substance use and adolescent sexual activity using the national longitudinal survey of youth 1997 we examine the relationship between initiating substance use and youth sexual behaviour we employ a combination of panel data and propensity score matching techniques to control for observed and unobserved heterogeneity the results indicate striking differences across gender for males initiating alcohol or marijuana use is positively and significantly associated with the likelihood of engaging in sexual intercourse and uncontracepted sexual intercourse for females in contrast there is no robust evidence for such links

the farmers home administration s social discount rate the aim was to estimate the sdr revealed by past decisions by the farmers home administration fmha concerning their farm ownership programme in new york state these decisions involved trading off a current loan against a long stream of future farm profits the ratio of the coefficients to these two variables in a logit equation produced the estimate of the sdr the main finding was that a very high rate of discount was uncovered in the range 70 73 these high rates may be explained by individual risk and the life cycle context in which the estimates were made

state alcohol policies teen drinking and traffic fatalities this empirical study evaluates the policy responsiveness of teen drinking in models that can condition on the unobserved state specific attributes that may have biased conventional evaluations the results demonstrate that cross state heterogeneity can be important and that beer taxes have relatively small and statistically insignificant effects on teen drinking models of youth traffic fatalities also indicate that the conventional beer tax elasticities are not robust to additional controls for omitted variables the importance of these omitted variables is illustrated by a counterfactual which compares models of nighttime fatalities to those that occur in the daytime when the rate of alcohol involvement is substantially lower

rationing by waiting and the value of time results from a natural experiment the authors analyze data from a natural experiment with rationing by waiting in the situation motorists were confronted with a choice between waiting in line for low priced gasoline or purchasing at a higher price without waiting they view this as a revealed preference experiment and use their choices to estimate the value of time spent waiting as a function of individual characteristics in most cases the estimates of the value of time are quite similar to individuals after tax wages 13 references 7 tables

openness and the sectoral effects of fiscal policy based on structural var evidence for the u s we document that a rise in govemment spending generates three facts i an appreciation of the terms of trade 2 a fall in the price of traded vs non traded goods proxied by the price of goods relative to services and 3 a positive co movement between the manufacturing and the service sector both in consumption and production we show that even if govetument spending is assumed to be as intensive in goods and services as households consumption the relative price behavior can be explained as a simple implication of trade openness however a baseline open economy business cycle mtxlel has problems in rationalizing simultaneously the sectoral co movement of quantities and the behavior of relative prices this anomaly is enhanced if govemment spending is assumed to be intensive in non traded goods jel e i2 f41 e62

trade openness and public expenditure the spanish case 1960 2000 the empirical link between the post wwii expansion of international market integration and the growth of national public expenditure has been widely noted with no consensus as yet regarding the interpretation of this correlation we posit that a likely link between increased openness and public spending is the use of the latter to offset changes in the distribution of income that result from increased openness to explore this potential link we study time series data from spain in 1960 2000 a period of major changes in political organization as well as in both fiscal and trade policy we find evidence that democracy reinforced the causal relation from increased openness to greater public expenditure thus the paper contributes to the literature that emphasizes that changes in political regimes are potentially important determinants of the observed international patterns of openness and government size

monetary union and wage bargaining institutions in the eu extrapolating from some member state experiences this article considers the question of how monetary union in the eu is likely to impact the preferences of governments employers and unions regarding the organization of wage bargaining european monetary union involves a decentralization of wage bargaining centered at the national level in relation to monetary policy centralized at the european level drawing on recent literature and on the experience of two member states italy and spain which prior to emu underwent periods of intense bargaining fragmentation the author argues that the imposition of restrictive monetary policy in a fragmented wage bargaining context in which workers nonetheless have substantial bargaining rights tends to have perverse effects these effects ultimately led governments and bargaining actors in italy and spain to seek a reorganization of bargaining that gave national actors greater control over wage setting the article considers to what extent a similar dynamic might play out in the euro zone

the long run relationship between openness and government size evidence from bounds test the bounds test is applied to determine the existence of a level relationship between government size openness terms of trade volatility and external risk using time series data from australia canada england norway sweden and the usa bounds test results show that the existence of a long run relationship in the usa and canada but not in any of the other countries long run parameters are estimated using both autoregressive distributed lag and fm ols procedures results vary from country to country with some evidence that government size is significantly affected by openness and terms of trade volatility however contrary to argument and evidence developed using cross section data empirical evidence presented in this paper show that the size of the government has not changed to mitigate the effect of increased income risks associated with greater openness

