policy equilibria in a federal system the effects of higher tax ceilings for unemployment insurance abstract in many federal systems a higher authority imposes changes that may alter lower level policies depending on the type of change and differences among lower level parties for example we model changes in the parameters of american states unemployment insurance ui systems when the federal government raises the ui tax ceiling bargaining among interested parties alters ui benefits and taxes we estimate a difference in differences model describing ui tax payments when federal increases in 1972 1978 and 1983 increased some states ceilings where the federal constraint was binding taxes rose nearly 20 percent the theory and empirical analysis suggest themselves as examples for future research on topics in public finance labor economics and international trade

sense and no n sense of energy security indicators energy security ranks high on the policy agenda of many countries to improve on energy security governments undertake regulatory measures for promoting renewable energy increasing energy efficiency or curbing carbon dioxide emissions the impacts of such measures on energy security are typically monitored by means of so called energy security indicators in this paper we show that the common use of wide spread energy security indicators falls short of providing a meaningful metric regulatory measures to improve on energy security trigger ambiguous effects across energy security indicators we conclude that a major pitfall of energy security indicators is the lack of a rigorous microeconomic foundation

optimal bidding strategies and modeling of imperfect information among competitive generators the emerging electricity market behaves more like an oligopoly than a perfectly competitive market due to special features such as a limited number of producers large investment size barrier to entry transmission constraints and transmission losses which discourage purchase from distant suppliers this makes it practicable for only a few independent power suppliers to service a given geographic region and in this imperfect market each power supplier can increase its own profit through strategic bidding the profit of each supplier is influenced to varying extents by differences in the degree of imperfection of knowledge of rival suppliers a new framework to build bidding strategies for power suppliers in an electricity market is presented in this paper it is assumed that each supplier bids a linear supply function and that the system is dispatched to minimize customer payments each supplier chooses the coefficients in the linear supply function to maximize benefits subject to expectations about how rival suppliers will bid a stochastic optimization formulation is developed and two methods proposed for describing and solving this problem a numerical example serves to illustrate the essential features of the approach and the results are used to investigate the potential market power

politics and efficiency of separating capital and ordinary government budgets we analyze a golden rule that separates capital and ordinary account budgets and allows a government to finance only capital items with debt many national governments followed this rule in the eighteenth and nineteenth centuries and most u s states do today we study an overlapping generations economy where majorities choose durable and nondurable public goods in each period when demographics imply even moderate departures from ricardian equivalence the golden rule substantially improves efficiency examples calibrated to u s demographics show greater improvements at the state level or with nineteenth century demographics than under current national demographics

line item veto where is thy sting roponents of giving the president the authority to use a line item veto argue that the institutional change is needed to limit special interest legislation and restrain spending opponents respond that it would grant too much added power to the president thereby upsetting the delicate balance wisely crafted by the founding fathers this article focuses on the presumption evidently shared by both sides in the debate that adoption of item veto authority will have significant consequences in terms of budget outcomes and the distribution of power 1 curiously there presently exists little empirical support for the presumption that item veto authority is important most studies comparing states with various types of veto authority have failed to detect significant effects associated with item veto additional tests of our own are consistent with these results after reviewing the empirical evidence we reconsider the alleged effects of item veto authority by seating the popular depiction in an explicit model of the budgetary process formal modeling exposes logical inconsistencies contained in popular veto discourse further the model makes clear that the predicted consequences of item veto commonly projected as ubiquitous in fact arise only in select settings

measuring the energy security implications of fossil fuel resource concentration abstract economic assessments of the welfare effects of energy insecurity are typically uncertain and fail to provide clear guidance to policy makers as a result governments have had little analytical support to complement expert judgment in the assessment of energy security this is likely to be inadequate when considering multiple policy goals and in particular the intersections between energy security and climate change mitigation policies this paper presents an alternative approach which focuses on gauging the causes of energy insecurity as a way to assist policy making the paper focuses on the energy security implications of fossil fuel resource concentration and distinguishes between the price and physical availability components of energy insecurity it defines two separate indexes the energy security price index espi based on the measure of market concentration in competitive fossil fuel markets and the energy security physical availability index espai based on the measure of supply flexibility in regulated markets the paper illustrates the application of espi and espai with two case studies france and the united kingdom looking at the evolution of both indexes to 2030

taxation and political business cycles in eu economies this paper examines whether incumbent national governments of 11 member states of the european union manipulated the tax policy instruments at their disposal in order to create national political business cycles opportunistic or partisan the empirical evidence based on data concerning the 1965 to 1997 period does not support this hypothesis rather it appears that governments have pursued stabilization policies

capital budgets borrowing rules and state capital spending abstract this paper compares the level and composition of government spending in u s states that maintain separate budgets for capital and operating expenditures with that in states that employ unified budgets it also investigates the effects of pay as you go financing rules for capital projects the empirical findings suggest that states with separate capital budgets spend more on public capital projects than comparable states with unified budgets there is no evidence that the presence or absence of a capital budget affects the level of non capital spending pay as you go requirements for financing capital projects are associated with lower levels of both capital and non capital spending

a time series analysis of representative agent models of consumption andleisure choice under uncertainty this paper investigates empirically a model of aggregate consumption and leisure decisions in which utility from goods and leisure is nontime separable the nonseparability of preferences accommodates intertemporal substitution or complementarity of leisure and thereby affects the comovements in aggregate compensation and hours worked these cross relations are examined empirically using postwar monthly u s data on quantities real wages and the real return on the one month treasury bill the estimated values of the parameters governing preferences differ significantly from the values assumed in several studies of real business models several possible explanations of these discrepancies are discussed

divided we reform evidence from us welfare policies abstract divided government is often thought of as causing legislative deadlock i investigate the link between divided government and economic reforms using a novel data set on welfare reforms in us states between 1978 and 2010 panel data regressions show that under divided government a us state is around 25 more likely to adopt a welfare reform than under unified government several robustness checks confirm this counter intuitive finding case study evidence suggests an explanation based on policy competition between governor senate and house

