legislative district configurations and fiscal policy in american states in accordance with the median voter theorem the median legislator is decisive in representative democracy if the preferences of the median legislator differ from the preferences of the median voter in the polity fiscal policy choices will predictably diverge from those favored by the median voter this paper seeks to identify the median district and therein the preferences driving the median legislator in american state legislatures using economic characteristics of constituents we find substantial differences between the median district and the statewide median as the income of the median district rises above the median income of the polity government expenditures increase in addition the degree to which income is skewed across legislative districts affects spending for redistribution programs finally we find that direct democracy procedures which allow the statewide median voter to check legislative decisions limit the impact of differences between the district and polity medians

the futile quest for a grand explanation of long run government expenditure this paper carries out a critical reappraisal of the two contending theories purporting to explain long run government spending wagner s law and different variants of the ratchet effect we analyze data spanning from the early 19 th century until the present day in sweden and the united kingdom hence in contrast to previous studies we evaluate the validity of wagner s law and the ratchet effect hypothesis over a very long time period starting at the beginning of industrialization cointegration analysis is used to investigate the long run relationships between government expenditure and gdp focusing on sub periods and structural breaks moreover we test the ratchet effect hypothesis by estimating models which allow for asymmetric adjustment according to our main results wagner s law does not hold in the long run although the data are consistent with wagner s law between roughly 1860 and the mid 1970s this can be traced to the formation of the modern public sector including the introduction of public education health care and so forth yet wagner s law did not hold during the initial industrialization phase before 1860 and in recent periods gdp only affects the government spending share when we control for population age structure finally we find some evidence of asymmetric adjustment in the uk particularly in the post wwii period however the ratchet effect is not a general cause of the growth of government spending

wagner s hypothesis evidence from kuwait using cointegration tests this paper investigates the relationship between public expenditure and a number of socioeconomic variables including the level of income in kuwait a general form of the public expenditure function is formulated and recent developments in time series econometrics including unit roots and cointegration tests and an error correction model are used given the characteristics of the economy alternative measures for each variables are used the analysis in the paper is based on time series data covering the period from 1969 70 to 1994 95 in general the findings lend little support to the existence of long run equilibrium relationship between public expenditure and the socioeconomic variables and the evidence does not lend support to the validity of wagner s law in kuwait

a test of the wagner s hypothesis for the fiji islands in this article we examine wagner s law for fiji for the period 1970 to 2002 using the johansen 1988 test for cointegration we find one cointegration relationship between national output and government expenditure using five different long run estimators we find robust results on the impact of national income on government expenditure the elasticity ranges from 1 36 to 1 44 implying that a 1 increase in income leads to a 1 36 1 44 increase in government expenditure moreover we find that in the long run national income granger causes government expenditure while these results are consistent with wagner s law we warn policy makers that because fiji s total debt stands at around 69 of gdp in future the bulk of expenditure will go towards debt financing at the expense of productive sectors

trade facilitation and manufactured exports is africa different summary trade facilitation defined as reducing the transaction costs associated with the enforcement regulation and administration of trade policies has been at the forefront of discussions on policy measures for reducing the costs of exporting and importing in developing countries this study uses a new panel dataset for 124 developed and developing countries available for the period 2003 04 to assess the impact of trade facilitation and other trade related institutional constraints on manufacturing export performance with particular reference to africa we estimate a standard gravity model augmented with trade facilitation regulatory quality and infrastructure indicators our results show that trade facilitation reforms could contribute to improve export performance in africa but other reforms including the quality of the regulatory environment and the quality of the basic transport and communications infrastructure are also needed furthermore improvements in on the border and behind the border policies yield a higher return in terms of increasing manufacturing export performance in african countries than in the rest of the world

ideology and the growth of government abstract we analyze the impact of ideology on the size of government in a simple model the government sets redistribution and provision of public services according to the preferences of the median voter ideology is defined in terms of preferences for public services and the impact of ideology on the size of government is shown to increase with mean income this idea is tested using measures of ideology based on party manifestos we show that the interaction of ideology and mean income has a major role in explaining the increase and divergence in government size observed across oecd countries

