centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

uniqueness and indeterminacy on the dynamics of endogenous growth abstract in this paper we study the dynamics of endogenous growth both in the model of lucas and in a generalization that incorporates a labor leisure choice we characterize the regions of the parameter space that give rise to unique equilibria as well as the regions that yield a continuum of equilibria with positive growth rates we find that such multiple equilibria exist for empirically very plausible parameters in particular when the lucas model is modified to incorporate endogenous labor journal of economic literature numbers e00 e3 o40

seller beware how bundling affects valuation abstracthow does bundling affect valuation this research proposes the asymmetry hypothesis in the valuation of bundles consumers demand more compensation for the loss of items from bundles compared with the loss of the same items in isolation yet they express lower willingness to pay for items added to bundles compared with the same items purchased separately this asymmetry persists because bundling causes consumers to perceive multiple items as a single inseparable gestalt unit thus consumers resist altering the whole of the bundle by removing or adding items six studies demonstrate this asymmetry across judgments of monetary value studies 1 and 2 and dis satisfaction study 3 moreover bundle composition the ability of different items to create the impression of a whole moderates the effect of bundling on valuation study 4 and the need to replace missing items i e restoring the whole mediates the effect of bundling on compensation demanded for losses study 5 finally the a

consumption self control by rationing purchase quantities of virtue and vice consumers attempts to control their unwanted consumption impulses influence many everyday purchases with broad implications for marketers pricing policies addressing theoreticians and practitioners alike this paper uses multiple empirical methods to show that consumers voluntarily and strategically ration their purchase quantities of goods that are likely to be consumed on impulse and that therefore may pose self control problems for example many regular smokers buy their cigarettes by the pack although they could easily afford to buy 10 pack cartons these smokers knowingly forgo sizable per unit savings from quantity discounts which they could realize if they bought cartons by rationing their purchase quantities they also self impose additional transactions costs on marginal consumption which makes excessive smoking overly difficult and costly such strategic self imposition of constraints is intuitively appealing yet theoretically problematic the marketing literature lacks operationalizations and empirical tests of such consumption self control strategies and of their managerial implications this paper provides experimental evidence of the operation of consumer self control and empirically illustrates its direct implications for the pricing of consumer goods moreover the paper develops a conceptual framework for the design of empirical tests of such self imposed constraints on consumption in consumer goods markets within matched pairs of products we distinguish relative virtue and vice goods whose preference ordering changes with whet her consumers evaluate immediate or delayed consumption consequences for example ignoring long term health effects many smokers prefer regular relative vice to light relative virtue cigarettes because they prefer the taste of the former however ignoring these short term taste differences the same smokers prefer light to regular cigarettes when they consider the long term health effects of smoking these preference orders can lead to dynamically inconsistent consumption choices by consumers whose tradeoffs between the immediate and delayed consequences of consumption depend on the time lag between purchase and consumption this creates a potential self control problem because these consumers will be tempted to over consume the vices they have in stock at home purchase quantity rationing helps them solve the self control problem by limiting their stock and hence their consumption opportunities such rationing implies that per purchase occasion vice consumers will be less likely than virtue consumers to buy larger quantities in response to unit price reductions such as quantity discounts we first test this prediction in two laboratory experiments we then examine the external validity of the results at the retail level with a field survey of quantity discounts and with a scanner data analysis of chain wide store level demand across a variety of different pairs of matched vice regular and virtue reduced fat calorie or caffeine etc product categories the analyses of these experimental field and scanner data provide strong convergent evidence of a characteristic crossover in demand schedules for relative vices and virtues for categories as diverse as among others potato chips chocolate chip cookies cream cheese beer soft drinks ice cream and frozen yogurt chewing gum coffee and beef andturkey bologna vice consumers demand increases less in response to price reductions than virtue consumers demand although their preferences are not generally weaker for vices than for virtues constraints on vice purchases are self imposed and strategic rather than driven by simple preferences we suggest that rationing their vice inventories at the point of purchase allows consumers to limit subsequent consumption as a result of purchase quantity rationing however vice buyers forgo savings from price reductions through quantity discounts effectively paying price premiums for the opportunity to engage in self control thus purchase quantity rationing vice consumers are relatively price in sensitive from a managerial and public policy perspective our findings should offer marketing practitioners in many consumer goods industries new opportunities to increase profits through segmentation and price discrimination based on consumer self control they can charge premium prices for small sizes of vices relative to the corresponding quantity discounts for virtues virtue consumers on the other hand will buy larger amounts even when quantity discounts are relatively shallow a key conceptual contribution of this paper lies in showing how marketing researchers can investigate a whole class of strategic self constraining consumer behaviors empirically moreover this research is the first to extend previous theoretical work on impulse control by empirically demonstrating its broader implications for marketing decision making

does decentralization reduce income inequality only in rich states we investigate the relationship between fiscal decentralization and income inequality using data from u s states over three and a half decades our study contributes to the literature in several ways in terms of empirical methodology and specification first we take into account integration and cointegration properties of the data and estimate the cointegratingrelationship between fiscal decentralization and income inequality using fully modified ordinary least squares following pedroni 2000 second we investigate the direction of the causality finally and perhaps most importantly we investigate if the relationship between fiscal decentralization and income inequality is conditional on income in each state we find that fiscal decentralization does reduce income inequality but only in rich states we also find that causality runs from fiscal decentralization to income inequality not the other way around

property tax revenues and multidimensional poverty reduction in colombia a spatial approach summary fiscal decentralization as an instrument to reduce poverty is an open debate that still takes place with little and contradictory empirical evidence regarding whether or not it has served the poor this paper focuses on analyzing the impact of municipalities per capita property tax revenues on multidimensional poverty in the colombian case this locally raised tax is used as an indicator of the state capacity that municipalities exercise when fiscal decentralization takes place to estimate its impact on poverty we control for the possible endogeneity biases that might affect this relationship while taking into account that multidimensional poverty exhibits strong spatial correlation among colombian municipalities we find statistically significant results that demonstrate a causal and diminishing effect of property tax revenues on the poverty headcount ratio and gap we also find that this effect has substantial spillovers across municipalities the findings of the paper highlight the need to strengthen subnational revenue systems through policy designs to increase locally raised revenues we simulate four different counterfactual scenarios to evaluate the potential effect of alternative policy designs on multidimensional poverty the results of these policy scenarios demonstrate that spatially differentiated policy schemes have greater effectiveness in reducing multidimensional poverty than geographically mute designs

