of the service alone influences the services received by an individual 2 existing applications of congestion to growth theory introduce it into ak models see barro and sala i martin 1992 1995 glomm and ravikumar 1994 1997 and turnovsky 1996 1997 however the ak model features two limitations that restrict its flexibility to examine the relationship between congestion and growth first as solow 1994 pointed out sustained ongoing

public input competition abstract public investment in infrastructure may help create agglomeration economies by attracting mobile factors such as skilled labour competition among regions in public investment can then be destructive this paper analyzes the nash equilibria to a simple model of public input competition even though the regions are assumed identical the equilibrium may not be symmetric the problem with non cooperative behaviour is not only that regions invest too much but that too many regions may choose to invest depending on the parameter values the nash equilibrium may be efficient may be inefficient or may not exist at least not in pure strategies better mobility among regions leads to more aggressive competition the analysis suggests that rents from public investment may be dissipated by governments competition to attract mobile factors

ict and transport infrastructure development an empirical analysis of complementarity abstractthis paper provides an empirical framework to assess the nonlinear complementary linkage effects that arise from the interaction between motorway capital and information and communications

productive government expenditures and long run growth the purpose of this paper is to review some of the recent developments in endogenous growth models specifically our focus is on the growth effects of productive government spending in dynamic general equilibrium models we use a simple overlapping generations model as our basic framework and illustrate the role of taxes and spending we then examine several related issues nonrivalry in publicly provided goods existence and uniqueness of competitive equilibrium endogenous public policy ways of financing public expenditures composition of publicly provided goods and services and private alternatives finally we review some empirical results related to output elasticity of public capital and educational expenditures

on the effectiveness of private and public capital this study assesses the effectiveness of private and public capital investments in the performance of manufactures within the framework of the duality theory the response of costs of production and input utilization to changes in the stocks of private and public capital is measured by the appropriate elasticities obtained from a cost function instead of considering private capital either as a variable or fixed input on a priori grounds its nature is checked that is the study discriminates between a long and a short run situation the empirical exercise is made for the manufacturing industries in the spanish regions

survey of social and economic growth in se europe a new conceptual frame for sustainability metrics the practice so far has indicated that there is a sensitive relationship that exists between social and economic subsystem of sustainable development therefore this research suggests comparison of the states of these two subsystems as a new conceptual frame which is essential for strategic conceptualization of development the research pointed out a rather visible collision between the achieved degree of economic and social development in the countries of south eastern europe in respect to germany and france which were taken into consideration as two of the most developed countries in the european union and in the entire world the indicators which are given in this research point to the necessity of further scientific and practical consideration of strategic conceptualization of relationship between economics and society

is all public capital created equal this paper uses a var approach to investigate the effects of public investment on private sector performance in the united states this approach is consistent with the argument that the analysis of

original issue high yield bonds aging analyses of defaults exchanges and calls this paper presents an aging analysis of 741 high yield bonds and finds default exchange and call percentages substantially higher than reported in earlier studies by december 31 1988 cumulative defaults are 34 percent for bonds issued in 1977 and 1978 and range from 19 to 27 percent for issue years 1979 1983 and from 3 to 9 percent for issue years 1984 1986 exchanges are also a significant factor although they often are followed by default moreover a significant percentage of high yield debt 26 47 percent for 1977 1982 has been called by december 31 1988 approximately one third of the bonds issued in 1977 1982 has defaulted or been exchanged and an additional one third had been called on average only 28 percent of these issues are still outstanding there is no evidence that early results for more recent issue years differ markedly from issue years 1977 to 1982

evidence of public spending crowding out from a panel of oecd countries the empirical relationship between government spending and private investment is examined using a panel of 14 oecd countries the evidence suggests the existence of a significant crowding in effect of private investment by public investment through the positive impact of infrastructure on private investment productivity moreover government consumption appears to crowd out private investment the implications of these results are of foremost importance when it comes to fiscal consolidation deficit reductions engineered through cuts in public investment could severely impinge on private capital accumulation and growth prospects