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

the impact of late budgets on state government borrowing costs abstract we analyze how a key component of fiscal governance the ability of governments to pass a budget on time affects government bond yield spreads based on a sample of 36 us states from 1988 to 1997 and using an original data set on budget enactment dates we estimate that a 30 day budget delay has a cumulative impact that is equivalent to a one time increase in the yield spread of around 10 basis points states with sufficient liquidity incur no costs from late budgets while unified governments face large penalties from not finishing a budget on time

local government grants and income tax revenue redistributive politics in norway 1900 1990 an important aspect of the welfare state is public provision of private goods primarily education and health care in norway the provision of these services has been organized through the local public sector the development of the welfare state has to a large extent been the development of welfare communes the important revenue sources of the local and county governments grants and income tax revenue have been controlled nationally and the paper addresses the determinants of these revenues during 1900 1990 the approach combines a demand model of local public services emphasizing price and income elasticities with a political economy model of central government ideology and strength the decision making is understood as bargaining between the government and interest groups and the political structure consequently is of importance for the policy outcome the analysis shows how politics matter and the results indicate that a minority coalition government implies 30 more grant and income tax revenue to local and county governments than one party majority in the long run

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

energy security and renewable energy deployment in the eu liaisons dangereuses or virtuous circle abstract a large body of literature estimates the effect of energy security drivers on renewable energy deployment using import dependence as a proxy for energy security which is an approach that ignores the potential effect of other energy security strategies such as the diversification of energy sources using panel data for the energy sector across 21 eu member states we investigate the effect of different energy security concepts on the development of renewable energies we compare the results of applying different energy security indicators including the ones used in eu energy policymaking unlike previous studies this study reports a long term relationship between energy security and renewable deployment our findings suggest that the relationship between energy security policies and renewable energy sources res deployment is far from straightforward and depends on the chosen energy security strategy which is usually linked to different energy security conceptualizations our primary findings confirm i that res deployment is a consequence of a combination of energy security strategies including environmental concerns rather than being solely caused by a shift towards more sustainable energy policies and ii that among the different energy security strategies the diversification of energy sources through renewable energy deployment is a more coherent strategy than using res to reduce dependency

energy security energy modelling and uncertainty the paper develops a framework to analyze energy security in an expected utility framework where there is a risk of disruption of imported energy the analysis shows the importance of an energy tax as a tool in maximizing expected utility and how the level of that tax varies according to the key parameters of the system risk aversion probability of disruption demand elasticity and cost of disruption

political uncertainty and public financing costs evidence from u s gubernatorial elections and municipal bond markets this research investigates how political uncertainty around u s gubernatorial elections in uences the borrowing costs of public debt measured by yields of municipal bonds our evidence from both the new issuance market and the secondary market shows that yields of municipal bonds increase sharply by 6 to 8 basis points before elections and then reverse afterward elections have more pronounced impact during economic downturns when outcomes are less predictable and when states have more outstanding debt several state institutions such as gaap budgeting spending limits and tax increase limits help to mitigate the adverse impact of political uncertainty

who pays for public employee health costs abstract we analyze the incidence of public employee health benefits because these benefits are negotiated through the political process relevant labor market institutions deviate significantly from the competitive private sector benchmark empirically we find that roughly 15 percent of the cost of recent benefit growth was passed onto school district employees through reductions in wages and salaries strong teachers unions were associated with relatively strong linkages between benefit growth and growth in total compensation our analysis is consistent with the view that the costs of public workers benefits are difficult to monitor contributing to benefit oriented and often under funded compensation schemes

assessing the energy vulnerability case of industrialised countries the emergence of new big consumer countries on the energy markets and the perspective of oil and gas depletion at the end of the current century raise the concerns about fair distribution of the remaining resources for the common and sustainable wellbeing of the mankind high volatility of energy prices discourages the investment and delays the energy technology transition voluntary measures are needed mainly in industrialised countries in order to develop alternative and sustainable energy sources to enable technology transfer towards emerging and developing countries and to avoid struggle for energy procurement in this paper a composite index of energy demand supply weaknesses is defined as a proxy of energy vulnerability the proposed index is based on several indicators such as energy intensity oil and gas import dependency co2 content of primary energy supply electricity supply weaknesses and non diversity in transport fuels the assessment of this composite index for selected industrialised countries is discussed as well as the sensitivity to various factors

divided government fiscal institutions and budget deficits evidence from the states does partisan control of american state government have systematic effects on state spending and taxing levels does divided control affect the government s ability to make hard decisions do institutional rules like legal deficit carryover restrictions matter using a formal model of fiscal policy to guide empirical analysis of data covering the american states from 1968 to 1987 we conclude that 1 aggregate state budget totals are driven by different factors under democrats and republicans the net result being that democrats target spending and taxes to higher shares of state level personal income 2 divided government is less able to react to revenue shocks that lead to budget deficits particularly where different parties control each chamber of the legislature and 3 unified party governments with restricted ability to carry deficits into the next fiscal year outside the south have sharper reactions to negative revenue shocks than those without restrictions

the elusive costs and the immaterial gains of fiscal constraints we study whether fiscal restrictions affect volatilities and correlations of macrovariables and the probability of excessive debt for a sample of 48 us states fiscal constraints are characterized with a number of indicators and volatilities and correlations are computed in several ways the second moments of macroeconomic variables in states with different fiscal constraints are economically and statistically similar excessive debt and the mechanism linking budget deficit and excessive debts are independent of whether tight or loose fiscal constraints are in place creative budget accounting may account for the results

