some macroeconomics for the 21st century this note describes a numerical simulation of a model of economic growth a simplified version of robert tamura s 1996 model of world income dynamics based on technology diffusion the model makes predictions for trends in average world income growth and about the evolution of the relative income distribution that accord well with observation the model is used to forecast the course of world income growth and income inequality over the century to come

foreign aid an instrument for fighting communism abstract in this paper we test the argument that the sizeable reduction in aggregate aid levels in the 1990s was due to the end of the cold war we test two different models using a dynamic econometric specification on a panel of 17 donor countries spanning the years 1970 97 we find aid to be positively related to military expenditures in the former eastern bloc during the cold war but not in the 1990s suggesting that the reductions in aid disbursements are driven by the disappearance of an important motive for aid we also study the effect on aid allocation but here we do not find any robust effects of the end of the cold war

political and institutional determinants of fiscal policy in the european community in recent theoretical and empirical research the variation in political and institutional arrangements which may affect the process of national policy formation is examined in order to explain cross country differences with respect to fiscal policies pursued in this paper we build upon this literature and examine whether and how cross country differences in debt accumulation and public sector size of member countries of the european community during the 1980s can be explained we conclude that the growth of government debt is positively related to the frequency of government changes and negatively to sound budgetary procedures in countries with left wing governments the growth of the share of government spending in total output generally tends to be higher

state and state expenditure determinants of social investment and social consumption spending in the postwar united states the conventional logic of industrialization thesis holds that escalations in public expenditures are a response to industrial maturation and attendant sociocultural and demographic transformations with a neutral state arbitrating differing needs via the electoral aggregation of citizen preferences to promote the general welfare the present research develops an alternative conception of the liberal capitalist state and state expenditure policy fiscal policy is portrayed as a highly politicized vehicle by which the state attempts to insure private accumulation placate and encourage competing classes and factions and acquiesce to or rebuff demands by mass insurgents all within the context of a tenuously legitimate electoral system and a fragile social order a time series regression analysis of the determinants of social investment and social consumption spending is undertaken for the u s over the 1949 77 period results suggest that the development perspective is seriously flawed as fluctuations in these expenditures reflect an inherently politicized budgetary process whereby the complex interplay of a variety of structural economic and partisan political forces are determinant

government spending cycles ideological or opportunistic this paper examines whether partisan and opportunistic motives affect government expenditure growth in the netherlands the time series analysis covering the period 1953 1993 allows for different types of government spending in general spending is inspired by ideological and opportunistic motives all government expenditure categories show an upward drift during election times and the partisan motives behind government spending are clearly revealed left wing cabinets attach greater importance to social security and health care than right wing cabinets and right wing cabinets value expenditure on infrastructure and defense more than left wing parties

great powers hierarchy and endogenous regimes rethinking the domestic causes of peace this paper blends recent research on hierarchy and democratization to examine the theoretical and empirical costs of treating regime type exogenously in the literature most identified with studying its impact on international politics it argues that the apparent peace among democratic states that emerges in the aftermath of world war i is not caused by domestic institutional attributes normally associated with democracy instead this peace is an artifact of historically specific great power settlements these settlements shape subsequent aggregate patterns of military conflict by altering the organizational configuration of the system in three critical ways by creating new states by altering hierarchical orders and by influencing regime type in states these claims are defended with a series of tests that show first how the statistical relationship between democracy and peace has exhibited substantial variation across great power orders second that this statistical relationship breaks down with theoretically motivated research design changes and third that great powers foster peace and similar regime types within their hierarchical orders in short the relationship between democracy and peace is spurious the international political order is still built and managed by great powers

reevaluating the modernization hypothesis we revisit and critically reevaluate the widely accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy existing studies find support for this hypothesis because they fail to control for the presence of omitted variables controlling for these factors either by including country fixed effects in a linear model or by including parameterized random effects in a nonlinear double hazard model removes the correlation between income and the likelihood of transitions to and from democratic regimes in addition the estimated fixed effects from the linear model are related to historical factors that affect both the level of income per capita and the likelihood of democracy in a country this evidence is consistent with the idea that events during critical historical junctures can lead to divergent political economic development paths some leading to prosperity and democracy others to relative poverty and non democracy