forecasting losses on a liquidating long term loan portfolio abstract assessing the condition of financial institutions and valuation of loan portfolios in secondary markets require the estimation of exposure to losses on existing portfolios of long term loans data from a major u s financial institution were used to construct a forecasting model with markovian structure and nonstationary transition probabilities the model proved to be effective in representing changes in probability of default that occur as individual loans mature and accurate in forecasting aggregate defaults and losses on a nationwide portfolio of long term loans

the keynesian multiplier effect reconsidered the keynesian multiplier effect is reinterpreted and several issues that may have misled assessments of the effect of fiscal spending are discussed it is shown that even in the textbook keynesian framework some transfer policy reduces aggregate demand and that public works spending may completely crowd out private consumption useless public works are found to be equivalent to transfers although they increase accounting national income more than transfers do the net effect of fiscal spending on national benefits is explored and shown to equal only the direct benefit created by the spending

government deficits and aggregate demand abstract the evidence presented in this paper indicates that changes in government spending transfers and taxes can have substantial effects on aggregate demand the estimates also indicate that the promise of future social security benefits significantly reduces private saving each the basic implications of the so called ricardian equivalence theorem is contradicted by the data the results are consistent with the more general view of the effects of fiscal actions and fiscal expectations that is described in the paper

the philippines roll on roll off policy and its impact on household income abstractour paper captures the immediate impact of the roll on roll off policy that offered an alternative system of inter island transfer within the philippines it provides evidence on the effect

the information value of failure predictions in credit assessment abstract this paper is concerned with the information value of failure prediction in the context of bank lending decisions it argues that earlier concerns about the methodology and robustness of classificatory models are given the volume of confirmatory studies no longer of practical significance instead the problem is whether reported classificatory performance provides information of value new information in a plausible ex ante decision situation in interpreting ex post evidence it appears that claimed information value is directly dependent on assumptions about factors which are neither specified nor testable within the conventional ex post experiment past claims for information value have used extreme values for these assumptions but it is argued that with plausible alternative assumptions the ex post evidence is also consistent with negative information value

the equilibrium approach to fiscal policy this paper lays out a simple model for the purpose of bringing together the various strands of the analysis of fiscal policy in an optimizing competitive equilibrium model the discussion centers on the critic al assumptions lying behind the ricardian equivalence proposition th e role of the time profile and composition of public expenditure and the timing of distortional taxation copyright 1988 by ohio state university press

interest rates and expected future budget deficits in the united states several recent empirical studies have found no evidence of a positive association between interest rates and current and past budget deficits one possible explanation for this finding is that interest rates are related much more to the expectation of future budget deficits than to current and past budget deficits in this paper i investigate whether this explanation is valid finding no evidence that it is section ii briefly formulates and discusses the hypothesis under consideration stating some of its implications section iii presents the results of regressing the commercial paper rate moody s aaa bond rate and the ex post real commercial paper rate on current and past government spending budget deficits and real money supplies the regressions have been fitted to the entire sample of monthly data spanning the period between june 1908 and march 1984 and to 11

government spending interest rates prices and budget deficits in the united kingdom 1701 1918 abstract the british data from the early 1700s through wwi provide an unmatched opportunity for studying temporary changes in government purchases temporary increases which appeared mainly as wartime spending raised long term interest rates but significantly increased the growth rates of money and prices only during suspensions of the gold standard 1797 1821 and 1914 1918 temporary changes in military spending accounted for the bulk of budget deficits over the sample of more than 200 years i found only two major non war deficits one associated with compensation payments to slaveowners in 1835 1936 and the other with a dispute over the income tax in 1909 1910 interest rates did not react much to these exogenous deficits

