disaggregating china s local political budget cycles righting the u abstract what impact does spending time horizon have on political budget cycles while traditional political budget cycles increase visible spending with immediate gains before political turnover i hypothesize that spending in categories with less immediate gains categories increases when opportunity costs are lower in this article i build on existing literature on budget cycles in both democracies and non democracies to disaggregate types of budget cycles those with long run versus short run benefits in china after central level reforms welfare targets with long run gains became visible to local leaders constituents the central leaders above them local leaders then had an incentive to provide welfare but only when it was the least costly in terms of opportunity costs using fixed effects models panel data from china s 333 municipalities for 1994 2012 i find welfare spending minimizes both relatively and absolutely around year three and maximizes at the beginning and end of a politician s tenure when opportunity costs and probability of political advancement are lowest these cycles are the most dramatic in western provinces where education is a particularly important tool for ideological spread health and social security spending also see expansion at the end of mayor s tenures although the cycles are less pronounced than in education spending this study expands the literature on political budget cycles by disaggregating government spending and considering the impact of timeliness on cycles

the impacts of government ideology on innovation what are the main implications abstract this study investigates the relationship between government ideology and technical innovativeness of the whole country by using multinational panel data covering 110 countries from 1995 to 2015 and by employing comprehensive indicators for technical innovation i e trademark and patent application in empirical research we utilize the panel generalized method of moment gmm technique to introduce dynamic variables in order to avoid the bias caused by potential endogeneity next we generate three cross items to examine whether the effect of government ideology on technical innovation differs under different circumstances we then change the measurement of government ideology to assure the reliability of our empirical results further investigate whether the changes of political ideology influence technical innovation and carry out a robustness test by dividing the whole sample into two sub samples based on the level of democracy by employing two samples which limited by 3 main coalition parties in government at most such as re elected government and non alternated government in countries overall the empirical results show that a leftist ruling party inhibits the progress of technical innovation whereas a right wing ruling party promotes the appearance of new technology the effect of government ideology on innovation is not similar under some circumstances more evidence is presented by using two dummy variables to represent left wing and right wing

a general equilibrium analysis on the impacts of regional and sectoral emission allowance allocation at carbon trading market abstract it is critical to adapt to climate change and reduce the overall carbon emissions china announced its nationally determined contributions ndc at the paris climate conference in 2015 the carbon cap and trade scheme which plays a key role in carbon emissions abatement is an effective policy for china to achieve its ndc this study focuses on the allocation of regional and sectoral initial carbon emission allowances in shanghai an impact evaluation on the macro economy carbon trading markets and participating sectors for the year 2030 was conducted by applying a computable general equilibrium cge model the results show that the carbon cap and trade scheme would cause a 3 4 gdp loss and an 8 9 welfare loss in 2030 the carbon price would be 161 2 usd t and 147 2 usd t under the two representative scenarios the allocation of initial allowances would have a significant impact on both carbon market scale and sectoral trading behaviors the power generation sector and the petrol oil sector would undertake the greatest output loss while the metal smelting sector would become the main seller furthermore the initial allowances allocation under a certain abatement target would hardly affect sectoral production but remarkably affect trade behaviors at the carbon trading markets

new parties and policy outcomes evidence from colombian local governments abstract in many democracies increasing political competition has changed the traditional party system and brought new parties into the political arena this study examines whether the presence of politicians from new parties affects the size of government measured by public spending and tax revenue the study focuses on colombian municipalities where new parties have been numerous and successful in recent years regression discontinuity estimates show that public spending and tax revenues are significantly higher in municipalities governed by a mayor from a new party using information about local politics and the features of the new parties i argue that this result is not associated with new party ideology but instead relates to new parties having lower probability of reelection which raises the incentives to increase short term rent seeking

a test of the law of one price in retail banking this paper investigates the level and the determinants of retail banking interest rate differences among spanish banks in the period 1989 2003 we find that the interest rates of twenty five different bank loan and deposit products adjust rather rapidly to their long term values in response to external shocks as the relative version of the law of one price predicts but the evidence runs contrary to the absolute version of the law credit risk premium part of the marginal cost of the loans granted by a particular bank is an important source of interest rate dispersion across banks and loan products both before and after spain joined the euro zone therefore differences in credit risk policies across banks must be taken into account when forming expectations about european retail banking integration

how do budget deficits and economic growth affect reelection prospects evidence from a large panel of countries conventional wisdom is that good economic conditions and expansionary fiscal policy help incumbents get reelected but this has not been tested in a large cross section of countries we test these arguments in a sample of 74 countries over the period 1960 2003 we find no evidence that deficits help reelection in any group of countries developed and less developed new and old democracies countries with different government or electoral systems and countries with different levels of democracy in developed countries and in old democracies election year deficits actually reduce the probability that a leader is reelected with similar although smaller negative electoral effects of deficits in the earlier years of an incumbent s term in office higher growth rates of real gdp per capita raise the probability of reelection only in the less developed countries and in new democracies but voters are affected by growth over the leader s term in office rather than in the election year itself and apparently only by growth not attributed to global growth low inflation is rewarded by voters only in the developed countries the effects we find are not only statistically significant but also quite substantial quantitatively we also suggest how the absence of a positive electoral effect of deficits can be consistent with the political deficit cycle found in new democracies

transparency and economic policy we provide a two period model of political competition in which voters imperfectly observe the electoral promises made to other voters imperfect observability generates an incentive for candidates to offer excessive transfers even if voters are homogeneous and taxation is distortionary government spending is larger than in a world of perfect observability transfers are partly financed through government debt and the size of the debt is higher in less transparent political systems the model provides an explanation of fiscal churning it also predicts that groups whose transfers are less visible to others receive higher transfers and that imperfect transparency of transfers may lead to underprovision of public goods from the policy perspective the main novelty of our analysis is a separate evaluation of the transparency of spending and the transparency of revenues we show that the transparency of the political system does not unambiguously improve efficiency transparency of spending is beneficial but transparency of revenues can be counterproductive because it endogenously leads to increased wasteful spending

