an empirical investigation of coalitional bargaining procedures abstract models of government formation processes in multi party democracies are usually highly sensitive to the rules that govern the selection of formateurs i e the parties selected to propose a potential government the theoretical literature has focused on two selection rules selection proportional to seat share and selection in order of seat share in this paper we use a new data set on government formations in 11 parliamentary democracies to empirically assess which selection rule most closely approximates the data we find that while there is little empirical support for selection in order of seat share proportional selection fits the data well however we also find that a simple alternative that combines the insights of the two selection rules outperforms both of them in their ability to explain the data

party system institutionalization and government formation in new democracies party systems provide the essential structure of the coalition bargaining environment stability in party systems ensures the presence of regularities that can be observed in government formation but most empirical research focuses on established democracies in new democracies party systems are less institutionalized which means that interactions between parties can be unpredictable and has significant implications for coalition formation this article presents the first study of coalition formation in new democracies that employs an empirical design comparable to that of the leading research on western europe the author uses a new data set of potential coalitions in central and eastern europe to examine three explanations for government formation that arise when party systems are weakly institutionalized the results show first that incumbency is a disadvantage for governments in new democracies when formation occurs postelection this disadvantage is due to high levels of electoral volatility caused by policy failure and clientelistic practices incumbents are advantaged when formation takes place midterm as weak party system institutionalization leads to an inchoate pattern of interaction between opposition parties which therefore fail to provide a viable alternative second the presence of former dominant parties influences government formation by stifling the development of programmatic competition instead programmatic competition is subjugated to contestation based on historical enmities and third established parties collude to exclude new parties from coalition formation a possible indicator that a party system is becoming more institutionalized the article provides new insights into the importance of routinized and stable political practices and institutions

european schemes for promoting renewables in liberalised markets abstract the paper describes possibilities and problems for penetration of supply systems based on renewable energy sources in liberalised markets the analysis is based on recent development in eu with different models for support of installations based on renewable energy these include feed in models with guaranteed minimum tariffs tender models for different bands of technologies and green certificates trading models with obligatory consumer quota the paper describes the market situation in selected european countries including germany the uk holland and denmark an eu directive from september 2001 has postponed the decision on a possible harmonisation of promotional models until at least 2005 in order to obtain more practical experience with the different support schemes a critical evaluation is given in this paper of the different models with proposals for a balanced development between environmental and trading concerns it is argued that too much emphasis is presently given to the side of free trade at the expense of long range planning for a sustainable energy development

does direct democracy reduce public debt evidence from swiss municipalities although some countries have managed toobtain balanced budgets or even budgetsurpluses in recent times public debts ofmany oecd countries remain at high levels since structural reforms of public spendinghave only infrequently taken place in mostcountries fiscal pressure will increaseagain in the future due to society s ageingand the accompanying increases in socialtransfer spending constitutionalrestrictions on debt levels and legal rulesof the budgetary process such as a strongrole of the minister of finance aresupposed to be helping against the debtbias inherent in political decision makingprocedures in addition to such top downbudgetary procedures this paperinvestigates the impact of referendumapproval of budget deficits by the voterson the level of public debt in a crosssection of the 134 largest swissmunicipalities in 1990

coordination and crisis in monetary unions we characterize fiscal and monetary policy in a monetary union with the potential for rollover crises in sovereign debt markets member country fiscal authorities lack commitment to repay their debt and choose fiscal policy independently a common monetary authority chooses inflation for the union also without commitment we first describe the existence of a fiscal externality that arises in the presence of limited commitment and leads countries to over borrow this externality rationalizes the imposition of debt ceilings in a monetary union we then investigate the impact of the composition of debt in a monetary union that is the fraction of high debt versus low debt members on the occurrence of self fulfilling debt crises we demonstrate that a high debt country may be less vulnerable to crises and have higher welfare when it belongs to a union with an intermediate mix of high and low debt members than one where all other members are low debt this contrasts with the conventional wisdom that all countries should prefer a union with low debt members as such a union can credibly deliver low inflation these findings shed new light on the criteria for an optimal currency area in the presence of rollover crises

the stability pact more than a minor nuisance stability pact more than a minor nuisance the stability and growth pact will lead member countries to aim for cyclically balanced budgets until this steady state is reached europe will continue its efforts at de cit cutting while so doing politicians are less likely to undertake the dif cult labour market reforms that are really needed is further scal retrenchment wise the paper reviews the reasons that have been advanced in favour of a stability pact and nds them wanting the most serious justi cations such as the systemic risk of bank crisis following a government s failure to service its debt can be better dealt with in other ways for example by prudential limits on banks exposure to public debts moreover our analysis reveals that the macroeconomic costs of the stability pact while sizeable are not as dangerous as often believed the costs will be barely visible once the steady state is reached the true macroeconomic costs are front loaded they concern the next few years after a decade already dominated by convergence efforts barry eichengreen and charles wyplosz