measuring the immeasurable a survey of sustainability indices sustainability indices for countries provide a one dimensional metric to valuate country specific information on the three dimensions of sustainable development economic environmental and social conditions at the policy level they suggest an unambiguous yardstick against which a country s development can be measured and even a cross country comparison can be performed this paper reviews the explanatory power of various sustainability indices applied in policy practice we show that these indices fail to fulfill fundamental scientific requirements making them rather useless if not misleading with respect to policy advice

does welfare play any role in female headship decisions abstract previous studies have examined whether the welfare system has contributed to the dramatic increase in single parent families this paper explores why the results in this literature are sensitive to the presence of state fixed effects it considers one natural explanation namely that the composition of the population differs across states in ways that are related to welfare program generosity after controlling for individual effects the results provide no evidence that welfare raises the propensity to form female headed households for either whites or blacks these results illustrate the potential pitfalls of assuming that state factors are fixed over a long period of time they also suggest that previous studies may have overstated the effect of welfare programs on family structure

does oilrig activity react to oil price changes an empirical investigation in this paper we analyze how oilrig activity in different non opec regions is affected by the crude oil price we estimate relationships between oilrig activity and crude oil prices using dynamic regression models augmented with latent components capturing trend and seasonality the results generally show a positive relationship between oilrig activity and the crude oil price but the strength of the relationship differs across regions overall there seems to be a clear relationship between the oil industry structure in the region and the oilrig activity s reaction to price changes on average the long run price elasticity for oilrig activity in non opec countries is around unity

the cost of governing strategic behavior of the president and legislators in brazil s budgetary process several characteristics of a political system have been identified as increasing the cost of governing such as presidentialism federalism an open list with proportional representation a multiparty system and coalition governments although brazil suffers from all of these pathologies the authors argue that other characteristics of the brazilian system have the opposite effect and allow high levels of governability at low cost in particular the authors examine the role of legislators amendments to the budget which provide the executive a low cost means of obtaining support the authors provide evidence that the brazilian president routinely uses his or her powers to reward and punish legislators for supporting or opposing his or her interests in congress although legislators have a limited role in the budgetary process that role can have important electoral consequences for their political careers

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

government decision making and the incidence of federal mandates abstract this paper analyzes the effects of federally mandated program changes on state spending and revenues incorporating and evaluating the predictive value of several common theories of the state decision making process using several sources of exogenous increases in public medical spending i estimate that the entire state portion of the burden of mandated spending is borne by decreases in other public welfare spending while federal mandates may influence the composition of benefits at the state level it is much more difficult for them to change the total level of state transfers comparison of state reactions to different shocks suggests that these reductions are due in part to the substitutability of programs in the voter utility function but also in part to the stickiness of spending within budget categories states with greater racial differences between recipients and voters and states with less generous neighbors reduce other public welfare spending by even more alleviating the burden the medical expansions imposed on their taxpayers mandates may thus serve only to increase inequality across states

a security constrained bid clearing system for the new zealand wholesale electricity market this paper reports upon the mathematical models and implementation of the scheduling pricing and dispatch spd application for the new zealand electricity market nzem spd analyzes bids for energy offers reserve offers and energy demands and recognizes explicitly the effects on bid clearing due to transmission congestion network losses reserve requirements and ramp rate limits advanced lp solution methods are utilized to solve the large scale constrained optimization problem results on a 67 bus test system and the nzem are included

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

energy security in china a quantitative analysis and policy implications abstract this study aims to examine how china s energy security has changed over 30 years of reform and the opening period it constructs a 4 as quantitative evaluation framework the availability of energy resources the applicability of technology the acceptability by society and the affordability of energy resources the quantitative results show that china s energy security was at its best during the sixth fyp period 1981 1985 but then deteriorated until it hit higher levels between 1995 and 2005 however it was still lower than the level reached during the sixth fyp period during the eleventh fyp period 2006 2010 the energy security situation deteriorated again differences in policy priority over the study period appear to affect the country s energy security status this study suggests that china needs to develop renewable energy resources on a large scale and pay more attention to emissions control to reverse the downward trend in energy security

indicators of energy security in industrialised countries energy security has become a popular catch phrase both in the scientific arena as well as in the political discussion yet in general the applied concepts of energy security are rather vague this paper sheds some light on concepts and indicators of energy security first we conceptually discuss the issue of energy supply security and explain why it is not to handle by one science alone and what economics may contribute in order to structure the topic after providing a brief survey of existing attempts to define or measure energy security we suggest an additional dimension along which indicators of energy security may be classified ex post and ex ante indicators finally we illustrate our concept on the basis of several simplified indicators while ex post indicators are mostly based on price developments ex ante indicators are to a greater extent aimed at illustrating potential problems our illustration suggests that it is worthwhile to take into account the market structure along with the political stability of exporting countries

energy security externalities and policies abstract in this paper we review conceptual arguments and empirical evidence related to two potential sources of market failure involving energy security in doing so we consider several questions involving the distinction between externality and market inefficiency and the distinction between market failures that are amenable or not amenable to correction given our current understanding of the workings of an economy several conclusions follow from our analysis regarding the potential sources of market failure and possible remedies the problem of excess wealth transfer from exporter market power may be an issue but current knowledge of oil market behaviour is too weak to support a strong conclusion other supposed costs of oil import dependence also are not well grounded including externalities related to the vulnerability of the economy to energy price shocks