average marginal tax rates from social security and the individual income tax we extend previous estimates of the average marginal tax rate from the federal individual income tax to include social security our computations consider the tax rates on employers employees and the self employed the income that accrues to persons with earnings below the ceiling and the effective deductibility of employers social security contributions from workers taxable income the next effect of social security on the average marginal tax rate is below 02 until 1966 but then rises to 03 in 1968 04 in 1973 05 in 1974 06 in 1979 and 07 in 1982 this abstract was borrowed from another version of this item

government debt government spending and private sector behavior a current period tax reduction financed by issuing government debt shifts the timing of tax collection from the current period to the future if the future taxes implied by government debt are not fully perceived and discounted by the private sector there will be a net wealth effect that increases private sector consumption thus reducing capital accumulation and growth if on the other hand the implied future taxes are perceived and discounted by the private sector the current period tax reduction will be used to increase private saving to pay for the future taxes and government debt will be absorbed without any real effects on the economy the effects of government spending financed by current period taxation also depend upon private sector perceptions 2 if the benefits of government spending are ignored private sector consumption will decrease in accordance with the reduction in permanent disposable income to the extent that government spending is on consumption type goods that are perceived as substitutes for privately provided consumption goods there will be a relatively greater reduction in private sector consumption to the extent that government spending is on investment type goods yielding future goods and services that are perceived as substitutes for future privately provided consumption goods there will be a relatively smaller reduction in private sector consumption the standard approach to modeling private sector consumption saving behavior involves a rather asymmetric set of assumptions as to how the private sector perceives the various elements of government fiscal policy 3 current period taxes are assumed to be fully perceived but current period government spending is implicitly assumed to be completely ignored by the private sector in considering permanent personal disposable income the private sector is assumed to be forward looking in its assessment of income and taxation the stock of government debt is nevertheless included as part of the stock of private wealth the implicit assumption associate professor of economics graduate school of business university of chicago 1101 east 58th street chicago il 60637 i thank eugene fama levis kochin michael mussa paul evans and an anonymous referee for helpful comments i am particularly grateful to daniel benjamin for contributing many hours of discussion and laura lahaye who was a research assistant and valuable adviser on earlier drafts the theoretical debate on the burden of the debt has been long standing gerald o driscoll 1977 documents ricardo s nineteenth century position robert barro 1974 reopened the debate by introducing the fundamental issue of intergenerational transfers also discussed in merton miller and charles upton 1974 the empirical side of the debate was initiated by levis kochin s 1974 attempt to test for the effects of deficits on consumption and by martin feldstein s 1974 attempt to test for the effects of social security wealth on consumption other empirical contributions include jess yawitz and laurence meyer 1976 myself 1978 and j earnest tanner 1978 1979 with respect to the effects of government deficits and debt and barro 1978 michael darby 1979 and dean leimer and selig lesnoy 1982 with respect to social security wealth see also interesting recent papers by john seater 1982 who generates detailed tests of the effects of deficits and debt on consumption charles plosser 1982 who explores the effects of government spending and debt shocks on interest rates and feldstein 1982 who attempts tests similar to some in this paper see fn 29 2martin bailey s 1962 1971 development of the effects of government spending on private consumption and aggregate economic activity is the seminal contribution paul david and john scadding 1974 extend bailey s ideas and provide some supporting empirical evidence more recently willem buiter 1977 and myself 1978 developed models based on bailey s earlier work barro 1981 has an interesting paper on related issues see also david aschauer 1982 3the standard approach incorporates fiscal policy through the concept of personal disposable income and by including the stock of government debt as part of personal wealth see for example the empirical specification of albert ando and franco modigliani 1963 which has been the basis of most empirical consumption studies since and feldstein 1974 for one of the more influential papers based on the ando modigliani specification