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

openness external risk and volatility implications for the compensation hypothesis a central assumption in the globalization literature is that economic openness generates economic insecurity and volatility based on this assumption schol ars of international political economy have proposed the compensation hypothesis which claims that globalization bolsters rather than undermines the welfare state by increasing public demand for social protection against externally generated eco nomic instability the openness volatility link is dubious however on both theoret ical and empirical grounds in this study i revisit the volatility assumption focusing on a crucial difference between openness and external risk in their effect on volatil ity my statistical analysis of a panel data set from 175 countries 1950 2002 finds a consistent effect of external risk on volatility of the major economic aggregates but a largely insignificant effect of openness these findings suggest that economic volatility may be a mistaken link in explaining the openness spending nexus calling for further research on the causal mechanisms linking the two the general growth of government in the post world war ii era is one of the most important empirical regularities in political science measured by general govern ment consumption or sectoral expenditures government size grew dramatically during most of the postwar period intrigued by this phenomenal government growth political scientists offered numerous accounts some viewing this growth as a corollary of economic phenomena such as modernization industrialization income distribution or fiscal illusion and others attributing government growth to political causes such as bureaucratization interest group politics and electoral competition 1

the aging population and the size of the welfare state is there a puzzle abstract razin sadka and swagel razin asaf efraim sadka and phillip swagel 2002 the aging population and the size of the welfare state the journal of political economy vol 110 no 4 pp 900 918 unveil a puzzling fact the welfare state appears to be shrinking even as the dependency ratio rises while they formulate an elegant political economy model to explain the coexistence of an aging population and declining transfers the resolution of the puzzle turns out to be much simpler labor tax rates and per capita transfers are negatively correlated with the dependency ratio in advanced economies only because this measure includes children as well as retirees both labor tax rates and per capita transfers in advanced economies are in fact historically positively correlated with the ratio of retirees to the working age population and negatively correlated with the ratio of children to the working age population increasing the number of retirees shifts preferences toward higher taxes and transfers by increasing the fraction of the population that receives transfers in contrast workers with more children prefer to spend more of their lifetime income while raising dependents so they prefer smaller public pension systems these results suggest that fiscal leakage from workers to retirees is not required to explain the broad trends in the transfer policies of advanced economies

an investigation of the public deficts and government spending relationship evidence for greece this paper tests the validity of the buchanan wagner hypothesis for greece that increases in public spending are the result of the tolerance of large deficits over the period 1961 1994 to test this hypothesis three unit root pretests the dickey fuller phillips perron and kwiatkowski et al and maximum likelihood estimation techniques of cointegrating vectors and a vector error correction model are employed a long run relationship is found to exist among government spending deficit income wages and adult population and the importance of short run deviations are presented the empirical evidence suggests that buchanan and wagner hypothesis seems to find support for greece in the long run and the short run further productivity in the public sector is lower than in the private sector and the growth of income is not an important determinant of the increase in the relative size of public spending

product complexity quality of institutions and the protrade effect of immigrants the paper assesses the trade creating impact of foreign born residents on the international imports and exports of the french regions where they are settled the protrade effect of immigrants is investigated along two intertwined dimensions the complexity of traded goods and the quality of institutions in partner countries the trade enhancing impact of immigrants is on average more salient when they come from a country with weak institutions however this positive impact is especially large on the imports of simple products when we turn to complex goods for which the information channel conveyed by immigrants is the most valuable immigration enhances imports regardless of the quality of institutions in the partner country regarding exports immigrants substitute for weak institutions on both simple and complex goods