linking policies and economic voting explaining reelection in the case of the spanish socialist party economic voting literature has shown that voters hold governments responsible for the state of the economy election studies have also found that voters punish governing parties that divert from their campaign promises and move their policy positions these bodies of literature cannot convincingly explain the repeated reelection of the socialist party which passed supply side economic measures at odds with campaign promises and its traditional ideology furthermore the party succeeded in gaining reelection regardless of the state of the economy and despite consistently high unemployment in this article it is argued that to better understand the repeated electoral success of the socialist party three additional factors have to be taken into account the party system compensatory policies and internal party politics these factors allowed the spanish socialist party to build an electoral support coalition based on lower classes rural voters and voters dependent on state subsidized income

government size and macroeconomic stability abstract we analyze the effects of government size on output variability in the context of a rbc model in which government size is parameterized by the income tax rate and the share of government purchases in output the model implies that i income taxes are destabilizing and ii for most specifications considered government purchases are stabilizing we compare those predictions with the results of simple cross country regressions using data for 22 oecd countries the estimated relationship between empirical indicators of government size and measures of gdp variability appears far stronger than the model predicts and often has the opposite sign

commodity trade and international risk sharing how much do financial markets matter abstract this paper evaluates the social gains from international risk sharing in some simple general equilibrium models with output uncertainty a simulation model calibrated to selected moments of u s and japanese data estimates the incremental loss from a ban on international portfolio diversification to be on the order of 0 20 percent of output per year even the theoretical gains from asset trade may disappear under alternative sets of assumptions on preferences and technology the paper argues that the small magnitude of potential trade gains may help explain the apparently inconsistent findings of empirical studies on the degree of international capital mobility

by force of demand explaining cyclical fluctuations of international trade and government spending abstract this paper explores the role of demand shocks as an alternative to productivity shocks in driving both domestic and international business cycles within the international real business cycle irbc framework in addition to those well documented domestic business cycle fluctuations e g the volatility and cyclicality of output consumption investment labor hours and labor productivity and international business cycle properties e g the countercyclical net export and the comovement puzzle this paper focuses on two additional stylized facts in the industrialized countries the procyclical trade openness the gdp fraction of trade volume and the countercyclical government size the gdp fraction of government spending using a parsimonious dynamic stochastic general equilibrium model we show that the model s predictions under productivity shocks are not consistent with these facts instead a demand shock driven model replicates the above facts while matching other domestic and international business cycle properties an estimated version of the model confirms the quantitatively important impacts of demand shocks

the terms of trade and the international coordination of fiscal policy this paper develops an example of a noncooperative game between fiscal authorities in two countries the key strategic link between countries is the terms of trade an equilibrium without cooperation is characterized by excessive tax rates and public spending levels in each country the outcome is analogous to the nash equilibrium of the static optimal tarif game in trade theory but in this model there is also a dynamic distortion caused by noncooperative behaviour this dynamic distortion depresses capital accumulation and reduces the equilibrium capital stock in each country numerical examples suggest a significant welfare benefit of cooperation

an implicit price of a daly for use in a cost benefit analysis of arvs this article uses the revealed preference approach to estimate the price for a disability adjusted life year daly implied by grant decisions by the global fund for aids tuberculosis tb and malaria gfatm a cost benefit criterion is used that requires the daly price exceed the cost effectiveness ratio the estimated price was 6300 for a daly saved from any disease but it was 11 900 from a daly saved specifically from hiv aids estimates of the cost effectiveness ratios of antiretroviral drug therapies arvs in the literature were examined at the daly prices implicit by gfatm decisions arvs would be socially worthwhile

government size government debt and globalization this article empirically investigates the effect of globalization on government size and debt using panel heterogeneous cointegration techniques to a panel of developing and developed countries i

estimating the effectiveness and benefits of alcohol treatment programmes for use in economic evaluations a binary probit model based on random utility theory is employed to obtain the implicit determinants of alcohol treatment effectiveness revealed by decisions made by programme evaluators of behavioural changes by patients a scale of equivalences for the behavioural variables is constructed which uses reductions in alcohol drinking as the unit of account because one of the behavioural variables was the change in income from treatment expressed in dollars the trade offs contained in the scale of equivalences can be translated into monetary terms using the human capital approach the method is applied to a sample of 1689 observations from the national alcoholism program information system napis tapes for 1977 81