security of supply and retail competition in the european gas market some model based insights in this paper we analyze the impact of uncertain disruptions in gas supply upon gas retailer contracting behavior and consequent price and welfare implications in a gas market characterized by long term gas contracts using a static cournot model in order to most realistically describe the economical situation our representation divides the market into two stages the upstream market that links by means of long term contracts producers in exporting countries russia algeria etc to local retailers who bring gas to the consuming countries to satisfy local demands in the downstream market disruption costs are modeled using short run demand functions first we mathematically develop a general model and write the associated kkt conditions then we propose some case studies under iso elasticity assumptions for the long short run inverse demand curves in order to predict qualitatively and quantitatively the impacts of supply disruptions on western european gas trade in the second part we study in detail the german gas market of the 1980s to explain the supply choices of the german retailer and we derive interesting conclusions and insights concerning the amounts and prices of natural gas brought to the market the last part of the paper is dedicated to a study of the bulgarian gas market which is greatly dependent on the russian gas supplies and hence very sensitive to interruption risks some interesting conclusions are derived concerning the necessity to economically regulate the market by means of gas amounts control if the disruption probability is high enough

the line item veto and public sector budgets evidence from the states abstract the paper examines the claim that gubernatorial line item veto power reduces state spending analysis of a rich set of state budget data indicates that long run budgets are not altered by an item veto and that in the short run the item veto s potency is contingent upon the political setting in certain circumstances governors with political incentives to use an item veto alter spending and revenues in a statistically significant and quantitatively important fashion these results suggest that state budgets have not been importantly altered as a result of the existence of the line item veto and shed doubt on the use of the line item veto to reduce federal government spending

the macroeconomic effects of fiscal rules in the us states abstract fiscal policy restrictions are often criticized for limiting the ability of governments to react to business cycle fluctuations and consequently the adoption of quantitative restrictions is viewed as inevitably leading to increased macroeconomic volatility in this paper we use data from 48 us states to investigate how budget rules affect fiscal policy outcomes our key findings are that 1 strict budgetary restrictions lead to lower policy volatility i e less aggressive use of discretion in conducting fiscal policy and 2 fiscal restrictions reduce the responsiveness of fiscal policy to output shocks these two results should have opposite effects on output volatility while less discretion should reduce volatility less responsiveness of fiscal policy might amplify business cycles we provide empirical support for the first effect restrictions by reducing discretion in fiscal policy can reduce macroeconomic volatility

non competitive market behaviour in the international coking coal market in this paper a primal dual programming model of international coking coal trade is constructed to test for non competitive market behaviour world trade in 1996 is simulated under perfect competition and various non competitive market structures statistical tests are used to compare simulated trade flows with actual data assuming cournot nash behaviour an all consumer oligopsony market structure is preferred to alternative models under an all consumer oligopsony world coking coal prices and trade are lower than under perfect competition under an oligopsonistic structure welfare gains from productivity increases in australian coal mines might largely accrue to coal buyers

an empirical method of dynamic oligopoly behavior analysis in electricity markets evidence of market power existing in the electricity markets has been empirically revealed but the understanding of the market structure and generation companies gencos strategic behaviors underlying the market power is far from satisfactory this paper presents a theory and method for estimating the conjectural variations of gencos based on these estimates of conjectural variations in an actual electricity market an empirical methodology is also proposed to analyze the dynamic oligopoly behaviors underlying market power this is not only useful for system regulators to analyze the market structure but also to recognize and control the market power accordingly the australia national electricity market is used as the simulation case to test the proposed method

general revenue sharing and public sector unions abstract in this paper i find that in the context of a large intergovernmental general revenue sharing program implemented from 1972 to 1986 cities increased expenditures one for one with federal grants which is suggestive of a large flypaper effect furthermore i find that cities in states with pro union collective bargaining laws spent more than half of the transfers on increased wages while cities in states without such laws spent a greater fraction on increased government services these latter findings suggest that public sector unions play an important role in determining the usage and impact of intergovernmental grants

the fiscal stress arising from state and local retiree health obligations a major factor weighing down the long term finances of state and local governments is the obligation to fund retiree benefits while state and local government pension obligations have been analyzed in great detail much less attention has been paid to the costs of the other major retiree benefit provided by these governments retiree health insurance the first portion of the paper uses the information contained in the annual actuarial reports for public retiree health plans to reverse engineer the cash flows underlying the liabilities given in the report obtaining the cash flows allows us to construct liability estimates which are consistent across governments in terms of the discount rate actuarial method and assumptions concerning medical cost inflation and mortality we find that the total unfunded accrued liability of state and local governments for the provision of retiree health care exceeds 1 trillion or about of total state and local government revenue relative to pension obligations discounted at the same rate we find that unfunded retiree health care liabilities are the size of unfunded pension obligations we also find that using assumptions concerning the growth in health care costs that are arguably more realistic than those employed by most states actually reduces the size of the liability in most cases pushing in the opposite direction we find that using plausibly more realistic mortality assumptions increases the size of liability the second portion of the paper places retiree health care obligations into context by examining the budget pressures associated with retiree health on a continuing largely pay as you go basis we find that much of the projected increase in retiree health obligations as a share of revenue is the result of health care cost growth on average states could put their retiree health obligations into long run fiscal balance by contributing an additional percent of total revenue toward the benefit each year there is however wide variation across the states with the majority of states requiring little in the way of additional financing but some states requiring a significantly larger increase

defining the government s debt and deficit although the budget deficit and the public debt feature prominently in political debate and economic research there is no agreement about how they should be measured they can b e defined for different sets of public institutions including the nested sets corresponding to central government general government and the public sector and for any definition of government there are many measures of the debt and deficit including those generated by four kinds of accounts cash financial full accrual and comprehensive which can be derived from four nested sets of assets and liabilities each debt and deficit measure says something about public finances but none tells the whol e story each is also vulnerable to manipulation and is likely to be manipulated if it is subject to a binding fiscal rule or target narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of governme nt narrow definitions of debt and deficit encourage operations involving off balance sheets assets and liabilities while broad measures are susceptible to the mismeasurement of on balance sheet assets and liabilities reviewing the literature on these is sues the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships

