reaction or interaction spatial process identification in multi tiered government structures abstract this paper models horizontal and vertical fiscal externalities in a multi tiered structure of government and implements maximum likelihood and instrumental variables estimation techniques to identify the source of spatial dependence in english local government expenditures the results show that when vertical fiscal externalities among upper tier county authority and lower tier district authority expenditures are explicitly taken into account the estimated magnitude of inter district fiscal interactions is substantially reduced the observed positive spatial autocorrelation among district expenditures can consequently be attributed to a large extent to common reaction to county fiscal policies rather than to actual strategic interaction

a general equilibrium analysis of production subsidy in a harris todaro developing economy an application to india since 1950s india has advocated import substituting industrialization policies to promote its manufacturing sector the end result was creation of a dual economy highly favored manufacturing sector with high and rigid wages and neglected agricultural sector with low wages and poverty because of the higher wages in the manufacturing sector the rural laborers migrate to the urban sector a typical characteristic of the harris todaro developing economy realizing this crisis the indian government recently initiated policies to boost agricultural production to curb the labor migration and improve the welfare of the rural population in this study we develop a computable general equilibrium cge model for india by incorporating harris todaro economic characteristics of unemployment labor migration farm dependant population and labor intensive agriculture we use the model to analyze the effects of agricultural production subsidy policies on employment factor price output price output levels and we

performance rating and yardstick competition in social service provision abstract this paper investigates whether national evaluation of decentralised government performance tends by lessening local information spill overs to reduce the scope for local performance comparisons and consequently to lower the extent of spatial auto correlation among local government expenditures it analyses local government expenditures on personal social services in the uk before and after the introduction of a national performance assessment system sspr social services performance rating that would attribute a rating to each local authority the empirical evidence is consistent with the hypothesis that the sspr has reduced local yardstick competition

determinants of donations in private nonprofit markets abstract we estimate the responsiveness of donations to a number of economic variables including price advertising and the availability of revenue from such other sources as government grants and program service sales utilizing a set of irs data on individual nonprofit organizations in each of seven industries including hospitals and higher education for the years 1982 1994 we find distinct overall patterns as well as notable variation across industries a nonprofit organization s fundraising expenditures are estimated to exert two countervailing effects on donations the direct advertising and information effect augments donations while the indirect effect on the price of donating has a negative effect we do not find evidence that fundraising is carried to the profit maximizing levels in some industries fundraising is substantially short of that level while in other industries it is excessive implying that the marginal return to fundraising is exceeded by the cost focusing on whether revenue from other sources affects donations to a nonprofit organization we find evidence that revenue from either government grants or from the organization s own program sales activity generally does not crowd out private donations to the contrary in most industries there are significant positive effects

testing the taxmimicking versus expenditure spill over hypotheses using english data spatial interaction among local governments in tax setting and public spending decisions is receiving increasing attention in the applied public economics literature spatial interaction models rely on the presence of an externality from local budget making in traditional public finance models external effects originate either from interjurisdictional resource flows due to tax competition for a mobile base or from local public expenditure spill overs into neighbouring jurisdictions however the recent political agency yardstick competition literature has stressed the role of informational externalities between neighbouring jurisdictions and predicted tax mimicry at the local level the actual relevance of the above hypotheses clearly needs to be assessed empirically in this paper an attempt is made at discriminating between alternative sources of local fiscal interaction by using data on the english municipal authorities budgets while both public spending levels and local property tax rates ex

micro estimates of public spending demand functions and tests of the tiebout and median voter hypotheses responses to questions given to a random sample of michigan households are used to estimate public spending demand functions while income and price elasticities are similar to those obtained from aggregate data positive income elasticities appear to arise because public services are distributed in a prorich manner a relatively small variance in spending demands among urban and suburban communities in metropolitan areas with substantial public service variety suggests that the tiebout mechanism works this interpretation is supported by the fact that actual spending conforms substantially to desired levels in urban areas but less so in rural areas with little public sector choice

does fiscal cooperation increase local tax rates in urban areas charlot s paty s and piguet v does fiscal cooperation increase local tax rates in urban areas regional studies the main purpose of this paper is to assess the effects of fiscal cooperation on local taxation in a decentralized country using experience in french urban municipalities a tax setting model for local business tax is estimated using spatial and panel econometric techniques for the period 1993 2003 controlling for population size it is found that fiscal cooperation is likely to reduce tax competition and as a consequence to increase local business tax rates

an empirical analysis of intergovernmental tax interaction the case of business income taxes in canada both federal and provincial governments in canada levy corporate taxes on busi nesses in their jurisdictions which potentially gives rise to horizontal and vertical tax exter nalities within the federation using a simple model of interdependent tax choices we estimate tax setting functions for the federal government ontario quebec and an aggregate of the remaining eight provinces we find evidence of significant vertical and horizontal tax inter actions provincial tax rates respond negatively to the federal tax rate while at least some provinces increase their tax rates in response to increases in the tax rates of other provinces