politicians as experts electoral control and fiscal restraints we propose an argument for fiscal restraints that is based on the premise that the services of politicians are credence goods politicians are experts who specialize in observing the true state of the economy budget maximizing politicians are better informed than the electorate about the level of public spending necessary to manage public affairs voters who are able to observe the size of the budget but not the necessary level of spending affect the government s spending behavior via electoral control a fiscal restraint limits the maximum spending a government can choose we identify conditions under which such a fiscal restraint improves voter welfare and discuss the role of the political opposition as a second expert in situations in which the state of the economy requires a level of spending which exceeds the fiscal restraint

state responses to fiscal crises the effects of budgetary institutions and politics this paper explores the dynamics of state taxes and spending during the late 1980s when regional economic downturns and increased expenditure demands led to substantial state budget deficits more restrictive state fiscal institutions such as no deficit carryover rules and tax and expenditure limitations are correlated with more rapid fiscal adjustment to unexpected deficits political factors are also important when a single party controls the state house and the governorship deficit adjustment is much faster than when party control is divided in gubernatorial election years tax increases and spending cuts are both significantly smaller than at other times

a model of endogenous government formation political parties bargain over the allocation of cabinet portfolios when forming coalition governments noncooperative theories of legislative bargaining typically predict that the formateur enjoys a disproportionate share of government ministry positions however empirical evidence indicates that parties receive shares of portfolios proportional to their share of legislative seats that a government party contributes to the government coalition in support of gamson s law of portfolio allocation this article examines government formation as a process in which both the government coalition and the formateur are determined endogenously in equilibrium if parties have similar preferences over cabinet portfolios the share of seats they are allocated is proportional to the parties sizes

renewable energy sources in the spanish electricity market instruments and effects the implementation of directive 2001 77 ec on the promotion of electricity produced from renewable sources sets a target of 22 1 of electricity consumption in the eu in 2010 and establishes various mechanisms that member countries may adopt depending on their needs this paper analyses these mechanisms their implementation in spain by means of rd 661 2007 and the degree of fulfilment of objectives it concludes with an analysis of the effectiveness of the mechanisms adopted and recommendations on market design

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

a note on the empirical effectiveness of formal fiscal restraints abstract an important agrument in the current debate over european monetary integration is that a monetary union requires formal fiscal restraints limiting individual member states budgetary powers to reduce the common monetary authority s risk of having to bail out insolvent member governments this note presents empirical evidence on the effectiveness of fiscal restraints on state budgets in the united states nonparametric tests reveal that fiscal restraints significantly affect the probability of fiscal choices and performance without however preventing extreme outcomes fiscal restraints induce substitution of nonrestricted for restricted debt instruments

grid parity and self consumption with photovoltaic systems under the present regulatory framework in spain the case of the university of jaen campus abstract the cut off of any subsidy or feed in tariff that incentives the installation of new renewable energy systems which are close to the grid parity is a reality in most of the european countries but in the recent years the grid parity has worsened because of the global economic crisis in the case of spain in addition to the economic problems the photovoltaic sector has been dramatically damaged through a changeable regulatory framework an excessive bureaucracy and the inclusion of additional fees or possible back up tolls that are very prejudicial for the deployment of this sector nowadays the current spanish legislation mentions the possibility of self consumption totally or partially of the electricity generated by pv or any renewable energy systems but up to the date of this work the law that regulates the administrative technical and economic conditions for the net metering of the electrical energy produced within the consumer s network is still under a draft stage in this paper it is analyzed the case of the university of jaen where it has been identified and simulated several pv systems on the roofs and parking lots of the university campus and considering the current electrical tariffs hourly defined for the case of high power and high voltage consumers it has been done a cost and economic analysis as a result it has been obtained an average levelised cost of energy around 0 125 kwh 1 a discount payback time of 17 5 years or less a positive net present value and a nominal internal rate of return of 8 48 in the worst case beyond that it has been carried out a sensitivity analysis of the factors that have more influence in the profitability of these systems like the initial investment cost the pv electricity yield additional taxes and the variations in the electricity price market

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

european monetary unification a tour d horizon this article takes stock of the literature and debate over european monetary unification in contrast to other papers where it is argued that the issues and prospects remain shrouded in uncertainty i argue that in a number of important areas a reasonable degree of consensus now exists as the result of a decade of scholarship the subsequent stock taking concentrates on areas where significant questions remain starting with the implications of surrendering the exchange rate and an independent national monetary policy as instruments of adjustment the conduct of fiscal policy under the excessive deficit procedure and the stability pact and how quickly the european union is likely to develop an eu wide system of fiscal federalism to accompany its monetary union turning from fiscal to monetary issues i ask whether the european central bank ecb will be as inflation averse as the bundesbank what exchange rate policy the ecb will pursue and whether the euro will be a leading reserve currency i conclude with what may be the most contentious issue of all namely whether europe s monetary union could collapse after it begins

