war revolution and the growth of the coercive state modern states are powerful resilient institutions the most durable of which have established and consolidated their rule through conquest revolution and war successful involvement in violent conflict leads to the development of militarized and police states and reinforces elite political cultures that favor the use of coercion in future disputes if warfare has unfavorable outcomes elites will prefer noncoercive strategies in the future from these and other propositions are derived models of the processes by which garrison states emerge and persist in autocracies and democracies states with high material capabilities are more likely to become garrison states than weaker states which tend to avoid international conflict and to rely on accommodation in internal conflicts states with low political capabilities are susceptible to revolutionary overthrow and the establishment of revolutionary garrison states the role of diversion of domestic conflicts to the external environment also is considered

institutional selection in international relations state anarchy as order by the end of the medieval era three new competing institutions attempted to capture gains from trade and reduce feudal particularism sovereign territorial states cityleagues and city states by the middle of the seventeenth century city leagues and city states had declined markedly territorial states survived as the dominant form because they were able to reduce free riding lower transaction costs and credibly commit their constituents the selection process took place along three dimensions first sovereign territorial states proved competitively superior in the economic realm second states increasingly recognized only other sovereign territorial states as legitimate actors in the international system third other actors defected to or copied the institutional makeup of sovereign territorial organization the emergence of discrete territorial units in which only sovereign authorities represented their citizens as the predominant type of organization in international affairs created a new solution to the problem of markets and hierarchies

the rule of law and economic growth where are we summary it is widely assumed that the rule of law is essential for economic growth however the rule of law is clearly a multidimensional concept encompassing a variety of discrete components from security of person and property rights to checks on government and control of corruption we review the theory underlying these different causal mechanisms linking the rule of law to economic growth and provide an introduction to some outstanding measurement issues we find that the correlation among different components of the rule of law concept are not tight among developing countries and that some inferences about the effects of property rights protection may not be warranted

estimating income poverty in the presence of measurement error and missing data problems reliable measures of poverty are an essential statistical tool for public policies aimed at reducing poverty in this article we consider the reliability of income poverty measures based on survey data which are typically plagued by missing data and measurement error neglecting these problems can bias the estimated poverty rates we show how to derive upper and lower bounds for the population poverty rate using the sample evidence an upper bound on the probability of misclassifying people into poor and nonpoor and instrumental or monotone instrumental variable assumptions by using the european community household panel we compute bounds for the poverty rate in 10 european countries and study the sensitivity of poverty comparisons across countries to missing data and measurement error problems supplemental materials for this article may be downloaded from the jbes website

macroeconomic features of the french revolution this paper describes aspects of the french revolution from the perspective of theories about money and government budget constraints we describe how unpleasant fiscal arithmetic gripped the old regime how the estates general responded to reorganize france s fiscal affairs and how fiscal exigencies impelled the revolution into a procession of monetary experiments ending in hyper inflation

high public debt the italian experience introduction is there a public debt problem in italy luigi spaventa the end of large public debts alberto alesina monetary and fiscal policy coordination with a high public debt guido tabellini the management of public debt and financial markets marco pagano capital controls and public finance the experience in italy alberto giovannini public debt and households demand for monetary assets in italy andrea bollino and nicola rossi

the economic development democratization relationship does the outside world matter the relationship between economic development and democratization offers a central focus in linking comparative and international politics analysts agree that economic development facilitates democratization but that the relationship is considerably less than perfect should advocates of the democratic peace argument prove to be correct in emphasizing the role of regime type in pacifying international politics an obvious question becomes what else drives democratization besides economic development in this article the authors explore the relationship between domestic development in the form of economic growth and democratization and international conditions they suggest that a number of international factors such as external threat conflict and trade openness can aid or abet democratization and economic growth to systematically analyze one facet of this proposition they use both robust regression and generalized estimating equations and find that the international environment significantly al