diffusion and the international context of democratization democracy does not evolve sui generis the spatial clustering in democ racy and transitions suggests that international factors play a prominent role in forg ing democracies as well as influencing their durability we argue that democracy often comes about as a result of changes in the relative power of important actors and groups as well as their evaluations of particular institutions both of which are often influenced by forces outside the country in question the scope and extent of con nections with other democratic countries in a region can strengthen support for dem ocratic reform and help sustain institutions in transitional democracies results from a transition model demonstrate that international factors can exert a strong influence on the prospects for transitions to democracy and the spatial clustering in democ racy and transitions cannot adequately be explained by the hypothesized domestic social requisites of individual countries

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

global markets and national politics collision course or virtuous circle increasing exposure to trade foreign direct investment and liquid capital mobility have not prompted a pervasive policy race to the neoliberal bottom among the oecd countries one reason is that there are strong political incentives for governments to cushion the dislocations and risk generated by openness moreover countries with large and expanding public economies when balanced with increased revenues even from capital taxes have not suffered from capital flight or higher interest rates this is because the modern welfare state comprising income transfer programs and publicly provided social services generates economically important collective goods that are undersupplied by markets and that actors are interested in productivity value these range from the accumulation of human and physical capital to social stability under conditions of high market uncertainty to popular support for the market economy itself as a result arguments about the demise of national autonomy in the global economy are considerably overdrawn

fiscal policy cycles and public expenditure in developing countries the paper studies empirically the fiscal policy instruments by which governments try to influence election outcomes in 24 developing countries for the 1973 1992 period the study finds that the main vehicle for expansionary fiscal policies around elections is increasing public expenditure rather than lowering taxes and public investment cycles seem particularly prominent institutional mechanisms which constrain discretionary expenditure policies and which strengthen fiscal control are therefore worthwhile considering to prevent opportunistic policy making around elections

income and democracy evidence from system gmm estimates abstract does higher income cause democracy accounting for the dynamic nature and high persistence of income and democracy we find a statistically significant positive relation between income and democracy for a postwar period sample of up to 150 countries our results are robust across different measures of democracy and instrumentation strategies

measuring poverty in a growing world or measuring growth in a poor world the extent to which growth reduces global poverty has been disputed for 30 years although there are better data than ever before controversies are not resolved a major problem is that consumption measured from household surveys which is used to measure poverty grows less rapidly than consumption measured in national accounts in the world as a whole and in large countries particularly india china and the united states in consequence measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries one plausible cause is that richer households are less likely to participate in surveys but growth in the national accounts is also upward biased and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys so it is possible for consumption of the poor to grow less rapidly than national consumption without any increase in measured inequality current statistical procedures in poor

ties to the rest autocratic linkages and regime survival the relationship between international linkages and the nature and survival of political regimes has gained increasing attention in recent years but remains one that is poorly understood in this article we make three central contributions to our understanding of international linkage politics and autocratic regime survival first we introduce and develop the concept of autocratic linkage and highlight its importance for understanding the international politics of autocratic survival second we use event history analysis to demonstrate that autocratic linkage has a systematic effect on the duration of authoritarian regimes finally we complement our quantitative analysis with a focused comparison of autocratic linkage politics in the middle east we show that variation in saudi arabian support for autocratic incumbents in the wake of the arab spring protests can be explained in significant part by variation in linkage relationships

the rebirth of the liberal creed paths to neoliberalism in four countries1 since the 1970s market based economic policies have been institutionalized as a nearly global policy paradigm using four national case studies this article shows that economic and financial globalization played a critical role in fostering the transition to neoliberal policies but that local institutional conditions were decisive in shaping the nature and meaning of the shift while the analysis finds that developing countries appear more dependent upon direct external pressures than developed ones it also shows that institutionalized patterns of state society relations determined the way in which neoliberal transitions were carried out somewhat irrespectively of the level of economic development in chile and britain poorly mediated distributional conflict created the ideological conditions for a monetarist revolution in mexico and france on the other hand neoliberalism was understood mainly as a necessary step to adapt the country to the international economy