output based allocations and revenue recycling implications for the new zealand emissions trading scheme abstract the new zealand emissions trading scheme nz ets is more comprehensive in its coverage of emissions than schemes introduced or proposed to date in any other country in that it includes agricultural greenhouse gases which account for half of new zealand s total emissions but motivated by concerns for the international competitiveness of emissions intensive trade exposed industrial and agricultural activities current legislation provides for substantial ongoing free allocations to such activities linked to their output here we use a computable general equilibrium model to analyse the impacts of output based allocation given the possibility of recycling net revenues to reduce prior distorting taxes unlike previous modelling studies of alternative nz ets designs we allow for a more realistic modelling both of capital and labour supply we find that as suggested by theoretical results interactions between the ets and existing taxes are important given any level of output based allocation the negative macroeconomic impacts can be reduced by recycling net revenues as efficiently as possible less obviously we find that there may be an optimal non zero level of output based allocation this optimal level increases as the carbon price and or factor supply elasticities increase but decreases if revenues are recycled with greater efficiency

political incentives and state subsidy allocation evidence from hungarian municipalities using a comprehensive database on successful and rejected applications for the european union s structural and cohesion funds between 2004 and 2012 in hungary we study which grant types are susceptible to political favoritism and how this is achieved with fixed effects and matching estimators we study whether applicants from municipalities with a mayor endorsed by the governing coalition won a higher grant value than applicants where the mayor was affiliated with the opposition we find limited evidence for such a difference for total grant value but in cases when the applicant is a public entity or the purpose of the project is construction and therefore visible to voters and thus may bring about electoral benefits we do find effects of 16 21 the decomposition of the effect suggests that favoritism plays a role both in the application and the decision making process as applicants from aligned townships apply in larger numbers and have higher acceptance rates when analyzing the effect of grants on votes we show that voters indeed reward construction and public projects but not the other grant types

political budget cycles with informed voters evidence from italy i exploit a reform that required italian municipalities to disclose their balance sheetsbefore elections to study whether having more informed voters aects the political budgetcycle to start inve

do elections affect the composition of fiscal policy in developed established democracies this paper investigates the impact of elections on the level and composition of fiscal instruments using a sample of 19 high income oecd democracies during the period 1972 1999 we find that elections shift public spending towards current expenditures at the cost of public investment although we find no evidence for an electoral cycle for government deficit and overall expenditures we find a negative effect of elections on revenue attributed to a fall in direct taxation our results apply for predetermined electoral periods while endogenous elections seem to increase deficit and leave the composition of fiscal policy unaffected

political business cycles 40 years after nordhaus the aim of this article is to survey the huge literature that has emerged in the last four decades following nordhaus s rev econ stud 42 2 169 190 1975 publication on political business cycles pbcs i first propose some developments in history of thought to examine the context in which this ground breaking contribution saw the light of the day i also present a simplified version of nordhaus s model to highlight his key results i detail some early critiques of this model and the fields of investigations to which they gave birth i then focus on the institutional context and examine its influence on pbcs the actual research agenda finally i derive some paths for future research

local political business cycles evidence from philippine municipalities abstract this paper establishes the existence of short term political business cycles in the philippines over the period 2003 2009 examining a balanced panel of 1143 municipalities shows that employment levels increase in the two pre electoral quarters and drop sharply in the two quarters following elections further results are consistent with the cycles being generated by incumbents attempts to increase their chances of re election cycles are stronger in sectors that incumbents are more able to influence and when they expect stronger electoral competition evidence suggests that these cycles are detrimental to development

an assessment of a proposed ets in australia by using the monash green model abstract using the monash green model and a database containing detailed energy sectors this paper evaluates the effects of a proposed emissions trading scheme on the australian economy and the emissions levels the simulation results indicate that the price of carbon permits has to increase from a 4 1 per tonne in 2015 through a 13 1 per tonne in 2020 to a 41 3 per tonne in 2030 to achieve a target of 28 below the 2005 level in 2030 the main buyers of permits would be the agricultural sector black coal electricity sector and brown coal electricity sector compared to the business as usual scenario australia s gdp is projected to be 0 85 lower in 2020 and 1 6 lower in 2030 household welfare measured in terms of equivalent variations will increase due to compensations provided by the government the results also lend strong support towards the transition to renewable energy the stylised model was adapted to inform the results of the full model

voters as fiscal conservatives voters penalize federal and state spending growth this is the central result of my analysis of voting behavior in presidential senatorial and gubernatorial elections from 1950 1988 the composition of federal spending growth seems irrelevant the vote loss to the president s party from an extra dollar of defense or nondefense spending is the same however in gubernatorial elections expansion of state welfare spending exacts a disproportionate political price deficit financing of federal or state spending does not appear to matter politically i conclude by discussing the obvious question of why government budgets have grown in the face of this voter hostility

the effect of fiscal performance on local government election results in israel 1989 1998 abstract we discuss the circumstances under which voters in local elections will reward fiscal responsibility and suggest that such circumstances evolved in israel in the mid 1990s we present empirical evidence that indeed fiscal performance of mayors substantially affected their reelection probability in the 1998 campaign but not in the 1989 and 1993 campaigns changes in the political environment enforcement of audit and financial reporting requirements tougher imposition of hard budget constraints and the development of local media are proposed as explanations the hypotheses that the fiscal variables reflect the income level at the locality or the mayor s success in extracting resources from the central government are tested and rejected