ten years after the financial crisis what have we learned from the renaissance in fiscal research author s ramey valerie a abstract this paper takes stock of what we have learned from the renaissance in fiscal research in the ten years since the financial crisis i first discuss the new innovations in methodology and various strengths and weaknesses of the main approaches to estimating fiscal multipliers reviewing the estimates i come to the surprising conclusion that the bulk of the estimates for average spending and tax change multipliers lie in a fairly narrow range 0 6 to 1 for spending multipliers and 2 to 3 for tax change multipliers however i identify economic circumstances in which multipliers lie outside those ranges finally i review the debate on whether multipliers were higher for the 2009 obama stimulus spending in the united states or for fiscal consolidations in europe

public sector capital and the productivity puzzle a number of studies have suggested a quantitatively important relationship between public sector capital accumulation and private sector productivity with the most compelling evidence derived from analyses of state level data estimates herein of production functions that use standard techniques to control for unobserved state specific characteristics however reveal essentially no role for public sector capital in affecting private sector productivity only estimates of state production functions that do not include such controls find substantial productivity impacts this result reconciles existing econometric estimates with the findings of hulten and schwab based on growth accounting techniques as such techniques effectively control for state specific effects region level estimates are essentially identical to those from state data suggesting no quantitatively important spillover effects across states copyright 1994 by mit press

corrigendum to congestible public goods and local indeterminacy a two sector endogenous growth model journal of economic dynamics control 31 7 2007 2486 2518

infrastructure provision and macroeconomic performance this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy 2011 elsevier b v all rights reserved

optimal fiscal policy public capital and the productivity slowdown abstract this paper develops a quantitative theoretical model for the optimal provision of public capital we show that the ratio of public to private capital in the us economy since 1925 evolves in a manner that is broadly consistent with an optimal transition path derived from a simple growth model the model is used to quantify the conditions under which an increase in the stock of public capital is desirable and to investigate the degree to which nonoptimal fiscal policies can account for the us productivity slowdown

majority rule bargaining and the under provision of public investment goods abstract despite evidence that modern democracies systematically shortchange public investment goods relatively little theoretical work exists to explain this phenomenon we build on baron and ferejohn s american political science review 83 4 1989 1181 1206 bargaining model to describe public investments in a setting of budgetary politics specifically we show that underinvestment inherently arises from distributive politics within a majoritarian institution the inability of current majorities to contract with future ones drives a wedge between spending on consumption today and investing for future consumption extensions to the model demonstrate that earmarking future returns to specific players and or detaching consumption from investment decisions yields more efficient levels of public investment

excludable and non excludable public inputs consequences for economic growth non excludable and excludable public inputs are introduced into an endogenous growth model we derive the equilibrium growth rate and design the optimal tax and user cost structure emphasizing the role of congestion and its consequences for the government s budget the latter comprises fee and tax revenues that are used to finance the public inputs although they may generate insufficient revenue to do so entirely we extend the model to allow for monopoly pricing of the user fee by the government most of the analysis is conducted for general production functions consistent with endogenous growth but the ces technology is also considered a vast literature has evolved emphasizing the role of public investment as a determinant of economic growth among the earliest contributions arrow and kurz 1970 is particularly significant while the seminal work of barro 1990 has been especially influential with respect to the contemporary endogenous growth literature stimulated by aschauer s 1989 findings pertaining to the high rate of return on public capital several authors have explored various aspects of the role of public capital in stimulating economic growth for example baxter and king 1993 and fisher and turnovsky 1998 examine the interaction between public and private capital in a ramsey type growth model while futagami et al 1993 perform a similar type of analysis in an endogenous growth context glomm and ravikumar 1997 analyse the growth effects of productive public spending in an overlapping generations setup extending the framework to include majority voting and alternative compositions of publicly provided goods and services they also indicate private alternatives to public provision but do not pursue this in detail cassou and lansing 1998 focus on the relationship between private and public capital showing how the evolution of the ratio between the two in the us economy since 1925 is broadly consistent with the predictions of a simple ramsey growth model they also show how the productivity slowdown in the us economy since the 1970s is more likely due to increasing tax rates than to non optimal public investment policy much of the literature including barro treats the public input as a pure public good freely available without restrictions or impediments to all agents in the economy but the public goods literature identifies many different characteristics that most public goods in fact exhibit notably the presence of rivalry and or excludability see e g cornes and sandler 1996 thus the treatment of a public