princes and merchants european city growth before the industrial revolution as measured by the pace of city growth in western europe from 1000 to 1800 absolutist monarchs stunted the growth of commerce and industry a region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government this might be explained by higher rates of taxation under revenue maximizing absolutist governments than under nonabsolutist governments which care more about general economic prosperity and less about state revenue

social status and economic performance a survey abstract this survey combines ideas and results from sociology and economics recognizing that economic decisions are often shaped by social concerns and influences based on the sociological literature we define social status and describe its measurement we then describe the role of social status in economic analysis of saving and consumption wages and economic growth we review recent work on status determination in equilibrium including evolutionary models we conclude with some remarks on the need for further interaction between sociology and economics

electoral cycles in active labor market policies we examine how electoral motives influence active labor market policies that promote short term job creation such policies reduce measures of unemployment using german state data for the period 1985 to 2004 we show that election motivated politicians pushed job promotion schemes before elections

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

political budget cycles the case of the western german lander this paper focuses on the issue of the electoral andideological cycles in state government budget for the elevenwestern german lander we verify this hypothesis over theperiod 1974 1994 for the following budgetary variables totalexpenditures surplus deficit administration health care education roads and social security benefits while overallour results seem to show that generally the party variabledoes not play a systematic role in spending decisions theyprovide some support to the opportunistic cycle theory showingthat the only relevant phenomenon is the effect of theupcoming election on the government spending inclinations

does public support help democracy survive it is widely believed that democracy requires public support to survive the empirical evidence for this hypothesis is weak however with existing tests resting on small cross sectional samples and producing contradictory results the underlying problem is that survey measures of support for democracy are fragmented across time space and different survey questions in response this article uses a bayesian latent variable model to estimate a smooth country year panel of democratic support for 135 countries and up to 29 years the article then demonstrates a positive effect of support on subsequent democratic change while adjusting for the possible confounding effects of prior levels of democracy and unobservable time invariant factors support is moreover more robustly linked with the endurance of democracy than its emergence in the first place as lipset 1959 and easton 1965 hypothesized over 50 years ago public support does indeed help democracy survive

developing difference social organization and the rise of the auto industries of south korea taiwan spain and argentina theories of economic development as diverse as modernization dependency world system and market reform take a critical factor view proponents of each theory argue that countries fail to develop because of an obstacle to economic growth we argue instead that neither a critical factor nor a single path leads to economic development viable paths vary economic growth depends on linking a country s historically developed patterns of social organization to the opportunities of global markets we formulate a sociological theory of cross national comparative advantage including not only economic factor endowments but also institutionalized patterns of authority and organization such patterns legitimize certain actors and certain relationships among those actors which facilitate development success in some activities but not in others we illustrate this approach to understanding development outcomes with a comparative analysis of the difficult rise of the automobile assembly and components industries in south korea taiwan spain and argentina

influences on executive and congressional budgetary priorities 1955 1981 a reduced form equation system is used to analyze the influence of economic political and institutional influences on the budgetary priorities of the executive branch and congress during fiscal 1955 81 three related issues are considered the extent to which political and macroeconomic factors affect priorities the degree of interdependence among the components of the federal budget and between spending and revenues and differences between the executive branch and congress with respect to these issues both types of interdependence are present within both executive branch and congressional budgeting although this interdependence is stronger within the executive branch the influence of economic conditions on budgetary outcomes is strong but varies considerably across spending categories there is no evidence of apolitical business cycle political variables exert a modest influence on the budgetary outcomes examined differences between democratic and republican budgetary policies as well as differences in the budgetary priorities of different presidential administrations are small by comparison with the differences between executive and congressional policies

the economics of organization the transaction cost approach the transaction cost approach to the study of economic organization regards the transaction as the basic unit of analysis and holds that an understanding of transaction cost economizing is central to the study of organizations applications of this approach require that transactions be dimensionalized and that alternative governance structures be described economizing is accomplished by assigning transactions to governance structures in a discriminating way the approach applies both to the determination of efficient boundaries as between firms and markets and to the organization of internal transactions including the design of employment relations the approach is compared and contrasted with selected parts of the organization theory literature