does tax competition really promote growth abstract this paper considers the relationship between tax competition and growth in an endogenous growth model where there are stochastic shocks to productivity and capital taxes fund a public good which may be for final consumption or an infrastructure input absent stochastic shocks decentralized tax setting two or more jurisdictions maximizes the rate of growth as the constant returns to scale present with endogenous growth implies extreme tax competition stochastic shocks imply that households face a portfolio choice problem which dampens down tax competition and may raise taxes above the centralized level growth can be lower with decentralization our results also predict a negative relationship between output volatility and growth with decentralization

public budget composition fiscal de centralization and welfare we study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending we find that full centralization of tax and expenditure policies is optimal when infrastructure productivity is similar across regions when differences are not too large partial centralization is optimal with strong differences full decentralization becomes optimal national steady state output tends to be highest under full decentralization we provide a justification for the mixed evidence regarding the oates conjecture by showing that full dominates partial decentralization despite being inferior to complete decentralization on etudie le degre optimal de decentralisation fiscale dans une economie federale dynamique ou les gouvernements decident de la taille du budget et de son allocation entre les depenses en education publique et en infrastructures on decouvre qu une pleine centralisation des taxes et des depenses est optimale quand la productivite des infrastructures est la meme dans toutes les regions quand les differences ne sont pas trop importantes une centralisation partielle est optimale en presence de fortes differences la pleine decentralisation est optimale la production nationale en regime permanent tend aetre la plus elevee quand il y a pleine decentralisation on fournit une justification pour les resultats mixtes obtenus quant a la conjoncture de oates en montrant que la pleine decentralisation est preferable a la decentralisation partielle meme si elle est inferieure a la decentralisation complete

decentralization and economic growth revisited an empirical note abstract although it is theoretically expected that decentralization leads to efficient provision of local public services and stimulates economic development there is a mixed picture of the decentralization effect on economic growth across earlier empirical studies using the instrument variables iv technique with the latest cross country data for the period from 1997 to 2001 this paper found that fiscal decentralization has a significant positive impact on per capita gdp growth therefore when the focus is placed on the latest information on the economic situation in the latter 1990s decentralization particularly on the fiscal expenditure side is instrumental in economic growth

the red and the black mental accounting of savings and debt in the standard economic account of consumer behavior the cost of a purchase takes the form of a reduction in future utility when expenditures that otherwise could have been made are forgone the reality of consumer hedonics is different when people make purchases they often experience an immediate pain of paying which can undermine the pleasure derived from consumption the ticking of the taxi meter for example reduces one s pleasure from the ride we propose a double entry mental accounting theory that describes the nature of these reciprocal interactions between the pleasure of consumption and the pain of paying and draws out their implications for consumer behavior and hedonics a central assumption of the model which we call prospective accounting is that consumption that has already been paid for can be enjoyed as if it were free and that the pain associated with payments made prior to consumption but not after is buffered by thoughts of the benefits that the payments will finance another important concept is coupling which refers to the degree to which consumption calls to mind thoughts of payment and vice versa some financing methods such as credit cards tend to weaken coupling whereas others such as cash payment produce tight coupling our model makes a variety of predictions that are at variance with economic formulations contrary to the standard prediction that people will finance purchases to minimize the present value of payments our model predicts strong debt aversion that they should prefer to prepay for consumption or to get paid for work after it is performed such pay before sequences confer hedonic benefits because consumption can be enjoyed without thinking about the need to pay for it in the future likewise when paying beforehand the pain of paying is mitigated by thoughts of future consumption benefits contrary to the economic prediction that consumers should prefer to pay at the margin for what they consume our model predicts that consumers will find it less painful to pay for and hence will prefer flat rate pricing schemes such as unlimited internet access at a fixed monthly price even if it involves paying more for the same usage other predictions concern spending patterns with cash charge or credit cards and preferences for the earmarking of purchases we test these predictions in a series of surveys and in a conjoint like analysis that pitted our double entry mental accounting model against a standard discounting formulation and another benchmark that did not incorporate hedonic interactions between consumption and payments our model provides a better fit of the data for 60 of the subjects the discounting formulation provides a better fit for only 29 of the subjects even when allowing for positive and negative discount rates the pain of paying we argue plays an important role in consumer self regulation but is hedonically costly from a hedonic perspective the ideal situation is one in which payments are tightly coupled to consumption so that paying evokes thoughts about the benefits being financed but consumption is decoupled from payments so that consumption does not evoke thoughts about payment from an efficiency perspective however it is important for consumers to be aware of what they are paying for consumption this creates a tension between hedonic efficiency and what we call decision efficiency various institutional arrangements such as financing of public parks through taxes or usage fees play into this tradeoff a producer developing a pricing structure for their product or service should be aware of these two conflicting objectives and should try to devise a structure that reconciles them

fiscal federalism decentralization and economic growth a meta analysis the theoretical literature on fiscal federalism has identified several channels through which government decentralization could affect economic growth much of the literature focuses on the efficiency aspects of a decentralized provision of public services but decentralization may also increase growth by raising the ability of the political system to innovate and carry out reforms in contrast some authors argue that decentralization increases corruption and government inefficiency and thus may diminish growth given this theoretical ambiguity several studies have attempted to identify the effect of decentralization on economic growth empirically over the last two decades we review and conduct a meta analysis of this empirical literature based on our analysis we point out open questions and discuss possible ways to answer them jel h77 043 c52 i introduction building on various theoretical contributions an empirical literature analyzing the effect of fiscal decentralization on economic growth has emerged since the 1990s the relevant studies vary as to whether they use cross sectional time series or panel data as to whether they rely on cross country or single country samples and they vary in estimation methods decentralization measures and sample composition given the size and heterogeneity of the empirical literature it is useful to review the individual studies and summarize their main findings conducting a comprehensive search we identify 31 published and unpublished studies on the effect of fiscal decentralization on economic growth each of these studies estimates several models resulting in over 400 individual estimates while we first review these studies in a traditional manner our main aim is to analyze these estimates quantitatively specifically the main contribution of this article is to offer a meta analysis of the empirical findings on fiscal decentralization and economic growth a meta analysis is a useful methodology in our context as it is difficult to obtain clear cut conclusions with only a traditional survey of empirical literature the individual studies vary substantially in their characteristics and correspondingly in the findings they report by conducting a meta analysis however we can identify how the idiosyncratic characteristics of a particular study relate to its findings the meta analysis approach thus addresses model uncertainty with regard to each individual estimate in addition it can also serve as a partial response to the methodological critique of empirical research on fiscal decentralization by rodden 2004 as it helps to clarify the quantitative effects of different decentralization measures and estimation techniques finally as meta analytical techniques are rarely used in economics we also aim at contributing to the further establishment of this methodology stanley 2001 2008 the next section briefly discusses the various theoretical arguments as to why fiscal decentralization may affect economic growth we then provide a short traditional survey of the empirical studies in section iii we review this literature more systematically and quantitatively in section iv in section v we report the results of meta regressions and discuss how the idiosyncratic characteristics of a given study are related to its specific findings finally section vi provides a discussion of the results and some conclusions ii how could fiscal federalism affect economic growth theoretical approaches within the framework of the solow swan model solow 1956 swan 1956 fiscal federalism may be associated with a different level of efficiency in governance than unitary systems leading to a different value of solow s a the level of technology a regime change toward federalism would then be associated with temporarily different growth rates and eventually different levels of income but not with persistent growth differences