the theory of sovering debt and spain under philip ii this paper examines lending by a genoese led cartel to philip ii of spain 1556 98 from the perspective of theory on sovereign debt models in this literature suggest that the genoese linked specie deliveries from spain to the low countries to lending in order to create a penalty to enforce their loans the king tried to renege the genoese applied the penalty and the king ultimately repaid when the episode is used to examine theory the crown s observed debt ceiling and estimates of its cost of enduring the penalty and its ability to repay are in line with predctions of bulow and rogoff the nature of the penalty has the flavor of gole and kehoe s model its observation on the path of play is suggestive of atkeson s model

government growth in the twenty first century public choice explanations of government growth fall into three main categories budget maximization theories rational choice models and path dependent models like the ratchet hypothesis the strengths and weaknesses of these theories as explanations for government growth are considered along with some facts about the actual growth of government to conjecture about its trajectory in the twenty first century government size seems to have been constrained in the past primarily by its ability to raise revenue growth rates in the new century thus appear to depend on factors constraining government s ability to continue to expand the tax base

factors underlying the growth of local government in the 19th century united states early in the 19th century local governmentsspent less than either the federal or stategovernments by the end of the 19thcentury local governments spent more thanthe federal and state governments combined this growth is obviously related to thegrowth of cities but cities continued togrow in the 20th century while the localgovernment share of total governmentexpenditures fell so the growth of citiescannot be the complete answer anexamination of expenditures and revenues intwo cities boston and baltimore suggests that no one component ofexpenditures was responsible for increasesin total spending rather it appears thatthe primary causal factor was revenuegrowth cities rely heavily on propertytaxes and the increasing value of taxableproperty allowed cities to raise increasingamounts of revenue leading to increasedgovernment spending

efficiency of american states after implementation of the patient protection and affordable care act ppaca from 2014 to 2017 abstractwe assess the impact of healthcare efficiency among u s states after implementation of the ppaca a malmquist index decomposes productivity changes of state healthcare systems since 2014

cities constitutions and sovereign borrowing in europe 1274 1785 this article investigates the politics of sovereign borrowing in europe over the very long run i consider three alternative hypotheses regarding the sources of borrower credibility according to the first european states with constitutional checks on executive authority found it easier to obtain credit at low interest rates than did states that lacked such constraints my second hypothesis focuses on state type city state versus territorial state and the way in which this may have influ enced the balance of political power between owners of land and owners of capital in a society this hypothesis suggests that after controlling for other factors one should observe that city states in europe found it easier to borrow than did larger territorial states and that these city states paid lower interest rates on their debt finally my third hypothesis suggests that borrower credibility depended on the simultaneous presence of both constitutional checks and balances and a city state when one con siders a broad sample of cases over a long time span there is strong support for the proposition involving city states and merchant power but less support for the argu ment that constitutional checks influenced credibility regardless of state type city state or territorial state there is however some empirical evidence of an interaction effect whereby constitutional constraints on rulers made city states particularly cred ible as borrowers my results are robust to a number of controls for alternative deter minants for sample selection bias and for the endogeneity of city state development one of the most frequently cited recent arguments about european state develop ment involves the effect of constitutional checks and balances on economic per formance in areas where political institutions placed constraints on rulers scholars have argued that property rights were more secure which helped stimulate invest ment innovation and growth authors have suggested that checks and balances also facilitated long term borrowing by governments since creditors found it less likely that constrained rulers would default on loans easier access to loans at low interest rates gave some states an advantage in international competition the con trasting cases of great britain and france provide a popular illustration of the

the origins of state capacity property rights taxation and politics economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes this paper develops a framework where policy choices in market regulation and taxation are constrained by past investments in legal and fiscal capacity it studies the economic and political determinants of such investments demonstrating that legal and fiscal capacity are typically complements the results show that among other things common interest public goods such as fighting external wars as well as political stability and inclusive political institutions are conducive to building state capacity some correlations in cross country data are consistent with the theory