imf financial programs and conditionality abstract this paper presents an overview of the development of conditionality and financial programming techniques used by the imf the current analytical framework underlying imf conditionality is described and critically appraised questions are raised on the consistency of the approach followed on the issue of devaluation with the overall framework on the length of programs and the costs of adjustment in cases of structural disequilibria the conclusion is reached that whilst existing financial programming techniques are valid for certain cases they would need to be revised and supplemented to make them relevant to other cases some suggestions for improvement of the fund s operational procedures are made

democracy and financial crisis existing scholarship attributes various political and economic advantages to democratic governance these advantages may make more democratic countries prone to financial crises democracy is characterized by constraints on executive authority accountability through free and fair elections protections for civil liberties and large winning coalitions these characteristics bring important benefits but they can also have unintended consequences that increase the likelihood of financial instability and crises using data covering the past two centuries i demonstrate a strong relationship between democracy and financial crisis onset on average democracies are about twice as likely to experience a crisis as autocracies this is an empirical regularity that is robust across a wide range of model specifications and time periods

factor endowments inequality and paths of development among new world economies whereas traditional explanations of differences in long run paths of development across the americas generally point to the significance of differences in national heritage or religion we highlight the relevance of stark contrasts in the degree of inequality in wealth human capital and political power in accounting for how fundamental economic institutions evolved over time we argue moreover that the roots of these disparities in the extent of inequality lay in differences in the initial factor endowments dating back to the era of european colonization we document through comparative studies of suffrage public land and schooling policies systematic patterns by which societies in the americas that began with more extreme inequality or heterogeneity in the population were more likely to develop institutional structures that greatly advantaged members of elite classes and disadvantaging the bulk of the population by providing them with more political influence and access to economic opportunities the clear implication is that institutions should not be presumed to be exogenous economists need to learn more about where they come from to understand their relation to economic development our findings not only contribute to our knowledge of why extreme differences in the extent of inequality across new world economies have persisted for centuries but also to the study of processes of long run economic growth past and present

central bank independence and macroeconomic performance some comparative evidence this note uses information on a sample of sixteen oecd countries to assess the relationship between central bank independence and macroeconomic performance as previous work suggests politically controlled central banks are more likely to pursue policies that lead to high and variable inflation however the authors find little evidence that political control of central bank policy has any impact on measures of the level or variability of growth unemployment or the ex ante real interest rate copyright 1993 by ohio state university press

diffusion or confusion clustered shocks and the conditional diffusion of democracy scholars observing clustering in transitions to democracy argue that democratization diffuses across borders as citizens in autocracies demand the same reforms they witness in neighboring states we disagree this article demonstrates that diffusion plays only a highly conditional role in democratization we advance and test an alternative two step theory of clustered democratization 1 economic and international political shocks which are clustered spatially and temporally induce the breakdown of authoritarian regimes then 2 democratic diffusion in turn influences whether a fallen dictatorship will be replaced by a democracy or a new autocracy diffusion despite playing an important role is insufficient to explain the clustering of transitions using data on 125 autocracies from 1875 to 2004 we show that economic crises trigger authoritarian breakdowns while diffusion influences whether the new regime is democratic or authoritarian

politics institutions and welfare spending in industrialized democracies 1960 82 electoral turnout as well as left and center governments increase welfare effort that the welfare efforts of governments led by particular types of parties show significant differences and vary notably with the strength of oppositional and junior coalitional parties and that relatively neocorporatist centralized and traditionalistic polities are high on welfare effort overall our findings suggest that contrary to many claims both partisan and nonpartisan facets of democratic politics and political institutions shape contemporary social welfare effort

democracy development and the international system as noted by seymour m lipset over 50 years ago development and democracy have been strongly correlated in the contemporary world today even after the prolonged democratization wave that started in the 1970s and accelerated in the 1990s the distribution of democracies remains highly skewed by level of per capita income whereas 94 of the countries with a per capita income above 10 000 in constant of 1996 held free and competitive elections in 1999 only 18 with a per capita income below 2 000 did so this empirical relationship between income and democracy was even tighter earlier in history just looking at per capita income we can successfully predict 76 of the annual observations of political regimes in sovereign countries after world war two the proportion of cases that are predicted correctly is 85 for the interwar period and 91 before world war one 1