a model of political equilibrium in a representative democracy abstract this paper studies political equilibrium in a two party representative democracy in which the political parties are policy motivated and voters trade off their policy preferences against their party identity it is shown that the parties will in general adopt differing policy positions in equilibrium and that under certain qualifications the winning policy will lie between the more popular party s preferred policy and a certain utilitarian optimum the winning policy will be closer to this utilitarian optimum the less biased the electorate is in terms of party identification

oil prices and the terms of trade abstract the combination of substantial terms of trade variability and unstable correlation patterns of trade prices with output and trade volumes has led some to suggest a break in the link between trade volumes and prices we find that oil accounts for much of the variation in the terms of trade over the last twenty five years and its quantitative role varies significantly over time and since our dynamic general equilibrium model predicts that the economy responds differently to oil supply shocks than to other shocks changes in their relative importance helps to account for the unstable correlations in the data

the size and scope of government comparative politics with rational politicians we try to demonstrate how economists may engage in research on comparative politics relating the size and composition of government spending to the political system a downsian model of electoral competition and forward looking voting indicates that majoritarian as opposed to proportional elections increase competition between parties by focusing it into some key marginal districts this leads to less public goods less rents for politicians more redistribution and larger government a model of legislative bargaining and backward looking voting indicates that presidential as opposed to parliamentary regimes increase competition between both politicians and voters this leads to less public goods less rents for politicians less redistribution and smaller government we confront these predictions with cross country data from around 1990 controlling for economic and social determinants of government spending we nd strong and robust support for the prediction that the size of government is smaller under presidential regimes and weaker support for the prediction that majoritarian elections are associated with less public goods

the welfare state and competitiveness in all industrial countries fiscal policy is increasingly about redistribution in this paper the authors study redistribution across different types of agents in a world characterized by the presence of labor unions and distortionary taxation they show that an increase in transfers financed by distortionary taxation has nonlinear effects on unit labor costs relative to the other countries depending on the degree of centralization of the wage setting process in the labor market the authors find considerable empirical support for the model in a sample of fourteen oecd countries copyright 1997 by american economic association

wagner s hypothesis in time series and cross section perspectives evidence from real data for 115 countries internationally comparable data on income and government expenditure for 115 countries covering the period 1950 80 are used to assess the validity of wagner s hypothesis individual country time series data and several intercountry cross sections are studied besides a tremendous diversity in the position for various countries the results indicate that while there is support for the hypothesis in some time series data sets such support is lacking in most cross section estimates much of the support for the hypothesis reported in many earlier studies therefore was probably due to either use of limited samples or inadequate data comparability across the observations studied copyright 1987 by mit press

globalization and risk sharing we study the effects of globalization on risk sharing and welfare like the previous literature we assume that governments cannot commit to enforce the repayment of debts owed by their citizens unlike the previous literature we assume that governments cannot discriminate between domestic and foreign creditors when enforcing debt payments this creates novel interactions between domestic and international trade in assets i increases in domestic trade raise the benefits of enforcement and facilitate international trade in fact in our set up countries can obtain international risk sharing even in the absence of default penalties ii increases in foreign trade raise the costs of enforcement and hamper domestic trade as a result globalization may worsen domestic risk sharing and lower welfare we show how these effects depend on various characteristics of tradable goods and explore the roles of borrowing limits debt renegotiations and trade policy

tradable and nontradable directed technical change abstractwe wish to reconcile the major trends in wages and the terms of trade using a directed technical change approach in which i tradable and nontradable goods can be substitutes or complemen

globalisation and government spending evidence for the hyper globalisation of the 1990s and 2000s in this paper we provide an up to date empirical assessment of the relationship between economic globalisation and government spending for the hyper globalisation period of the 1990s and 2000s we use data on government consumption spending and more disaggregated spending components e g social welfare we also use a range of globalisation measures including the most recent version of the kof globalisation index and a combination of econometric methods including fixed effects and instrumental variable iv estimation the results suggest that hyper globalisation has had divergent and conflicting effects on consumption spending while de jure trade globalisation has tended to raise spending de jure financial globalisation has tended to reduce it we also find evidence that the positive effect of de facto trade globalisation on spending weakened significantly during the 1990s and 2000s in comparison with earlier decades these effects could have contributed to the growing political backlash witnessed against globalisation since the early 2000s