marshall s scale economies and jacobs externality in korea the role of age size and the legal form of organisation of establishments this paper revisits the concept of agglomeration economies by estimating the effects of localisation urbanisation and local competition on labour productivity using establish ment level data in korean manufacturing industries it is found that when an establish ment locates in a more localised specialised more urbanised diversified and more competitive area its workers become more productive due to external benefits from agglomeration issues of self selection bias and omitted variable bias are addressed by instrumenting the variables measuring localisation economies and controlling for the fixed effects of establishments location and industries year however the external effects from the spatial proximity of other establishments vary across the categories of industry type age size and legal form of organisation of establishments establishments in traditional heavy manufacturing industries receive more external benefits in a less diversified area while those in transport equipment manufacturing industries enjoy the largest benefits from localisation externalities exist for establishments aged between 2 and 7 years having at least 10 workers being corporate and having multiplants or not being headquarters establishments in relatively young industries rely more on diver sified environments while establishments in relatively old industries receive greater external benefits in the same industry cluster this result supports the product life cycle location theory of duranton and puga

is public expenditure productive abstract this paper considers the relationship between aggregate productivity and stock and flow government spending variables the empirical results indicate that i the nonmilitary public capital stock is dramatically more important in determining productivity than is either the flow of nonmilitary or military spending ii military capital bears little relation to productivity and iii a core infrastructure of streets highways airports mass transit sewers water systems etc has most explanatory power for productivity the paper also suggests an important role for the net public capital stock in the productivity slowdown of the last fifteen years

public infrastructure and the productive performance of canadian manufacturing industries this article examines the effects of public infrastructure on the productive performance of 12 two digit canadian manufacturing industries a flexible cost function incorporating public capital infrastructure is estimated for each industry separately using annual time series data for 1961 1995 the effects of public infrastructure on productivity are measured in terms of both cost saving dual and output augmenting primal measures we also investigate how public capital influences the input demand and cost structure in each industry and calculate the rate of return to public capital the empirical results provide strong evidence of the important role public infrastructure plays in the productivity of manufacturing industries the public capital serves as a substitute for both private capital and labor in most industries the rates of return to public capital are significant and vary over the years

public and private capital productivity puzzle a nonparametric approach is public expenditure productive is there a shortfall or excess in public capital investment we address these old issues in the light of new econometric tools it is argued that the cobb douglas specification that ignores nonlinearity inherent in the functional relationship of the production technology causes incorrect estimates of input elasticities to avoid possible model misspecification we use li racine generalized kernel estimation this procedure is used to estimate the returns to private capital employment and public capital in gross state product from a panel of 48 states for 17 years in contrast to previous studies we find that the return to public capital is positive and significantly different from zero

between development and social policies the impact of european structural funds in objective 1 regions rodriguez pose a and fratesi u 2004 between development and social policies the impact of european structural funds in objective 1 regions reg studies 38 97 113 european regional support has grown in parallel with european integration the funds targeted at achieving greater economic and social cohesion and reducing disparities within the european union eu have more than doubled in relative terms since the end of the 1980s making development policies the second most important policy area in the eu the majority of the development funds have been earmarked for objective 1 regions i e regions where gdp per capita is below the 75 threshold of the eu average however the european development policies have come under increasing criticism based on two facts the lack of upward mobility of assisted regions and the absence of regional convergence this paper assesses using cross sectional and panel data analyses the failure so far of european development policies to fulfil their objective of de

the determinants of default on insured conventional residential mortgage loans this paper presents empirical evidence on the determinants of default for insured residential mortgages a multinomial logit model is specified and estimated for regional aggregates constructed from cross sectional and time series data the results document the independent statistical significance of contemporaneous payment income and loan value ratios and unemployment rates as well as more commonly studied determinants of default such as age and the original loan value ratio