the electoral budget cycle this article begins with a review of the now substantial literature on the thesis that polticians manipulate governmental outputs so as to favor their chances of reelection it concludes that while this electoral cycle thesis was initially overstated by its proponents it retains more plausibility than recent critics have allowed this conclusion is then demonstrated through an analysis of expenditures by the ten provincial governments in canada between 1951 and 1984

embeddedness inflation and international regimes the imf in the early postwar period1 this article explores why the international monetary fund imf adopted a set of orthodox anti inflationary policy prescriptions during the early postwar period when keynesian thinking was predominant drawing on primary documents from the imf archive and secondary literature the author argues that these early trends were fostered by dynamics familiar to organizational sociologists because organizations are designed by architects possessing bounded rationality they must adapt to circumstances unforeseen at their founding they may also be pushed in unexpected directions by the influential actors in their environments the power of professionals and the propensity to routinization international regimes which are partly made up of organizations may therefore be prone to internal contradictions

top incomes in the long run of history a recent literature has constructed top income shares time series over the long run for more than twenty countries using income tax statistics top incomes represent a small share of the population but a very significant share of total income and total taxes paid hence aggregate economic growth per capita and gini inequality indexes are sensitive to excluding or including top incomes we discuss the estimation methods and issues that arise when constructing top income share series including income definition and comparability over time and across countries tax avoidance and tax evasion we provide a summary of the key empirical findings most countries experience a dramatic drop in top income shares in the first part of the twentieth century in general due to shocks to top capital incomes during the wars and depression shocks top income shares do not recover in the immediate postwar decades however over the last thirty years top income shares have increased substantially in english speaking countries and in india and china but not in continental european countries or japan this increase is due in part to an unprecedented surge in top wage incomes as a result wage income comprises a larger fraction of top incomes than in the past finally we discuss the theoretical and empirical models that have been proposed to account for the facts and the main questions that remain open

introduction epistemic communities and international policy coordination the growing technical uncertainties and complexities of problems of global concern have made international policy coordination not only increasingly necessary but also increasingly difficult if decision makers are unfamiliar with the technical aspects of a specific problem how do they define state interests and develop viable solutions what factors shape their behavior under conditions of uncertainty what are the origins of international institutions and how can we best study the processes through which international policy coordination and order emerge while a variety of analytic approaches have been used to address the problems of international cooperation the approaches have yielded only fragmentary insights at its core the study of policy coordination among states involves arguments about determinism versus free will and about the ways in which the international system is maintained and transformed among the overlapping topics of debate are whether national behavior is determined or broadly conditioned by system level factors unit level factors or some complex interplay between the two whether state policymakers can identify national interests and behave independently of pressures from the social groups they nominally represent and whether states respond consistently to opportunities to create defend or expand their own wealth and power to enhance collective material benefits or to promote nonmaterial values a related question of

does personal background influence a finance minister to cook the books an investigation of creative accounting in swiss cantons abstractthis article aims to identify the factors influencing the use of creative accounting in the public sector its distinctive feature is that it sheds light on creative accounting when used not to hide public deficits but to conceal surpluses it especially explores the impact of the finance minister s fm s background on the phenomenon we take advantage of the quasi experimental settings of the swiss cantons in which the financial management act sets out the possibility of implementing certain accounting gimmicks including mainly additional depreciation charges these charges which are depreciations in name only enable the fm to artificially inflate expenses thus increasing the deficit or reducing the surplus our panel data set of the 26 cantons over the period 1980 2012 includes a new data set of creative accounting and of 116 cantonal fms our results indicate that the fms cook the books irrespective of their personal or ideological background with the exception that trained economists

determinants of democracy a panel study of over 100 countries from 1960 to 1995 finds that improvements in the standard of living predict increase in democracy as measured by a subjective indicator of electoral rights the propensity for democracy rises with per capita gdp primary schooling and a smaller gap between male and female primary attainment for a given standard of living democaracy tends to fall with urbnization and with a greater reliance on natrual resources democracy has little relation to country size but rises with the middle class share of income the apparently strong relation of democracy to colonial heritage mostly disappears when the economic variables are held constant similarly the allowance for these economic variables weakens the interplay between democracy and religious affiliation however negative effects from muslim and non religious affiliations remain intact