do more open economies have bigger governments another look abstract we reconsider the evidence of a positive relationship between openness and the size of government recently established by rodrik rodrik d 1998 why do more open economies have bigger governments journal of political economy 106 997 1032 and others while the existing literature focuses on expenditure based measures of government we consider non budgetary measures such as government ownership of enterprises price controls asset expropriation each of these may have little impact on government expenditures yet can make the role of government sizable we demonstrate that the scope of government is much larger in less open economies when considering non budgetary measures additionally we show that higher levels of non budgetary government are positively correlated with trade barriers finally we provide further evidence on the hypothesis that larger governments provide social insurance in open economies subject to terms of trade shocks although we find that greater terms of trade risk is weakly associated with larger government in all forms these interventions include price controls and greater risk of asset expropriation which are hard to reconcile with a pure insurance motive

on the benefits of a monetary union does it pay to be bigger this paper revisits the question of the appropriate domain of a currency area using a new keynesian open economy model in which the world is split into two areas each framed as a continuum of small open regions we show that the adoption of a common currency like the euro can be beneficial for the members of the monetary union since the spill over effects generated by the inflationary policies of the small open economies are likely to outweigh the costs of not tailoring monetary policy to country specific shocks we also show that while the enlargement of the monetary union to another group of small open economies can bring about welfare gains for all countries involved monetary integration of two large economies such as the euro area and the u s will not these findings can help to rationalize the process of the creation and enlargement of multi country currency areas like the eurozone

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

from labor to finance understanding the failure of socialist economic policies in spain this article seeks to explain the spanish socialist party s psoe s failure to reverse spain s dismal employment record during the course of its long government tenure from 1982 until 1996 most efforts to explain spain s position at the extreme of the unemployment spectrum in europe follow the prevalent tendency in the comparative political economy literature by giving causal primacy to labor market institutions this article challenges this labor market centered view by arguing that the failure of the socialist government s economic policy strategy is to be found in the interaction of two other factors the biased course of financial liberalization and the perverse effects of the psoe s macroeconomic policy strategy on inflation and on the process of social concertation national wage bargaining the article also seeks to explain the psoe s choices in these policy areas

structural unemployment spain versus portugal the increase in european unemployment over the last two decades has made clear that the natural rate of unemployment is all but natural and all but constant a considerable body of research has explored the determinants of what is now and more appropriately called the structural rate of unemployment much of this research was summarized in the book by richard layard et al 1991 this year has seen two new and important contributions an in depth empirical study by the organization for economic cooperation and development oecd 1994 and a theoretical exploration by edmund phelps 1994 how much closer are we to understanding the differences in structural rates across countries and their movements over time to answer those questions we decided to take up what may be the biggest empirical challenge facing theories of structural unemployment the dramatic difference in the unemployment experiences of portugal and spain both countries have had a remarkably similar history over the last 20 years yet one spain has the highest unemployment rate in the european union 24 4 percent while the other portugal has save for luxembourg the lowest one 6 8 percent this paper presents our conclusions a short summary is that humility and more research are in order

why should trade negotiators negotiate about in recent years there have been growing demands to make trade liberalization contingent on adoption of common labor and environmental standards the straightforward economic answer is that this makes little sense neither the gains from trade nor the gains from appropriate regulation are compromised if other countries impose standards that are weaker than your own it is possible to offer second bet economic rationales for harmonization but these are empirically unconvincing the only serious argument in favor or regulation is political that regulation which is in the national interest may not be politically feasible unless other countries do the same

the politics of 1992 fiscal policy and european integration the internal market in europe will greatly increase the international mobility of resources how will this affect fiscal policy in different countries we consider taxation of capital in a two country model where a democratically chosen government in each country chooses tax policy higher capital mobility changes the politico economic equilibrium in two ways on the one hand it leads to more tax competition between the countries this economic effect tends to lower tax rates in both countries on the other hand it alters voters preferences and makes them elect a different government this political effect offsets the increased tax competition although not completely

trade policy home market effect versus terms of trade externality we study trade policy in a two sector krugman 1980 trade model allowing for wage import and export subsidies taxes we study non cooperative trade policies first for each individual instrument and then for the situation where all instruments can be set simultaneously and contrast those with the efficient allocation we show that in this general context there are four motives for non cooperative trade policies the correction of monopolistic distortions the terms of trade manipulation the delocation motive for protection home market effect the fiscal burden shifting motive the nash equilibrium when all instruments are available is characterized by first best level wage subsidies and inefficient import subsidies and export taxes which aim at relocating firms to the other economy and improving terms of trade thus the dominating incentives for non cooperative trade policies are the fiscal burden shifting motives and terms of trade effects

