a bright future can be ours macroeconomic policy for non eurozone western countries radical changes in macroeconomic policy could produce a brighter future the neoclassical myth that a free market economy inevitably moves to an equilibrium position determined solely by supply side factors must be rejected and replaced by the insight that the position of an economy in the longer run is path dependent fiscal policy in recessions should be biased towards increasing physical and human capital which will improve the productivity of an economy raising living standards and hence taxable capacity thus enabling future public debt to be reduced if this is desirable monetary policy should play a very minor role in aggregate demand policy with interest rate settings largely used to help achieve long term income distribution goals all this is fundamental to geoff harcourt s vision of macroeconomic policy and this paper spells out how this vision can be implemented in 2012 in western countries not hamstrung by euro zone rules and regulations

making the same mistake again or is this time different the world faces an economic crisis of unprecedented proportions but much of the policy response has certainly not lacked for precedent national governments and international organisations including the international monetary fund imf have looked to crises of the past for solutions to the present and austerity has become a familiar theme the inability to effectively resolve the current crisis however gives rise to the question is this time different this article provides a broad overview to the origins and development of the recent economic crisis and the resort to policies of austerity although there is historical precedent for the resort to austerity such as the uk treasury view during the 1920s and 1930s this time things are different many of the current problems are deeply rooted and reflect the impact of the shift towards free market economics that started in the 1970s 2 the origins of the crisis since the beginning of the 1970s the private sector finance in particular has reorganised on an increasingly global scale it has innovated in terms of both structure and products and it has experienced significant growth as tridico 2012 this issue shows this financialisation was characterised by a ballooning of stock exchanges as many firms decided not only to list their shares but also to become involved in speculative finance in response to pressures on firms to maximise shareholder value together with the progressive erosion of worker and trade union rights and influence labour markets became more flexible and real wages stagnated concurrently profits rebounded leading to burgeoning inequality in this context aggregate demand and consumption were bolstered by easy credit and the wealth effects of speculative bubbles first in stocks and shares and then in housing

democracy and human capital formation education spending in latin america 1980 to 1997 this article examines the relationship between democratic representation and spending on education in latin america the authors assess the impact that democracy has on the distribution of resources between different levels of schooling and on total spending on education specifically they test whether democratic governments allocate a greater share of resources to primary education the level that benefits the largest segment of the electorate and that is most critical for human capital formation in developing countries using time series cross sectional analysis the authors find that democracies devote a higher percentage of their educational resources to primary education and that they maintain higher absolute spending levels on education in the aggregate thereby enhancing the prospects of human capital formation

democracy visibility and public good provision we examine the role of visibility in influencing government resource allocation across a multiplicity of public goods we show that a visibility effect distorts governmental resource allocation such that it helps explain why governments neglect provision of essential public goods despite their considerable benefits we show that greater democratization widens the gap in resource allocation between more visible such as famine prevention versus less visible such as malnutrition prevention public goods up to an intermediate level of democracy beyond this level this gap decreases furthermore public goods with low visibility are prone to multiple equilibria in resource allocation with voter expectations being shown to be important

aid remittances medical brain drain and child mortality evidence using inter and intra country data this article analyses the respective impact of aid remittances and medical brain drain mbd on child mortality using panel and cross country quintile level data on respectively 84 and 46 developing countries our results show that remittances reduce child mortality while mbd increases it health aid also significantly reduces child mortality but its impact is less robust than the impact of remittances remittances seem to be more effective in reducing mortality for children belonging to households from the upper classes whereas neither a pro poor nor anti poor effect is found for health aid

pressure groups and redistribution abstract the simple pressure group model of political redistribution can predict more with less restrictive assumptions instead of ready made pressure groups composed of individuals who vote their pocketbooks we posit heterogeneous agents each of whom decides which group to join and how much effort to expend on political activity our model then examines social affinity conditions that foster pressure group formation political sympathies based on social affinity imply testable effects of growth rate and income distribution on progressive transfers effects that prove substantial in pooled time series cross section regressions for 13 oecd countries 1960 1981