a historical review of promotion strategies for electricity from renewable energy sources in eu countries abstract the core objective of this paper is to elaborate on historically implemented promotion strategies of renewable energy sources and the associated deployment within the european electricity market hence at a first glance the historic development of renewable energy sources in the electricity res e sector is addressed on member state and on sectoral level as well as consequently discussed according to available res e potentials and costs the specific focus of this paper are promotion strategies for res e options as they are the key driver of an efficient and effective res e deployment therefore the paper depicts the main types of different promotion schemes and their properties additionally several cases studies of different european member states show an in depth analysis of the different res e promotion schemes in this context special emphasises are put on the question of effective and efficient promotion scheme designs of different res e technologies generally conducted research led to the conclusion that technology specific financial support measures of res e performed much more effective and efficient than others did hence it is not all about the common question of feed in tariffs vs quota systems based on tradable green certificates but more about the design criteria of implemented res e support schemes

unique equilibrium in a model of self fulfilling currency attacks even though self fulfilling currency attacks lead to multiple equilibria when fundamentals are common knowledge we demonstrate the uniqueness of equilibrium when speculators face a small amount of noise in their signals about the fundamentals this unique equilibrium depends not only on the fundamentals but also on financial variables such as the quantity of hot money in circulation and the costs of speculative trading in contrast to multiple equilibrium models our model allows analysis of policy proposals directed at curtailing currency attacks

green electricity market development lessons from europe and the us this study compares the development and implementation of green electricity policies in germany the netherlands sweden and the united states a set of countries applying a range of policy instruments to encourage electricity from renewable energy sources a general tendency is identified that policies shift emphasis from r d stimulation towards dissemination and market application of renewable energy technologies we argue that in light of the long term nature of policy goals on energy security mitigation of climate change and environmental protection the applied range of policy instruments may be lacking in providing incentives for the long term development of new technologies clarifying policy objectives would allow careful selection of policy instruments including support for r d improved capacity building for policy implementation is also important

basic concepts for designing renewable electricity support aiming at a full scale transition by 2050 abstract renewable electricity supply is a crucial factor in the realization of a low carbon energy economy the understanding is growing that a full turn over of the electricity sectors by 2050 is an elementary condition for avoiding global average temperature increase beyond 2 c this article adopts such full transition as europe s target when designing renewable energy policy an immediate corollary is that phasing in unprecedented energy efficiency and renewable generation must be paralleled by phasing out non sustainable fossil fuel and nuclear power technologies the double phasing programme assigns novel meaning to nearby target settings for renewable power as share of total power consumption it requires organizing in the medium term eu wide markets for green power a highly demanding task in the present context of poorly functional markets in brown power the eu commission s 2007 2008 proposals of expanding tradable certificates markets were not based on solid analysis of past experiences and future necessities the keystone of sound policies on renewable electricity development is a detailed scientific differentiation and qualification of renewable electricity sources and technologies for measuring the huge diversity in the field we provide but structuring concepts about such qualification because implementation requires extensive research resources support for renewable electricity development is organized via feed in prices or premiums and via quota obligations connected to tradable green certificates green certificates are dependent on physical generated renewable power but separable and no joint products contrary to conventional wisdom we argue their separation in cost analysis but firm linking during trade a few graphs illustrate the importance of assigning qualities to different renewable power sources technologies feed in systems based on an acceptable qualification perform generally better than certificate markets imposing uniform approaches on a very diverse reality for a similar reason uniform and undifferentiated taxation of non sustainable energy sources cannot replace renewable energy support schemes capable of differentiation

bailing out expectations and public health expenditure we use a natural experiment the fiscal adjustment of italy in the 1990s to meet the maastricht criteria to test a simple model of soft budget constraint that closely resembles the intergovernmental relationships in the italian public health care sector we show that the link between the ex ante financing by the central government and the health expenditure by regions was stronger when regional expectations of future bailing outs were presumably lower confirming previous research we also prove that more fiscally autonomous regions were more financially responsible and that a political alignment effect was present with friendly regional governments controlling more expenditure than unfriendly ones our results suggest that at least in italy bailing out expectations by regions may be the missing variable emphasised by culyer a j 1988 health care expenditures in canada myth and reality canadian tax papers 82 for empirical models explaining health expenditure our results also raise some worries about the outcome of the current decentralization process in europe

fiscal transparency political parties and debt in oecd countries abstract many believe and argue that fiscal or budgetary transparency has large positive effects on fiscal performance however the evidence linking transparency and fiscal policy outcomes is less compelling to analyze the effects of fiscal transparency on public debt accumulation we present a career concerns model with political parties this allows us to integrate as implications of a single model three hitherto separate results in the literature on deficit and debt accumulation that transparency decreases debt accumulation at least by reducing an electoral cycle in deficits that right wing governments at least for strategic reasons tend to have higher deficits than left wing governments and that increasing political polarization increases debt accumulation to test the predictions of the model we construct a replicable index of fiscal transparency on 19 country oecd data simultaneous estimates of debt and transparency strongly confirm that a higher degree of fiscal transparency is associated with lower public debt and deficits independent of controls for explanatory variables from other approaches