juvenile crime and punishment evidence from japan over the last decade juvenile crime has become a serious social problem in japan the juvenile law was revised in 2001 to impose harsher punishment on juvenile offenders this revision makes it possible to impose criminal punishment on 14 and 15 year old criminal offenders while those offenders aged 16 19 have always faced criminal punishment both before and after the revision using this revision as a natural experiment this study conducts a difference in differences estimation to examine the effect of punishment on juvenile crime the analysis provides evidence that punishment can deter juvenile crime in addition this research examines the criminal behaviour of 13 year olds who face no change in punishment but who soon will in the near future the results suggest that the revision also had a negative impact on the criminal behaviour of these younger offenders

welfare and macroeconomic interdependence we develop a baseline model of monetary and fiscal transmission in interdependent economies the welfare effects of expansionary policies are related to monopolistic supply in production and monopoly power of a country in trade an unanticipated exchange rate depreciation can be beggar thyself rather than beggar thy neighbor as gains in domestic output are offset by deteriorating terms of trade smaller and more open economies are more prone to suffer from inflationary shocks larger economies benefit from moderate demand led expansions but may be worse off if policy makers attempt to close the output gap fiscal shocks are generally beggar thy neighbor in the long run in the short run they raise domestic demand at given terms of trade thus reducing the welfare benefits from monetary expansions analytical tractability makes our model uniquely suitable as a starting point to approach the recent new open economy macroeconomic literature

delinquency schooling and work time allocation decision of youth this paper examines the possible factors that affect the time allocation decision of youth between delinquency schooling and work based on a joint decision model evidence from montreal shows that influences from different social institutions such as family church school peers and the workplace are important determinants of how young people decide to spend their time on various activities the findings provided here take into account the joint decision nature of the problem and therefore provide more precise estimates than those of the existing literature

exogenous volatility and the size of government in developing countries this paper presents instrumental variables estimates of the effects of gdp per capita volatility on the size of government we show that for a panel of 157 countries spanning more than half a century rainfall volatility has a significant positive effect on gdp per capita volatility in countries with above median temperatures in these countries rainfall volatility has also a significant positive reduced form effect on the gdp share of government there is no significant reduced form effect in the sample of countries with below median temperatures where rainfall volatility has no significant effect on gdp per capita volatility using rainfall volatility as an instrumental variable in the sample of countries with above median temperatures yields that greater gdp per capita volatility leads to a significantly higher gdp share of government

the value of time and the effect of fines on child car safety seat usage we report the results of a survey on child car safety seat usage and test the hypothesis that the opportunity cost of time is a significant determinant of proper seat use we find that parents with high wage rates are less likely to properly use a car seat we predict that a fine of 1775 along with a certainty of being apprehended once in a four year period would be needed to induce 95 compliance with child car safety seat laws

differences in income elasticities and trends in real exchange rates abstract one might expect that differences in income elasticities in trade and or differences in growth rates among countries would give rise to strong secular trends in real exchange rates for example fast growing countries might need steady depreciation to get the world to accept their growing exports in fact however income elasticities are systematically related to growth rates by the 45 degree rule under which fast growing countries appear to face high income elasticities of demand for their exports while having low income elasticities of import demand the net effect of this relationship between elasticities and growth rates is that secular trends in real exchange rates are much smaller than one might otherwise have expected relative ppp holds fairly well this paper documents the existence of a 45 degree rule and suggests an explanation in terms of increasing returns and product differentiation

the minimum wage law and youth crimes time series evidence gtrowing evidence indicates that the federal minimum wage law has adversely affected the employment rate the labor force participation rate and on the job training of young workers 1 insofar as the minimum wage has adverse effects on youth labor markets it is also expected to affect the time spent in activities outside the labor market including criminal activities 2 little research has been done on the minimum wage

is there always too little research in endogenous growth with expanding product variety abstract it is generally believed that models of endogenous growth with expanding product variety typically yield a too low level of research we show here that this result is due to the implicit choice of a particular value for a crucial parameter once this parameter is set free one finds that too much research can occur as well

coordination of optimal taxation in a two country equilibrium model abstract the optimal determination of distortionary taxes on labour income in order to finance the provision of publicly provided private goods is considered within the context of a static two country equilibrium model it is shown that with cobb douglas utility functions the lack of international coordination of optimal taxation leads to excessive supplies of publicly provided private goods