spatial patterns in local taxation tax mimicking or error mimicking this paper tests for mimicry in local tax setting by using a panel data set of the english non metropolitan districts in the 1980s when property tax rate variability across districts was highest the results confirm the presence of large and significant spatial interactions among districts even after allowing for district specific and time effects a district appears to be significantly affected by its neighbours policies a 10 increase in the local property tax rate of a district s neighbours leads to an increase of 4 5 in its own property tax rate on the other hand the absence of correlation in tax rates between lower tier district authorities and upper tier county authorities suggests that the spatial pattern in district tax rates is not simply driven by spatially auto correlated shocks

tax structure in a federation abstract does national taxation of a base influence the degree to which the local government will use the same tax base does the tax rate chosen by one local government influence the choices made by another local government the theoretical answer to these questions is often in the affirmative because of vertical and horizontal externalities that result when several governments are operating at the same time in a fiscal system however little empirical information is available this paper estimates the impact of horizontal and vertical externalities on the choice of tax rates by local governments operating in a federation higher national income tax rates and lower poverty rates are found to lead to lower local income tax rates

committee assignments constituent preferences and campaign contributions committee assignments constituent preferences and campaign constributions the familiar economic model of regulation as developed by stigler 1971 peltzman 1976 and becker 1983 posits an essentially frictionless market process for regulatory policy formation in which a single regulator legislator chooses policy to maximize net support from competing groups in this paper we extend the supply side of this model by considering the effect of legislative institutions and unorganized constituent preferences on the ability of incumbents in the house of representatives to serve specific interest groups we then test this formulation by examining the recent history of interest group campaign contributions to these legislators our theoretical model concentrates on how a legislator allocates time between serving specific interest groups outside his district and serving his constituency we do not model interest group decisions directly assuming simply that they purchase their desired amount of service from the lowest cost suppliers our model sorts legislators by the supply price at which they can serve a particular group this price depends on the preferences of the voters in the legislators district and the productivity of the legislator in producing policy service for each group 1 the empirical section tests the model by examining the pattern of interest group campaign contributions to house incumbents from 1978 through 1984 our regression analysis tends to confirm both implications of the theory first the pattern of campaign contributions from specific interest groups to legislators is shaped by the division of substantive legislative and regulatory jurisdictions represented by the system of house standing committees second voter preferences influence the pattern of contributions by affecting the supply price at which a legislator can offer policy to interest groups legislators with sympathetic or indifferent constituencies are able to offer a lower price and are therefore able to attract larger sums than those with hostile constituencies these results are important for two reasons first the influence of congressional institutions such as committees on policy is not widely accepted while several studies faith levins and tollison 1982 weingast and moran 1983 weingast 1984 grier 1989 and robert 1990 have documented the effects of changes in a particular committee on policies under its jurisdiction this work considers the jurisdiction of only a single committee in each case 2 by examining the linkages between congressional committees and political action committees pacs we investigate whether interest groups act as if committees have power second while the chicago model of regulation emphasizes correctly in our view that policy is the result of vote maximizing calculations and the incremental balancing nature of any equilibrium the model is imprecise about which sets of preferences are most important in determining the levels of policy or the size of changes in policies focusing on committees promotes a parsimonious specification of both the political players members of the relevant committee rather than the entire congress and the pivotal voters committee members constituencies more than the nation determining specific policy outcomes the paper is organized as follows section i reviews some issues on the nature and sources of committee influence in the u s congress the second section incorporates committee assignments into a theory of decision making by interest group investors sections iii and iv describe our data and estimation technique and present the empirical results the fifth and final section discusses some implications and conclusions of this research i committee power in congress legislators differ substantively by virtue of their committee assignments committees in congress and particularly in the house of representatives possess disproportionate power over the policy areas in their respective jurisdictions have the right to hold hearings and recommend budget allocations for the bureaus in their jurisdiction goodwin 1970

does smart growth matter to public finance this paper addresses four fundamental questions about the relationship between smart growth a fiscally motivated anti sprawl policy movement and public finance do low density spatially extensive land use patterns cost more to support if so how large an influence does sprawl actually have how does the influence differ among types of spending and how does it compare with the influence of other relevant factors the analysis which is based on the entire continental us and uses a series of spatial econometric models to evaluate one aggregate total direct and nine disaggregate education fire protection housing and community development libraries parks and recreation police protection roadways sewerage and solid waste disposal measures of spending provides the most detailed evidence to date of how sprawl affects the vast sum of revenue that local governments spend every year