income distribution functions with disturbances abstract recent exercises in the maximum likelihood estimation of income distribution functions provide goodness of fit tests which lead to the rejection of most models this result is usually ignored on the ground that the test is too strict since it allows for sampling variation only if income distribution functions like other econometric models are not meant to hold exactly we should introduce disturbances in the statistical model here we treat observed income as the sum of a systematic component with a specific two parameter distribution pareto gamma or lognormal and an independent normal error the ensuing models fit conventional u s income data much better than their traditional counterparts but they still fail a goodness of fit test

poverty and inequality under income and price dispersions many policies simultaneously affect the distribution of prices and incomes in the economy moreover a bias may occur when there is a stochastic relationship between prices and incomes and this relationship is being ignored it is therefore important to dispose of an analytical framework for welfare analysis that could account for changes in this joint distribution how can the joint influences of price and income distributions on poverty and inequality indicators be analysed we offer a method to deal with this problem by using parametric formulae of poverty and inequality measures we propose statistical indicators for the levels variabilities and a statistical link of price indices and nominal living standards these indicators are consistent with an approximation of the problem based on a bivariate lognormal distribution of price indices and nominal living standards our analysis provides hints about the social welfare impact of economic shocks or policies affecting levels variabilities and correlation of prices and incomes intuitive insights are obtained while using arithmetic means and variances instead does not lead to illuminating results the role of price and income variabilities for poverty and inequality is more complex than generally expected with the possibility of several variation regimes empirical investigation of these statistics would guide social policies

the democratic advantage institutional foundations of financial power in international competition despite their presumed liabilities institutions associated with democracy serve as a source of power in prolonged international competition by increasing the financial resources that states can bring to bear the theory of sovereign debt suggests that a state s ability to raise money through public borrowing is enhanced when debtholders have mechanisms for sanctioning state leaders in the event of default institutions associated with liberal government provide such mechanisms all other things being equal states that possess these institutions enjoy superior access to credit and lower interest rates than do states in which the sovereign has more discretion to default unilaterally liberal states can not only raise more money from a given economic base but can also pursue tax smoothing policies that minimize economic distortions the ability to finance competition in a manner that is consistent with long term economic growth generates a significant advantage in prolonged rivalries these claims are explored by analyzing the anglo french rivalry 1688 1815 and the cold war

global wars public debts and the long cycle the explanation of the rise and fall of the world system s leading powers in terms of uneven economic development tends to overlook the role of the creation and management of public credit and national debts prior to 1815 the netherlands and great britain owed a significant proportion of their respective victories over the larger and wealthier states of spain and france to the development of competitive financial capabilities winning however leads to higher absolute debt burdens which prior to 1945 encouraged postwar reductions in governmental expenditures in this fashion world leaders have contributed to the erosion of their preponderant capability positions before the emergence of international rivals these ideas are elaborated within the context of george modelski s long cycle of world leadership theory and through a brief review of war related financial problems between 1500 and 1815 and the consequent development of national debts the longitudinal analysis of british and american public debt data provides collaborating empirical support

powerful pacifists democratic states and war democracies are less likely to fight wars with each other they are also more likely to prevail in wars with autocratic states i offer an explanation of this syndrome of powerful pacifism drawn from the microeconomic theory of the state state rent seeking creates an imperialist bias in a country s foreign policy this bias is smallest in democracies where the costs to society of controlling the state are relatively low and greatest in autocracies where the costs are higher as a result of this bias autocracies will be more expansionist and in turn war prone in their relations with each other where the absence of this imperialist bias is manifest the relative pacifism of democracies appears in addition democracies constrained by their societies from earning rents will devote greater absolute resources to security enjoy greater societal support for their policies and tend to form overwhelming countercoalitions against expansionist autocracies it follows that democracies will be more likely to win wars

central banks at war war is expensive troops must be equipped and weapons must be procured when the enormous borrowing requirements of war make the sovereigns credibility problem more difficult central banks enhance a government s ability to borrow by being the sole direct purchaser of government debt the central bank increases the effective punishment that can be imposed on the government for defaulting on the marginal lender this increases lenders confidence that the government will be punished in case of default making lenders willing to purchase the debt at a lower rate of interest the sovereign dependent on the low borrowing costs offered by the central bank has an incentive to retain the bank data covering the nineteenth and early twentieth centuries reveal that possessing a central bank lowers the sovereign s borrowing costs particularly during times of war