constitutional power and competing risks monarchs presidents prime ministers and the termination of east and west european cabinets some european constitutions give cabinets great discretion to manage their own demise whereas others limit their choices and insert the head of state into decisions about government termination in this article we map the tremendous variation in the constitutional rules that govern cabinet termination and test existing expectations about its effects on a government s survival and mode of termination in doing so we use the most extensive government survival data set available to date the first to include east and west european governments our results demonstrate that constitutional constraints on governments and presidential influence on cabinet termination are much more common than has previously been understood and have powerful effects on the hazard profiles of governments these results alter and improve the discipline s understanding of government termination and durability and have implications for comparative work in a range of areas including the survival and performance of democracies electoral accountability opportunistic election calling and political business cycles

the conditional impact of incumbency on government formation previous research on coalition politics has found an incumbency advantage in government formation but it has provided no clear explanation as to why this advantage exists we classify existing theories as either preference based or institutions based explanations for why incumbent coalitions might be likely to form again and we integrate these explanations into a coherent theoretical argument we also claim that it is possible to some extent to distinguish these explanations empirically by taking into account the historical context of coalition bargaining using a comprehensive new data set on coalition bargaining in europe we show that coalitions in general are more likely to form if the parties comprising them have worked together in the recent past and that incumbent coalitions are more likely to re form if partners have not experienced a severe public conflict while in office together or suffered a recent setback at the polls the incumbency advantage disappears completely if partners have become mired in conflict or have lost legislative seats even after accounting for the impact of seat share on coalition size moreover in certain circumstances institutional rules that grant incumbents an advantage in coalition bargaining greatly enhance their ability to remain in office

when politics and models collide estimating models of multiparty elections theory the spatial model of elections can better be represented by using conditional logit models which consider the position of the parties in issue spaces than by multinomial logit models which only consider the position of voters in the issue space the spatial model and random utility models in general suffer from a failure to adequately consider the substitutability of parties sharing similar or identical issue positions hypotheses multinomial logit is not necessarily better than successive applications of binomial logit conditional logit allows for considering more interesting political questions than does multinomial logit the spatial model may not correspond to voter decision making in multiple party settings multinomial probit allows for a relaxation of the iia condition and this should improve estimates of the effect of adding or removing parties methods comparisons of binomial logit multinomial logit conditional logit and multinomial probit on simulated data and survey data from multiparty elections results multinomial logit offers almost no benefits over binomial logit conditional logit is capable of examining movements by parties whereas multinomial logit is not multinomial probit performs better than conditional logit when considering the effects of altering the set of choices available to voters estimation of multinomial probit with more than three choices is feasible

do state balanced budget requirements matter testing two explanatory frameworks balanced budget requirements bbrs affect all aspects of financial operations previous studies relied on characterizations that highlight a constitutional statutory distinction hou and smith public budgeting finance 26 3 22 45 2006 instead propose a political technical construct this article uses probit estimation six measures of balance and long panels to test which framework offers more explanatory power the findings suggest that bbrs matter to varying degrees technical requirements exert bigger effects than political ones the effects are more obvious on narrower than broader measures of balance and in the later phases of the budget cycle and the political technical construct offers more explanatory power than the constitutional statutory distinction

public policies to support the development of renewable energy in romania a review abstract the aim of this study is to review the public policies used to support the development of renewable energy in romania over the past ten years romania assumed a target of 24 share of renewable energy in consumption in 2020 higher than the average target of the european union and this target has already been reached in the beginning of 2014 as a result of the public policies implemented therefore this study examines firstly the support schemes for the development of renewable energy in the european union underlining the arguments to support the renewable energy as well as the main barriers for its development secondly this study analyses the renewable energy sector in romania in terms of theoretical and economic potential production and consumption of renewable energy and legislation related to the renewable energy thirdly this study discloses the main issues of the public renewable energy policy in romania starting with an overview of the tradable green certificates system and revealing the changes of the romanian support scheme and the possible effects of the policy changes the results of the present study may be useful for further research regarding public policies for the development of renewable energy projects

will policies to promote renewable electricity generation be effective evidence from panel stationarity and unit root tests for 115 countries abstract this study examines whether policies to promote renewable electricity generation are likely to be effective by applying panel unit root and stationarity tests to time series data on renewable electricity generation for 115 countries over the period 1980 2008 we find that for the panel as a whole and almost three quarters of the individual countries renewable electricity generation is characterized by a unit root this result implies that policies to promote renewable electricity generation such as renewable portfolio standards which result in annual increases in renewable energy and as such which represent permanent positive shocks to the long run growth path of renewable electricity generation will be more effective in increasing renewable electricity generation than policies with a pre specified time horizon

politics institutions and fiscal performance in a federal system an analysis of the argentine provinces abstract we posit that the fiscal behavior of argentine provinces is determined by a common pool game at two levels within each province and across political units in the latter game the national government has a greater incentive than the provincial governments to internalize the negative externality of fiscal imprudence given relatively strong party discipline the president is able to induce governors from his party to internalize a portion of the externality to a greater extent than opposition governors in argentina party matters for fiscal behavior but it does so for reasons different from those identified in studies of oecd countries