poverty and growth impacts of high oil prices evidence from sri lanka the sharp rise in oil and food prices in 2007 and 2008 caused negative impacts on poverty and economic growth in many oil and food importing developing countries some analysts believe that these countries are under stress again due to a rise in crude oil prices to a two and a half year high in march 2011 which has also been partly responsible for higher food prices in recent months however there is a limited body of empirical evidence available from developing countries on the impact of high oil prices on growth in general and household poverty in particular in this study sri lanka is used as a case study and a computable general equilibrium cge approach is adopted as an analytical framework to explore the growth and poverty impacts of high oil prices the results suggest that urban low income households are the group most adversely affected by high global oil prices followed by low income rural households in contrast estate low income households are the least affected out of all low income households the energy intensive manufacturing sector and services sector are affected most compared to the agricultural sector

estimates of energy subsidies in china and impact of energy subsidy reform abstract for a transitional economy such as china some energy subsidies are reasonable and sometimes even necessary for achieving social goals however with rising energy prices and environmental concerns we see conflicts emerging between energy subsidies energy demand supply fundamentals and climate change considerations energy subsidies have important implications for sustainable development through their effects on energy use efficiency and the choice of fuel source this paper applies the price gap approach to estimate china s energy subsidies results indicate that china s energy subsidies amounted to cny 356 73 billion in 2007 equivalent to 1 43 of gdp subsidies for oil products consumption are the largest followed by subsidies for the electricity and coal sectors furthermore a cge model is used to analyze the economic impacts of energy subsidy reforms our findings show that removing energy subsidies will result in a significant fall in energy demand and emissions but will have negative impacts on macroeconomic variables we conclude that offsetting policies could be adopted such that certain shares of these subsidies are reallocated to support other sustainable development measures which could lead to reducing energy intensity and favoring the environment

do states play welfare games abstract this paper uses a panel of state level annual data from 1983 to 1994 for each of the contiguous united states and the district of columbia to explore the degree to which states simultaneously set welfare benefits using instrumental variables estimation we find substantial empirical evidence that is supportive of the notion of welfare competition furthermore we find that state responses to neighbor benefit decreases tend to be significantly larger in magnitude as their responses to neighbor benefit increases our results therefore have potential implications for public policy in the wake of the increased decentralization of welfare policy associated with the welfare reform of 1996

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

balancing incentives in the compensation contracts of nonprofit hospital ceos abstract given the considerable insight into corporate governance achieved through studies of executive compensation in proprietary firms it is surprising that executive contracting in nonprofit organizations remains largely unexplored in this paper we use the multitask principal agent model of holmstrom and milgrom the journal of law economics and organization 7 1991 suppl 24 to argue that nonprofit hospitals represent an optimal response to information asymmetries between managers and boards for a board with multidimensional objectives the agency problem is getting top executives to distribute their efforts across all dimensions of the hospital s mission the nonprofit form is preferred because the absence of high powered incentives such as share ownership reduces executives incentives to place undue emphasis on improving financial performance at the expense of important but less observable tasks using newly available compensation data we test the model by comparing the conditional distributions of earnings for industrial and nonprofit hospital ceos in ontario our best estimates are that ceos in publicly traded firms earn twice as much on average as those in similarly sized nonprofit hospitals but bear roughly eight times the income variance estimates of the associated degree of risk aversion are well within conventional bounds and are consistent with the trade off between insurance and incentives predicted by the theory

spatial dependence through local yardstick competition theory and testing abstract we propose a model of contracting for natural monopolies in which yardstick evaluation of performance can be optimal where principals have partially unobservable objective functions and agents are risk averse an externality is generated which can be observed in patterns of spatial dependence imposing standard contracting rules on principals can eliminate the externality and spatial dependence we test this prediction using spatial econometrics on uk data covering a regime shift from independent contracting to compulsory competitive tendering rules

budget spillovers and fiscal policy interdependence evidence from the states abstract this paper formalizes and tests the notion that states expenditures depend on the spending of similarly situated states we find that even after allowing for fixed state effects year effects and common random shocks among neighbors a state government s level of per capita expenditure is positively and significantly affected by the expenditure levels of its neighbors ceteris paribus a one dollar increase in a state s neighbors expenditures increases its own expenditure by over 70 cents

the consequences of overlapping tax bases for redistribution and public spending in a federation tax and expenditure policies are studied in a federation with imperfectly mobile households states implement a linear progressive tax and supply a public good a vertical fiscal externality reflecting the effect of state policies on federal revenues provides an incentive for state taxes to be too progressive a horizontal fiscal externality causes nonoptimal state taxes and expenditures because of the migration effect the federal government implements its own linear progressive tax and makes transfers to the states the federal government can nullify both externalities by appropriate fiscal policies and redistributive taxation can be decentralized to the states c 1998 elsevier science s a