uncertainty electoral incentives and political myopia we study the determinants of political myopia in a rational model of electoral accountability with informational frictions and uncertainty when politicians ability is ex ante unknown and policy choices are unobservable elections improve political accountability and selection however incumbents underinvest in costly policies with future returns to signal high ability and increase re election probability surprisingly uncertainty reduces political myopia and may increase social welfare we also address the socially optimal political rewards and the desirability of a one term limit our predictions are consistent with several stylised facts and with a new empirical observation aggregate uncertainty is positively correlated with fiscal discipline

development of the electricity environmental policy cge model gtap e powers a case of the carbon tax in south africa abstract a new carbon price mechanism with full emission coverage is developed within the framework of a global computable general equilibrium model gtap e powers to enhance the capacity and accuracy for climate change and energy policy assessment the model developed is then used to examine the potential impacts of the carbon tax in south africa results show that incorporation of non co2 emissions in the model significantly alters the results of which the economy of south africa experiences higher costs compared to the case that only has co2 emissions when more sectors are included in the policy it also puts higher costs on the economy as higher levels of emissions are subject to the carbon tax results also show that south africa only experiences small tradeoffs from introducing the carbon tax in all scenarios that is with a tax rate of 9 15 the country is able to reduce its emission levels by 12 25 15 6 at the costs of real gdp reduction by 1 17 1 59 fossil based industrial sectors are particularly worst off while clean and renewable energy sectors strongly expand their production the results indicate that south africa is likely to move to a low carbon and sustainable economy with such a policy

two round elections one round determinants evidence from the french municipal elections using a new database of french municipalities that covers 821 towns and two elections 2001 and 2008 we examine how the budget structure degree of electoral competition and the economic context affect the share of votes for the incumbent we take into account the institutional details of the two round structure of the electoral process created by french electoral rules dual ballot under plurality rules we show that in the first round of the electoral process spending on equipment including infrastructures can influence the voter and that electoral competition has a strong impact on the incumbent s score in the second round the incumbent s vote is affected more by national considerations and local budget variables have no effect we show that the dynamics between the first and the second rounds are intense the results suggest that the determinants of each round s outcome in a two round electoral process are different

the electoral budget cycle on municipal waste collection expenditure abstractthis article analyses the determinants of municipal waste collection expenditure specifically the effects of electoral cycles on municipal waste collection expenditure we use a database with information on spanish municipalities with more than 1000 inhabitants for the period 2002 2011 our results reveal that incumbents adopt an opportunistic behaviour increasing spending on waste in the preelection year and reducing it in the election and post election years therefore we confirm an electoral budget cycle on waste collection expenditures in spain additionally we find that the levels of income unemployment and upper level governments transfers have a positive impact on waste collection spending finally population density level of urbanization average age of the population of the municipality and less fragmented governments negatively influence waste collection spending

the impacts of carbon pricing on coastal megacities a cge analysis of singapore abstract pricing carbon is a widely used policy instrument for climate change mitigation quantitative analysis of carbon pricing are mainly conducted at the regional and national level rarely at the city level due to data availability as a representative of coastal megacities that are vulnerable to both climate change and climate policies singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures a city level computable general equilibrium cge model is developed to simulate potential impacts of carbon pricing on the city including paying border carbon adjustment bca on exports or introducing a domestic carbon tax different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax the simulation results show that a domestic carbon tax is a more cost effective option than paying bca given an identical carbon price at s 10 t co 2 gdp total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the bca scenario in terms of absolute emissions reduction a carbon tax that covers energy manufacturing and land transport sectors would be preferred making emissions around 2 7 lower than 2010 baseline level

opportunistic politicians and fiscal outcomes the curious case of vorarlberg using a unique set of electoral rules present in the austrian state of vorarlberg we explore the question ofwhether direct election of the mayor affects the size of local governments using difference in differences estimation and propensity score matching we find evidence that direct elections of the mayor are associated with less expenditure on public administration and public personnel and higher expenditure in the visible categories of spending i e transportation infrastructure and economic subsidies to firms and individuals

carbon dioxide emissions allocation a review carbon dioxide co2 emissions allocation plays a fundamental role in determining reduction responsibility at economy level or emission permits at firm level past decades have seen the development and applications of various methods for co2 emissions allocation this paper provides a literature review of co2 emissions allocation with emphasis on the evolution of allocation methods used it begins with a summary of the most popular allocation principles and criteria that lay a foundation for the development of allocation methods we then classify the existing allocation methods into four groups namely indicator optimization game theoretic and hybrid approaches the main features and findings of past studies are identified and summarized while the fairness principle prevails in earlier studies the efficiency principle has been found to receive increasing attention recently we also present a comparison of the empirical results based on ten popular indicator methods to show how indicator choice affects the allocation results issues related to selecting appropriate methods in co2 emissions allocation are finally discussed further research may be carried out to strike a balance between fairness and efficiency so that the allocation results become more widely acceptable and economically feasible

general equilibrium economy wide impacts of the increased energy taxes in vietnam abstract the vietnamese government is proposing a new tax levy on either petroleum products or coal or both that is the government expects to increase the current tax rates to the maximum levels set previously in this instance the tax on coal is intended to increase by 50 while the tax on petroleum products is intended to increase by 33 33 this study employs a computable general equilibrium model to assess the effects of these increases in taxes on the vietnamese economy focusing on energy transportation and the private sectors results show that an increase in tax on petroleum products will considerably affect the country with a reduction of real gdp by 1 99 exports and imports are also highly unfavorably affected in this instance the total emission level will be reduced by 7 12 the increased tax on coal however will allow vietnam to experience much lower unfavorable effects while being able to cut a substantial amount of the emission level for example real gdp would only decline by 0 51 while total emission level will be reduced by 10 25 if these taxes are increased together vietnam will experience considerable contractions in the economy but it is able to reduce a substantial emission level