participation in universal prevention programs we analyse family decisions to participate in community based universal substance abuse prevention programmes through the framework of expected utility theory family functioning which has been shown to be a good indicator of child risk for substance abuse provides a useful reference point for family decision making our results show that well functioning families with children at low risk for substance use should have the lowest incentive to participate but that high risk families may also opt out of prevention programmes for programmes that are most effective for high risk youth this could be a problem using data from the strengthening families programme sfp and the washington healthy youth survey hys we empirically test the implications of our model and find that at least for one measure of family functioning those families with children most likely to be at risk for substance use are opting out of the programme

economic globalization and the welfare state in affluent democracies 1975 1998 prior scholarship is sharply divided on how or if globalization influences welfare states globalization s effects may be positive causing expansion negative triggering crisis and reduction curvilinear contributing to convergence or insignificant we bring new evidence to bear on this crucial debate with a pooled time series analysis of two measures of the welfare state and 16 indicators of economic globalization for 17 affluent democracies from 1975 to 1998 the analysis suggests that 1 state of the art welfare state models warrant revision in the globalization era 2 most indicators of economic globalization do not have significant effects 3 the few significant globalization effects are in different directions and often inconsistent with extant theories 4 the globalization effects are far smaller than the effects of domestic political and economic factors and 5 these effects are not systematically different for liberal vs nonliberal welfare state regimes european vs non european countries or with four alternative dependent variables increased globalization and a modest convergence of the welfare state have occurred but globalization does not unambiguously cause welfare state expansion crisis and reduction or convergence bisherige befunde der sozialwissenschaftlichen forschung zum kausalen verhaltnis von globalisierung und wohlfahrtsstaat sind nicht eindeutig danach kann globalisierung positive effekte haben und zu einem ausbau an wohlfahrtsstaatlichkeit fuhren eine krise des wohlfahrtsstaates oder leistungsreduktionen herbeifuhren kurvilineare wirkungen aufweisen und zu konvergenz beitragen als auch vollkommen insignifikant sein unsere gepoolte zeitreihenanalyse von wohlfahrtsstaatlichkeit und globalisierung in 17 reichen demokratien 1975 1998 hat folgende befunde zu tage gefordert 1 im zeitalter der globalisierung erscheinen bestehende wohlfahrtsstaatsmodelle revisionsbedurftig 2 die mehrzahl der okonomischen globalisierungsindikatoren weist keine signifikanten effekte auf 3 die wenigen signifikanten effekte zeigen in unterschiedliche richtungen und stimmen haufig nicht mit bestehenden theoretischen annahmen uberein 4 die globalisierungseffekte sind deutlich kleiner als die effekte binnenpolitischer variablen und okonomischer faktoren 5 diese effekte unterscheiden sich in liberalen und nicht liberalen wohlfahrtsregimen bzw europaischen und nicht europaischen landern nicht systematisch von einander im analysezeitraum konnen wir sowohl einen anstieg der verschiedenen globalisierungsindikatoren sowie eine moderate konvergenz der verschiedenen wohlfahrtsstaaten konstatieren jedoch kann der prozess der globalisierung nicht eindeutig als kausale ursache fur die unterschiedlichen entwicklungsrichtungen in den verschiedenen wohlfahrtsstaaten identifiziert werden

openness country size and government abstract this paper shows that smaller countries have a larger share of public consumption in gdp and are also more open to trade these empirical observations are consistent with recent theoretical models explaining country formation and break up and may account for the observed positive empirical relationship between trade openness and government size

the survival of the welfare state this paper provides an analytical characterization of markov perfect equilibria in a model with repeated voting where agents vote over distortionary income redistribution a key result is that the future constituency for redistributive policies depends positively on current redistribution since this affects both private investments and the future distribution of voters the model features multiple equilibria in some equilibria positive redistribution persists forever in other equilibria even a majority of beneficiaries of redistribution vote strategically so as to induce the end of the welfare state next period skill biased technical change makes the survival of the welfare state less likely

optimal fiscal policy in open economies with labour market distortions abstract we set up a general equilibrium model with unemployment owing to distortions in the labour market it is shown that a public expansion financed by a distortionary income tax may give rise to a decrease in unemployment even if public goods are pure waste such an expansion may give rise to an increase in welfare if it is associated with a decrease in unemployment since part of the gain from a fiscal expansion is achieved at the expense of welfare in other countries non cooperative policies tend to be too expansionary

revamping the weak protecting the strong and managing privatization governing globalization in the spanish takeoff conventional wisdom holds that liberal economic policy and a hasty integration into the european union is the central feature of spain s successful adaptation to the globalizationwave this study argues that a set of illiberal and protectionist policies are crucial to understanding the spanish transformation spain s reorganization of its economy displayed three broad components the revamping of industrial sectors from above the targeted protection granted to the energy banking and telecommunications sectors and a defined strategy of privatization that prevented any major international player from taking part in a given business the author argues that this statist model of market transition in spain was decisively shaped by two concrete features of the spanish political economy as it unfolded under the import substitution industrialization model the organizational and economic weakness of the domestic industrial bourgeoisie and the comparatively entrenched position of financial capital and its ener