the determinants of municipal tax rates in british columbia in this paper we study the regional pattern of municipal business property tax rates in the province of british columbia reduced form tax setting equations produce some evidence that municipal governments respond to tax changes in neighbouring jurisdictions a joint investigation of the determinants of tax base and municipal taxation decisions however reveals that it is difficult to interpret this response as arising primarily out of competition over tax base there is also some evidence that municipal tax rates are sensitive to taxes set on the same base by super municipal bodies jel classification c33 h71 les determinants des taux d imposition municipale en colombie britannique dans ce memoire les auteurs etudient le pattern regional des taux d imposition municipale sur la propriete fonciere commerciale dans la province de la colombie britannique on montre a l aide d un modele en forme reduite d equations de definition des taux d imposition que les gouvernements municipaux reagissent aux changements dans les taux d imposition dans leur voisinage cependant un examen conjoint des determinants de la base d imposition et des decisions municipales montre qu il est difficile d interpreter cette reaction comme emanant d une concurrence fiscale on montre aussi que les taux d imposition municipale sont sensibles aux niveaux de fiscalite imposes sur la meme base par les autorites supra municipales

public funding and repertoire conventionality in the german public theatre sector an econometric analysis this study empirically examines the relationship between public funding and repertoire decisions in the german public theatre sector a cross sectional econometric model is constructed to estimate the effects for a sample of 127 public theatres covering the theatre season 1998 1999 using a conventionality index as the dependent variable which has to be calculated first the empirical results show that public subsidy subscription income multiple venues the existence of other theatres in a community as well as the size and the level of education of a community have a significant impact on repertoire conventionality

determinants of sovereign wealth fund investment in private equity vs public equity this paper examines the investments of 19 sovereign wealth funds swfs in 424 firms both public and private around the world from 1991 through 2010 the data indicate that swfs similar to other institutional investors are less likely to invest in private equity than in public equity internationally however the economic significance of this impact is surprisingly low unlike other institutional investors swfs are more likely to invest in private equity compared with public equity in target nations where investor protection is low and where the bilateral political relations between the swf and the target nation are weak surprisingly cultural differences play a marginally positive role in the choice to invest in private equity investment outside an swf s own sovereign nation comprehensively we find that swfs act distinctively from other traditional institutional investors when investing in private equity

a model of welfare competition with evidence from afdc in this paper we test empirically for strategic behavior among the states using the cash support program aid to families with dependent children afdc to motivate the empirical work we adapt wildasin s model of income redistribution 1991 american economic review 81 757 773 to a model of interjurisdictional welfare competition although welfare competition may be generated from different frameworks we choose wildasin s model to illustrate how welfare benefit interdependence is genereated in the context of welfare migration we estimate a representative reaction function for afdc using both cross sections and pooled cross section data after controlling for other determinants of afdc benefit levels and for spatial error autocorrelation we find evidence showing competition 2000 academic press

organization form residual claimants and corporate control eugene fama and michael jensen s treatment of the separation of ownership and control is both insightful and informative it deepens our understanding of corporate control and the analysis of residual claimants usefully extends the economics of internal organization to include partnerships mutuals nonprofits and the like the basic argument is this specialized governance structures arise in response to the efficiency needs of each type of organization this is an important argument and one with which i broadly concur they couple this however with a strong suggestion that these structures have reached a high degree of refinement on which account there is not now if indeed there ever has been an organization control problem with which scholars and others are legitimately concerned on this point i have grave doubts my discussion of the paper addresses three issues what is the relation if any of the hierarchical organization of the firm to economic performance what relation if any does residual claimant status have to the composition and character of the board of directors and is there now or has there ever been a corporate control problem i deal with each of these issues in order

local fiscal competition an application to sales taxation with multiple federations abstract local sales tax rates influence the location of retail activity this paper develops a theory and empirical identification strategy for studying sales tax competition with multiple federations as exemplified by multiple counties each containing several cities in addition to strategic interactions with nearby cities and a city s own county city tax rates are influenced by the tax rates of neighboring counties cities react heterogeneously to own county sales tax rates depending on distance to the county border using data on the driving time to county borders and a comprehensive cross section of local sales tax rates i exploit variation in proximity to county borders to identify vertical fiscal competition cities located near county borders react more intensely to their county s tax rate in comparison to towns at the interior an increase in the neighboring county tax rate raises city tax rates in nearby counties

evaluating the impact of reforming the food subsidy program in egypt a mixed demand approach abstract food subsidy is one of the policies considered to protect consumer welfare against food price increases in particular when the insufficient local production has to be complemented by food imports with volatile prices egypt has experienced several food crises the latest in 2008 which put an halt to attempts to reform in depth the system of food subsidies because of social unrest in this paper we use a mixed demand approach to analyze the consumption structure of egyptian households our model specification takes into consideration the characteristics of the egyptian food subsidy system where some food items have predetermined quotas while others are associated with predetermined subsidized prices price income and quota elasticities are estimated from the egyptian family expenditure survey and welfare change measures are derived by income class simulations of various options to eliminate subsidies on selected food items are conducted we estimate the negative welfare impact of the reforms especially in the context of increasing food prices by comparing welfare effects of policy options by income quartiles and by household category rural urban