cross country comparisons of technical efficiency of health production a demonstration of pitfalls it has been proposed that cross country comparisons of the technical efficiency of health production estimated using data envelopment analysis dea have useful applications for policy makers in theory such an analysis utilizes measures of the socioeconomic determinants of health relevant to all social policy not just health policy using oecd and who data this article critically analyses a number of outstanding theoretical questions regarding the use of dea in this setting it concludes that until such questions are addressed the resultant implications for policy will be based on misleading information

the peaceful conspiracy bond markets and international relations during the pax britannica this article provides foundations to polanyi s famed argument that monopoly power in the global capital market served as an instrument of peace during the pax britannica 1815 1914 our perspective is novel we focus on the role of intermediaries and certification we show that when information and enforcement are imperfect there is scope for the endogenous emergence of prestigious intermediaries who enjoy a monopoly position and as a result control government actions they can implement conditional lending they subject the distribution of credit to the adoption of peaceful policies prestigious intermediaries act that way because of their concern with maintaining an unblemished track record when wars increased risks of default our analysis which brings together insights from different disciplines provides a significant extension to and departure from recent research on how countries accumulate reputational capital

war international finance and fiscal capacity in the long run in this article i revisit the relationship between war and state making in modern times by focusing on two prominent types of war finance taxes and foreign loans financing war with tax money enhances the capacity to assess wealth and monitor compliance namely fiscal capacity tax financed war facilitates the adoption of power sharing institutions which transform taxation into a non zero sum game carrying on the effect of war in the long run financing war with external capital does not contribute to long term fiscal capacity if borrowers interrupt debt service and as part of the default settlement war debt is condoned or exchanged for nontax revenue the empirical evidence draws from war around the world as early as 1816 results suggest that globalization of capital markets in the nineteenth century undermined the association between war state making and political reform

the inequality of actual incomes and earning capacities between households in europe abstract in this paper the distributions of net household income in seven european countries belgium denmark france great britain italy the netherlands and west germany are considered the analysis is made by means of inequality measurement in terms of the variance of logincomes and the theil index t both these measures are so called decomposable inequality measures comparisons and decompositions are presented with respect to several socio economic characteristics for each country the differences between countries are also discussed furthermore a new concept is introduced the earnings inequality index which is intended to measure earnings differences between occupations and other social characteristics irrespective of the actual numbers in those groups the data on which we base our estimates are from a survey carried out in seven european countries in october 1979

war making and state making governmental expenditures tax revenues and global wars addressing the disputed relationship between war and the expansion of governmental expenditures and revenues box tiao intervention models are applied to a number of british 1700 1980 united states 1792 1980 french 1815 1979 and japanese 1878 1980 spending and taxation series distinguishing between global and interstate wars the more intensive and extensive bouts of warfare global wars tend to bring about abrupt permanent impacts in contrast to the temporary changes associated with most interstate wars the observed displacements are reflected in both war related and nonwar related types of expenditure and are also observed before 1900 although our findings are not universally applicable and are subject to various other qualifications they may be interpreted in general as reinforcing the need for an appreciation of the persistent centrality of war especially global war in the discontinuous growth and expansion of the modern state

postwar british economic growth and the legacy of keynes the policies used by britain to finance world war ii represented a dramatic departure from the policies used to finance earlier wars and were very different from the policies used by the united states during the war following keynes s recommendations britain taxed capital income at a much higher rate than the united states during the war and for much of the postwar period we analyze quantitatively the policies designed by keneys using an endogenous growth model and the ncoclassical growth model we also evaluate the implications of tax smoothing policies we find that the welfare costs of keynes s policies were very high relative to a tax smoothing policy and argue that britain s poor macroeconomic performance in the early postwar period is a consequence of the high tax rates levied on capital income