bank linkages and international trade abstract we uncover a new channel through which international finance is related to trade the formation of international bank linkages increases exports bank linkages are measured for each pair of countries in each year as a number of bank pairs in these two countries that are connected through cross border syndicated lending using a gravity approach to model trade for 66 countries over 24 years with a full set of fixed effects source year target year source target we find that new connections between banks in a given country pair lead to an increase in trade flows between these countries in the following year and to trade diversions from countries competing for similar imports we conjecture that the mechanism for this effect is the role bank linkages play in reducing export risk and present evidence supporting this conjecture in particular using industry level trade data and controlling for country pair year and industry fixed effects we find that new bank linkages have larger impacts on trade in industries which tend to be subject to more export risk for u s banks we can show that bank linkages are positively associated with foreign letter of credit exposures

institutions and financial development evidence from international migrants in the united states abstract we investigate the impact of institutions on financial development by analyzing the financial behavior of immigrants in the united states we find that immigrants from countries with institutions that more effectively protect private property are more likely to own stock in the united states the effect of home country institutions is persistent and absorbed early in life the impact of institutions is amplified for immigrants who live in metropolitan areas with many other immigrants from the same country these findings are robust to alternative measures of institutional effectiveness and to various methods of controlling for unobserved individual characteristics including specifications with country fixed effects

explaining service price differences in international comparisons this paper reexamines observed international differences in the price of services and the positive correlation of these with per capita gdp differences using a general trade model with a nontraced sector the authors find that differences in countries factor endowments populations trade policies and trade balances will have ambiguous and sometimes opposite effects on their service prices and real incomes estimating the service price equation using recent data suggests that larger endowments of agricultural land minerals and capital larger trade deficits and higher prices for tradables increase service prices conversely larger populations and labor forces reduce service prices copyright 1991 by american economic association

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

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

a bound testing analysis of wagner s law in nigeria 1970 2006 this study tests wagner s law the tendency for government activities to expand along with economic expansion for nigeria using annual time series data between 1970 and 2006 it adopts the bounds test approach proposed by pesaran et al 2001 based on unrestricted error correction model uecm and toda and yamamoto s 1995 granger noncausality tests empirical results from the bounds test indicate that there exists no long run relationship between government expenditure and output in nigeria in addition toda and yamamoto s 1995 causality test results show that wagner s law does not hold for more than the period being tested rather we found a weak empirical support in the proposition by keynes that public expenditure is an exogenous factor and a policy instrument for increasing national income

bridging trade theory and labour econometrics the effects of international migration this paper surveys current theoretical and empirical research on international migration with a particular emphasis on the links between trade theory and labour empirics

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

the curious attraction of wagner s law wagner s law of increasing state activity has recently been subjected to intensive use of recondite econometric testing procedures an examination of the relevant articles reveals ignorance both of wagner s definition of state activity and of his insistence that he was not engaged in prediction consequently the omission of public enterprises contained in wagner s definition leads to a model misspecification and the object of testing his hypothesiss remains obscure

wagner s law revisited cointegration and causality tests for new zealand wagner s law states that the share of government expenditure in gross national product gnp will increase with economic development many associated empirical studies substitute gnp with gross domestic product gdp this article presents an empirical investigation into the validity of wagner s law for new zealand over the period 1960 to 2007 and compares the results obtained using these two measures of output application of the autoregressive distributed lag ardl bounds test suggests a cointegrating relationship between either output measure and the share of government spending and further application of general to specific gets engle and granger eg phillip hansen s fully modified ordinary least squares fmols and johansen s time series techniques illustrate statistical robustness and an income elasticity between 0 56 and 0 84 the results suggest that output measures granger cause the share of government expenditure in the long run thereby providing support for wagner s law and these resul

comparing evidence on wagner s hypothesis from conventional and real data abstract conventional and internationally comparable data for 34 countries are utilized to assess the relationship between general government expenditure and income while the conventional data can be deemed as mildly supportive of wagner s hypothesis evidence from the icp data suggests a decline in the share of general government as income per capita rises