economic social and environmental impacts of fuel subsidies a revisit of malaysia abstract subsidizing energy has been widely used but is economically unfavorable the malaysian government has shown strong intention to reduce energy subsidies recently but face challenges to prepare policy instruments to manage the impact this study develops a computable general equilibrium cge model with breakdown of households by income level to evaluate the potential impacts of removing energy subsidies on the malaysian economy it is shown that removing petroleum and gas subsidy would improve economic efficiency and increase gdp up to 0 65 budget deficit would be largely reduced after removing the petroleum subsidies especially when the saved subsidy cost is not budgeted for other expenditure households would be worse off in most scenarios due to higher price level but some compensation policy could make the lowest income group no worse than baseline without harm the economy the reduction in carbon emissions ranges 1 84 6 63 in different scenarios the simulation results suggest malaysia to completely remove all fuel subsidies and use the saved funding to cut budget deficit or spend on education health and other service sector it is also necessary to set a compensation scheme to minimize public resistance and make sure such scheme is affordable

exploring impact of carbon tax on china s co2 reductions and provincial disparities abstract with fast development it is not easy for china to achieve carbon reduction targets only by traditional command and control measures e g the measures for energy efficiency carbon tax is advocated as one effective complementary measure and has high possibility to be implemented for china s future low carbon development under such a circumstance this paper aims at forecasting the possible impact of carbon tax on both carbon reduction and economic loss of 30 chinese provinces a 30 chinese province cge computational general equilibrium model has been developed to conduct the provincial evaluation and seven scenarios including business as usual bau scenario and six carbon tax scenarios with carbon price from 20 usd ton to 120 usd ton up to 2030 are set the results show that china s industrial co2 will be reduced from 12 2 billion tons under bau scenario to 10 4 billion tons 9 3 billion tons 8 5 billion tons 7 9 billion tons 7 4 billion tons and 7 0 billion tons under scenarios of tax20 tax40 tax60 tax80 tax100 and tax120 in 2030 respectively electricity metal and chemicals sectors have high reduction potentials and are priority sectors for carbon tax policy provincial disparity analysis demonstrates that coal production consumption and total energy consumption are key factors to affect carbon tax effect on co2 reduction and inner mongolia shandong shanxi and hebei have the largest industrial co2 reduction potentials after levying carbon tax however the implementation of carbon tax will impede economic development for all provinces therefore the concept of carbon tax efficiency is further proposed in order to evaluate the effectiveness of carbon tax by considering both co2 reduction and gdp loss policy suggestions indicate that provinces of shanxi inner mongolia hebei and anhui should be set priority when implementing carbon tax policy in china and carbon price should be no more than 50 usd ton

measuring the welfare effects of reducing a subsidy on a commodity using micro models an application to kuwait s residential demand for electricity abstract this paper provides a conceptual and empirical approach for evaluating the direct benefits and costs that are associated with reforming the price of a subsidized commodity using a micro model the welfare analysis is based on two alternative scenarios a hypothetical percentage increase in the price of the commodity and a hypothetical percentage decrease in the amount of subsidy the latter is considered to be a simultaneous problem in which the exact price of the commodity that reduces consumption and subsequently the subsidy to the specific target level needs to be determined first as a case study the paper utilizes the most recent household expenditure survey in the state of kuwait to estimate residential electricity demand for different household groups i e low middle and high income and employs a partial equilibrium model to measure the welfare implications that may result from a reduction in the electricity subsidy rates the empirical findings show that a small increase in the price of electricity would reduce annual consumption by 4741 million kwh and annual subsidy by us 734 million the results also show that the loss in consumers welfare is approximately us 145 million while the financial and environmental benefits to the society ranges between us 658 million and us 889 million the magnitude of these welfare gains suggests that electricity price reforms combined with a rebate scheme to compensate households for their welfare loss offsetting any political resistance to reform is a win win situation

agency problems and unrelated business income of non profit organizations an empirical analysis nonprofit organizations are traditionally assumed to dislike commercial activities in the usa they are however allowed to engage in commercial activities but the income they derive from these activities is then subject to the so called unrelated business income tax if npos do indeed dislike commercial income then why do they engage in these activities using a data set of 2103 us npos this study suggests that the presence of agency problems inside the organization can at least provide an explanation for the occurrence of unrelated business income

the unequal benefits of fuel subsidies a review of evidence for developing countries summary this paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries on average the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups a 0 25 decrease in the per liter subsidy results in a 5 decrease in income for all groups more than half of this impact arises from the indirect impact on prices of other goods and services consumed by households fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups in absolute terms the top income quintile captures six times more in subsidies than the bottom