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

marginal benefit incidence of public health spending evidence from indonesian sub national data we examine the marginal effects of decentralized public health spending by incorporating estimates of behavioural responses to changes in health spending in benefit incidence analysis the analysis is based on a panel dataset of 207 indonesian districts over the period from 2001 to 2004 we show that district public health spending is largely driven by central government transfers with an elasticity of around 0 9 we find a positive effect of public health spending on utilization of outpatient care in the public sector for the poorest two quartiles we find no evidence that public expenditures crowd out utilization of private services or household health spending our analysis suggests that increased public health spending improves targeting to the poor as behavioural changes in public health care utilization are pro poor nonetheless most of the benefits of the additional spending accrued to existing users of services as initial utilization shares outweigh the behavioural responses

basic health care provision and under 5 mortality a cross national study of developing countries summary in two cross sections of developing countries under 5 mortality is found to be associated strongly with maternal and infant health program effort and with the share of births attended by trained personnel but never with any indicator of health care spending from the standpoint of reducing under 5 mortality then the main challenge in many developing countries may be less to raise overall public health spending or even the share of public health spending devoted to basic services than to assure that a very small absolute amount of revenue is spent effectively to raise access to or improve the quality of maternal and infant health care

social policy and mortality decline in east asia and latin america abstract since 1960 chile and costa rica have improved life expectancy and infant survival as much as south korea and taiwan despite growing more slowly suffering more income poverty and having more unequally distributed incomes this paper analyzes the origins and impact of the publicly funded social services that allowed chile and costa rica to achieve rapid reductions in the risk of early death despite relatively poor performance on income related indicators and explores how south korea and taiwan managed to achieve similar progress at reducing premature mortality despite making less deliberate efforts to fund social services for the poor

randomized evaluations of educational programs in developing countries some lessons this paper reviews recent randomized evaluations of educational programs in developing countries including programs to increase school participation to provide educational inputs and to reform education it then extracts some lessons for education policy and for the practice and political economy of randomized evaluations

paths to development is there a bangladesh surprise using aggregate indices of education health demographic and gender equality outcomes we empirically investigate the hypothesis that bangladesh achieved a higher level of social development compared with countries of similar level of per capita income stylized facts and cross country regression results support this hypothesis for a broad range of dimensions further tests show that such achievements do not simply reflect income mediated channels and social expenditure programs we conclude by speculating on the role of bangladesh s development to sustain the process of growth and on the role of governance and institutional quality for the nexus between growth and development

does the median voter model explain the size of government evidence from the states despite an attempt by its own authors it is difficult to argue that the influential model of the size of government developed by meltzer and richard 1981 has had convincing empirical backing in this paper we adapt that model to a model of state government size the main testable hypothesis is that as income inequality grows government size as measured by the percentage of income devoted to government redistribution grows we test the model using panel data from the us states from 1979 1991 in contrast to the results found by meltzer and richard 1983 we find little evidence to support the model the results are robust to several model specifications and estimation techniques

the political economy of growth democracy and human capital democracy is more than just another brake or booster for the economy we argue that there are significant indirect effects of democracy on growth through public health and education where economists use life expectancy and education as proxies for human capital we expect democracy will be an important determinant of the level of public services manifested in these indicators in addition to whatever direct effect democracy may have on growth we predict an important indirect effect through public policies that condition the level of human capital in different societies we conduct statistical investigations into the direct and indirect effects of democracy on growth using a data set consisting of a 30 year panel of 128 countries we find that democracy has no statistically significant direct effect on growth rather we discover that the effect of democracy is largely indirect through increased life expectancy in poor countries and increased secondary education in nonpoor countries t he relationship between democracy and economic growth has received considerable attention in recent years as yet however there is no consensus among analysts on the relationship between these two widely studied variables sound theoretical positions have been advanced suggesting that democracy is both an impediment and facilitator of growth careful quantitative tests of the relationship have produced contradictory results in our view existing studies fail to develop an adequate political theory of growth and as a result their empirical models are typically misspecified with competing arguments on both sides of the question many analysts merely add a variable for democracy to existing economic models and then look at the sign of the coefficient and its significance this is inadequate democracy is more than just another brake or booster for the economy we argue that there are important indirect effects of democracy on growth that are manifested through public health and education where economists typically use life expectancy and secondary school enrollment as proxies for human capital we expect that democracy will itself be an important determinant of the level of public services captured in these indicators thus in