electoral rules political competition and fiscal expenditures regression discontinuity evidence from brazilian municipalities we exploit a discontinuity in the rules of brazilian mayoral elections to investigate whether political competition has a causal impact on fiscal policy choices in municipalities with fewer than 2

election cycles and electricity provision evidence from a quasi experiment with indian special elections abstract we present evidence from india showing that state governments induce electoral cycles in electricity service provision our data and research strategy allow us to build on models of political business cycles and targeted distribution in two important ways first we demonstrate that by manipulating the flow of critical inputs into economic activity like electricity elected leaders can influence economic outcomes even in contexts where they have constrained fiscal capacity second we identify the effect of elections on electricity provision by focusing on special elections held for exogenous reasons our results show that state governments induce substantive increases in electricity service to constituencies that hold special elections manipulation of the power supply is stronger in contested constituencies and during special elections held in states where the government commands only a small majority overall we find no evidence of positive welfare effects from the electoral manipulation of electricity supply

opportunistic and partisan election cycles in brazil new evidence at the municipal level this article tests the hypothesis of opportunistic and partisan cycle models using a new large data set of brazilian municipalities over the 1989 2005 period the results show an increase in total and current expenditures and a decrease in municipal investments local tax revenues and budget surplus in election years they also show that partisan ideology exerts a relative influence on the performance of the local public accounts these results confirm that both opportunistic and partisan cycles have occurred in the management of the budgets of brazilian municipalities after the end of the military government

spillover effects in local public spending abstractthis paper investigated the fiscal interactions between italian municipalities over the period 2001 11 and found a positive horizontal interdependence in spending decisions the results are robust to different specifications of the spatial neighbours and are confirmed by a natural experiment an earthquake in the abruzzo region of italy in 2009 that creates an exogenous variation in the neighbours spending furthermore there is no evidence of yardstick competition when one considers political effects while a negative relationship is found between spatial interaction and the size of the municipality thus it can be concluded that spillover effects drive the strategic interactions in spending decisions

the african political business cycle varieties of experience abstractwe seek to understand both the incidence and the impact of the african political business cycle in the light of a literature which has argued that with major extensions of democracy since the 1990s the cycle has both become more intense and has made african political systems more fragile with the help of country case studies we argue first that the african political business cycle is not homogeneous and occurs relatively infrequently in so called dominant party systems where a pre election stimulus confers little political advantage secondly we show that in those countries where a political cycle does occur it does not necessarily cause institutional damage whether it does or not depends not so much on whether there is an electoral cycle as on whether this cycle calms or exacerbates fears of an unjust allocation of resources in other words the composition of the pre election stimulus in terms of its allocation between different categories of voter is as important as its size

resource windfalls and public debt a political economy perspective abstract can natural resource windfalls increase public debt in democracies adopting a political economy perspective we show that the answer is in the affirmative resource windfalls increase both the government s income and wealth the former mitigates the need to borrow whereas the latter encourages further borrowing as it improves its terms implying an ambiguous pure effect of resource windfalls on debt re election considerations shorten political time horizons and give rise to political myopia we show that higher political myopia induced by more stringent institutional re election restrictions magnifies the wealth effect turning positive the effect of resource windfalls on debt we test the model s predictions using a panel of u s states over the period 1963 2007 our identification strategy rests on constitutionally entrenched differences in gubernatorial term limits that provide plausibly exogenous variation in re election prospects and geographically based cross state differences in natural endowments our baseline estimates indicate that a resource windfall of 1 induces an increase of approximately 20 in the public debt of states with more stringent re election restrictions

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

how do elections affect international cooperation evidence from environmental treaty participation is there a strategically beneficial time for political leaders to make international environmental commitments based on the political cycles theory we argue that leaders have incentives to delay costly ratification of international environmental agreements to the post electoral period however the cost of participating in these agreements is often lower for developing countries and they may enjoy indirect advantages which may make them more prone to ratifying in the pre electoral period these hypotheses are assessed empirically by studying the ratification process of 41 global environmental agreements censused in the environmental treaties and resources indicators database from 1976 to 1999 we use a duration model in which time is measured on a daily basis enabling us to precisely identify pre and post electoral periods a significant challenge in political cycles studies our investigation reveals the existence of political ratification cycles that are of substantial magnitude and non linear over the pre and post electoral years

the politics of related lending we analyze the protability of government owned banks lending to their owners we nd evidence that such lending has been used to transfer bank prots to the governments but only in localities where the incumbent politicians face signicant competition for reelection in localities where the incumbent party has a high probability of reelection there is no such evidence this result establishes a causal link behind extant evidence that banks lending to controlling parties owners and directors can result in looting of the banks we nd evidence that such looting occurs when controlling parties are at risk of losing control

political violence cycles electoral incentives and the provision of counterterrorism how do electoral incentives affect the counterterrorism policies chosen by reelection seeking incumbents this article tests the argument that governments alter their choice of security strategies