a review of multi criteria decision making mcdm towards sustainable renewable energy development abstract in the current era of sustainable development energy planning has become complex due to the involvement of multiple benchmarks like technical social economic and environmental this in turn puts major constraints for decision makers to optimize energy alternatives independently and discretely especially in case of rural communities in addition topographical limitations concerning renewable energy systems which are mostly distributed in nature the energy planning becomes more complicated in such cases decision analysis plays a vital role for designing such systems by considering various criteria and objectives even at disintegrated levels of electrification multiple criteria decision making mcdm is a branch of operational research dealing with finding optimal results in complex scenarios including various indicators conflicting objectives and criteria this tool is becoming popular in the field of energy planning due to the flexibility it provides to the decision makers to take decisions while considering all the criteria and objectives simultaneously this article develops an insight into various mcdm techniques progress made by considering renewable energy applications over mcdm methods and future prospects in this area an extensive review in the sphere of sustainable energy has been performed by utilizing mcdm technique

wagner s law versus displacement effect abstractthe public sector has grown dramatically over the past few centuries in many developed countries in this article we use wavelet methods to distinguish between two leading explanations for this growth wagner s law and the displacement effect in doing so we use the long term data of 10 oecd countries for a maximum time span of 1800 2009 we find that the validity of wagner s law is likely to vary strongly over time for each country a roughly similar feature in most of the countries is that the law is less valid in the earliest stage of economic development as well as in the advanced stages with the validity tending to follow an inverted u shaped pattern with economic development further our results indicate that the long run growth of government size cannot be adequately explained by wagner s law on the other hand the displacement effect appears to account for the bulk of the growth in most of the countries

testing wagner versus keynes using disaggregated public expenditure data for canada this paper attempts to test wagnerian versus keynesian hypotheses by examining the relationship between national income and total public expenditure as well as its various components for canada during the period 1950 1995 engle and granger s two step cointegration and error correction techniques are employed to test these two hypotheses the results of this study support both the hypotheses when tested with broader aggregate expenditure data i e total government current expenditure ce and total current expenditures on goods and services cegs although the results of this study do not support the existence of any long run relationship between gdp and the disaggregated public expenditure variables they do support the existence of short run causation implying that national income may be causing or caused by a component of the total government current expenditure in the short run

corruption product complexity and african exporters abstractseveral studies have shown that african manufacturers perform poorly especially in comparison to their counterparts from other developing countries we build on these studies by a examining the decision to stop exporting among african manufacturers and b investigating whether these decisions can be linked to institutional dimensions such as corruption consistent with previous studies we observe that a significant fraction of african firms stop exporting every year using product complexity as a measure of an industry s sensitivity to corruption we find that firms in more corruption sensitive industries are more likely to stop exporting if there is an increase in overall corruption in the exporting country firm characteristics such as size and productivity also seem to influence the decision to stop exporting our finding about the relationship between corruption and the decision to stop exporting supports the conventional wisdom that corruption is detrimental to economic performance

trade law and product complexity abstract how does the quality of national institutions that enforce the rule of law influence international trade anderson and marcouiller argue that bad institutions located in the importer s country deter international trade because they enable economic predators to steal and extort rents at the importer s border we complement this research and show how good institutions located in the exporter s country enhance international trade in particular trade in complex products whose characteristics are difficult to fully specify in a contract we argue that both exporter and importer institutions affect international as well as domestic transaction costs in complex and simple product markets international transaction costs are a part of the costs of trade domestic transaction costs affect complex and simple products differently thereby changing a country s comparative advantage in producing such goods we find ample empirical evidence for these predictions countries that have good institutions tend to

the growth of government in italy evidence from 1861 to 1979 that the public sector has grown both in absolute terms and relative to the rest of the economy is an undisputable fact that both growth rates have accelerated in recent history is also an unchallenged fact more cautious must we be about why these trends have occurred and are persisting we have tested three partially competing theories of government growth using italian annual data from 1861 to 1979 and assessed that the redistribution model explains the facts better than either the public goods model or the specialized interest hypothesis although the latter tells the most convincing story about the causes underlying transfers to firms we have also tried to discriminate between two competing views of a politician the value free intermediary found in the median voter literature and the entrepreneur emphasized in the theory of agency costs the bits of evidence we gathered are more consistent with a politician entrepreneur than a politician intermediary