machine replacement and the business cycle lumps and bumps this paper explores investment fluctuations due to discrete changes in a plant s capital stock the resulting aggregate investment dynamics are surprisingly rich reflecting the interaction between a replacement cycle the cross sectional distribution of the age of the capital stock and an aggregate shock using plant level data lumpy investment is procyclical and more likely for older capital further the predicted path of aggregate investment that neglects vintage effects tracks actual aggregate investment reasonably well however ignoring fluctuations in the cross sectional distribution of investment vintages can yield predictable nontrivial errors in forecasting changes in aggregate investment

does alcohol consumption reduce human capital accumulation evidence from the college alcohol study it is often conjectured that a significant cost of youthful drinking is the future labour market consequences of having accumulated a lower stock of human capital while several studies have investigated the effect of youthful drinking on the quantity of human capital stock accumulated measured by years of education completed or high school graduation this paper investigates the effect of alcohol consumption on the quality of human capital stock accumulated as measured by college students gpa using data from the harvard school of public health s college alcohol study the indirect effect of the quantity of alcohol consumed on gpa is estimated through hours spent studying as well as the direct effect results show that the net total effect of alcohol consumption on gpa is negative for the sample of college students and that the main effect is via a reduction in the hours spent studying this finding confirms that high levels of alcohol consumption have an overall negative consequence for academic achie

goods prices and exchange rates what have we learned import prices typically change by a smaller proportion than the exchange rate between the exporting and importing country recent research indicates that common currency relative prices for similar goods exported to different markets are highly correlated with exchange rates between those markets this evidence suggests that incomplete pass through is a consequence of third degree price discrimination while distance matters for market segmentation borders have independent effects the source of the border effect has not been clearly identified furthermore there is little evidence yet to suggest substantial market power is implied by the observed price discrimination

market wages and youth crime to study the problem of widespread youth crime i analyze a timeallocation model in which consumers face parametric wages and diminishing marginal returns to crime the theory motivates an econometric model that i estimate using data from the national longitudinal survey of youth my estimates suggest that youth behavior is responsive to price incentives and that falling real wages may have been an important determinant of rising youth crime during the 1970s and 1980s moreover wage differentials explain a substantial component of both the racial differential in criminal participation and the age distribution of crime

the gains from fiscal cooperation in the two commodity real trade model abstract this paper analyzes the gains from fiscal cooperation within the context of the standard two commodity real trade model it shows how the adjustment in the terms of trade is the critical factor in determining the effects of moving from a noncooperative equilibrium in general a noncooperative equilibrium leads to an overexpansion of government expenditure on the import good relative to a cooperative equilibrium the specific example of a logarithmic economy is also considered the paper discusses further the welfare effects resulting from the formation of a coalition of two countries among three

openness government size and the terms of trade this paper investigates the relationship between trade openness and the size ofngovernments both theoretically and empirically we argue that openness can increase the size of governments through two channels 1 a terms of trade externality whereby trade lowers the domestic cost of taxation and 2 the demand for insurance whereby trade raises risk and public transfers we provide a unified framework for studying and testing these two mechanisms our main theoretical prediction is that the relative strength of the two explanations depends on a key parameter namely the elasticity of substitution between domestic and foreign goods moreover while the first mechanism is inefficient from the standpoint of world welfare the second is instead optimal in the empirical part of the paper we provide new evidence on the positive association between openness and government size and we explore its determinants consistently with the terms of trade externality channel we show that the correlation is contingent on a low elasticity of substitution between domestic and foreign goods our findings raise warnings that globalization may have led to inefficiently large governments

alcoholism work and income this article reports on an empirical analysis of the relationships between alcoholism and income and working we show that the relationships between alcoholism and labor market success have important age or life cycle dimensions we present evidence that alcoholism may affect income more by restricting labor market participation than by affecting the wages of workers finally we demonstrate that the effects of alcoholism on earnings depend on the extent to which one controls for other covariates associated with alcoholism as such we suggest that there may be important indirect as well as direct effects of alcoholism on labor market success