incentives for the identification and treatment of children with disabilities the supplemental security income program abstract this paper examines how supplemental security income ssi benefit availability and generosity affect the probability that families identify health problems in their children and move onto the ssi rolls first i observe that a liberalization of ssi eligibility in 1990 was followed by a substantial re evaluation of the health status of low income children by their parents then i find that increases in ssi benefits raise the likelihood that a family identifies a chronic impairment in their child my results indicate that cash assistance targeted on children with disabilities promotes the detection and treatment of medical problems in low income children

the political determinants of fiscal policies in the states of india an empirical investigation abstract using data from the 14 major states of india we investigate whether state governments fiscal policy choices are tempered by political considerations our principal findings are twofold first we show that certain fiscal policies experience electoral cycles state governments raise less commodity tax revenue spend less on the current account and incur larger capital account developmental expenditures in election years than in all other years second we show that coalition state governments raise less own non tax revenues and spend less on the current account than state governments that are more cohesive in composition in sum the dispersion of political power affects government size

testing the rationality of state revenue forecasts recent revenue shortfalls in several states focus attention on the question of whether states do a good job of forecasting revenues in modem economics forecasts are eval uated on the basis of whether or not they are rational do the forecasts optimally incorporate all available information this paper develops a method for testing the rationality of state revenue forecasts and applies it to the analysis of data from new jersey massachusetts and maryland one of our main findings is that in all three states the forecasts of own revenues are systematically biased downward tn 1985 the 50 states raised 349 billion in revenues from their own sources and received 84 billion in grants from the federal government u s bureau of the census 1987 p 266 state governments are clearly important players in the u s system of public finance and the efficiency with which they conduct their financial affairs has an important impact on consumer welfare one important determinant of a state s ability to con duct reasonable fiscal policies is the quality of its revenue forecasts sensible deliberations about ex penditures cannot be made in the absence of good forecasts indeed in the presence of con stitutional or statutory provisions for balanced budgets unanticipated changes in revenues can wreak havoc not only on proposals that are sched uled for funding but on plans that have already been put into effect as well in recent months two powerful governors michael dukakis of massachusetts and mario cuomo of new york have suffered major politi cal embarrassments because actual revenues fell substantially short of the predictions in their re spective states such episodes focus attention on the question of whether states do a good job of forecasting revenues in modem economics fore casts are evaluated on the basis of whether or not they are rational do the forecasts optimally incorporate all information that is available at the time they are made although there is a large literature on state revenue forecasting methods that literature focuses mostly on state budgetary institutions forecasts themselves are evaluated only in an informal fashion 1 although the theory and econometric methods of rational expectations have been used to evaluate forecasts made by households and businesses 2 these powerful tools have not been applied to state government fore casts this paper applies these methods to the problem of state revenue forecasting and as an example uses them to analyze data from new jersey massachusetts and maryland the results cast light not only on the question of rationality per se but on issues such as the impact of political factors on forecasts section ii presents the conceptual framework for testing rational expectations the relevant in stitutional issues and data are described in section iii the results are discussed in section iv we find that in all three states forecasts of own rev enues are systematically biased downward section v concludes with a summary

budget institutions and fiscal performance of the brazilian federal government abstract this article aims to assess the impact of federal budget institutions on the primary deficit of the brazilian federal government from 1985 to 2009 a period marked by important changes in these institutions based on the methodology established in the literature on political economy that is linked to the macroeconomic mainstream three sets of budget indices and their respective sub indices are constructed and their behaviour over the period of analysis indicate that the changes made have resulted in institutions that induce greater fiscal discipline regarding the effect of these institutions on the fiscal performance the results allow us to conclude that the institutional changes have contributed to a lower government deficit

political parties and the business cycle in the united states 1948 1984 this paper tests the existence and the extent of a politically induced business cycle in the u s in the post world war ii period the cycle described in this paper is different from the traditional political business cycle of nordhaus it is based on a systematic difference between the monetary policies of the two parties in a model with labor contracts from an explicit optimization problem we derive a system of equations for output and money growth then we successfully test the non linear restriction imposed by the theory on the parameters of the system of equations we cannot reject the hypothesis that money growth has been systematically different under the two types of administration and that this difference contributes to explain output fluctuations

the costs of compliance a cge assessment of canada s policy options under the kyoto protocol canada has committed itself under the kyoto protocol to reduce greenhouse gas emissions between 2008 and 2012 on average by six per cent from the base 1990 level as of 2009 however canada s greenhouse gas emissions are far above its 1990 level which calls for stringent short term policy measures if canada is to meet its legally binding commitment this paper uses a multi region multi commodity static general equilibrium model to quantify the economic impacts of alternative compliance strategies for canada in the context of climate policies undertaken by other kyoto parties the numerical results confirm fears by canadian policymakers of substantial economic adjustment costs should canada fulfill its kyoto commitments solely through domestic action however a rigorous use of the project based cdm on top of international emissions trading could allow canada to live up to its international climate policy commitment at politically much more tolerable costs