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

bargaining delays in the government formation process in parliamentary democracies the transfer of power from one government to the next is sometimes characterized by long periods of negotiations in which party leaders bargain over the composition and policy objectives of a new cabinet although these delays can have substantial political and economic consequences surprisingly little is known about their determinants moreover the few studies that exist reach contradictory conclusions in this article the author examines how factors relating to uncertainty and bargaining complexity influence the duration of the government formation process in 16 west european countries from 1944 to 1998 in line with the article s theoretical expectations the author finds that factors increasing uncertainty over the type of cabinet that is acceptable always lead to delays in forming governments but that factors increasing bargaining complexity such as the number of parties and ideological polarization in the legislature only do so when there is sufficient uncertainty

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

fiscal decentralization a political theory with latin american cases theories of fiscal federalism explain the efficiency and other economic gains from decentralization but do not explain its extent and nature in practice the authors develop a political theory of decentralization that focuses on the lines of political accountability between politicians at different levels of government the more accountable central level politicians presidents and legislators are to subnational politicians the greater the extent of decentralization and the more it will conform to the preferences of subnational politicians for example with respect to the degree of the center s discretion the model is tested on five latin american countries that although formally decentralized in fact exhibit wide differences in the distribution of spending and revenue responsibilities the theory also helps explain a number of problems governments have encountered in decentralizing including subnational debt crises and a mismatch between responsibilities and resources

cabinet survival and competing risks we attempt to resolve a recent controversy in the study of cabinet terminations pertaining to the shape of hazard rates on the one hand warwick 1992b provides evidence that cabinets are more likely to terminate the longer they are in office alt and king s 1994 analysis on the other hand suggests that hazard rates are constant over the life time of a cabinet this issue is of particular theoretical importance since a constant hazard rate would add support to the nonstrategic model of cabinet termination due to browne et al 1986 while an increasing hazard rate would seem to favor lupia and strom s 1995 strategic approach by applying a semi parametric competing risk approach to data on cabinet durations we are able to show that through its use of theory based censoring the previous literature in effect analyzed only one mode in which cabinets terminate the case where one cabinet is replaced by another without a new election once cabinet terminations that lead to chamber dissolutions with subsequent elections are analyzed directly we can show that they are governed by a very different stochastic process hazard rates are not flat as in the case of replacements but increase over the life of the government further the covariates governing replacement terminations fail to explain dissolution terminations these findings add support to the strategic approach suggested by lupia and strom

do credit markets discipline sovereign borrowers evidence from u s states the degree to which credit markets discipline sovereign borrowers is investigated by estimating the supply curve for debt faced by u s states the results generally support an optimistic view of the market discipline hypothesis with credit markets providing incentives for sovereign borrowers to restrain borrowing while the risk premium on bond yields is estimated to increase only gradually at low levels of debt this effect appears to become much larger as debt rises there is also some evidence that credit markets may withhold access to credit at very high levels of debt copyright 1995 by ohio state university press

the merit order effect a detailed analysis of the price effect of renewable electricity generation on spot market prices in germany the german feed in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies critics state that the costs for consumers are too high an important aspect to be considered in the discussion is the price effect created by renewable electricity generation this paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in germany the central aspect to be analysed is the impact of renewable electricity generation on spot market prices the results generated by an agent based simulation platform indicate that the financial volume of the price reduction is considerable in the short run this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits in the case of the year 2006 the volume of the merit order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers

time inconsistency and free riding in a monetary union in monetary unions a time inconsistency problem in monetary policy leads to a novel type of free rider problem in the setting of non monetary policies the free rider problem leads union members to pursue lax non monetary policies that induce the monetary authority to generate high inflation free riding can be mitigated by imposing constraints on non monetary policies without a time inconsistency problem the union has no free rider problem then constraints on non monetary policies are unnecessary and possibly harmful this theory is here detailed and applied to several non monetary policies labor market policy fiscal policy and bank regulation

profitability analysis of grid connected photovoltaic facilities for household electricity self sufficiency abstract spain exhibits a high level of energy dependence and has significant solar energy resources these two facts have given rise to the prominence that renewable energy particularly solar photovoltaic technology has enjoyed in recent years supported by a favorable regulatory framework currently the spanish government is providing new ways in energy policy to enhance and accelerate the development of low power photovoltaic generation facilities for self consumption by introducing energy policies for feed in payments of surplus electricity such facilities are an example of distributed electrical generation with important benefits for the environment and the rest of the electrical system because when properly managed they can help improve the system s stability and reduce overall losses by analyzing household demand and solar photovoltaic energy resources the profitability of such facilities is considered in this article taking into account the technical and economic impact of storage systems and proposing models for feed in payments of surplus electricity in an attempt to assess whether this method of electricity generation versus the method of conventionally supplied power from a grid at a regulated tariff can rival each other economically in terms of parity