speaking platitudes to power observing american business ethics in an age of declining hegemony over the last generation american business ethics has focused excessively on the process of managerial decision making while ignoring the collective impact of these decisions and avoiding other approaches that might earn the disapproval of corporate executives this narrowness helped the field establish itself during the 1980s when american management under pressure from finance and heightened competition was unreceptive to any limitations on its autonomy relying however on top down approaches inspired by aristotle locke and kant while ignoring the consequentialism of mill and rawls made the field totally reliant upon the good will of these same corporate executives for generating any impact trends in employee compensation finance regulation government procurement and taxpayer subsidies suggest that business ethics has failed to significantly influence corporate behavior a result that would have not surprised the realists of the post war generation of business and society scholars if business ethics is to prove relevant in the contemporary world the field needs to acknowledge past failures and develop new approaches the decline of american economic hegemony coupled to the increased internationalization of the discipline may create the opportunity to do so

wealthier is healthier we estimate the effect of income on health using cross country timeseries data on health infant and child mortality and life expectancy and income per capita we use instrumental variables estimates using exogenous determinants of income growth to identify the pure income effect on health isolated from reverse causation or incidental association the long run income elasticity of infant and child mortality in developing countries lies between 0 2 and 0 4 using these estimates we calculate that over a half a million child deaths in the developing world in 1990 alone can be attributed to the poor economic performance in the 1980s

austerity and fraud under different structures of technology and resource abundance we present the implications of a simple analytical theory in which economic crisis emerges from rising real resource costs in systems with high fixed costs relative to variable costs we show the integral role played by financial fraud in this process and explain the effects of austerity and stimulus policies in the face of crisis under differing combinations of fixed and variable costs

water for life the impact of the privatization of water services on child mortality while most countries are committed to increasing access to safe water and thereby reducing child mortality there is little consensus on how to actually improve water services one important proposal under discussion is whether to privatize water provision in the 1990s argentina embarked on one of the largest privatization campaigns in the world including the privatization of local water companies covering approximately 30 percent of the country s municipalities using the variation in ownership of water provision across time and space generated by the privatization process we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest 26 percent in the poorest areas we check the robustness of these estimates using cause specific mortality while privatization is associated with significant reductions in deaths from infectious and parasitic diseases it is uncorrelated with deaths from causes unrelated to water conditions

ethnic politics risk and policy making a cross national statistical analysis of government responses to hiv aids what explains country policy responses to the aids pandemic the author highlights ethnic politics as a negative influence on aids related expenditures and other policies when societies are ethnically divided and fragmented elites are less likely to mobilize around the idea of risk from a stigmatized condition fearing that their group will suffer reputational consequences they are more likely to emphasize that the risks are contained within other groups or that the threat is exaggerated in turn governments are less likely to provide policies because of lower demand and the potential for political resistance to actions viewed as unwelcome and or unnecessary a series of cross national statistical analyses consistently reveal negative effects of ethnic fractionalization on aids policy as compared with analogous analyses it is possible to rule out the potential endogeneity concern that ethnic political competition might be a consequence as much as it was a cause of bad public policy and underdevelop

is democracy good for the poor many scholars claim that democracy improves the welfare of the poor this article uses data on infant and child mortality to challenge this claim cross national studies tend to exclude from their samples nondemocratic states that have performed well this leads to the mistaken inference that nondemocracies have worse records than democracies once these and other flaws are corrected democracy has little or no effect on infant and child mortality rates democracies spend more money on education and health than nondemocracies but these benefits seem to accrue to middle and upper income groups

how democracy affects growth abstract this paper introduces a new methodology to examine the empirical relationship between democracy and economic growth democratic institutions are assumed to affect growth through a series of channels we specify and estimate a full system of equations determining growth and the channel variables results suggest that democracy fosters growth by improving the accumulation of human capital and less robustly by lowering income inequality on the other hand democracy hinders growth by reducing the rate of physical capital accumulation and less robustly by raising the ratio of government consumption to gdp once all of these indirect effects are accounted for the overall effect of democracy on economic growth is moderately negative our results indicate that democratic institutions are responsive to the demands of the poor by expanding access to education and lowering income inequality but do so at the expense of physical capital accumulation

do electoral institutions have an impact on population health there is an emerging political economics literature which purports to show that legislatures elected based on proportional electoral rules spend more and redistribute more than legislatures elected based on majoritarian electoral rules going a step further the authors of this paper consider whether degree of electoral proportionality has an impact on population health and in particular the health of the least advantaged members of society a panel of 24 parliamentary democracies for the years 1960 2004 is used to examine the relationship between electoral institutions and health the authors find that greater electoral proportionality is positively associated with overall population health as indicated by life expectancy and with the health of the poorest as indicated by a reduction in infant mortality a panel of 17 countries for the years 1970 2004 is then used to show to that electoral permissiveness modifies the impact of health spending on infant mortality