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

equilibrium political budget cycles political business cycle theories generally rely on nominal rigidities and voter myopia this paper offers an equilibrium theory that preserves some basic insights from earlier models though with significant refinements the political budget cycle emphasized here is in fiscal policy rather than output and inflation it arises via a multidimensional signal process one can consider the welfare implications of proposals to mitigate the cycle and the effects of altering the electoral structure copyright 1990 by american economic association

pandering and pork barrel politics abstract we develop a model of pork barrel politics in which a government official tries to improve her reelection chances by spending on targeted interest groups the spending signals that she shares their concerns we investigate the effect of such pandering on public spending pandering increases spending relative to a non accountable official one who does not have to run for reelection if either the official s overall spending propensity is known or if it is unknown but the effect of spending on the deficit is opaque to voters by contrast an unknown spending propensity may induce the elected official to exhibit fiscal discipline if spending is transparent

what do oecd countries cut first when faced with fiscal adjustments expenditure in this article we explore the relationship between components of government expenditure and government size during the period 1970 2007 for a sample of 25 developed countries to shed light on how fiscal discipline might influence public spending composition in the coming years using the pooled mean group estimation we find that fiscal adjustments protect functions that have both a social and productive character such as education and health spending in addition the most productive spending that related to transport and communications is also isolated from budgetary cuts this result shows evidence of governments reacting to the voter s increasing realization that reducing productive expenditures harms long term economic growth by striking a balance between utility and economic growthenhancing expenditure

the electoral dynamics of human development this paper analyses the impact of elections on the dynamics of human development in a panel of 82 countries over the period 1980 2013 the incidence of partisan and political support effects is also taken into account a gmm estimator is employed in the empirical analysis and the results point out to the presence of an electoral cycle in the growth rate of human development majority governments also influence it but no clear evidence is found regarding partisan effects the electoral cycles have proved to be stronger in non oecd countries in countries with less frequent elections with lower levels of income and human development in presidential and non plurality systems and in proportional representation regimes they have also become more intense in this millennium

economic transition and growth some extensions of neoclassical growth models are discussed that allow for cross section heterogeneity among economies and evolution in rates of technological progress over time the models oer a spectrum of transitional behavior among economies that includes con vergence to a common steady state path as well as various forms of transitional divergence and convergence mechanisms for modeling such transitions and measuring them econo metrically are developed in the paper a new regression test of convergence is proposed its asymptotic properties are derived and some simulations of its nite sample properties are reported transition curves for individual economies and subgroups of economies are estimated in a series of empirical applications of the methods to regional us data oecd data and penn world table data

re election incentives and deforestation cycles in the brazilian amazon abstract despite expansive research on amazonian deforestation and its drivers the role of local politics is not well understood using a panel data set that combines municipal level deforestation and election data from 2002 to 2012 i estimate the effect of an incumbent mayor running for re election on deforestation rates in election periods i find that deforestation rates increase 8 10 in election years when an incumbent mayor runs for re election an amount equivalent to four percent of the total forest lost since the 2004 elections electoral deforestation cycles do not appear to be driven by changes in agricultural policy implementation and activity but are linked to corruption and campaign finance suggesting that weak institutional constraints facilitate electoral manipulation of forest resources this phenomenon is not likely limited to amazonian forests re election incentives could very well lead to misallocation of other natural resources in alternate geographies

electoral cycles in public administration decisions evidence from german municipalities abstractelectoral cycles in public administration decisions evidence from german municipalities regional studies this paper provides evidence that there is an electoral cycle in public administration decisions using data from german local governments in the period 2001 10 specifically it finds that the number of building licences issued by the public administration significantly increases in election years this result is robust to various specification tests and to dealing with the potential endogeneity of the election timing

voting suffrage and the political budget cycle evidence from the london metropolitan boroughs 1902 1937 we study the opportunistic political budget cycle in the london metropolitan boroughs between 1902 and 1937 under two different suffrage regimes taxpayer suffrage 1902 1914 and universal suffrage 1921 1937 we argue and find supporting evidence that the political budget cycle operates differently under the two types of suffrage taxpayer suffrage where the right to vote and the obligation to pay local taxes are linked encourages demands for retrenchment and the political budget cycle manifests itself in election year tax cuts and savings on administration costs universal suffrage where all adult residents can vote irrespective of their taxpayer status creates demands for productive public services and the political budget cycle manifests itself in election year hikes in capital spending and a reduction in current spending

running to keep in the same place consumer choice as a game of status if individuals care about their status defined as their rank in the distribution of consumption of one positional good then the consumer s problem is strategic as her utility depends on the consumption choices of others in the symmetric nash equilibrium each individual spends an inefficiently high amount on the status good using techniques from auction theory we analyze the effects of exogenous changes in the distribution of income in a richer society almost all individuals spend more on conspicuous consumption and individual utility is lower at each income level in a more equal society the poor are worse off

fiscal policy and reelection in brazilian municipalities this paper uses a new panel of more than 2 000 brazilian municipalities over 13 years to analyze the influence of public expenditures on the probability of mayors reelec tion we examine brazilian municipal elections from 1988 to 2000 using a logit fixed effects model the results suggest that mayors who spend more during their terms of office increase the probability of their own reelection or of a successor of the same political party in par ticular higher capital spending over the years preceding elections and current expenditures in election years are beneficial to brazilian incumbent mayors

federalism fiscal restraints and european monetary union a prominent feature of the maastricht treaty on european union is the restrictions it places on fiscal policy under the provisions of the excessive deficit procedure or edp the success of member states in avoiding excessive deficits during the transition to economic and monetary union emu is one of four criteria governing admission to the monetary union once monetary union has begun member states are unconditionally required to avoid excessive deficits a state has an excessive deficit when it is so declared by the european council upon a report by the european commission and a judgment by the monetary committee the edp is set in motion if a country s deficit and general government debt respectively exceed 3 percent and 60 percent of gdp the justification for these procedures is that member states participating in the monetary union must be restrained from overborrowing to avoid destabilizing the common currency if excessive deficits cause a debt crisis the european central bank ecb will come under pressure to bail out the imperiled government the bailout could be ex post in which case the ecb would monetize the government s debt or ex ante in which case it would keep interest rates low to lighten the debt service burden either way unfettered fiscal policies could create inflationary pressures that the ecb will find difficult to resist