harmonization of renewable electricity feed in laws in the european union this paper focuses on the harmonization of feed in laws in the european union as a support mechanism for the promotion of renewable electricity in particular it proposes a methodology for harmonization based on a feed in law with a modular and transparent premium for renewable electricity producers this premium considers technology costs some grid services political incentives and national priorities the proposed approach includes flexibility mechanisms to update and revise premiums to avoid windfall profits for producers and to share technology innovation benefits with electricity consumers while maintaining incentives for innovation our approach is based on the review of the main features of the german and spanish feed in laws and takes into account other necessary considerations for harmonization such as grid access funding definitions and standards ownership of rights derived from renewables and exceptions for small non commercial producers and energy intensive industries

output fluctuations and fiscal policy u s state and local governments 1978 1994 abstract we study the cyclical properties of u s state and local government fiscal policy the budget surpluses of both are procyclical over short and medium term horizons procyclical surpluses are the result of strongly procyclical revenue and weakly procyclical expenditure these results hold whether aggregate u s wide fluctuations are controlled for or not federal grants to state and local governments are procyclical but this is due to aggregate output fluctuations with respect to state level output fluctuations federal grants are countercyclical the budget surpluses of trust funds and utilities are also procyclical but there is no evidence that this effect is stronger in states where balanced budget rules are tighter the cyclical patterns of state and local budget surpluses are affected by various political institutions for example budget surpluses are less procyclical in conservative states in an election year that occurs in good times state governments refrain from accumulating a larger surplus in bad times no such asymmetry between election and non election years is apparent

law focal points and fiscal discipline in the united states and the european union many studies suggest that strict balanced budget rules can restrain sovereign debt and lower sovereign borrowing costs even if those rules are never enforced in court why might public officials adhere to a rule that is practically never enforced in court existing literature points to a legal deterrence logic in which the threat of judicial enforcement deters sovereigns from violating the rules in the first place by contrast we argue that balanced budget rules work by coordinating decentralized punishment of sovereigns by bond markets rather than by posing a credible threat of judicial enforcement therefore the clarity of the focal point provided by the rule rather than the strength of its judicial enforcement mechanisms determines its effectiveness we develop a formal model that captures the logic of our argument and we assess this model using data on u s states we then consider implications of our argument for the impact of the balanced budget rules recently imposed on eurozone states in the fiscal compact treaty

fiscal policy rules and the sustainability of public debt in europe the sustainability of public debt is interpreted as the result of the interaction of fiscal policy with the economic environment and not as a statistical concept as in most of the recent literature if debt is not to explode over time policymakers have to respond to the changing conditions in the macroeconomic environment this article defines the conditions that will ensure compliance of fiscal policy with the intertemporal budget constraint in the context of europe s fiscal policy rules the empirical part of the article reveals that european public debt is sustainable in this respect but questions regarding long run liquidity requirements remain unresolved

harmonization of renewable electricity feed in laws a comment abstract this comment aims at critically analyzing some of the economic efficiency issues that are raised in the paper by munoz et al 2007 harmonization of renewable electricity feed in laws in the european union energy policy 35 3104 3114 on the harmonization of feed in law schemes for renewable electricity in the european union we comment on the choice between green certificate systems and feed in laws but pay particular attention to the implementation and design of a harmonized feed in law scheme in the comment we argue first that the approach suggested by munoz et al tends to downplay many of the practical difficulties in assessing the real costs facing investors in renewable electricity not the least since the presence of regulatory uncertainty about the marginal costs of renewable electricity may be essential for the choice between different support systems concerning the benefit side of renewable electricity promotion the munoz et al 2007 paper builds on an interpretation of the eu renewables directive that provides plenty of room for national priorities and that therefore essentially implies that harmonized support premiums per se are of little value we argue instead that a harmonized system should primarily address the international spillover effects from renewable electricity promotion not the least those related to improved security of supply in europe there exists then a strong case for disregarding the specific national benefits of renewable electricity production in the design of harmonized support systems and for instead considering international perhaps at the start bilateral policy support coordination based on entirely uniform support levels

sub nationals risk premia in fiscal federations fiscal performance and institutional design the recent debt crisis in europe highlighted the importance of institutional design and in particular bail out clauses in determining states risk premia in fiscal or quasi fiscal federations this paper examines the determinants of sub national governments risk premia in fiscal federations using secondary market data for the usa canada australia and germany it finds that as for central governments fiscal fundamentals matter in the pricing of risk and sub national governments with higher public debt and larger deficits pay higher premia however this relationship is not uniform across federations and it differs with institutional arrangements in particular market pricing mechanisms are less effective in presence of explicit or implicit guarantees from the central government we show that when sub national governments depend on high transfers from the central government i e when there is some form of implicit guarantee from the center markets are less responsive to sub national governments fiscal fundamentals using primary market data the paper also shows that high transfer dependency lowers the probability of sub national governments to borrow on capital markets