did fiscal institutions affect wagner s law in italy during 1951 2009 period an empirical analysis in this article we test wagner s assumption of the one sided directional flow moving from economic growth to public spending in italy for the 1951 2009 period we pay particular attention to the impact of certain regime shifts related to changes in italian budget regulations and procedures and the relevance of fiscal institutions to the fiscal performance equation i e the public spending national income nexus the error correction model is estimated to measure short run dynamic effects and the long run equilibrium between the two time series the empirical evidence suggests that wagner s law is supported in regard to policy implications we find that public spending reacted less to positive changes in economic growth when the strengthening of the ministry of finance occurred in 1997 ciampi s reform some sensitivity analyses confirm our empirical evidence

a causal relationship between government spending and economic development an empirical examination of the greek economy during the past few years in many countries both developed and developing there has been a tendency to increase government spending this article intends to examine this tendency of the public sector as well as the existing relationship between the extent of government spending and economic development the data used cover a time period between 1960 and 2001 an effort is made to determine causal relationships between spending and economic development through the use of wagner s theory

challenges in the wind turbines location process in central europe the use of spatial decision support systems abstract the implementation of a framework for climate and energy policies in europe entails a number of development projects connected to renewable energy resources as far as many western countries have realized some of those investments during recent decades and have more experience in that field most of the countries in central europe have to face that challenge right now however a rapid increase in renewable energy production in those countries can cause some dysfunctions in the investment process national control authorities in poland marked that the decision making process concerning the location of wind turbines has not been carried out properly the paper presents a review of the studies regarding the use of spatial analysis in renewable energy policy implementation and a proposition for the use of the multi criteria spatial decision support system based on geographical information systems the presented model has a character of an open framework which allows a user to add any location parameter or factor which is possible to be represented as a metric value the spatial character of the proposed solution exceeds only mathematical models in the way of interpretation of the results an intuitive model supports communication with stakeholders and helps to explain the correlations between human activity and the location of power plants the model was tested on the case study of wroclaw agglomeration area poland and includes 13 location factors the use of a multi criteria model guaranteed a broader point of view in comparing five different scenarios of wind farms development in the decision making process as it combines conflicted interests groups minimalizes subjective assessment and enables to define priorities while setting weights of factors

coordination commitment and enforcement the case of the merchant guild we interpret historical evidence in light of a repeated game model to conclude that merchant guilds emerged during the late medieval period to allow rulers of trade centers to commit to the security of alien merchants the merchant guild developed the theoretically required attributes secured merchants property rights and evolved in response to crises to extend the range of its effectiveness contributing to the expansion of trade during the late medieval period we elaborate on the relations between our theory and the monopoly theory of merchant guilds and contrast it with repeated game theories that provide no role for formal organization

trade democracy and the gravity equation abstract does democracy affect trade there are several channels by which democracy may affect trade with differing implications first democratization in the exporting country can improve product quality and reduce trade costs increasing bilateral trade second democratization in the importing country may increase trade barriers and thus reduce imports in this paper i analyze the effect of democracy on trade by augmenting the gravity equation with democracy using a rich panel data set and controlling for the endogeneity of democracy i find empirical evidence consistent with the hypothesis that democracy fosters trade this finding is robust to various econometric methods and to the use of disaggregated specifications

testing the buchanan wagner hypothesis european evidence from panel unit root and cointegration tests according to the buchanan wagnerhypothesis public deficits reduce theperceived price of public goods to thecurrent generation of voters who in turn increase the demands for such socialservices several recent studies haveattempted to test this proposition in thispaper we apply modern time seriestechniques organized around panel unit rootand panel cointegration to draw sharperconclusions from the short time series thatare typically available we find that thereis a long run positive relationship betweengovernment spending and government deficitsfor each country individually as well asfor the panel as a whole this providessupport for the bw hypothesis we alsoanalyze the implications for the relativeproductivity performance of the public andprivate sector the existence of scaleeconomies in the provision of publicservices as well as the extent of crowdingout effects