fiscal policy and the term structure abstract this paper investigates the empirical association between deficits in interest rates it extends the results in plosser 1982 to include the more recent experience the association between a measure of ex ante real rates and deficits is also considered the results largely corroborate the previous results first little or no association between real or nominal interest rates and deficits is found second output and to a lesser extent military spending are found to have a significant association with interest rates

reprint to infrastructure provision and macroeconomic performance abstract this paper studies the differences between private and government provision of infrastructure capital utilization decisions and their differential role in determining market prices for capital goods under the two regimes of infrastructure provision serve as a critical transmission mechanism for fiscal policy a subsidy to private providers of infrastructure is preferable to direct government provision irrespective of how the subsidy or expenditure is financed the case for private provision is much stronger in economies characterized by high levels of congestion the choice between private and government provision also has a crucial effect on the design of optimal fiscal policy

efficiency adjusted public capital and growth summary this paper constructs an efficiency adjusted public capital stock series and re examines the public capital and growth relationship the paper also examines the effects of four specific stages of the public investment process appraisal selection implementation and evaluation on capital accumulation and growth the results show that public capital is a significant contributor to economic growth the quality of public investment as measured by variables capturing the adequacy of project selection and implementation is statistically significant in explaining variations in economic growth a result mainly driven by low income countries

public policies and convergence abstract this paper employs a dynamic framework to compare the effects of alternative government policies on convergence of industrialized economies to the technology frontier the government s instruments include facilitating private investment and education policy the latter enhances skills of heterogenous specialists and implies the decision on their respective shares the analysis distinguishes between an isolated policy of a single economy and coordinated policies of various countries which policy maximizes the speed of convergence is crucially affected by the economy s state of development a policy switch between the mentioned instruments while catching up may be preferable

airline traffic and urban economic development this paper provides new evidence on the link between airline traffic and employment in us metropolitan areas the evidence confirms the common view that good airline service is an important factor in urban economic development frequent service to a variety of destinations reflected in a high level of passenger enplanements facilitates easy face to face contact with businesses in other cities attracting new firms to the metro area and stimulating employment at established enterprises the empirical results show that a 10 per cent increase in passenger enplanements in a metro area leads approximately to a 1 per cent increase in employment in service related industries however airline traffic has no effect on manufacturing and other goods related employment suggesting that air travel is less important for such firms than for service related businesses these estimates are generated controlling for reverse causality between employment and traffic the results imply that expansion of chicago s o hare ai

new evidence on deficits and interest rates it is generally assumed on theoretical grounds that increases in government borrowing cause interest rates to rise 1 but empirical support for this proposition has been weak at best several recent papers have uncovered no strong relationship between deficits and short terrn interest rates however the research reported here indicates that although the relationship between deficits and short terrn interest rates may be tenuous there is strong evidence that larger deficits are associated with higher long terrn interest rates much of the debate about whether there is a strong relationship between federal borrowing and interest rates concerns the crowding out question this controversy centers on the direct and indirect eilffects of government fiscal actions on private spending these effects have been well documented in the theoretical literature e g buiter 1977 carlson and spencer 1975 blinder and solow 1973 many of the crowding out effects studied in this literature depend on the connection between government borrowing and high interest rates friedman 1978 meyer 1975 silber 1970 this is called short run indirect crowding out and may occur when increases in government spending and borrowing cause interest rates to rise which then may cause private spending to be reduced buiter 1977 pp 310 13

partisan alignment effects on total factor productivity aray h partisan alignment effects on total factor productivity regional studies unlike the literature on political effects on real economy that suggests that partisan effects accrue through aggregate demand it is hypothesized that such effects could also accrue through aggregate supply using panel data for the spanish regions over the 1986 2010 period the main results are 1 partisan alignment effects only arise when central government enjoys a majority 2 there exist a positive contemporaneous effect and negative lagged effects and 3 in absolute value such effects vanish over time results are robust to different specifications and measures of total factor productivity tfp and methods of estimation