does fiscal decentralization constrain leviathan new evidence from local property tax competition this paper reexamines whether fiscal decentralization constrains leviathan government using panel data for pennsylvania we compare actual property tax rates to the leviathan revenue maximizing rates for municipalities school districts and counties using spatial econometric methods we also estimate the degree of spatial dependence at the three levels of local government we find that fiscal decentralization results in stronger intergovernmental competition and lower tax rates we also find evidence of collusion among school districts that exhibit high interdependence but also high tax rates this calls into question the current literature s blind use of spatial dependence as a measure of intergovernmental competition

an economic theory of self control the concept of self control is incorporated in a theory of individual intertemporal choice by modeling the individual as an organization the individual at a point in time is assumed to be both a farsighted planner and a myopic doer the resulting conflict is seen to be fundamentally similar to the agency conflict between the owners and managers of a firm both individuals and firms use the same techniques to mitigate the problems which the conflicts create this paper stresses the implications of this agency model and discusses as applications the effect of pensions on saving saving and the timing of income flows and individual discount rates

micro incentives and municipal behavior political decentralization and fiscal federalism in argentina and mexico summary this article analyzes the mixed results of political and fiscal decentralization in latin america by comparing taxing and spending policies in six cities in argentina and mexico consistent with previous studies we find that decentralization has been frustrated by overconcentration of power at the provincial level and large vertical fiscal imbalances though we characterize these as functional elements in a system of redistributive policy making that benefits a wide array of provincial and municipal actors we seek to add a new dimension to the literature by arguing that micro level incentives conditions and circumstances particular to specific places are more important determinants of municipal behavior than macro level structures those policy and institutional changes intended to make officials more responsive to local conditions federalism local elections intergovernmental transfers and own source revenues we conclude that the theory of decentralization relies on a flawed conception of the causal mechanisms that are hypothesized to create responsiveness in local officials

on the optimality of the nordic system of dual income taxation abstract in recent years the nordic countries have introduced a so called dual income tax which combines a proportional tax on capital income with progressive taxation of labour income the paper argues that this asymmetric treatment of the two types of income can be defended on pure efficiency grounds because the progressivity of the labour income tax serves to reduce the private return to human capital investment thereby offsetting the tendency of a proportional comprehensive income tax to discriminate in favour of such investment the analysis is based on an overlapping generations model of a small open economy where consumers face a trade off between investment in human capital and investment in non human capital extended versions of the model allow for liquidity constraints and an endogenous labour leisure choice

natural disaster impacts and fiscal decentralization in recent years many developing countries have sought to implement more decentralized governmental systems despite efforts toward fiscal federalism assessment of decentralization activity has been hampered by lack of consistent cross country measures of effectiveness since governments play a central role in the management of catastrophic events disaster impact data provide an opportunity to evaluate whether government structure is important in limiting disaster losses we use cross country data over the 1970 2005 period to estimate the relationship between decentralization and disaster casualties countries with more decentralized governments experience fewer disaster induced fatalities jel h73 q54

on the perceived value of money the reference dependence of currency numerosity effects money illusion research shows that the nominal face value of money affects consumer perceptions of its real value recent mixed findings on consumer valuations in different currencies suggest that the underlying anchoring and adjustment processes are complex we develop a framework to identify boundary conditions that specify the direction of anchoring effects on valuations in different currencies consumers anchor on the numerosity of the nominal difference between prices and salient referents e g budgets when evaluating transactions support for our framework comes from a series of experiments that evoke different reference standards we discuss implications and opportunities for future research

inefficiencies from metropolitan political and fiscal decentralization failures of tiebout competition we examine the welfare effects of provision of local public goods in an empirically relevant setting using a multi community model with mobile and heterogeneous households and with flexible housing supplies we characterize the first best allocation and show efficiency can be implemented with decentralization using head taxes we calibrate the model and compare welfare in property tax equilibria both decentralized and centralized to the efficient allocation inefficiencies with decentralization and property taxation are large dissipating most if not all the potential welfare gains that efficient decentralization could achieve in property tax equilibrium centralization is frequently more efficient an externality in community choice underlies the failure to achieve efficiency with decentralization and property taxes poorer households crowd richer communities and free ride by consuming relatively little housing thereby avoiding taxes copyright oxford university press

education overlapping generations and the existence of equilibrium abstract we describe a simple aggregative model the essential features of which are that individuals are mortal overlapping generations and can invest in their own training human capital it is shown by example that if expectations are rational then there may be a unique steady state but no competitive path starting away from the steady state

growth effects of flat rate taxes recent estimates of the potential growth effects of tax reform vary wildly ranging from zero to eight percentage points using an endogenous growth model we assess which model features and parameter values are important for determining the quantitative impact of tax reform we find that the critical parameters are factor shares depreciation rates the elasticity of intertemporal substitution and the elasticity of labor supply the elasticities of substitution in production on the other hand are relatively unimportant the quantitative estimates in several recent papers are compared with each other and with some of the evidence from u s experience we find that robert lucas s conclusion that tax reform would have little or no effect on the u s growth rate is theoretically robust and consistent with the evidence

progressive taxes equity and human capital accumulation in an endogenous growth model with overlapping generations abstract this paper explores the trade off between efficiency and intra and intergenerational equity in an endogenous growth model of an open economy with overlapping generations and human capital accumulation we demonstrate that progressive taxes hurt long run growth and exacerbate distortions associated with intergenerational spillovers however by raising saving these taxes strengthen the net foreign asset position