cost effectiveness of renewable electricity policies we analyze policies to promote renewable sources of electricity a portfolio standard rps raises electricity prices and primarily reduces gas fired generation a knee of the cost curve exists between 15 and 20 goals for 2020 in our central case and higher natural gas prices lower the cost of greater reliance on renewables a renewable energy production tax credit lowers electricity price at the expense of taxpayers which limits its effectiveness in reducing carbon emissions and it is less cost effective at increasing renewables than a portfolio standard neither policy is as cost effective as a cap and trade policy for achieving carbon emission reductions

voting weights and formateur advantages in the formation of coalition governments over the last two decades a large and important literature has emerged that uses game theoretic models of bargaining to study legislative coalitions to test key predictions of these models we examine the composition of coalition governments from 1946 and 2001 these predictions are almost always expressed in terms of parties minimal integer voting weights we calculate such weights for all parliamentary parties in addition we develop a statistical model that nests the predictions of many of these models of the distribution of posts we find that for parties that join but did not form the government there is a linear relationship between their share of the voting weight in parliament and their share of cabinet posts the party that forms the government the formateur receives a substantial bonus relative to its voting weight the latter finding is more consistent with proposal based bargaining models of coalition formation and suggests that parties gain disproportionate power not because of their size but because of their proposal power

negotiation in legislatures over government formation we question results claiming to extend non cooperative models of legislative bargaining to the theoretically general and substantively typical case with an arbitrary number of disciplined parties we identify problems with both the derivation of formal results and empirical evaluation of these no empirically robust formateur advantage is observed in field data on bargaining over government formation given this theoretical and empirical impasse we reconsider the substantive premises that should form the foundation for any new attempt to model this fundamental political process arguing that models should be grounded in binding constitutional constraints on the government formation process in parliamentary democracies

the public promotion of wind energy in spain from the transaction costs perspective 1986 2007 this paper analyzes the success of wind energy in spain from 1986 to 2007 certain special characteristics have emerged in spain that provide credibility to the feed in tariff fit device to promote this energy source to explain this success the analysis will focus on the intrinsic characteristics of fit using the concepts of the transaction cost theory tce nevertheless in this framework special attention is placed on the role that specific political and institutional factors have played in providing stability to this instrument thanks to an early start and an on going and generous fit device wind energy promotion for electricity has become a political success story in spain the main implication of this analysis is that this success is mainly due to the trade off between stability and flexibility in the use of spanish fit

on the need for fiscal constraints in a monetary union the desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to following its policies if it can commit then debt constraints can only impose costs if it cannot commit then fiscal policy has a free rider problem and debt constraints may be desirable this type of free rider problem is new and arises only because of a time inconsistency problem

the role of portuguese electricity generation regimes and industrial production abstract this paper examines how renewables special regime simultaneously interact with conventional sources ordinary regime within the portuguese electricity generation system there is also an appraisal of the relationship between these two regimes and economic activity using the industrial production index first difference var modelling was applied for monthly data for the time span of 2007 m1 to 2012 m10 the appropriateness of the var is proved the relationship between variables develops within a structure of endogeneity i e they generate feedback and may be both explained and explaining variables simultaneously the outcomes show a strong complementarity between the ordinary and special regimes economic activity causes electricity consumption but only the special regime causes economic activity moreover the non renewable component of the special regime does not cause a need for backup from either the ordinary regime or imports contributing to a reduction in energy dependency

mobile capital domestic institutions and electorally induced monetary and fiscal policy the literature on global integration and national policy autonomy often ignores a central result from open economy macroeconomics capital mobility constrains monetary policy when the exchange rate is fixed and fiscal policy when the exchange rate is flexible similarly examinations of the electoral determinants of monetary and fiscal policy typically ignore international pressures altogether we develop a formal model to analyze the interaction between fiscal and monetary policymakers under various exchange rate regimes and the degrees of central bank independence we test the model using data from oecd countries we find evidence that preelectoral monetary expansions occur only when the exchange rate is flexible and central bank independence is low preelectoral fiscal expansions occur when the exchange rate is fixed we then explore the implications of our model for arguments that emphasize the partisan sources of macroeconomic policy and for the conduct of fiscal policy after economic and monetary union in europe

making the first move a two stage analysis of the role of formateurs in parliamentary government formation a standard conclusion of theorists who model bargaining as a non cooperative game is that the party designated to make the first move the formateur party will determine the bargaining outcome most empirical studies of parliamentary coalition formation have paid surprisingly little attention to the formation process in this paper we model government formation as a two stage unordered discrete choice problem that better reflects this process the first step involves the selection of a formateur party and the second involves the choice of partners by the predicted formateur we evaluate several hypotheses for the two stages using a data set of all cabinets formed in the western european countries from 1970 to 2006 in our analyses of formateur selection we find that party size is clearly the dominant feature in the second stage we show that when predicting government composition it is fruitful to add information drawn from a first stage analysis