partisan politics and public finance changes in public spending in the industrialized democracies 1955 1989 this paper evaluates the role that partisan politics plays in altering public spending levels the analysis covers over three decades of data on the developments of the public sectors in 16 oecd countries the results of the analysis lend firm support to the partisan politics model of special note is the distinction between the electorate and the government ideological preferences and the dominant role that the former plays the results also suggest contrary to conventional wisdom that partisan political influences have not been eliminated with the tightening of linkages to the international economy

the kantian peace the pacific benefits of democracy interdependence and international organizations 1885 1992 the authors test kantian and realist theories of interstate conflict using data extending over more than a century treating those theories as complementary rather than competing as the classical liberals believed democracy economic interdependence and international organizations have strong and statistically significant effects on reducing the probability that states will be involved in militarized disputes moreover the benefits are not limited to the cold war era some realist influences notably distance and power predominance also reduce the likelihood of interstate conflict the character of the international system too affects the probability of dyadic disputes the consequences of having a strong hegemonic power vary but high levels of democracy and interdependence in the international system reduce the probability of conflict for all dyads not just for those that are democratic or dependent on trade

pure rank preferences and variation in risk taking behavior abstract assuming that an individual s rank in the wealth distribution is the only factor determining the individual s wellbeing we analyze the individual s risk preferences in relation to gaining or losing rank rather than the individual s risk preferences towards gaining or losing absolute wealth we show that in this characterization of preferences a high ranked individual is more willing than a low ranked individual to take risks that can provide him with a rise in rank relative risk aversion with respect to rank in the wealth distribution is a decreasing function of rank this result is robust to incorporating the level of absolute wealth in the individual s utility function

political models of the business cycle should be revived political models of the business cycle have typically been ignored because they appear inconsistent with rational behavior and because empirical evidence is inconclusive this paper addresses the second issue demonstrating for u s real gnp unemployment and inflation that electoral cycles persistent patterns across electoral terms are significant but apparently only for republican incumbents and that partisan cycles persistent differences between parties are also significant these findings are consistent with the conjecture that a minority party is more constrained by electoral concerns whereas a majority party is freer to pursue partisan objectives

studying the role of political competition in the evolution of government size over long horizons here we argue for the use of cointegration and error correction analysis to combine economic factors that are nonstationary with political factors that are stationary into an empirical model of the evolution of public policy over long periods the approach is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the government of canada over 130 years political competition emerges as the primary political factor affecting government size

the economic consequences of mrs thatcher it is difficult to overstate the gravity of what is now happening to the uk economy output is falling at an almost unprecedented rate unemployment is at a level not experienced since the inter war depression and is increasing rapidly towards 3 million or 13 of the labour force which would mean rates of 20 and above in large areas of the country nor is there any foreseeable prospect of unemployment coming down instead all the signs point to a continuing increase the social and political consequences of this are hard to predict it is not just a matter of the financial hardship suffered by those thrown out of work through no fault of their own or of the strain imposed on the social welfare system but also of the mental stress disillusionment and sense of helpless ness which come with not being able to find a job this could well have a damaging long term effect on attitudes towards work particularly among young people con demned to go straight from school on to the unemployment register and is almost bound to lead to widespread social unrest the cause of sudden high unemployment in the uk is a backlash against the consensus post war economic policies of demand management to maintain near full employment of support for industry and of income maintenance and the provision of social welfare services policies which were developed in response to the experience of the inter war years the thatcher government has embraced a doctrinaire monetarist strategy for controlling inflation and a laissez faire approach to the supply side of the economy without attempting to moderate the social impact of these policies the extreme nature of this experiment has attracted a good deal of interest from abroad especially from the usa where the new president has expressed admiration for mrs thatcher and what her government is doing if only because there is a danger of governments in other countries following the uk s lead particularly as both the imf and oecd have recently urged the pursuit of similar policies it is important to draw international attention to what is now happening in the uk 18 months after mrs thatcher took office in sharp contrast to the rhetoric of government promises the economy has been set on a path of rapidly falling output and escalating unemployment leading towards the destruction of large parts of manufacturing industry at the same time the social advances which have been made during the post war period are beginning to be reversed as the government desperately seeks ways of offsetting the increase in its budget deficit caused by deepening recession