the effect of taxation on human capital this study finds a significant negative effect of proportional income taxation on human capital of the few earlier studies to address this issue most suggested a negligible effect of taxation on investment in human capital this earlier conclusion is shown to be incorrect by using a model that is more general in several respects than the models used previously

fiscal decentralization and economic growth abstract fiscal decentralization may indeed have a direct impact on economic growth but the theoretical underpinnings for this relationship remain largely undeveloped a fair summary of the empirical search for a direct relationship between fiscal decentralization and economic growth is that it remains an open question much less attention has been devoted in the literature to the indirect channels through which fiscal decentralization may affect economic growth we argue that much work remains to be done before policy advisors and decision makers can formulate and implement decentralization programs on the basis of improving the rate of economic growth

regional economic disparities and decentralisation the study of the influence of decentralisation on economic growth has received some attention in recent years but very few studies deal with its impact on regional inequalities this paper analyses the impact of both fiscal and political decentralisation on regional inequalities using alternative measures for a sample of 17 oecd countries in order to check for other possible influences the study also includes measures of public sector size and the type of party in government the final section studies the relevance of fiscal decentralisation in the regional convergence process observed by several authors during the past two decades the research reveals a strong negative correlation between decentralisation especially fiscal decentralisation and regional inequalities and also a positive influence of decentralisation on regional convergence

tax structure and growth in a model with human capital abstract the effect of the tax structure on the long run growth rate of income and consumption is analyzed where tax structure refers to the mix of taxes on physical and human capital which satisfy an exogenously given government budget constraint the factor used intensively in the consumption good sector relative to the capital goods sector as a whole is taxed more highly in a growth maximizing tax structure an endogenous labor supply the tax treatment of depreciation and the effect of replacing the income tax with a consumption tax are all considered

aid growth and devolution considering aid modality and different types of decentralization in this paper we provide further evidence on the relationship between decentralization and foreign aid effectiveness our previous work has shown that decentralization decreases aid effectiveness i e the impact of aid on economic growth is negative in decentralized countries however our previous work has not taken different types of aid and different types of decentralization into account which is at the heart of our current analysis we consider different measures of decentralization in particular measures of fiscal decentralization derived from government finance statistics and measures of political decentralization that are constructed based on countries constitutional rules in addition we take different types of aid into account grants loans technical assistance total net oda and we distinguish between multi lateral and bi lateral aid in order to consider differences in the donor structure our empirical analysis is based on panel data of up to 53 developing countries in our growth regressions we combine all types of decentralization with the different types of aid we find important differences between different types of decentralization i fiscal decentralization negatively affects aid effectiveness in line with our previous work ii employment decentralization may increase aid effectiveness and iii political decentralization does not hamper aid effectiveness or may even have positive effects

revisiting the decentralization theorem on the role of externalities the decentralization theorem oates w e 1972 fiscal federalism harcourt brace jovanovich new york is central to the discussion of fiscal federalism we revisit the role of consumption spillovers in evaluating the merits of de centralization unlike the general prediction a higher degree of spillovers may reduce the difference in utility of centralization and decentralization the non monotonicity result relates to the difference in expenditures on public consumption provided decentralized choices yield higher levels of public expenditure a rise in the amount of spillovers allows residents to enjoy larger gains in public consumption and thereby utility under decentralization relative to centralization

federalism fertility and growth this paper analyses the effect of federalism on fertility and growth in a model with human capital accumulation and endogenous fertility two regimes of education finance are compared central and local i find that local education finance yields higher growth at the price of increased inequality the effect of federalism on total and differential fertility rates depends on the elasticity of substitution between children and consumption the paper also empirically examines the relationship between fertility rates and fiscal decentralisation on a panel of oecd countries and finds a weak negative effect of decentralisation on total and differential poor minus rich fertility

fiscal decentralization and economic growth a cross country study abstract we use a panel data set of 46 countries over the 1970 1989 period to investigate the relationship between fiscal decentralization and economic growth we find a negative relationship between fiscal decentralization and growth in developing countries but none in developed countries several explanations are offered for our findings

federal state and local governments evaluating their separate roles in us growth we use us county level data from 1970 to 1998 to explore the relationship between economic growth and government employment at three levels federal state and local increases in federal state and local government employments are all negatively related to economic growth we find no evidence that government is more efficient at lower levels while we cannot separate out the productive and redistributive services of government we document that the county level income distribution became slightly more unequal from 1970 to 1998 we conclude that a release of government employed labor inputs to the private sector would be growth enhancing

fiscal competition and growth when capital is imperfectly mobile is tax competition good for economic growth we address this question using a simple model of endogenous growth governments in a system of many small jurisdictions benevolently maximize the welfare of immobile residents quadratic de installation costs limit the mobility of capital we look at optimal taxation and long run growth and we analyse the effects of cost parameter variations on taxation and growth a race to the bottom in capital tax rates is only one possibility the relationship between capital mobility and capital tax rates is not monotonic growth and capital mobility are unambiguously positively related

fiscal decentralization and economic growth in the oecd what impact if any does fiscal decentralization fd have on economic growth further investigations of the inter relationships between fd and economic growth are timely given that government decentralization remains at the forefront of many organization for economic cooperation and development oecd policy agendas this study incorporates a range of measures of fd to better account for the direct impact of different levels of subnational fiscal autonomy on economic growth the analysis also considers the impact of previously omitted public sector decentralization variables that provide further indication of the extent to which subnational governments sng are closer to the people and potentially better able to account for local preferences in fiscal decision making whilst little evidence of a direct relationship between fd and output growth is found some evidence is found to suggest that federal systems tend to have lower growth rates than do unitary states independent of their degree of decentr

the dynamic effects of government spending policies in a two sector endogenous growth model this paper investigates the impact of government spending policies in a two sector model of endogenous growth endogenous growth arises because all factors of production physical and human capital are reproducible both temporary and permanent government spending shocks are examined the model implies that a permanent lump sum financed increase in government spending raises the long run growth rate this occurs because the negative wealth effects of a spending increase will increase labor supply on the other hand an income tax or wage tax financed rise in government spending reduces the growth rate the output effects of a temporary increase in government spending may be greater or less than a permanent increase in spending copyright 1995 by ohio state university press