local capture evidence from a central government transfer program in uganda according to official statistics 20 percent of uganda s total public expenditure was spent on education in the mid 1990s most of it on primary education one of the large public programs was a capitation grant to cover schools nonwage expenditures using panel data from a unique survey of primary schools we assess the extent to which the grant actually reached the intended end user schools the survey data reveal that during 1991 1995 the schools on average received only 13 percent of the grants most schools received nothing the bulk of the school grant was captured by local officials and politicians the data also reveal considerable variation in grants received across schools suggesting that rather than being passive recipients of flows from the government schools use their bargaining power to secure greater shares of funding we find that schools in better off communities managed to claim a higher share of their entitlements as a result actual education spending in contrast to budget allocations is regressive similar surveys in other african countries confirm that uganda is not a special case

the uk s coalition government and heterodox economics the uk coalition government s economic policy was primarily aimed at reducing the large fiscal deficit that it inherited mainly by cutting expenditure this was considered irrational by heterodox economists on the grounds that it would harm employment and output politicians influenced by this tradition advocated a plan b experience has shown that the coalition government s policy was not irrational employment reached record heights and economic growth resumed the paper draws attention to the implications of these facts for heterodox economics and economic policy it is concluded that just as mainstream economics had to rethink after the economic crisis of 2008 09 so heterodox economics has to rethink after the recovery of 2014 15

the effects of capital mobility trade openness and democracy on social spending in latin america 1980 1999 empirical studies measuring the impact of globalization on social spending have appeared recently in leading journals this study seeks to improve upon previous work by 1 employing a more sophisticated and comprehensive measure of financial openness 2 using a more accurate measure of trade openness based on purchasing power parities and 3 relying on social spending data that are more complete than those used by previous studies on latin america our estimates suggest that several empirical patterns reported in previous work deserve a second look we find that trade openness has a positive association with education and social security expenditures that financial openness does not constrain government outlays for social programs and that democracy has a strong positive association with social spending particularly on items that bolster human capital formation t he international integration of markets for goods and services over the past two decades is unprecedented amidst a broader context of international integration latin america has experienced the most dramatic change in its economic policy orientation since world war ii few regions have undergone as rapid and thorough an economic transformation how has economic integration affected the social welfare policies of latin american governments has it forced them to reduce spending on social programs in order to compete in the world economy or has it induced them to provide social safety nets for those hurt by economic competition has democratization in latin america compelled governments to spend more on social programs in relatively open economies

globalization domestic politics and social spending in latin america a time series cross section analysis 1973 97 this study examines the effects of globalization democratization and partisanship on social spending in fourteen latin american countries from 1973 to 1997 using a pooled time series error correction model the authors examine three sets of issues first following debates in the literature on oecd countries they want to know whether social spending has been encouraged or constrained by integration into global markets within this context they examine the extent to which such outcomes might be influenced by two additional sets of domestic political and institutional factors discussed in work on developed countries the electoral pressures of democratic institutions and whether or not popularly based governments are in power the authors show that trade integration has a consistently negative effect on aggregate social spending and that this is compounded by openness to capital markets this is the strongest and most robust finding in the study neither democratic nor popularly based governments consistently affect overall social spending the authors then disaggregate spending into social security transfers and expenditures on health and education they find that popularly based governments tend to protect social security transfers which tend to flow disproportionately to their unionized constituencies but they have a negative impact on health and education spending conversely a shift to democracy leads to increases in health and education spending which reaches a larger segment of the population the authors conclude by emphasizing the contrasting political logics of the different types of social spending

temporary weapons employers use of temps against organized labor since the 1970s u s employers have restructured their relationship to the labor market this restructuring has included their rising use of nonstandard workers particularly agency temps and their systematic attacks on labor unions these two trends are generally understood to be related but separate facets of a broader restructuring of the employment relationship in this article the author shows where and how these trends intersect by analyzing 106 labor management disputes employers use temps as weapons against unions in four primary ways to prevent unions from forming to weaken existing unions to apply pressure on unions during negotiations and to intimidate or harass striking workers the author concludes that deploying agency temps in this way is a qualitatively new phenomenon not simply a continuation of employers longstanding practice of replacing union workers with scab labor