political and monetary institutions and public financial policies in the industrial countries institutions and policies vittorio grilli donato masciandaro and guido tabellini why do countries as similar as the industrialized oecd countries go through such different experience in terms of public deficits and debts or in terms of inflation the answer cannot come from macroeconomic policy responses to different disturbances nor from the principles of optimal taxation but rather from politics this article focuses on the role that particular institutions exert in providing constraints and incentives which shape the actions of policymakers the electoral process and political traditions affect the ability of governments to deal with deficits and mounting debts what seems to matter most it is found is the effect of the durability of governments governments with short horizons act myopically and never quite tackle the hard choices such governments typically exist in countries with an electoral system favouring many small political parties central bank independence promotes low inflation with no apparent costs in terms of real economic performance irrespective of the political institutions in fact there is no link between monetary and fiscal discipline these findings carry powerful implications for countries facing high indebtedness or stubborn inflation but also for the construction of the european economic and monetary union

status the distribution of wealth private and social attitudes to risk this paper supposes an individual cares about his her own wealth not only directly but also via the relative standing that this wealth induces the implications for risk taking are investigated in particular such a model provides a natural explanation of the concave convex concave utility described by friedman and savage however there are a number of key differences between the present model and any model based on own wealth alone for example an equilibrium wealth distribution here may have a middle class further the status interaction involves an externality and an equilibrium wealth distribution may be pareto inefficient but also about the implied relative standing in the distribution of wealth has a long but checkered history an early exponent of such ideas was of course veblen 1899 it is indeed a notion which most economists reject albeit usually without explicit comment a notable and articulate exception however is frank 1985 for example see also the references frank cites on pp 33 34 it is however a notion with substantial intuitive appeal and it seems useful to ascertain its consequences before coming to a final judgement as to its merits the present paper is concerned with deriving the consequences of such valuation of status for risk taking what seems to be the sharpest possible model is adopted here this assumes that what is essentially ordinal rank in the wealth distribution enters von neumann morgenstern utility as an argument in addi tion to wealth itself thus higher wealth increases utility not only directly but also indirectly via higher status in the interests of both simplicity and drama it is typically assumed here that all individuals have identical utility functions which are concave in wealth but convex in status section 2 discusses how the model provides a natural explanation of the fundamental phenomenon addressed by friedman and savage 1948 that individuals may simultaneously purchase insurance and participate in lotteries although each individual here has a utility function which is concave in wealth itself utility can nevertheless be convex in wealth over some range when the indirect effect via status is included this effect is enhanced by the convexity of utility in status but will follow in any case if increasing wealth entails moving up in status much more rapidly than losing wealth entails moving down it is shown

the determinants of western european government growth 1950 1980 european publics and politicians are concerned about big and growing governments such concern is not ill founded government size measured as the ratio of government expenditures to gross domestic product has marched upwards steadily since 1950 in the 12 european nations examined here the present research represents an initial step toward solving the mystery of why these governments have grown to begin a modest theoretical framework for understanding government growth is advanced next specific hypotheses of growth are fitted into the framework and operationalized for empirical testing finally statistical models to account for public sector expansion in each of the dozen nations over the 1950 1980 period are developed the models suggest that a variety of forces have worked to enlarge european governments with perhaps the most important being pressure for government assistance from groups disadvantaged by sour economic conditions

income and democracy existing studies establish a strong cross country correlation between income and democracy but do not control for factors that simultaneously affect both variables we show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and vari ous measures of democracy we present instrumental variables estimates that also show no causal effect of income on democracy the cross country corre lation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years this pattern is con sistent with the idea that societies embarked on divergent political economic development paths at certain critical junctures jel d7 e 1