increasing the capital income tax may lead to faster growth this paper shows that under rather mild conditions higher capital income taxes lead to faster growth in an overlapping generations economy with endogenous growth government expenditures are financed with labor income taxes as well as capital income taxes since capital income accrues to the old taxing it reliefs the tax burden on the young and leaves them with more income out of which to save we argue that savings are sufficiently interest inelastic so that higher savings and therefore higher growth result the basic argument is not seriously challenged by a grandfather clause for initial capital or by the old receiving some labor income as well the reasoning is similar to feldstein 1978 auerbach 1979 and in particular jones and manuelli 1992 but in contrast to the conventional wisdom about the effect of capital income taxation as say in lucas 1990

risk perception in psychology and economics abstract the concept of rationality has been basic to most economic analysis its content has been successively refined over the generations as applied to the static world of certainty it has turned out to be a weak hypothesis not easily refuted and therefore not very useful as an explanation though not literally a tautology but recent decades have seen the development of stronger versions applied to a world in which time and uncertainty are real among its most important manifestations have been criteria for consistency in allocation over time the expected utility hypothesis of behavior under uncertainty and what may be termed the bayesian hypothesis for learning that is the consistent use of conditional probabilities for changing beliefs on the basis of new information these hypotheses have been used widely in offering explanations of empirically observed behavior though as not infrequently in economics the theoretical development has gone much further than the empirical implementation these hypotheses have also been used increasingly in normative analysis as a component of benefit cost studies therefore frequently referred to as benefit risk studies the value of reducing mortality rates from diseases for example has been studied by assuming that choice of occupations is made inter alia by comparing wage differences with mortality differences

decentralization and economic growth in europe for whom the bell tolls the effects of fiscal decentralization on economic growth are analyzed a theoretical framework is developed that builds on the relationships between government size and growth and between decentra

decentralization and the composition of public expenditure in spain gonzalez alegre j decentralization and the composition of public expenditure in spain regional studies this paper examines the effects of fiscal decentralization on the economic distribution of public expenditures using panel data from the seventeen spanish regions 1984 2003 it is shown that fiscal decentralization is a crucial determinant of the share of the public budget devoted to capital the estimation run is based on a model in which the utility of the representative agent from the current public expenditure depends on the distance to the level of the administration that provides it that could be the cause why decentralized economies experience a higher share of current expenditure in the budget of the public administrations gonzalez alegre j la decentralisation et la structure des depenses publiques en espagne regional studies cet article cherche a examiner l impact de la fiscalite decentralisee sur la distribution economique des depenses publiques a partir des donnees provenant d une

local decentralization and local economic growth a cross sectional examination of us metropolitan areas this paper builds on the growing empirical literature that explores the relationship between government structure and economic growth it uses a new data set of 314 us metropolitan areas to examine the relationship between local decentralization and local economic growth the results indicate a negative relationship between the central city share of metro area population and economic growth and a positive relationship between both the number of municipalities per 100 000 residents and the number of counties per 100 000 residents and economic growth those findings provide support for the hypothesis that decentralization enhances economic growth

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

the behavioral life cycle hypothesis self control mental accounting and framing are incorporated in a behavioral enrichment of the life cycle theory of saving called the behavioral life cycle blc hypothesis the key assumption of the blc theory is that households treat components of their wealth as nonfungible even in the absence of credit rationing specifically wealth is assumed to be divided into three mental accounts current income current assets and future income the temptation to spend is assumed to be greatest for current income and least for future income considerable empirical support for the blc theory is presented primarily drawn from published econometric studies

factor income taxation and growth under asymmetric information abstract this paper studies the growth effects of factor income taxation on capital and labor in an endogenous growth model with overlapping generations capital accumulation in our model takes place through credit financed investments in a market with asymmetric information between lenders and borrowers we show that in the presence of asymmetric information capital income taxation worsens the adverse selection problem in the credit market which in turn introduces an additional adverse effect on growth in so doing our analysis provides a new argument in favor of a lower higher capital labor income taxation in funding public expenditures

the countervailing effects of competition on public goods provision when bargaining inefficiencies lead to bad outcomes political competition is widely recognized as a mediator of public goods provision through its salutary effect on incumbents electoral incentives we argue that political competition additionally mediates public goods provision by reducing the efficiency of legislative bargaining these countervailing forces may produce a net negative effect in places with weak parties and low transparency typical of many young democracies we provide evidence of a robust negative relationship between political competition and local public goods using panel data from mali tests of mechanisms corroborate our interpretation of this relationship as evidence of legislative bargaining inefficiencies to explore the generalizability of these findings we analyze cross country panel data and show that political competition leads to better worse public goods provision under high low levels of party system institutionalization the paper sheds light on why political competition is only selectively beneficial and underscores the importance of considering both the electoral and legislative arenas

how to make a 29 increase look bigger the unit effect in option comparisons quantitative information can appear in different units e g 7 year warranty 84 month warranty this article demonstrates that attribute differences appear larger on scales with a higher number of units expressing quality information on such an expanded scale makes consumers switch to a higher quality option testifying to its practical importance expressing the energy content of snacks in kilojoules rather than kilocalories increases the choice of a healthy snack the unit effect occurs because consumers focus on the number rather than the type of units in which information is expressed numerosity effect therefore reminding consumers of alternative units in which information can be expressed eliminates the unit effect finally the unit effect moderates relative thinking consumers are more sensitive to relative attribute differences when the attribute is expressed on expanded scales the relation with anchoring and implications for temporal discounting and loyalty programs are discussed

optimal taxation and spending in general competitive growth models abstract we find that the optimal long run tax on capital income is zero even if the capital stock does not converge to a steady state nor to a steady state growth rate the optimal tax on human capital is also zero if human capital is not a final good but the long run wage tax is not generally zero we argue that consumption tax proposals such as the flat tax are not consumption taxes and are biased against human capital

decentralization and pollution spillovers evidence from the re drawing of county borders in brazil decentralization can improve service delivery but it can also generate externalities across jurisdictional boundaries we examine the nature and size of water pollution externalities as rivers flow across jurisdictions panel data on water pollution in brazilian rivers coupled with county splits that change the locations of borders allow us to identify the spatial patterns of pollution as rivers approach and cross borders controlling for fixed effects and trends specific to each location the theory of externalities predicts that pollution should increase at an increasing rate as the river approaches the downstream exit border that there should be a structural break in the slope of the pollution function at the border and that a larger number of managing jurisdictions should exacerbate pollution externalities we find support for all four predictions in the data satellite data on growth in night time lights along rivers show that local authorities allow more settlements to develop close to rivers in the downstream portions of counties which is the likely underlying mechanism the border effects on pollution are not as pronounced when the cost of inter jurisdictional coordination is lower