regionalisation versus globalisation in european financial market integration evidence from co integration analyses abstract motivated by recent regulatory changes this study investigates the degree of integration in retail lending in six core european union eu countries using co integration methodology which allows to investigate the presence and effects of structural breaks while in the pre break period we could detect integration to a limited degree the evidence for integration weakened in the post 1992 period this could however reflect a convergence process particularly with respect to spreads this result is clearly a regional not a global phenomenon as european lending rates are not yet fully integrated the still segmented financial markets pose a challenge for a unified monetary policy

global samaritans donor election cycles and the allocation of humanitarian aid abstract this paper finds a large causal donor election cycle effect in humanitarian aid allocations on average humanitarian aid increases by 19 in the year before elections our identification strategy consists of focusing on donors with fixed election dates making elections clearly exogenous furthermore we find large interaction effects with natural and human disasters this evidence is consistent with our theory that incumbent governments responding to humanitarian disasters can increase voter support for their party and insure against the political fall out of not being seen as representatives of a country with global interests and influence however it is important to stress that despite our findings human and natural disasters explain a substantially larger share of the overall variation in humanitarian aid observed in the data

a state space approach to measuring the impact of sovereign and credit risk on interest rate convergence in the euro area this paper employs a time varying parameter state space model to explore the impact of the crisis on bank retail rates in the euro area we show that convergence in interest rates has been adversely affected by the crisis and quantify the role of sovereign and credit risk as two alternative explanations for the increase in financial fragmentation a key finding is that the heterogeneity in sovereign risk across member states accounts for a sizable part of the increase in the cross sectional dispersion of various lending and deposit rates in contrast the impact of the increased heterogeneity in credit risk on bank retail rates is negligible our results suggest that efforts to reduce sovereign tensions as exemplified by the ecb s omt program may help to reduce financial fragmentation we compare the impact of sovereign and credit risk measures on bank retail rates in the euro area during the crisis to this end we use a time varying parameter state space model we investigate both lending and deposit rates we find that heterogeneity in sovereign risk accounts for a sizable part of the increase in the dispersion of retail rates in contrast the impact of heterogeneity in credit risk is negligible

the global financial crisis and integration in european retail banking abstract the aim of this paper is twofold firstly to investigate the integration process within the european union retail banking sector by analysing deposit and lending rates to the household sector during the period 2003 2011 secondly to assess the impact of the 2008 global financial crisis on the banking integration process an area that is yet unexplored an important contribution of the paper is the application of the recently developed phillips and sul 2007a panel convergence methodology which has not hitherto been employed in this area this method analyses the degree as well as the speed of convergence identifies the presence of club formation and measures the behaviour of each country s transition path relative to the panel average the empirical results point to the presence of convergence in all deposit and lending rates to the household sector up to 2007 in sharp contrast the null of convergence is rejected in all deposit and credit markets after the onset of the 2008 financial crisis these results show that the global crisis has had a detrimental effect on the banking integration process we find some convergence in a few sub clusters of countries but the rate of convergence is typically slow and several countries are identified as diverging altogether in addition we find that the credit market in general is far more heterogeneous than the savings market

impacts of alternative allowance allocation methods under a cap and trade program in power sector emission trading is considered to be a cost effective environmental economic instrument for pollution control however the policy design of an emission trading program has a decisive impact on its performance allowance allocation is one of the most important policy design issues in emission trading not only for equity but also for policy performance in this research an artificial market for sulfur dioxide so2 emission trading was constructed by applying an agent based model the performance of the jiangsu so2 emission trading market was examined under different allowance allocation methods and transaction costs the results showed that the market efficiency of emission trading would be affected by the allocation methods when the transaction costs are positive the auction allowance allocation method was more efficient and had the lowest total emission control costs than the other three allocation methods examined however the use of this method will require that power plants pay for all of their allowance and doing so will increase the production costs of power plants on the other hand output based allowance allocation is the second best method

implications of a long term increase in oil prices for tourism it is expected that global oil prices will increase in the future assessing the overall economic impacts on tourism is difficult as oil price rises will be concomitant with global changes in other commodity prices exchange rates and incomes a general equilibrium perspective is therefore presented in this paper the model couples a global general equilibrium model with a purpose built cge model of new zealand which focuses on describing tourism supply and demand in some detail the results indicate a decrease in real gross national disposable income of 1 7 for a doubling of oil price and a 9 reduction in the real value of tourism exports as a result of segment specific price increases and differing income and exchange rate effects and elasticities the reduction in demand for tourism in new zealand by 18 segments differs substantially the greatest reduction in demand is observed for tourists from the united kingdom

political budget cycles and fiscally conservative voters abstract i test whether the political budget cycle depends on the level of fiscal conservatism among voters to this end i use data from a referendum to collect revealed preferences for fiscal conservatism i find that pre election spending is increased only if voters have a sufficiently low level of fiscal conservatism if voters are highly fiscally conservative incumbents even decrease spending before elections

european emissions trading and the international competitiveness of energy intensive industries a legal and political evaluation of possible supporting measures abstract the eu emissions trading directive is expected by european energy intensive industries to harm their competitiveness vis a vis non european competitors many additional measures have thus been proposed to level the playing field and to protect the competitiveness of european energy intensive industries within the larger effort of reducing europe s greenhouse gas emissions and of meeting its obligations under the 1997 kyoto protocol this article evaluates a range of proposed measures based on a set of political and legal criteria including environmental effectiveness the need to consider differentiated commitments responsibilities and capabilities conformity with world trade law and european union law and europe s overall political interests we discuss measures that could be adopted by the european union and its member states such as direct support for energy intensive industries restrictions of energy intensive imports into the european union through border cost adjustments quotas or technical regulations and cost reimbursement for affected developing countries we also analyse measures available to multilateral institutions such as the united nations framework convention on climate change and its kyoto protocol and the world trade organisation we conclude with a classification of the discussed measures with red unfeasible yellow potentially feasible or green feasible labels