crossing the river a comparative perspective on italian employment dynamics crossing the river a comparative perspective on italian employment dynamics this paper studies the unprecedented job destruction which occurred throughout europe during the recession of the early 1990s it raises the question whether changes in the institutional structure of various countries labour markets may have deepened the normal effects of the recession institutional legal and sociopolitical safety nets were used to protect many european employees from technological and demand shocks throughout the 1970s and early 1980s important steps have since been taken to deregulate industrial relations european labour markets may currently be in the middle of the river they already experience the negative employment aspects of an american labour market without yet enjoying its benefits based on a study of several countries the article concludes that the social costs of deregulation will be smallest if the intended destination of the transition is reached credibly and without hesitation policy makers must point decisively towards a well defined riverbank rather than leaving the labour market in the middle of the stream giuseppe bertola and andrea ichino

dynamic fiscal competition a political economy theory abstract i develop a political economy theory of dynamic fiscal competition via public spending and debt with internationally mobile capital strategic policies generate two cross border externalities that voters in each country fail to internalize 1 an increase in public spending that bolsters capital accumulation but also 2 a race to the top in public debt which crowds out capital the relative size of these two externalities varies with the number of financially integrated countries and interacts with the domestic political conflict between young and old voters despite residence based taxation capital tax rates are lower under strategic policies than under coordination furthermore they may decline with financial integration strategic policies lead to lower long run output and welfare relative to coordination but are preferred by subsequent generations of voters if the number of financially integrated countries is low or the political weight of the young is high

an optimal taxation approach to fiscal federalism in a federal system of government each unit of government decides independently how much of each type of public good to provide and what types of taxes and which tax rates to use in funding the public goods in this paper we explore what types of problems can arise from this decentralized form of decision making in particular we describe systematically the types of externalities that one unit of government can create for nonresidents through both its public goods decisions and its taxation decisions the paper also explores briefly what the central government might do to lessen the costs of decentralized decision making

human development and alcohol abuse in adolescence the aim of this article is to analyse the development of human capital in adolescents as represented by their state of health and educational attainment when this capital is affected by the abusive consumption of alcohol measured by grams of ethanol to that end we adopt a theoretical framework derived from the model of rational addiction the model of health demand and the model of schooling demand which is then estimated by using data drawn from the spanish national survey on drug use in the school population 1996 1998 2000 results confirm that higher alcohol consumption leads to worse health states and lower academic efficiency among adolescents which suggests the need to implement effective policies aimed at reducing alcohol abuse among this population group

the effects of labor markets and income inequality on crime evidence from panel data we estimate a model of crime using panel data for the u s we focus on the role of labor markets income distribution and demographics on property crime we find strong evidence that favorable labor market conditions have a significant negative effect on property crime we further test this result using sector specific wages and find that crime is most elastic with respect to wages in sectors that use low skilled labor we also find that income inequality has no significant effect on crime and that the proportion of young males in the population has a significant positive effect on crime

trade capital mobility and tax competition this paper examines a system of governments national state or local that finance public expenditures with taxes on mobile capital e g a property tax unlike previous research on tax competition explicit consideration is given to the general equilibrium determination of the prices at which goods are traded between regions the analysis identifies inefficiencies in government behavior that are not apparent in models in which the terms of trade are exogenously given capital taxation is shown to create an inefficient distribution of public good outputs across regions accompanied by an inefficient pattern of trade a model is presented in which the chosen levels of public good outputs differ across regions containing identical residents and production possibilities there is a wasteful diversity of public good supplies

trade and the political economy of redistribution this paper shows how international trade affects the support for policies which redistribute income between workers across sectors and how the existence of such policies changes the support for trade liberalization workers who are imperfectly mobile across sectors vote on whether to subsidize ailing sectors thereby redistributing income but also distorting the labor allocation we present three main findings first redistributive policies are more likely to arise in a small open than in a closed economy for a broad range of parameters second if a redistributive policy is adopted in both situations income differences across sectors tend to be lower in the open economy third the possibility to redistribute income across sectors raises the political support for trade liberalization in the first place

the causes of spanish unemployment a structural var approach abstract in this paper we review the main causes of spanish unemployment and weight them by estimating a simple macroeconomic model using the structural var methodology by using this methodology we associate different causes of unemployment with shocks of different nature which have long lasting effects due to full hysteresis we claim that such an extreme assumption on state dependency is reasonable at least as a local approximation for the period and the economy at hand our results suggest that the combination of a plausible mixture of different types of shock and extreme persistence in their propagation mechanisms can satisfactorily explain the dismal performance of the spanish labour market during the last two decades