testing ricardian neutrality with an intertemporal stochastic model this paper s purpose is to develop and estimate a stochastic intertemporal model of consumption be havior and to use it for testing a version of the ricardian equivalen ce proposition with time series data two channels that may give rise to deviations from this proposition are specified finite horizons a nd liquidity constraints in addition the model incorporates explici tly the roles of taxes substitution between public and private consu mption and different degrees of consumer goods durability the evid ence based on data for israel in the first half of the 1980s suppor ts the ricardian neutrality specification yielding plausible estimat es for the behavioral parameters of the aggregate consumption functio n copyright 1988 by ohio state university press

government financing decisions and asset returns abstract this paper presents an empirical investigation of the relation between government financing decisions and asset returns in particular the focus is on whether a substitution of debt financing for tax financing of a given level of expenditures is associated with an increase in interest rates the paper brings a different perspective to empirical investigations of government fiscal policies by examining the response of asset prices in an efficient capital market to such policies rather than focusing on aggregate consumption behavior the results are consistent with the idea that asset prices are unrelated to how the government finances its expenditures the results however also indicate that the capital market is not indifferent with respect to the level of government expenditures as higher interest rates are associated with increases in government purchases

public capital and private productivity this paper uses three different approaches to investigate whether the declining provision of public capital is a major cause of declining labor productivity the juxtaposition of approaches removes

distributional effects of growth and public expenditures in africa estimates for tanzania and rwanda summary in this paper we explore the effects of fiscal policies and growth on measures of household welfare across the distribution of expenditures for two african countries rwanda and tanzania we explore the effect of government expenditures on expenditure growth in each quintile of the expenditure distribution and the effect of growth for each group we find that the benefits of growth are concentrated among the better off sectors of the population in these two countries perhaps to the detriment of the poorer sectors by looking at the effects within a country and across different groups of households and administrative entities we exploit variation in expenditures and growth across and within regions of each country to estimate the elasticities of expenditure with respect to fiscal expenditure and mean expenditure growth at different points of the expenditure distribution using household survey data and government expenditure data at the district level we find that overall mean expenditure growth benefits the top expenditure groups the welfare spillovers are mostly present for top 20 of the expenditure distribution with the middle of the distribution in tanzania responding slightly to these spillovers public social expenditures do not appear to affect inequality considerably but do tend to work toward decreasing inequality however mean expenditure growth is related to increases in inequality in the sense that the richest sectors of the population benefit the most from growth we find that the growth elasticity of expenditure is only above one for the top quintile in both countries in tanzania a 1 increase in average household expenditure is related to a 1 96 expenditure growth in the top quintile and 0 43 in the third quintile in rwanda a 1 increase in average household expenditure is related to a 1 93 increase in household expenditure in the top 20 of the distribution

fiscal policy and aggregate demand reply there appear to be two main conclusions of fred c graham s paper first he argues that the empirical evidence in aschauer 1985 supporting the permanent income hypothesis and a significant degree of substitutability between private consumption and government spending is specific to the sample period and to the limited nature of aschauer s unrestricted alternative model graham 1993 p 666 second after disaggregating government spending into various components he finds limited support for the hypothesis that federal nondefense spending as opposed to total federal state and local spending substitutes for private consumption the focus of my 1985 paper was on deriving a test of the ricardian equivalence theorem within an euler equation framework graham seems to have missed this point indeed there is no evidence in his paper to support the keynesian view that tax cuts stimulate private consumption and aggregate demand admittedly graham finds that changes in disposable income lead to changes in private consumption but this is not enough to support the standard keynesian analysis specifically it is necessary to determine whether tax changes per se induce changes in consumption spending consider a model similar to graham s equation 4 namely