election results and opportunistic policies a new test of the rational political business cycle model the literature on the rational pbc suggests that politicians systematically manipulate economic and fiscal conditions before elections to increase their chances of reelection most tests of this theory look for evidence of pre election distortions in fiscal policy we propose a new test that explores the two way interaction between the magnitude of the opportunistic distortion and the margin of victory the test is implemented using a large panel of portuguese municipalities the results show that opportunism leads to a larger win margin for the incumbent and that incumbents behave more opportunistically when their win margin is small these results are consistent with the theoretical model

the political economy of fiscal deficits and government production abstract this paper studies how disagreement over which goods government should provide affects resource allocation in the public sector an incumbent combines pre determined capital with labor to produce different goods in the current period and accumulates physical and financial capital for future production capital labor complementarity determines how anticipated political turnover shapes governments choice between saving in physical capital or financial assets turnover tends to render the stock of physical capital for public production too low and inefficiently combined with labor the main cost of political turnover is production inefficiency in the public sector not a suboptimal savings level

output based rebating of carbon taxes in a neighbour s backyard competitiveness leakage and welfare we investigate how in an open economy carbon taxes combined with output based rebating obr perform in interaction with the carbon policies of a large neighbouring trading partner analytical results suggest that whether the purpose of the obr policy is to compensate firms for carbon tax burdens or to maximize welfare accounting for global emission reductions the obr rate should be positive in policy relevant cases numerical simulations for canada with the us as the neighbouring trading partner indicate that the impact of us policies on the obr rate will depend crucially on the purpose of the canadian obr policies if for a given us carbon policy canada s aim is to restore the competitiveness of domestic emission intensive and trade exposed eite firms to the same level as before the introduction of its own carbon taxation we find that the necessary domestic obr rates will be insensitive to the foreign carbon policies however if not only the canadian carbon tax but also an equally high us tax is introduced compensatory canadian obr rates will be up to 50 lower depending on the sector and on us obr policy if the policy objective is to increase economy wide allocative efficiency welfare of canadian policies by accounting for carbon leakage the us policies will have only a minor downward pressure on desirable obr rates in canada practical choices of obr rates hardly affect overall domestic economic performance thus output based rebating qualifies as an instrument for compensating eite industries without a large sacrifice in terms of economy wide allocative efficiency

seeing the forest through the trees a meta analysis of political budget cycles despite a vast number of articles the political budget cycle literature contains many conflicting theories and empirical results i conduct the first ever meta analysis of this literature in order to establish whether a link between elections and government budgets exists using data on 1198 estimates across 88 studies published between 2000 and 2015 i find evidence of a statistically significant yet substantively small increase in government expenditures and public debt around elections and reductions in revenues and fiscal balance using meta regression analysis combined with bayesian model averaging i find support for some of the context conditional theories in the literature although the findings of political budget cycles are robust to publication bias as well as some of the methodological and study specific choices authors are forced to make they also shed light on how certain decisions may affect a study s findings this has implications for current and future research on political budget cycles

political budget cycles and the civil service evidence from highway spending in us states abstract we study political budget cycles in infrastructure spending that are conditional on bureaucratic organization bureaucrats can facilitate or hinder politicians ability to engage in voter friendly spending around elections to test this idea we use civil service reforms undertaken by us states in the second half of the 20th century to study political budget cycles in highway spending under civil service and patronage we find that under patronage highway spending is 12 higher in election years and 9 higher in the year before an election by contrast under civil service highway spending is essentially smooth over the electoral cycle these findings provide a novel way through which civil service rules can stabilize government activity

voter information and electoral outcomes the norwegian list of shame this paper studies the effect on vote shares and reelection probability for the incumbent s party from a signal indicating poor fiscal performance in norway local governments with persistent deficits are placed in the register for state review and approval of financial obligations robek in addition to increased central government monitoring placement in robek triggers a great deal of attention in the local media it is thus expected to raise voter awareness of the fiscal stance of the local government the results indicate that voters value the information embedded in this signal and take it into account when casting their votes both the share of votes for the incumbent s party and the probability that the incumbent party stays in office is significantly reduced as a consequence of the local government being included in the register the vote share for the incumbent is reduced by about three percentage points while the reelection probability is reduced by about 0 12

electoral manipulation via voter friendly spending theory and evidence abstract we present a model of the political budget cycle in which incumbents try to influence voters by changing the composition of government spending rather than overall spending or revenues rational voters may support an incumbent who targets them with spending before the election even though such spending may be due to opportunistic manipulation because it may also reflect sincere preference of the incumbent for types of spending voters favor classifying expenditures into those which are likely targeted to voters and those that are not we provide evidence supporting our model in data on local public finances for all colombian municipalities our findings indicate both a pre electoral increase in targeted expenditures combined with a contraction of other types of expenditure and a voter response to targeting

the impact of central bank independence on political monetary cycles in advanced and developing nations this paper examines the extent to which monetary policy is manipulated for political purposes during elections we do not detect political monetary cycles in advanced countries or developing nations with independent central banks we do find evidence however in developing countries that lack central bank independence furthermore we find some evidence that these cycles are not caused by monetization of election related fiscal expansions this suggests that pressure by politicians on the central bank to exploit the phillips curve may be an important factor in generating political monetary cycles

overlapping political budget cycles we advance the literature on political budget cycles by testing for cycles in expenditures for elections to the legislative and the executive branches using municipal data we identify cycles independently for the two branches evaluate the effects of overlaps and account for general year effects we find sizable effects on expenditures before legislative elections and even larger effects before joint elections to the legislature and the office of mayor in the case of coincident elections we show that it is important whether the incumbent chief executive seeks reelection to account for the potential endogeneity of that decision we apply an iv approach using age and pension eligibility rules