taxation and growth with overlapping generations abstract this paper examines the growth effects of wage and interest income taxation in an endogenous growth model which is characterized by diminishing point in time returns in human capital producing technology and overlapping generations of two period lived individuals we show that the greater the long term learning time of individuals the more individuals inherit human capital from the previous generation we demonstrate that a flat rate wage tax stimulates economic growth while interest income taxation does not necessarily foster such growth intergenerational redistribution induces individuals to change both physical and human capital accumulation affecting the growth rate through changes in factor prices

fiscal decentralisation and idc economic growth an empirical investigation the impact of fiscal decentralisation on ldc economic growth and development is widely debated in the development literature notwithstanding this there has been little attempt to test systematically this relationship accordingly in this note we present an empirical examination of the relationship between the level of fiscal decentralisation and economic growth rates across a sample of twenty three ldcsfrom 1974 to 1991 we fail to find however any strong systematic relationship between the two among our sample of ldcs

assessing the importance of tiebout sorting local heterogeneity from 1850 to 1990 this paper argues that long run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods the tiebout hypothesis we develop an extension of the tiebout model that predicts as mobility costs fall the heterogeneity across communities of individual public good preferences and of public good provision must weakly increase given the secular decline in mobility costs these predictions can be evaluated using historical data we find decreasing heterogeneity in policies and proxies for preferences across i a sample of u s municipalities 1870 1990 ii all boston area municipalities 1870 1990 and iii all u s counties 1850 1990

effect of face value on product valuation in foreign currencies ringgits p 1 u s dollar four studies demonstrate the robustness of the face value dinar p 1 effect across different currencies exchange rate frames and with samples from two countries and two studies show that ability related factors such as time pressure and experience moderate the face value effect the article concludes by discussing the theoretical implications of the findings

government size decentralization and growth empirical evidence from italian regions abstractthe aim of this study is to empirically assess the relationship among government size decentralization and economic growth in italian ordinary regions the empirical analysis based on a panel dataset on italian regions provides evidence in support of the existence of an inverted u shaped relationship between public expenditure and economic growth that depends on the degree of fiscal decentralization in particular according to our estimates on the specific italian case the optimal degree of decentralization is around 32 while the optimal government size value is approximately 52

fiscal centralization versus decentralization growth and welfare effects of spillovers leviathan taxation and capital mobility abstract this paper develops an endogenous growth model with spillovers of public goods leviathan taxation and mobile capital to examine the relative merits of centralized and decentralized fiscal systems for economic growth and social welfare we show that a decentralized system dominates a centralized system in terms of economic growth however the difference in social welfare between a decentralized and a centralized system is non monotonic and displays a hump shaped relationship with respect to capital mobility since higher capital mobility induces stronger tax competition this finding implies that there is an optimal degree of tax competition some tax competition is desirable but fierce tax competition may be harmful we also show that there is a critical level of spillovers of public goods above which centralization dominates decentralization in terms of social welfare as in previous studies however if spillovers are below this critical level capital mobility also matters in the welfare comparison between centralized and decentralized systems

the impact of fiscal decentralization on economics performance in high income oecd nations an institutional approach this paper examines the impact of public sector decentralization on per capita income controlling for differences in institutional arrangements among countries panel data regressions on a sample of observations from 20 high income oecd nations spanning the years 1972 to 2005 indicate that decentralization is positively related to income the empirical analysis shows that institutions consistent with economic freedom enhance the positive income effects of decentralization thus the impact of public sector decentralization is dependent upon a nation s institutional environment

on the number and size of nations this paper studies the equilibrium determination of the number of countries in different political regimes and in different economic environments with more or less economic integration we focus on the trade off between the benefits of large jurisdictions and the costs of heterogeneity of large and diverse populations our model implies that i democratization leads to secessions ii in equilibrium one generally observes an inefficiently large number of countries iii the equilibrium number of countries is increasing in the amount of economic integration

a branch of economics is missing micro micro theory jn the life history of most sciences there are movements toward the study of larger aggregates or toward the detailed study of smaller and more fundamental units my impression is that in most fields the movement toward the study of more micro units has predominated yet in economics in the 1930 s the movement was in the macro direction both physics and biology in the last three decades have made great strides by studying smaller and smaller entitiesphysics by studying more minute fundamental particles and biology by studying the fundamental elements determining genetics in a general sense economics has not been moving in this direction although some work of this nature exists the purpose of this paper is to review some samples of the work that exists and to argue that this area must become a major field of economic research and study the question of how individuals in multiperson firms influence firm decisions seems like such a natural question to ask that it is amazing that it is not part of the formal agenda of economists as a profession of course it has been asked but not by present day economists in their professional capacity in other words micromicroeconomics has never become an established field for the most part theorists have not only not raised this question but they have continued to develop micro theory in such a way as to discourage economists from raising this question part of the reason for this lies in the maximizing and optimizing biases of conventional micro theory and part can be ascribed to the consequences of the long period required to refine the theory so that elements that did not fit the basic model were discarded

money isn t everything but it helps if it doesn t look used how the physical appearance of money influences spending despite evidence that currency denomination can influence spending researchers have yet to examine whether the physical appearance of money can do the same this is important because smaller denomination bills tend to suffer greater wear than larger denomination bills using real money in the context of real purchases this article demonstrates that the physical appearance of money can override the influence of denomination the reason being people want to rid themselves of worn bills because they are disgusted by the contamination from others whereas people put a premium on crisp currency because they take pride in owning bills that can be spent around others this suggests that the physical appearance of money matters more than traditionally thought and like most things in life it too is inextricably linked to the social context the results suggest that money may be less fungible than people think

externalities and dynamics in models of learning or doing this paper analyzes the dynamics of general equilibrium models with externalities in human capital accumulation which extends that of uzawa lucas multiple balanced growth paths with different growth rates and a continuum of equilibria with a unique balanced growth path may exist in general endowment shocks can be followed by higher or lower growth rates a simple necessary and sufficient condition which depends only on the physical production technology is established for a positive impact of physical capital on productivity growth under the same condition a sudden removal of capital income taxation lowers welfare copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the denomination effect labeled the denomination effect study 1 shows in three field studies that the likelihood of spending is lower when an equivalent sum of money is represented by a single large denomination e g one 20 bill relative to many smaller denominations e g 20 1 bills in two of the three field studies individuals spent more once the decision to spend had been made study 2 then shows that consumers deliberately choose to receive money in a large denomination relative to small denominations when there is a need to exert self control in spending study 3 further shows that the denomination effect is contingent on individual differences in people s desire to reduce the pain of paying associated with spending the results suggest that the denomination effect occurs because large denominations are psychologically less fungible than smaller ones allowing them to be used as a strategic device to control and regulate spending