money and monetary stability in europe 1300 1914 abstract this paper investigates the determinants of monetary stability in europe from the late medieval era until world war i through this period the anchor for monetary policy was the silver or gold value of the monetary unit states however frequently abandoned this anchor some depreciating their monetary units against silver and gold less than 10 fold and others more than 10 000 fold between 1500 and 1914 to understand the determinants of these differences we compile a new and comprehensive monetary history dataset for all major states in europe and test alternative theories we find strong evidence that political factors and in particular fiscal capacity political regime and warfare explain patterns of monetary stability this finding is robust to addressing endogeneity controlling for the instability induced by the mechanics of the monetary system and accounting for the impacts of new monetary technologies and the advent of fiat standard

international systems and domestic politics linking complex interactions with empirical models in international relations following older debates in international relations literature concerning the relative importance of domestic versus systemic factors newer debates emphasize interdependence among states and the complex interactions between systemic and domestic factors as globalization and democratization advance theories and empirical models of international politics have become more complicated we present a systematic theoretical categorization of relationships between domestic and systemic variables we use this categorization so that scholars can match their theory to the appropriate empirical model and assess the degree to which systemic factors affect their arguments we also present two advances at the frontier of these empirical models in one we combine hierarchical models of moderating relationships with spatial models of interdependence among units within a system in the other we provide a model for analyzing spatial interdependence that varies over time this enables us to examine how the level of interdependence among units has evolved we illustrate our categorization and new models by revisiting the recent international political economy ipe debate over the relationship between trade policy and regime type in developing countries

mexico and the development of the practice of the international monetary fund abstract mexico has had a striking influence on the imf s articles and on the development of some of its most important policies both before and after the present version of the articles took effect in more recent years the problem of mexico s external debt has produced changes in the imf s relations with commercial banks its practice of surveillance and on the use of its resources under stand by arrangements in addition impending changes in the imf s response to external contingencies can be attributed to experience with mexico one of the generalizations drawn from this experience is that the imf s practice is not determined solely by the major industrialized countries

a world economy restored expert consensus and the anglo american postwar settlement although british and u s officials held markedly different views during the initial negotiations for a postwar economic order they were able to reach watershed trade and monetary agreements that set the terms for the reestablishment of an open world economy how does one explain this anglo american settlement reached at bretton woods in 1944 structural explanations based on underlying configurations of power and interests are helpful but leave important issues unresolved given the range of postwar economic orders that were possible and potentially consistent with underlying structures and also given the divergent and conflicting views both within and between the two governments why did the economic order take the particular shape it took this article argues that agreement was fostered by a community of british and american economists and policy specialists who embraced a set of policy ideas inspired by keynesianism and who played a critical role in defining government conceptions of postwar interests shaping the negotiating agenda for example shifting the focus of negotiations from trade issues which were highly contentious to monetary issues about which there was an emerging middle ground created by keynesian ideas and building coalitions in support of the postwar settlement

inequality among world citizens 1820 1992 this paper investigates the distribution of well being among world citizens during the last two centuries the estimates show that inequality of world distribution of income worsened from the beginning of the 19th century to world war ii and after that seems to have stabilized or to have grown more slowly in the early 19th century most inequality was due to differences within countries later it was due to differences between countries inequality in longevity also increased during the 19th century but then was reversed in the second half of the 20th century perhaps mitigating the failure of income inequality to improve in the last decades jel d31 f0 n0 o0

public expenditures in canadian provinces an empirical study of politico economic interactions it is widely believed that government ideology and electoral constraints are two major factors that influence the level of public expenditures however frey and schneider argue that the effects of the two phenomena are not simultaneous only when a government is popular can it pursue ideological goals and when popularity is low energies must be redirected toward gaining support from voters to win the next election data draw from the canadian provincial case are used to test empirically this hypothesis the findings support the frey and schneider explanation

electoral and partisan cycle regularities in canada in this paper following recent politico institutional approaches to the theory of economic policy the authors present a methodology for identifying political cycle regularities and test for electoral and partisan cycles in canadian target variables and monetary and fiscal policy instruments using annual data from 1926 to 1994 the empirical evidence suggests the absence of political cycles in canada