assessing long term energy security the case of electricity in the united kingdom there is a growing body of research into the potential security risks and trade offs which may emerge over the long term development of energy systems as part of this body of research this paper aims to develop and demonstrate a set of indicators for assessing the security of long term national electricity scenarios this paper extends the empirical work of existing frameworks by including reliability and cost parameters alongside a range of other important aspects of energy security such as diversity trade and acceptability and by using both qualitative and quantitative indicators without aggregation in order to identify trade offs this paper uses the indicators to assess the energy security implications of three plausible long term scenarios for the uk electricity system the results indicate that a major risk may be experienced by a lack of flexible responsive supply capacity in low carbon electricity pathways reducing overall energy demand is found to be the most beneficial policy for improving energy security in terms of generating benefits in multiple dimensions the paper finds that energy security is often conceptualised as the avoidance of causes of insecurity such as insecure fuel imports but that an equally important aspect of security lies in maximising responses to insecurity for example by increasing the flexibility and responsiveness of both supply and demand

a scenario simulation approach for market power analysis in hydrothermal systems this paper focuses on markets based on physical bilateral contracts combined with a power exchange px the main feature to be analyzed is the behavior of the hydrothermal system where one or more companies have a big reservoir with capacity for inter annual regulation in this work inter annual regulation means the ability of a reservoir to allocate water from consecutive years the use of the reservoirs in a context of a power exchange market with competition is the main objective of this study results on the chilean central interconnected system using stochastic dynamic programming are presented and discussed

majority rule bargaining and the under provision of public investment goods abstract despite evidence that modern democracies systematically shortchange public investment goods relatively little theoretical work exists to explain this phenomenon we build on baron and ferejohn s american political science review 83 4 1989 1181 1206 bargaining model to describe public investments in a setting of budgetary politics specifically we show that underinvestment inherently arises from distributive politics within a majoritarian institution the inability of current majorities to contract with future ones drives a wedge between spending on consumption today and investing for future consumption extensions to the model demonstrate that earmarking future returns to specific players and or detaching consumption from investment decisions yields more efficient levels of public investment

estimating a fiscal reaction function the case of debt sustainability in brazil this article reviews recent trends in fiscal performance in brazil estimates fiscal reaction functions for the consolidated public sector and different levels of government and tests for the sustainability of the public debt dynamics the empirical analysis based on monthly data for the period 1995 2004 suggests that all levels of government react strongly to changes in indebtedness by adjusting their primary budget surplus targets in addition the central government appears to follow a spend and tax policy changes in revenue are affected strongly by expenditure about two thirds of changes in primary spending are offset by higher revenue over the longer term institutions are also found to matter for fiscal sustainability the responsiveness of the sub national fiscal stance to indebtedness as well as that of central government revenue to changes in primary spending appears to have become stronger after 1998 when ceilings on indebtedness were introduced

legislative term limits and state spending supporters of legislative term limits often claim that they will lower state spending levels using fiscal data from 48 states from 1977 to 2001 this paper finds little support for this assertion instead this analysis finds that states with term limits have higher spending levels than states without term limits these results suggest that term limits give legislators greater incentives to deviate from socially optimal fiscal policy by altering the legislative environment in which such policy is formulated

property tax revaluation and tax levy growth abstract jurisdiction wide property revaluation like many administrative reforms may have unintended consequences this paper examines one such potential consequence by pooling 18 year time series for each of 39 massachusetts cities 17 of which revalued and 270 massachusetts towns 202 of which revalued we examine the hypothesis that politicians take advantage of the confusion generated by revaluation and raise property taxes by more than they otherwise would have we observe such a response in cities but not in towns and attribute this difference to differences in their governmental structures

long term energy services security what is it and how can it be measured and valued abstract the paper reviews some recent approaches towards measuring the extent of long term energy security and security externality valuation it starts out to discuss the contextual connotations of notions of energy security in medium to long term time frames and reviews some indicators that have been proposed to quantify it special attention is paid to two of these approaches which the authors helped to develop i e diversity based indices and the supply demand index the paper takes issue with conventional welfare economic approaches that neglect i the scope on the demand side for raising security and ii negative feedback mechanisms of socio political impacts of international rent transfers in fossil fuels exporting countries the concept of energy services security is proposed with a demand side focus this enables application of an integrated approach to gauge the resilience of a society to meet the needs of its population for energy services over longer timescales ahead from various interrelated perspectives propositions are made on the attribution of security externalities to the use of fossil fuels policies and suggestions for further improvements of measures for energy services security

are cash budgets a cure for excess fiscal deficits and at what cost abstract this paper investigates the effect of recent reforms of budgetary institutions in uganda and zambia we argue that cash budgeting has brought clear benefits in terms of improved expenditure control with regard to line ministries contrary to what is often suggested however adoption of a cash budget has not provided a means for top politicians in either country to tie their hands with respect to intervention in fiscal policy decisions in uganda improved fiscal policy outcomes have in fact been achieved as a result of and not in spite of discretionary interventions by top politicians in zambia a strict rule imposing a balanced budget on a monthly basis has proven partially effective due in no small part to international monetary fund imf enforcement but costly in terms of increased volatility of expenditures

the determinants of off budget activity of state and local governments the primary finding of this paper is that the off budget activity of the public sector is significantly and positively related to on budget activity by state and local governments we suggest the following policy implications one there appears to be evidence that the composition of total government activity is related to the relative costs of the alternative avenues of providing governmental activity future research into determining the nature of the relative cost differences may be one useful means of understanding both the composition of government activity as well as its total size two our ability to measure the true size of public sector participation in the economy must go well beyond our attempt here while we have presented information on one of the important hidden elements of public sector participation we are still a long way from effectively incorporating similar data on legislation regulations and so forth into our empirical tests further research into these issues is clearly warranted