legislative turnover fiscal policy and economic growth evidence from u s state legislatures an examination of how increased turnover among legislators in the fifty u s states affects fiscal policy and economic growth finds that it makes legislators short sighted turnover increases the size of government by increasing the shares of both total spending and taxes in income in particular turnover increases capital expenditure and income taxes both of which may cause long run distortions in the economy further increased turnover by resulting in inefficient fiscal policy reduces long term economic growth

political cycles in a developing economy effect of elections in indian states the author studies the effect of state legislative assembly elections on the policies of state governments in 14 major states of india from 1960 to 1996 she identifies the effect of the timing of elections using an instrument for the electoral cycle that distinguishes between constitutionally scheduled elections and midterm polls she contrasts two levers of policy manipulation fiscal policy and public service delivery to distinguish between alternative models of political cycles the predictions of three models are tested 1 populist cycles to woo uninformed and myopic voters 2 signaling models with asymmetric information 3 a moral hazard model with high discounting by political agents the empirical results for fiscal policy show that election years have a negative effect on some commodity taxes a positive effect on investment spending but no effect on deficits primarily because consumption spending is reduced with regard to public service delivery elections have a positive and large effect on road construction by state public works departments strikingly the fiscal effects are much smaller than the effect on roads the author argues that the pattern of evidence is inconsistent with the predictions of models of voter myopia and asymmetric information she explores an alternative moral hazard model in which the cycle is generated by high political discounting and career concerns persuade politicians to exert greater effort in election years on the management of public works

are elections debt brakes evidence from french municipalities we show that voters are fiscal conservatives although in the long run only while the average over the mandate level of debt has a negative impact on the probability of reelection pre election debt accumulation by incumbents increases their probability of reelection as the negative impact becomes larger as the debt level becomes higher it compensates for the short run effect elections thus appear as a disciplining device even if a weak one

opportunistic political cycles test in a young democracy setting this paper tests the theory of opportunistic cycles in a decade old democracy russia finds strong evidence of cycles and provides an explanation for why previous literature often found weaker evidence using regional monthly panel data we find that 1 the budget cycle is sizable and short lived public spending shifts toward direct monetary transfers to voters 2 the magnitude of the cycle decreases with democracy government transparency media freedom voter awareness and over time and 3 preelectoral manipulation increases incumbents chances for reelection the short length of the cycle explains underestimation of its size by previous literature because of low frequency data used in previous studies

distributive politics and spatial equity the allocation of public investment in chile abstractdistributive politics and spatial equity the allocation of public investment in chile regional studies this paper analyzes the influence of electoral concerns on investment distribution from the central government to chilean municipalities drawing upon panel data it shows that investment is mediated by pork barrel and political budget cycles as well as favouring the relatively better off areas estimations also reveal that resources are channelled to the municipalities where the vote margin in local elections is larger whereas national results are not relevant indicating that local governments lobbying capacity is prioritized over national electoral interests based on these results the implications for regional governance and for reducing the margin of arbitrary allocations are discussed

the political economy of fiscal deficits a survey this paper surveys recent literature both theoretical and empirical regarding political explanations for fiscal deficits political economy suggests conflicts of interest may lie behind the emergence of deficits 1 opportunistic politicians generate deficits to win elections even in conflict with general welfare 2 conflicts of interests between politicians partisan preferences create incentives for at least some incumbents to run deficits and 3 conflicts of interest between different social groups or regions generate tensions in the allocation of government resources leading to overspending this paper reviews these different strands of the literature it also covers contributions that highlight the crucial role of budget institutions in determining the extent to which the political motivations to generate deficits are indeed translated into poor fiscal outcomes promising avenues for future research are highlighted

output based allocation of emissions permits for mitigating tax and trade interactions the allocation of tradable emissions permits has important efficiency as well as distributional effects when tax and trade distortions are taken into account we compare different rules for allocating carbon allowances within sectors lumpsum grandfathering output based allocation oba auctioning and among sectors historical emissions or value added shares the output subsidies implicit in oba mitigate tax interactions unlike grand fathering oba with sectoral distributions based on value added is similar to revenue recycling with auctioning oba based on historical emissions supports heavier polluters more effectively counter acting carbon leakage but at higher welfare costs less energy intensive sectors are also sensitive to allocation rules

pork barrel politics and electoral returns at the local level does the targeted spending of public resources provide electoral benefits for incumbents despite the attention of scholars to that question the empirical results are mixed thus far the present paper supplies insights into the electoral benefits of discretionary funding on local elections i study the consequences of pork barrel politics in 7355 competitive mayoral elections in slovakia between 2006 and 2018 finding that more grants from the central government enhance the likelihood of mayors winning reelection the same advantage applies to mayors whose municipalities receive grants in local election years the effects of the number of grants obtained as well as the timing of their distribution are however moderated by municipal population more specifically a larger number of grants and resources obtained near the end of the mayoral term provides electoral benefits only to small town mayors but give no advantage to the mayors of larger urban areas

property tax and property values evidence from the 2012 italian tax reform abstract this paper assesses the extent to which property taxes are capitalized into property values exploiting the 2012 italian tax reform municipal level variation in the level of the property tax rates is instrumented using the exogenous staggered timing of local elections we show that the incumbent local governments with upcoming elections in 2013 shifted the composition of fiscal revenues towards lower property tax our 2sls estimate shows that a one standard deviation increase in municipal level property tax intensity leads to a 2 7 reduction of municipal property values in the year of the reform we elicit information on the characteristics of the compliers and show that these municipalities feature inefficient public spending and low social capital