political constraints to growth in an economic union abstract this paper studies the political economy of growth in an economic union such as the eu in the spirit of acemoglu aghion and zilibotti acemoglu d aghion p and zilibotti f 2006a distance to frontier selection and economic growth journal of the european economic association 4 1 37 74 acemoglu d aghion p and zilibotti f 2006b growth development and appropriate versus inappropriate institutions mimeo mit as the economy approaches the world technology frontier structural reforms that increase competition in intermediate goods sectors are necessary to boost innovation and productivity growth reforms however raise the opposition of incumbents and therefore are politically difficult to implement when there are important cross border policy spillover effects national governments are more easily captured by vested interests as they fail to internalize the benefits of reforms on the rest of the union in this situation productivity growth may be sluggish and the economy can fail to converge to the frontier on the other hand when policy is chosen by a union government or a collective body that takes into account union welfare the internalization of spillovers raises the perceived benefit of reforms and consequently lowers the ability of lobbies to obtain high levels of protection

pennies a day the effect of temporal reframing on transaction evaluation to increase transaction compliance marketers sometimes temporally reframe the cost of a product from an aggregate one time expense to a series of small ongoing expenses often in spite of the fact that the physical payments remain aggregated this temporal reframing is identified in this article as the pennies a day pad strategy a two step consumer decision making process of 1 comparison retrieval and 2 transaction evaluation is posited to explain the effectiveness of this strategy in a series of laboratory studies general support for pad effectiveness across a range of product categories and specific support for the proposed two step model was found the pad framing of a target transaction is shown to systematically foster the retrieval and consideration of small ongoing expenses as the standard of comparison whereas an aggregate framing of that same transaction is shown to foster the retrieval and consideration of large infrequent expenses this difference in retrieval is shown to significantly influence subsequent transaction evaluation and compliance

does decentralization contribute to efficiency evidence from oecd countries abstractthis article provides evidence on the relationship between fiscal decentralization and technical efficiency we begin the first stage of this study with a data envelopment analysis to obtain technical efficiency estimates for a sample of 23 oecd countries over the period 1992 2009 in a second stage we explore the effects of fiscal decentralization and other control variables on technical efficiency the results including all the control variables reveal a statistically significant negative relationship between fiscal decentralization of public expenditure and technical efficiency

political decentralization economic growth and regional disparities in the oecd ezcurra r and rodriguez pose a political decentralization economic growth and regional disparities in the oecd regional studies recent scholarly work has addressed whether decentralization affects economic growth and regional disparities by typically resorting to fiscal decentralization while disregarding political decentralization indices this article covers this gap by investigating the association between different political decentralization indices with two measures of economic performance changes in gross domestic product gdp per capita and in territorial inequalities the results suggest a lack of statistical relationship between political decentralization and economic growth regardless of how political decentralization is measured in the case of regional disparities the results depend on the index used and range from the absence of a link to a positive association between both factors ezcurra r and rodriguez pose a oecd

factor income taxation in a horizontal innovation model we consider the optimal factor income taxation in a standard r d model with technical change represented by an increase in the variety of intermediate goods in the model there are externalities both to working and to saving due to market power by firms incomplete appropriability of the benefits of inventions and the cost of economic activity in terms of public expenditures redistributing the tax burden from labor to capital will increase employment but in most cases reduce the rate of growth with conflicting effects on the deadweight loss from the externalities under plausible calibrations of the model the optimal tax rate on capital will be sizable

fiscal federalism and economic growth this paper uses an endogenous growth model with overlapping generations to explore the connection between fiscal federalism and economic growth the analysis shows that federalism which allows public good levels to be tailored to suit the differing demands of young and old consumers who live in different jurisdictions increases the incentive to save this stronger incentive in turn leads to an increase in investment in human capital and a byproduct of this higher investment is faster economic growth

slow down insensitivity to rate of consumption leads to avoidable satiation consumers often choose how quickly to consume things they enjoy the research presented here demonstrates that they tend to consume too rapidly growing tired of initially well liked stimuli such as a favorite snack experiments 1 and 4 or an enjoyable video game experiments 2 and 3 more quickly than they would if they slowed consumption the results also demonstrate that such overly rapid consumption results from a failure to appreciate that longer breaks between consumption episodes slow satiation the results present a paradox participants who choose their own rate of consumption experience less pleasure than those who have a slower rate of consumption chosen for them

on the taxation of human and physical capital in models of endogenous growth abstract this paper studies the effects of factor income taxation and of subsidies to human capital accumulation in models of endogenous growth it examines in particular how these effects depend on the specification of the leisure activity and on the technology and tax treatment of the sector producing human capital it shows that the negative effects of factor income taxes on economic growth are stronger when the human capital sector is a market good under these circumstances a subsidy to human capital accumulation can offset the direct growth effects of labor taxation making it akin to a consumption tax the paper then briefly discusses the normative implications of the analysis for the optimal taxation of factor incomes

perception judgment and motivation in manufacturing enterprises findings and preliminary hypotheses from in depth interviews abstract in depth interviews with decision makers in 113 well regarded small and medium size metalworking enterprises in argentina mexico and the united states suggest that such individuals often perceive market technological and public policy data in a highly imperfect manner and thus address themselves to problems which are variants sometimes remote variants of those actually confronted this leads to mistaken judgments and the use of judgmental heuristics to solve problems further biases results additional complications result from the fact that enterprise objectives vary from task to task these findings and preliminary hypotheses have major implications for the analysis of entrepreneurial behavior

taxation and long run growth abstract a number of recent papers have investigated the growth effects of tax reforms in the context of neoclassical growth models with human capital growth effects were found to be large but highly sensitive to parameter choices this paper shows that growth effects are smaller and much less sensitive in models that generate realistic life cycle behavior which requires that households are finitely lived but generations may be altruistically linked and face diminishing point in time returns in human capital accumulation reasonable upper bounds for growth effects in such models are less than one third of some values reported in the literature