vertical versus horizontal tax externalities an empirical test abstract we study taxation externalities in federations of benevolent governments where different hierarchical government levels tax the same base one can observe two types of externalities a horizontal externality working among governments of the same level and leading to tax rates that are too low compared to the social optimum and a vertical externality working between different levels of government and leading to suboptimally high tax rates building on the model of keen and kotsogiannis keen michael j kotsogiannis christos 2002 does federalism lead to excessively high taxes american economic review 92 1 363 370 we derive a discriminating hypothesis to distinguish vertical and horizontal tax externalities based on measurable variables this test is applied to a panel data set on local taxes in a sample of swiss municipalities that feature direct democratic fiscal decision making so as to maximize the correspondence with the benevolent governments of the theory we find that vertical externalities dominate they are thus an observed empirical phenomenon as well as a notable extension to the theory of tax competition

exemption or taxation for profits of non profits an answer from a model incorporating managerial discretion many non profit organizations engage in bothcharitable and purely commercial activities whereprofits from the latter are used to finance theformer should business income be tax exempted becauseof its cross subsidization function the effects ofexemption on the product mix are analysed using amodel incorporating managerial discretion acrucially different assumption from that of thecurrent literature under given assumptions tax exemption of commercial income emerges as a lessefficient means of supporting the charitable productthan alternative government measures such as anoutput subsidy

road tax interactions among local governments a spatial panel data analysis of the french case over the period 1984 2000 abstractthis article contributes to the literature on local tax interactions its novelty lies in its focus on the interactions of local governments via an indirect local tax on vehicles such as th

evaluating the role of subsidy reform in addressing poverty levels in malaysia a cge poverty framework abstractmalaysia as one of the top subsidised countries around the world has launched to reduce subsidies to capture its development goals this study therefore analyses the effects of the subsidy reform on the macroeconomic welfare and poverty levels of malaysia by applying a cge model the findings suggest that subsidy removal leads to significant falls in both income and consumption of rural urban and non citizen households and consequently decreases their welfare however poverty levels among rural households will most likely increase significantly when compared to urban households due to their relatively low level of income compared to other groups

testing for strategic interaction among local governments the case of growth controls this paper helps to fill a gap in the public economics literature by providing empirical evidence on strategic interaction among local governments using the methodology of case et al journal of public economics 52 285 307 1993 the paper focuses on the adoption of growth control measures by cities in california and looks for evidence of policy interdependence in these choices the data are drawn from an elaborate survey of growth control practices in california cities conducted by glickfeld and levine regional growth local reaction lincoln institute of land policy cambridge ma 1992 the survey results are used to compute an index of the stringency of growth controls in each city which serves as the dependent variable for the study

cost disease in defense and public administration baumol and politics william baumol s model predicts a steady increase in relative public sector prices or costs because of the combination of slow productivity growth and wage growth similar to sectors wherein productivity is growing more quickly in this paper we extend the baumol model with political variables and analyze price growth in defense and public administration using norwegian data we find strong support for the mechanism of the baumol model since manufacturing productivity is the most important determinant of relative public sector prices greater political fragmentation has also contributed to the price growth but its quantitative effect is smaller than that of manufacturing productivity an analysis of a labor intensive private service restaurants and cafes supports the broader relevance of the baumol mechanism and the validity of the estimated effect of political fragmentation on the two sectors considered herein

impacts of energy subsidy reform on the malaysian economy and transportation sector malaysia is paying a high level of subsidies on the consumption of energy about 5 of its gdp therefore reforming the energy subsidies as planned by the government will have a significant impact on household welfare and energy intensive sectors such as the transport sector this study employs a computable general equilibrium cge model to highlight the transmission channels through which the removal of energy subsidies affects the domestic economy the findings show that the shock increases real gdp and real investment while decreasing malaysian total exports and imports the removal of energy subsidies also decreases the aggregate energy demand and consequently decreases the level of carbon emissions in the malaysian economy in addition households experience significant falls in their consumption and welfare the transport sector is significantly influenced through an increase in production costs due to an increase in the prices of intermediate inputs the total output and total exports of the whole transport sector decrease while its imports increase in addition the use of all kinds of transport by households decreases significantly the malaysian energy subsidy reform leads to an initial decrease in co2 emissions and demand for electricity gas and petroleum products in the entire transport sector

evaluation of external market effects and government intervention in malaysia s agricultural sector a computable general equilibrium framework the purpose of this study is to evaluate the effects of changes in the external trade environment and domestic economic policies on the agricultural development of malaysia the scope of this research also includes providing further insights into the strengths and weaknesses of the computable general equilibrium cge methodology for agricultural policy analysis the first analysis focuses on the export agriculture sector which encompasses malaysia s two primary agricultural commodities rubber and palm oil heavily dependent on exports of rubber in the 1950s and 1960s malaysia has since built a more diversified economy with strong emphasis on manufacturing export agriculture however is still an important component of the national economy the second objective examines the influence of domestic policy on agricultural development the simulation results demonstrate the growing resiliency of the malaysian economy to external shocks also they point to the domestic economy s ability to buffer internal policy induced distortions