indicators for energy security the concept of energy security is widely used yet there is no consensus on its precise interpretation in this research we have provided an overview of available indicators for long term security of supply sos we distinguished four dimensions of energy security that relate to the availability accessibility affordability and acceptability of energy and classified indicators for energy security according to this taxonomy there is no one ideal indicator as the notion of energy security is highly context dependent rather applying multiple indicators leads to a broader understanding incorporating these indicators in model based scenario analysis showed accelerated depletion of currently known fossil resources due to increasing global demand coupled with increasing spatial discrepancy between consumption and production international trade in energy carriers is projected to have increased by 142 in 2050 compared to 2008 oil production is projected to become increasingly concentrated in a few countries up to 2030 after which production from other regions diversifies the market under stringent climate policies this diversification may not occur due to reduced demand for oil possible benefits of climate policy include increased fuel diversity and slower depletion of fossil resources

an international assessment of energy security performance energy security has in recent years grown as a salient policy and political issue to better understand energy security and sustainability concerns this study s main objective is to present an energy security index which measures national performance on energy security over time based on three years of research involving interviews surveys and an international workshop this study conceptualizes energy security as consisting of the interconnected factors of availability affordability efficiency sustainability and governance it then matches these factors with 20 metrics comprising an energy security index measuring international performance across 18 countries from 1990 to 2010 it offers three case studies of japan top performer laos middle performer and myanmar w orst performer to provide context to the index s results it then presents four conclusions first a majority of countries analyzed have regressed in terms of their energy security second despite the near total deterioration of energy security a great disparity exists between countries with some clear leaders such as japan third tradeoffs exist within different components of energy security fourth creating energy security is as much a matter of domestic policy from within as it is from foreign policy without

property taxation as incentive for cost control empirical evidence for utility services in norway recent theoretical research suggests that property taxation has incentive effects that can help control cost problems in the public sector the institutional setting in norway allows this first empirical investigation of the incentive effect of property taxation since we can separate between local governments with and without property tax the raw data of the variation in the unit cost level for utilities show that local governments with property tax have about 20 lower unit cost using both linear regression and propensity score matching we are not able to wash out the difference in unit costs our interpretation is that having a visible and controversial local tax related to property stimulates voter interest in local government activities and thereby may help cost control the incentive effect is of interest for the design of fiscal federalism

bohn s test of fiscal sustainability of the american state governments the dramatic fall in state revenues during the great recession and the resultant large budget deficits accentuated concerns about state fiscal sustainability i employ a model based approach proposed by bohn 1998 to test for sustainability in this approach a positive and significant reaction of the ratio of primary surplus ratio s to lagged debt constitutes a sufficient condition for sustainability based on a panel of 48 contiguous states 1961 2008 and several model specifications i find robust evidence in favor of sustainability further analysis suggests that the adjustment of the components of s to debt is asymmetric with the revenue side bearing a heavier burden than the spending side the response of s is also found to be asymmetric with respect to the level of debt finally the magnitude of the response is larger in states with a higher degree of fiscal stringency in general and own revenue and no deficit carryover provisions in particular

public pension accounting rules and economic outcomes we find a negative association between a state s fiscal condition and the use of discretion in applying governmental accounting standards board gasb rules to understate pension funding gaps we also find that the use of discretion is negatively associated with states decisions to increase taxes and cut spending in addition we find that the funding gap understatement is positively associated with higher future labor costs importantly this association is primarily attributable to the gasb methodology which systematically understates the funding gap this suggests that the gasb approach is associated with policy choices that have the potential to exacerbate fiscal stress

economic and political determinants of fee income in norwegian local governments this paper presents an empirical analysis of the determinants of fee income in norweigan local governments the point of departure is a representative voter model emphasizing the effects of pure economic variables the benchmark model is extended by including two aspects of the political system ideology and strength it is evident that increased socialist influence increases the size of the local public sector while a strong political leadership has an advantage in opposing pressure to increase spending

political alternation and the fiscal deficits abstract this paper proposes the index of political alternation as a long run measure of political competition it expands the empirical literature on political determinants of fiscal performance and presents evidence for argentina that amplifications of governments planning horizon enhance fiscal performance

tax innovation in the states capitalizing on political opportunity this paper assesses the factors that prompt states to adopt taxes during the twentieth century we test five explanations of state tax innovation derived from the literature economic development fiscal health election cycle party control and regional diffusion using event history analysis a pooled cross sectional time series technique while little support is found for the economic development and party control explanations our empirical results are highly consistent with a political opportunity explanation of state tax adoptions 1 the presence of a long time until the next election 2 the existence of a fiscal crisis and 3 the presence of neighboring states that have previously adopted a tax all create opportunities for politicians to shield themselves from the political costs of supporting a tax increase and are all shown by empirical analysis to increase the probability of a tax adoption this empirical evidence is consistent across different tax instruments and different periods of analysis throughout the twentieth century

fiscal transfers and fiscal sustainability we examine whether the u s and german state governments pursue sustainable fiscal policies taking into account fiscal transfers using panel data techniques we investigate whether the debt to gdp ratio had a positive influence on the primary surplus bohn model we show that including excluding fiscal transfers changes the results if fiscal transfers are not included in the primary surplus the test results do not indicate that the u s and german state governments pursued sustainable fiscal policies our results also suggest that fiscal transfers were positively related to debt these findings indicate that intergovernmental transfers have implicitly subsidized debts

direct democracy and public employees in the public sector employment may be inefficiently high because of patronage and wages may be inefficiently high because of the strength of public employee interest groups this paper explores whether the initiative process a direct democracy institution of growing importance can control these political economy problems as proponents and some research suggests based on a sample of 650 cities in 2000 i find that when public employees are not allowed to bargain collectively and patronage may be a problem initiatives appear to cut employment but not wages when public employees are allowed to bargain collectively driving up wages the initiative appears to cut wages by about 4 percent but has no measurable effect on employment the employment cutting result is quite robust surviving a number of robustness tests the wage cutting result survives some but not all robustness tests