recreation demand models with taste differences over people we estimate random parameter logit models of anglers choice of fishing site the models generalize logit by allowing coefficients to vary randomly over anglers rather than being fixed the models do not exhibit the restrictive independence from irrelevant alternatives property of logit and can represent any substitution pattern estimation explicitly accounts for the fact that the variation in coefficients over anglers induces correlation in unobserved utility over trips by the same angler willingness to pay for improved fish stock and the value to anglers of specific sites are calculated from the models and compared with the estimates obtained from a standard logit model

the dynamic adjustment of local government budgets does spain behave differently the aim of this article is to analyse whether spanish municipalities adjust in response to budget shocks and if so which elements of the budget they are more likely to adjust the methodology we use to answer these questions is a vector error correction model vecm estimated with data from a panel of spanish municipalities during the period 1988 to 2006 our results confirm that spanish municipalities do indeed make adjustments in response to fiscal shocks i e the deficit is stationary in the long run we compare our results with those obtained for us and germany to evaluate if the viability of local finance depends on the institutional arrangement and to analyse how it affects the adjustment patterns we observe that grants have a more important role in the adjustment process in environments where either they have an equalization objective or where there is no clear rule that determines their distribution this fact can generate a moral hazard problem governments tend to spend more due to the exp

who wins determining the party of the prime minister the prime ministership is the preeminent political post in parliamentary democracies yet few studies examine pm party choice perhaps under the assumption that the choice is a simple function of party size in this article we argue that key strategic actors and the context in which government negotiations take place can play a critical role in pm party choice we test our hypotheses using a mixed logit with random coefficients on an original data set comprising pm selection opportunities in 28 european countries our methodological approach allows us to incorporate qualitative concerns about heterogeneity and causal complexity into our analysis contrary to conventional wisdom we find that the largest party is often disadvantaged when it comes to pm party choice that some presidents play an influential role in choosing the pm and that the value of being the incumbent depends on one s performance in office and how the previous government ended

constraints on cabinet formation in parliamentary democracies coalition theory typically treats political parties involved in government formation in parliamentary democracies as if they were unconstrained players in an institution free world yet actual coalition options are often severely constrained by institutional arrangements and prior commitments we develop a systematic account of different constraints on government formation and examine their frequency across 10 parliamentary democracies hypothetical and empirical examples demonstrate how a small number of constraints can dramatically reduce the range of coalition options and redistribute bargaining power among political parties more adequate coalition theories need to recognize the effects of such constraints and to build on the theoretical lessons of the neoinstitutionalist approach to legislative behavior

interest yields credit ratings and economic characteristics of state bonds an empirical analysis note carosio giovanni and ignazio visco nota sulla costruzione di un tasso di interesse reale estratto dal bollettino della banca d italia 32 ottobre dicembre 1977 797 811 fama eugene f short term interest rates as predictors of inflation american economic review 65 june 1975 269 82 fama eugene f and andre farber money bonds and foreign exchange american economic review 69 september 1979 639 49 fischer stanley the demand for index bonds journal of political economy 83 june 1975 509 34 hartman richard and john h makin inflation uncertainty and interest rates theory and empirical tests national bureau of economic research working paper no 906 june 1982 hess patrick j and james l bicksler capital asset prices vs time series models as predictors of inflation journal of financial economics 2 december 1975 341 60 mundell robert a inflation and real interest journal of political economy 71 june 1963 280 83 nelson charles r and william g schwert short term interest rates as predictors of inflation on testing the hypothesis that the real rate of interest is constant american economic review 67 june 1977 478 86 papadia francesco forward exchange rates as predictors of future spot rates and the efficiency of the foreign exchange market journal of banking and finance s june 1981 217 40 papadia francesco and vittorio basano eec dg ii inflationary expectations surveybased inflationary expectations for the eec countries economic papers of the commission of the european communities directorate general for economic and firlancial affairs no 1 may 1981 pearce douglas k comparing survey and rational measures of expected inflation forecast performance and interest rate effects journal of money credit and banking 11 november 1979 447 56 visco ignazio the measurement and analysis of inflation expectations the case of italy economic papers barik of italy research department june 1979 149 242

balanced budget rules and fiscal outcomes evidence from historical constitutions this paper studies the long run fiscal consequences of balanced budget rules bbr that are enshrined in a country s constitution using historical data dating back to the 19th century and applying a difference in difference approach we find that the introduction of a constitutional bbr reduces government debt to gdp and expenditure to gdp ratios on average by around 11 and 3 percentage points respectively we do not find evidence that bbrs affect tax revenues our analysis indicates that such rules reduce the probability of experiencing a debt crisis and that the effective enforcement of bbrs can be conditional on the quality of democratic institutions in addition we implement an instrumental variable approach by instrumenting the probability of having budget rules on de jure constraints on changing the constitution this and other tests suggest that the relations we find are largely causal going from bbrs to fiscal outcomes