incumbent behavior vote seeking tax setting and yardstick competition this paper develops a model of the political economy of tax setting in a multijurisdictional world where voters choices and incumbent behavior are determined simultaneously voters are assumed to make comparisons between jurisdictions to overcome political agency problems this forces incumbents into a yardstick competition in which they care about what other incumbents are doing we provide a theoretical framework and empirical evidence using u s state data from 1960 to 1988 the results are encouraging to the view that vote seeking and tax setting are tied together through the nexus of yardstick competition

public spending interactions and local politics empirical evidence from french municipalities this paper aims at testing whether there exist spending interactions between french municipalities by estimating a dynamic panel data model our results suggest that there are some interactions between neighbouring municipalities as regards primary and investment expenditures a positive relationship between municipalities wage bill and un employment rates is likely to stress a rise of temporary employment in those municipalities that suffer from social troubles further the estimation results show that these interdepen dences also exist between cities whose mayors have the same partisan affiliation finally our results confirm the opportunistic behaviour of local governments which increase all categories of public spending in pre electoral periods

interactions in local governments spending decisions evidence from portugal costa h goncalves veiga l and portela m interactions in local governments spending decisions evidence from portugal regional studies this paper aims to analyse the degree of interaction between portuguese municipalities expenditure levels by estimating a dynamic panel model based on jurisdictional reaction functions the analysis is performed for all 278 portuguese mainland municipalities from 1986 to 2006 using alternative ways to measure neighbourhood results indicate that local governments spending decisions are significantly and positively influenced by the actions of neighbouring municipalities attempts to identify the sources of interaction allow it to be concluded that they are due to spillovers that require coordination in expenditure items and to mimicking behaviour possibly to attract households and firms

interdependent decision making in non profit industries a simultaneous equation analysis of english provincial theatre it is argued that much decision making in non profit industries is inherently interdependent and hence this should be modelled explicitly this has not been done in the literature to date the implications of using a simultaneous equations approach are illustrated in the context of the english provincial repertory market via the specification and estimation of a five equation model of theatre managers grant donors and consumers choices a joint product with these methodological results is detailed information about the subsidized provincial theatre market

budgetary constraints and programmatic choices by flemish subsidized theatres we analyse programmatic choices of flemish theatres and examine how they are affected by the theatres budgetary situation following lancaster s characteristics approach we identify several output characteristics of individual flemish theatres during the period 1980 to 2000 a simultaneous equation approach is used to capture the theatre managers subsidizing government s and consumers behaviour we find that changes in the budgetary situation of a theatre are translated into changes of both the amount and the nature of the theatre s output the budgetary impact on artistic choices has intensified since the introduction of a 4 yearly instead of yearly allocation of subsidies the decrease in financial risk for the individual theatres leads to an increase in artistic risk taking

law finance and the international mobility of corporate governance we introduce the topic of this special issue on the role of financial and legal institutions in international governance with a particular emphasis on a notion of international mobility of corporate governance our discussion places the special issue at the intersection of law finance and international business with a focus on the contexts of foreign investors and directors country level legal and regulatory institutions facilitate foreign ownership foreign directors raising external financial capital and international m a activity the interplay between the impact of foreign ownership and foreign directors on firm governance and performance depends on international differences in formal regulatory institutions in addition to legal conditions informal institutions such as political connections also shape the economic value of foreign ownership and foreign directors we highlight key papers in the literature provide an overview of the new papers in this special issue and offer suggestions for future research

vertical externalities in tax setting evidence from gasoline and cigarettes abstract a common feature of federal systems is that tax bases are joint property consequently state and federal tax setting decisions are interdependent our aim here is to put forward a rudimentary theoretical analysis of this phenomenon and to use the theory as a framework for econometrically estimating the magnitude of the responses we find that when the federal government increases taxes there is a significant positive response of state taxes for example a 10 cent per gallon increase in the federal tax rate on gasoline leads to a 3 2 cent increase in the state tax rate