fiscal rules and twin deficits the link between fiscal and external balances this paper investigates the relationship between countries fiscal balances and current accounts with an emphasis on the role of fiscal rules the direct effect of fiscal policy on the current account via aggregate import demand is potentially amplified by indirect effects materializing through interest rate effects and inter generational transfers that reduce savings on the other hand the implied positive relation between fiscal and external balances is potentially attenuated by offsetting changes in savings through ricardian equivalence considerations we expect this attenuation effect to be stronger in countries with more stringent fiscal rules and test this hypothesis using a panel of 73 countries over the period 1985 2012 as previous studies we find a positive effect of fiscal balances on the current account supporting the twin deficit hypothesis however the effect of fiscal balances on the current account depends on the stringency of fiscal budget balance or debt rules in place it is reduced by one third on average and virtually eliminated for countries with the most stringent fiscal rules authors abstract

the subnational politics of economic adjustment provincial politics and fiscal performance in argentina existing research has failed to address the impact of subnational politics on economic adjustment this article attempts to fill this gap by outlining theoretical reasons for anticipating policy divergences across levels of government and by offering three hypotheses to account for variation at the subnational level the authors explore these ideas on the basis of the argentine experience the study traces the impact of subnational policy on argentine economic adjustment and tests hypotheses about subnational policy variation on the basis of provincial fiscal data the authors findings underline the importance of subnational policy choice for national performance and suggest a revised understanding of the role of political competition in the economic adjustment process the authors find considerable evidence that interactions between party competition and the structure of the public sector shape provincial fiscal performance and thereby condition the capacity for economic adjustment at the national level

world crude oil and natural gas a demand and supply model abstract this paper examines world markets for crude oil and natural gas over the period 1918 1999 it analyzes the time series properties of output and prices and estimates demand and supply elasticities during 1918 1973 and 1973 1999 oil and gas prices were stable during the first period they became volatile afterwards reflecting deep changes in the market structure following the oil shock in 1973 demand price elasticities were too low however demand income elasticities were high supply price elasticities were also too low the elasticity estimates help to explain the market power of the oil producers and price volatility in response to shocks and corroborate elasticity estimates in energy studies

defining the government s debt and deficit defining the government s debt and deficit although the budget deficit and the public debt feature prominently in political debate and economic research there is no agreement about how they should be measured they can be defined for different sets of public institutions including the nested sets corresponding to central government general government and the public sector and for any definition of government there are many measures of the debt and deficit including those generated by four kinds of accounts cash financial full accrual and comprehensive which can be derived from four nested sets of assets and liabilities each debt and deficit measure says something about public finances but none tells the whole story each is also vulnerable to manipulation and is likely to be manipulated if it is subject to a binding fiscal rule or target narrow definitions of government encourage the shifting of spending to entities outside the defined perimeter of government narrow definitions of debt and deficit encourage operations involving off balance sheets assets and liabilities while broad measures are susceptible to the mismeasurement of on balance sheet assets and liabilities reviewing the literature on these issues the paper concludes that governments should publish several measures of the debt and deficit in a form that clearly reveals their interrelationships

the political economy of fiscal deficits a survey this paper surveys recent literature both theoretical and empirical regarding political explanations for fiscal deficits political economy suggests conflicts of interest may lie behind the emergence of deficits 1 opportunistic politicians generate deficits to win elections even in conflict with general welfare 2 conflicts of interests between politicians partisan preferences create incentives for at least some incumbents to run deficits and 3 conflicts of interest between different social groups or regions generate tensions in the allocation of government resources leading to overspending this paper reviews these different strands of the literature it also covers contributions that highlight the crucial role of budget institutions in determining the extent to which the political motivations to generate deficits are indeed translated into poor fiscal outcomes promising avenues for future research are highlighted

market power assessment and mitigation in hydrothermal systems the objective of this paper is to investigate market power issues in bid based hydrothermal scheduling initially market power is simulated with a single stage nash cournot equilibrium model market power assessment for multiple stages is then carried through a stochastic dynamic programming scheme the decision in each stage and state is the equilibrium of a multi agent game thereafter mitigation measures specially bilateral contracts are investigated case studies with data taken from the brazilian system are presented and discussed

strategic bidding in an energy brokerage this focus of this paper is to present a framework in which strategies may developed for the individual participants in an energy brokerage such a framework is expected to be important with the increasing interest in electricity market structures such as the energy brokerage that deregulation has produced to illustrate the process of strategic bidding a simple suboptimal bidding strategy is presented with the aid of a numerical example the bidding strategy must be suboptimal because of the amount of unknown information about the other bidders further tuning of this strategy will be required before application to realistic scenarios

the unexpected challenges of using energy intensity as a policy objective examining the debate over the apec energy intensity goal aims energy intensity energy demand per unit of economic output is one of the most widely used indicators of energy efficiency in energy policy discussions yet its application in real world policymaking can be surprisingly problematical this paper aims to provide guidance to governments and organizations considering using energy intensity as a policy objective scope in 2007 the apec community adopted then in 2011 revised an apec region wide energy intensity improvement goal this paper presents a case study of that experience focusing on three key lessons learned these lessons are not original findings however none of them have received the recognition they deserve and consequently they came as a surprise to many of those involved in apec s policy discussions conclusions the three lessons are as follows 1 energy intensity improvement is happening surprisingly quickly but not quickly enough to meet the world s energy challenges 2 it is difficult to find a definition of energy intensity that can make it suitable for use as an indicator of regional energy efficiency 3 whether the gdp s of individual economies are converted to common currency using market exchange rates or purchasing power parity ppp can dramatically change regional energy intensity improvement calculations