mental budgeting and consumer decisions consumers often set budgets for categories of expenses e g entertainment and track expenses against their budget because budgets cannot perfectly anticipate consumption opportunities people may earmark too much or too little money for a particular category this leads them to overconsume or underconsume goods in that category the results of three studies suggest that consumers do indeed set budgets and that budgeting may lead to underconsumption to show that consumers track expenses the studies demonstrate that budgeting effects are larger for purchases that are highly typical of their category such purchases reduce the amount people spend in a category and block the purchase of other typical items the studies control for satiation and income effects thus budgeting adds predictive power to standard economic consumer theory

fiscal decentralization and economic growth reconsidered recent studies examining the relation between fiscal decentralization and economic growth have failed to take account of the extent of the independent taxing powers available to sub national governments and thus have substantially overstated the degree of effective decentralization results from a cross section study of 19 oecd member countries suggest that when the measure of fiscal decentralization is limited to the revenues over which sub national governments have full autonomy its impact on economic growth is not statistically significant

federal competition and economic growth abstract this paper exploits exogenous variation in the natural topography of the united states to estimate the causal impact of inter jurisdictional competition on income growth we find that doubling the number of county governments in a metropolitan area leads to a 17 increase in the average annual growth rate of earnings per employee over 1969 2006 and a 10 increase in 2006 income per employee decomposing income effects using 2000 census worker level data we find that approximately half of the effect stems from making workers more productive while the other half comes from changing the composition of the workforce and inducing workers to work more hours we also present evidence that inter jurisdictional competition leads local governments to raise more in taxes spend more and issue more debt per capita but does not help them obtain more inter governmental transfers however the additional cost from this increase in expenditures to a median wage employee is much smaller than the increase in that employee s wages due to greater inter jurisdictional competition

on the optimal taxation of capital income abstract we show that in models in which labor services are supplied jointly with human capital the chamley and judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale moreover for a class of widely used preferences consumption taxes are zero in the limit as well however we show by the construction of two examples that these results no longer hold for certains types of restrictions on tax rates or if there are profits generated journal of economic literatureclassification numbers e62 h21

decentralization and corruption evidence across countries the relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design the theoretical literature makes ambiguous predictions about this relationship and it has remained virtually unexamined by empiricists the authors make a first attempt at examining the issue empirically by looking at the cross country relationship between fiscal decentralization and corruption as measured by a number of different indices their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption moreover they find that the origin of a country s legal system for example civil versus common legal code performs extremely well as an instrument for decentralization the estimated relationship between decentralization when so instrumented and corruption is even stronger the evidence suggests a number of interesting areas for future work including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction and understanding the channels through which decentralization succeeds in keeping corruption in check

the impact of fiscal decentralization on the composition of public expenditure panel data evidence from italy grisorio m j and prota f the impact of fiscal decentralization on the composition of public expenditure panel data evidence from italy regional studies this paper is an original contribution to the understanding of the relationship between fiscal decentralization and public expenditure composition it studies the effects of the ongoing decentralization process in italy on the share of different categories of public spending in total expenditure of the italian regional administrations over the period 1996 2008 the data used allow one to go beyond the usual distinction between current and capital expenditures and to present a functional classification of public expenditures through a panel data analysis the paper shows that the level of decentralization influences the composition of expenditure

fiscal incentives and policy choices of local governments evidence from china abstract this paper examines how fiscal incentives affect the policy choices of local governments in the context of china based on exogenous changes in the intergovernmental revenue sharing scheme we construct a simulated instrumental variable to resolve the endogeneity problem we find evidence that local governments shifted their efforts from fostering industrial growth to urbanizing china i e to developing the real estate and construction sectors when their retention rate of enterprise tax revenue was reduced the increase from the new revenue source compensated for half of the losses in revenue that resulted from the reassignment of fiscal rights the reassignment had also the effect of retarding the industrial growth of domestically owned firms in particular

aid growth and devolution summary this paper examines whether the degree of fiscal decentralization in aid receiving countries matters in explaining aid effectiveness the decentralization theorem predicts that the devolution of powers should increase aid effectiveness since local decision makers are better informed about local needs thereby decentralization may also have reverse effects e g through coordination problems excessive regulation administrative costs and local capture we use panel data for up to 60 countries and find that aid contributes to economic growth in centralized developing economies whereas it is less effective or even harmful in decentralized countries the cases of indonesia the philippines and uganda support our findings our results imply that donor countries should carefully consider how the two development instruments foreign aid and decentralization interact

factor shares in olg models of growth abstract in standard infinite horizon optimizing models of balanced growth aggregate savings are positively related to private rates of return on investment or for a given technology to the share of accumulated factors of production in aggregate income a relationship of opposite sign may however obtain in overlapping generations olg models where higher rates of return on older agents wealth imply lower disposable income for young laborers with high saving propensity this paper explores such issues in the context of a continuous time olg model deriving simple parametric restrictions conductive to results of either type and discussing how infinite horizon results may carry over to olg settings

analysis of a two sector model of endogenous growth with capital income taxation this paper addresses a two sector model of endogenous growth in which one sector produces final goods and the other produces new human capital both sectors employ human as well as physical capital under constant returns to scale technologies unlike existing studies of this type of model that have mostly concentrated on steady state analysis or on numerical simulations of calibrated models this paper presents an analytical argument concerning the dynamic behavior of the growth path and the effects of capital income taxation in and out of the steady growth equilibrium it is demonstrated that the dynamic behavior of the economy and some policy effects depend heavily upon the magnitude of factor intensity used in each production sector copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

qualitative and mixed methods research in economics surprising growth promising future qualitative research in economics has traditionally been unimportant compared to quantitative work yet there has been a small explosion in use of quantitative approaches in the past 10 15 years including mixed methods projects which use qualitative and quantitative methods in combination this paper surveys the growing use of qualitative methods in economics and closely related fields aiming to provide economists with a useful roadmap through major sets of qualitative methods and how and why they are used we review the growing body of economic research using qualitative approaches emphasizing the gains from using qualitative or mixed methods over traditional closed ended approaches it is argued that although qualitative methods are often portrayed as less reliable less accurate less powerful and or less credible than quantitative methods in fact the two sets of methods have their own strengths and how much can be learned from one type of method or the other depends on specific issues that arise in studying the topic of interest the central message of the paper is that well done qualitative work can provide scientifically valuable and intellectually helpful ways of adding to the stock of economic knowledge especially when applied to research questions for which they are well suited