conflicts between decentralized renewable electricity production and landscape services a spatially explicit quantitative assessment for switzerland abstract the production of decentralized renewable electricity often collides with provisioning regulating and cultural services of the landscape in this paper we operationalize the landscape service approach and generate conflict maps between three renewable energies wind pv forest biomass and six competing landscape services nutrition and materials aesthetics physical and experiential interactions heritage and symbolic content water and liquid flows lifecycle maintenance habitat and gene pool protection media content analysis and expert interviews were used to ground truth the national conflict maps in several swiss regions and to understand to what degree the national conflict assessments match the regional and local perceptions of these conflicts in switzerland approximately 40 000 km 2 biomass from forests is by far the least conflicting renewable energy followed by pv on roofs for the latter 68 of the technically feasible energy potential can be generated with low conflicts and more is expected with new materials wind has a high conflict potential only 12 of the technically feasible energy potential is low conflict pv on open land marginal land and shrubland is at the moment not currently feasible in switzerland the accuracy of our conflict assessment is sufficiently high to estimate the proportion that socially sustainable energy could cover of the overall energy gap of 22 25 twh yr caused by the phase out of swiss nuclear plants by 2050 low conflict solar energy from rooftops could contribute approximately 30 of the required 22 25 twh yr intensified wood production and wind energy could add another 40 the gap of approximately 30 must come from undisputed energy sources such as biogas from recycled organic material from centralized renewable energies such as geothermal or large hydropower or from new or technologically improved renewable energies the presented decision support tools are a timely contribution to the designation of legally binding zones for renewable energy production

testing wagner s law using disaggregated public expenditure data in the case of greece 1958 93 the factors that have influenced the growth of public expenditures have been the subject of extensive theoretical and empirical research the validity of wagner s law in the case of greece is tested using disaggregated public expenditure data for the period 1958 93 the methodology employed is that of cointegration and the related notion of error correction results reported here suggest that in the case of greece only the growth of defence expenditure may be explained in terms of wagner s law

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

export to elude abstract how does domestic value added tax vat reform affect firms export we address this question via a model in which firms choose their sales for the domestic and foreign markets optimally the model predicts that strengthening domestic tax enforcement has a negative effect on domestic sales but a positive effect on exports when firms face a convex production cost function we test the model predictions using detailed firm and product level data from chinese industrial surveys and customs records our empirical analyses rely on china s golden tax project which is an information technology introduced in 2001 2002 that dramatically reduces the cost of vat enforcement we find that after the adoption of the technology by the government firms located far from local tax offices face a larger increase in their effective vat rates than those located nearby the enforcement effect and the former increase their export more than the latter the elusion effect we also find that the elusion effect is stronger for firms subject to higher export rebates or more severe financial constraints

the size and composition of government expenditure abstract this paper tests several leading hypotheses on determinants of government expenditure the purpose is to avoid omitted variables bias by testing the prominent theories in a comprehensive specification to identify persistent puzzles for the current set of theories and to explore those puzzles in greater depth by looking at the composition of government expenditure and the level of government at which it takes place as well as its magnitude using government financial statistics data from the imf covering over 100 countries from 1970 2000 i look at cross sectional and inter temporal variation in government expenditure and both individual categories of expenditure such as defense education health care and different levels of government central and local among other results i find a new explanation for wagner s law widespread evidence that preference heterogeneity leads to decentralization rather than outright decreases in expenditures that a great deal of the expenditure associated with increased trade openness is not in categories that explicitly insure for risk and evidence that both political access and income inequality affect the extent of social insurance