is flexible labour good for innovation evidence from firm level data whether the use of flexible workers is damaging to innovation or not depends on the dominant innovation regime in a sector in sectors with a routinised innovation regime high shares of low paid temporary workers have a negative impact on the probability that firms invest in r d in sectors that tend towards a garage business regime however flexibility has no impact the two innovation regimes differ in the nature of their knowledge base reliance on generally available knowledge or dependence on a firm s historically accumulated knowledge base innovation in the latter regime benefits from longer job durations our results are consistent with findings in macro level studies that coordinated market economies with rigid labour markets have higher labour productivity gains than liberalised market economies

the tragedy of uk fiscal policy in the aftermath of the financial crisis the evolving response of the uk fiscal authorities to the financial crisis and recession are briefly outlined with a focus on the fiscal austerity programme introduced by the incoming coalition government during 2010 the reasoning for that programme is critically examined and largely dismissed it is argued that the drive for major cuts in public expenditure comes from seeking to achieve a balanced structural budget and reductions in estimated potential output the significance of the latter are discussed the paper is completed by a brief consideration of alternatives

restoring the promise of american labor law the product of an october 1993 conference on labor law reform jointly sponsored by the school of industrial and labor relations at cornell u and the department of economic research at the afl cio this volume both argues the need for fundamental reform of the legal and institutional underpinnings o

electoral institutions and the politics of coalitions why some democracies redistribute more than others standard political economy models of redistribution notably that of meltzer and richard 1981 fail to account for the remarkable variance in government redistribution across democracies we develop a general model of redistribution that explains why some democratic governments are more prone to redistribute than others we show that the electoral system plays a key role because it shapes the nature of political parties and the composition of governing coalitions hence redistribution our argument implies 1 that center left governments dominate under pr systems whereas center right governments dominate under majoritarian systems and 2 that pr systems redistribute more than majoritarian systems we test our argument on panel data for redistribution government partisanship and electoral system in advanced democracies w hy do some countries redistribute more than others most work on the politics of redistribution starts from the premise that democratic institutions empower those who stand to benefit from redistribution the basic logic is succinctly captured in the meltzer richard 1981 model where the voter with the median income is also the decisive voter with a typical right skewed distribution of income the median voter will push for redistributive spending up to the point where the benefit of such spending to the median voter is outweighed by the efficiency costs of distortionary taxation this argument implies that redistibution is much greater in democracies than in nondemocracies at least of the right authoritarian variety and that among the latter inegalitarian societies redistribute more than egalitarian ones there is some evidence to supportthefirstimplication althoughitisdisputed see ross 2005 but most of the variance in redistribution is probably within the same regime type according to datafromtheluxembourgincomestudy forexample the reduction in the poverty rate in united states as a result of taxation and transfers was 13 in 1994 whereas the comparable figure for sweden was 82 thepovertyrateisthepercentageofhouseholdsbelow 50 of the median income to explain this variance we have to look at political and economic differences

state capacity and health outcomes comparing argentina s and chile s reduction of infant and maternal mortality 1960 2013 summary there is substantial quantitative evidence linking higher state capacity to better health outcomes but scant attention has been paid to the specific mechanisms through which this causal influence operates the problem is compounded by the considerable diversity of ways in which the influence of the state on development outcomes has been conceptualized making it hard for practitioners to extract policy lessons from this literature in this study i seek to help to address both of these problems through a historical comparative examination of the ways in which state capacity affected infant and maternal mortality reduction in argentina and chile over the last half century i show that chile s greater investment in health specific state capacities was behind the remarkable historical reversal of fortune between these two countries in terms of infant and maternal mortality levels from 1960 to the present as well as behind chile s notorious reduction in the territorial inequality of these outcomes i show the key difference between the two countries was the quality reach and homogeneity of their respective public health systems from a theoretical standpoint i argue that the notions of bureaucratic quality and infrastructural power are both necessary and complementary perspectives through which to conceptualize state capacity and understand its causal influence over health and other desirable developmental outcomes in turn this suggests that a useful way to specify calls for better governance and to achieve better long run health performance may be to invest in the public health system s technical bureaucratic autonomy and in its system wide planning and coordination capacities

substitution between wage and nonwage benefits you gotta be kidding ollie you re just robbing yourself schuylkill mutual offers a terrific deal on keogh and we could plug you in in fact we advise plugging you in on the corporate end so not a nickel comes out of your personal pocket it comes out of the corporate pocket and there s that much less for uncle to tax these poor saps carrying their own premiums with no company input are living in the dark ages there s nothing shady about rigging it this way we re just using the laws the government has put there they want people to take advantage it all works to up the gross national product you know what i mean by keogh don t you you re looking kind of blank john updike p 296