rise of the fiduciary state a survey of sovereign wealth fund research we survey the literature documenting the rise of sovereign wealth funds swfs which with assets under management of over 5 4 trillion at year end 2014 are a major force in global finance research papers have analyzed the evolution of swfs from stabilization funds to stand alone wealth management funds we both survey this research and show that more than 25 countries have launched or proposed new swfs since january 2008 the most salient and controversial feature of swfs is that they are state owned we survey the existing literature on state ownership and discuss what this predicts about the efficiency and beneficence of government control of swf assets we discuss the documented importance of swf funding sources oil sales revenues versus excess reserves from export earnings and survey the normative literature describing how swfs should allocate funds we then summarize the empirical literature studying how swfs actually do allocate funds across asset classes geographically and across industries we document that most swf equity investments in publicly traded firms involve cross border purchases of sizeable minority stakes median around 20 in target firms with a strong preference for investments in the financial sector next we assess empirical studies examining the impact of swf stock investments on target firm financial and operating performance and find universal support for a positive announcement period stock price increase of 1 3 this however is significantly lower than the 5 abnormal return documented for stock purchases by comparable privately owned financial investors in recent studies indicating a sovereign wealth fund discount we conclude by summarizing the lessons of swf research and pointing out unresolved issues

why are some people and countries more protectionist than others we analyze two cross country data sets that contain information on attitudes toward trade as well as a broad range of socio demographic and other indicators we nd that pro trade preferences are signi cantly and robustly correlated with an individual s level of human capital in the manner predicted by the factor endowments model preferences over trade are also correlated with the trade exposure of the sector in which an individual is employed individuals in non traded sectors tend to be the most pro trade while individuals in sectors with a revealed comparative disadvantage are the most protectionist third an individual s relative economic status has a very strong positive association withpro trade attitudes finally non economic determinants in the form of values identities and attachments play an important role in explaining the variation in preferences over trade high degrees of neighborhood attachment and nationalism patriotism are associated withprotectionist tendencies c

a game theoretic explanation of the administrative lattice in institutions of higher learning abstract we provide a game theoretic model of academic organizations focusing on the strategic interaction of prototypical overseers administrators and professors by identifying key principal agent games routinely played in colleges and universities we begin to unpack the black box typically used to conceptualize these institutions our approach suggests an explanation for the seemingly inevitable drift of institutions of higher education into such well documented phenomena as academic ratchet and administrative lattice and builds an understanding of the organizational conditions in which drift would be restrained

food subsidies in egypt reform options distribution and welfare abstract egypt s food subsidies in 1996 97 5 5 percent of government expenditures cover rationed cooking oil and sugar 23 percent of subsidy cost and unrationed bread and flour 77 percent the subsidies enhance food security but are nontargeted and have substantial leakages this paper uses a computable general equilibrium cge model to simulate the short run effects of alternative food subsidy scenarios government savings from reduced spending finance uniform cuts in direct tax rates across all household types the model uses a 1996 97 database with detailed household information the targeting of cooking oil and sugar subsidies to the needy the bottom two quintiles in rural and urban areas has a progressive effect while elimination of this subsidy is regressive disaggregated household consumption changes are small 0 3 percent the targeting of all food subsidies is pro needy partly due to important indirect effects the consumption of the needy increases by 0 5 percent with little change for the nonneedy food subsidy elimination is regressive the needy suffer a consumption loss of 1 1 percent if the government savings instead are transferred to the needy the impact is reversed consumption increases by 4 2 percent for needy households while the nonneedy register a small loss the overall policy implication is that food subsidy reform can benefit the needy with at worst only a modest negative impact on the nonneedy if the subsidy is entirely eliminated targeted government programs would be necessary to protect the needy from the negative impact

sovereign wealth fund investments and the us political process we examine us firm level campaign finance contributions preceding and subsequent to equity investment by a sovereign wealth fund swf our empirical results suggest that swfs are attracted to firms engaged in us campaign finance and that firm campaign finance contributions increase after swf investment swf attraction to campaign finance firms increases 1 after an exogenous legal shock that liberalized corporate campaign finance activities and 2 in a subset of industries vulnerable to recent legislation capable of inhibiting or expunging foreign investment we provide some of the first evidence consistent with political motives for swf investment in the united states

the market for congressional votes is timing of contributions everything this study utilizes the timing of campaign contributions to identify whether the objective of political action committees pacs is to influence congressional votes or solely to elect a preferred candidate the results show that pac behavior is consistent with an attempt to purchase congressional votes and to influence elections contributions increase in the weeks surrounding legislative events of importance to pacs and elections the magnitude of increased contributions is examined the article also addresses the lack of legal enforcement mechanisms in vote for contribution agreements it develops hypotheses regarding the timing of contributions as an inexpensive mechanism to assure contractual performance hypotheses are tested regarding pacs incentives to mitigate potential cheating by legislators on such agreements results show that pacs use the timing of contributions as a mechanism to prevent legislators from reneging on vote for contribution trades

mental health expenditure in england a spatial panel approach we empirically investigate the determinants of local authority mental health expenditure in england we adopt a reduced form demand and supply model extended to incorporate possible interaction among authorities as well as unobserved heterogeneity the model is estimated using an annual panel dataset that allows us to explore both time series and cross municipality variation in mental health expenditure results are consistent with some degree of interdependence between neighbouring municipalities in spending decisions this first attempt to apply spatial panels in investigating health expenditure offers insights and raises new questions