a logistic growth theory of public expenditures a study of five countries over 100 years this paper offers a new theory and empirical testing of long term trends of public expenditures for five countries while wagner s law would imply an exponential growth process of the ratio between public expenditures and national income g y the law should be rejected both on theoretical and empirical grounds because it disregards the role of ever increasing distortionary taxation however under some conditions the combination of wagner s law and the pigou s conjecture that the excess burden of taxation constrains the growth of public expenditures can be captured by a non linear first order differential equation the equation is the verhulst s logistic originally invented to model malthusian predictions on population growth the integration of a verhulst equation generates an s shaped curve this analytical framework combines intuitions from a welfare economics and a public choice perspective and potentially offers a new research strategy on the dynamics of government expenditures we offer preliminary econometric estimates on long run trends around 1870 1990 of g y in u s u k france germany italy these estimates confirm a pattern of similar trajectories in spite of different national parameters and suggest that the logistic view of growth of government is consistent with observed data

tying trade flows a theory of countertrade with evidence a countertrade contract ties an export to an import usually countertrade is criticized as a form of bilateralism and reciprocity and thus as an inefficient form of international exchange in this paper the authors argue that there are circumstances in which the tying of two technologically unrelated trade flows may be efficiency enhancing they show that countertrade can be an efficient institution in international trade that solves moral hazard problems and restores creditworthiness of highly indebted countries the authors test the implications of their model using a sample of 230 countertrade contracts copyright 1995 by american economic association

public expenditure growth in greece and portugal wagner s law and beyond in the tradition of wagner s law this study examines the relationship between aggregate income and public expenditures in greece and portugal during the years 1958 85 unlike more conventional specifications our analysis focuses on the movement of different componenets of public expenditures permanent income relative prices stabilization policy and socio political factors emerge as thomain determinants of public expenditures while the results reveal significant difference in responses to these determinants across components of expenditures and between the two countries

the collateral channel under imperfect debt enforcement does a country s ability to enforce debt contracts affect the sensitivity of economic activity to collateral values to answer this question we introduce a novel industry specific measure of real asset redeployability the ease with which real assets are transfered to alternative uses as a proxy for collateral liquidation values our measure exploits the heterogeneity of expenditures in new and used capital and the heterogeneity in the composition of real asset holdings across u s industries using a cross industry cross country approach we find that industry size and growth are more sensitive to collateral values in countries with weaker debt enforcement our estimates indicate that the differential effect is sizeable the sensitivity of economic activity to collateral values is not affected by a country s financial development once the quality of debt enforcement is accounted for we then rationalize our empirical findings based on a model of credit under imperfect enforcement and discuss an important implication of our empirical result macroeconomic volatility generated by fluctuations in collateral values is higher in countries with weaker debt enforcement institutions

law trade and development abstract this paper uses a ricardian model to generate predictions about the influence of institutions on trade in differentiated complex and commoditized simple products and then uses a rich international trade data set for empirical tests the model draws the distinction between the role of international transaction costs and domestic production costs in the trade of complex and simple products the effects of institutions predicted by the model are identified with a three step estimation procedure we find that when countries have low quality institutions institutional reform primarily influences production costs and has little influence on the volume of trade institutional reform however increases the diversity of exports in complex goods markets conversely in countries with more developed institutions institutional reform primarily influences transaction costs and is associated with gains in the volume and the diversity of complex exports

informal barriers and agricultural trade does monetary integration matter eu enlargement and the recent sovereign debt crisis of euro zone countries have revived the debate around the european monetary union emu in this article we ask how informal barriers to agricultural and food trade have changed since the introduction of the common european currency and whether this evolution can be attributed to monetary integration we focus on the foreign trade of the 11 emu founder countries over a nine year period covering the creation of the emu and find a diminishing marginal trade impact of both information and institutional barriers we find a lower level of trade barriers but cannot attribute this outcome to the introduction to the euro

public expenditure and economic growth in the gulf cooperation council countries this article uses a dynamic model calibrated to the gulf cooperation council gcc countries data to examine the nature of the relationship between government expenditure and economic growth the article finds that national income is a predictive factor of the expanding role of government as postulated by wagner empirical investigations do not support the hypothesis of public expenditure causing national income as proposed by the keynesian theory

tax and spend or spend and tax empirical evidence from greece spain portugal and ireland the paper examines empirically the relationship between government revenues and expenditures in four european countries greece spain ireland and portugal in relative terms all four may be considered as the poorest members of the european union yet they present a fairly diverse picture as far as their macroeconomic performance and fiscal position is concerned the empirical findings from cointegration and causality tests that are reported here indicate that in the case of greece and ireland tax and spending decisions are taken simultaneously by the fiscal authority the tax and spend hypothesis is supported in the case of spain while absence of any causal ordering between government expenditure and tax revenues has been established for portugal

intellectual property rights product complexity and the organization of multinational firms this paper studies how the intellectual property right ipr regime in destination countries influences the way multinationals structure the international organization of their production in particular we explore how multinationals divide tasks of dierent complexities across countries with dierent levels of ipr protection the analysis studies the decision of firms between procurement from related parties and outsourcing to independents suppliers at the product level it also breaks down outsourcing into two types by distinguishing whether or not they involve technology sharing between the two parties we combine data from a french firm level survey on the mode choice for each transaction with a newly developed complexity measure at the product level our results confirm that firms are generally reluctant to source highly complex goods from outside firm boundaries by studying the interaction between product complexity and the ipr protection we obtain that i for technology sharing outsourcing iprs promote outsourcing of more complex goods to a destination country by guaranteeing the protection of their technology ii for non technology related outsourcing iprs attract the outsourcing of less complex products that are more prone to reverse engineering and simpler to decodify and imitate

world product and income international comparisons of real gross product the volume reports on the third phase of the united nations international comparison project icp the main results provide comparisons of real gross domestic product gdp per capita for thirty four countries in 1975 quantity and price comparisons are given also for personal consumption capital formation and public consumption and further subdivisions of final expenditures on gdp are estimated

financial development and the product cycle abstract i develop a model to study how financial institution differences across countries affect the offshoring decision of northern firms and whether a product cycle arises when the only comparative advantage of northern suppliers is their access to better financial institutions a northern final good producer needs to buy an intermediate input from a supplier to complete production she can find this supplier either in the low wage but financially underdeveloped south or in the high wage and financially developed north i show that financial institution differences affect the optimal contract offered to the supplier and are enough to generate a product cycle the final good producer faces a trade off between low wages and contracting distortions when the good is new she finds it optimal to keep production in the north at the cost of a higher wage but with the benefit of a less distorted contract however as the good becomes more standardized the importance of the supplier increases and the cost of not shifting production to the south and take advantage of the lower wage offsets the contractual distortions that the underdeveloped southern financial institutions create the most salient empirical prediction is that the more r d intensive an industry is the larger is the effect of financial development on offshoring these results also hold when wages are endogenized in the empirical section the prediction is tested and confirmed using disaggregated trade data

bicameral legislatures and fiscal policy john stuart mill s observation in the mid 19th century is clearly outdated the two chamber question receives scant attention in modern political economy the absence of continued debate might simply reflect a general satisfaction with the dual chambered structure as a desirable democratic institution most developed democracies and all but one of the american states have adopted a bicameral legislative structure in this paper we stress the many variations in bicameralism even among the american states and the effects these variations have on policy making and fiscal outcomes put simply bicameralism is not an all or none institution instead bicameralism is a variable institution that alters the identity of the median legislator within each chamber and determines the similarity of the dominant coalitions between the two chambers in this perspective the impact of bicameralism on policy comes principally from the different bases of representation across the two chambers moreover the analysis stresses that the degree of bicameralism changes regularly as a consequence of the redistricting process the remainder of the paper is organized as follows section 2 reviews the main conceptual arguments underlying the function of a bicameral organization section 3 examines implications for fiscal policy using data from the american states we develop several measures of bicameralism using detailed constituency data on economic and demographic characteristics at the level of state legislative districts we then use these measures to examine the effect of interdistrict constituent homogeneity on total state government spending as well as on the major com