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

different paths to the modern state in europe the interaction between warfare economic structure and political regime theoretical work on taxation and state building borrows heavily from early modern european experience while a number of european states increased centralized tax revenues during this period for others revenues stagnated or even declined and these variations have motivated alternative arguments for the determinants of fiscal and state capacity this study reviews the arguments concerning the three determinants that have received most attention namely warfare economic structure and political regime and tests them by making use of a new and comprehensive tax revenue dataset our main finding is that these three determinants worked in interaction with each other specifically when under pressure of war it was representative regimes in more urbanized commercial economies and authoritarian regimes in more rural agrarian economies that tended to better aggregate domestic interests towards state building

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

comparing the strength of nations the political capacity of advanced societies is measured we show that politically capable governments can mobilize vast resources from the society under the stress of war but totalitarian democr

democracy and financial crisis existing scholarship attributes various political and economic advantages to democratic governance these advantages may make more democratic countries prone to financial crises democracy is characterized by constraints on executive authority accountability through free and fair elections protections for civil liberties and large winning coalitions these characteristics bring important benefits but they can also have unintended consequences that increase the likelihood of financial instability and crises using data covering the past two centuries i demonstrate a strong relationship between democracy and financial crisis onset on average democracies are about twice as likely to experience a crisis as autocracies this is an empirical regularity that is robust across a wide range of model specifications and time periods

comparative democracy the economic development thesis in comparative politics an established finding that economic development fosters democratic performance has recently come under challenge we counter this challenge with a dynamic pooled time series analysis of a major but neglected data set from 131 nations the final generalized least squares autoregressive moving averages estimates n 2 096 appear robust and indicate strong economic development effects dependent in part on the nation s position in the world system for the first time rather hard evidence is offered on the causal relationship between economics and democracy according to granger tests economic development causes democracy but democracy does not cause economic development overall the various tests would seem to advance sharply the modeling of democratic performance

does high income promote democracy the authors construct a statistical model with which to test whether the regularity that democracy is more commonly found among wealthy countries stems from a democratizing effect of high income or is due entirely to other factors such as the historical context various features of the institutional setting and simultaneity with the process of leadership change even after correcting for these many other influences the democratizing effect of income remains as a statistically significant factor promoting the emergence of democratic political institutions the authors go on to find that leaders risks of losing power rise during their time in office and that these risks are higher in more democratic countries the authors confirm the finding by burkhart and lewis beck that the democracy promoting effect of income is stronger among the european countries they suggest that high income has a more powerful democratizing effect among the southern european countries because it interacts with pressure from major trading partners to democratize this suggests a revaluation of policies designed to foster the replacement of authoritarian regimes by democratic ones through free trade

economic dependence and political democracy a cross national study this study critically examines the widely held hypothesis that a simple inverse relationship exists between economic dependence and political democracy a recent study presenting empirical evidence in support of this simple hypothesis is first criticized on methodological grounds a reanalysis of the author s data which takes these criticisms into account fails to confirm the author s original findings the simple hypothesis is then retested using other measures of economic dependence and democracy these analyses also fail to confirm the simple hypothesis finally an alternative theoretical framework for viewing the relationship between economic dependence and political democracy is developed based on the work of o donnell cordoso skidmore and kaufman although this framework is not empirically tested here it serves to highlight the weak theoretical foundation that underlies the simple hypothesis

testing for the government s intertemporal budget restriction in brazil during 1823 1889 this article tests whether the government s intertemporal budget restriction was fulfilled during the brazilian imperial period 1823 1889 to accomplish this newly developed tests for cointegration with unknown structural breaks are applied it is found that government spending and government revenue are cointegrated if the effect of two unknown structural breaks is taken into account the estimated parameter vector reveals that the one by one relationship that is required for solvency does not prevail for the sub periods before and after the first break however it prevails for the sub period after the second break we interpret these findings as empirical support for the long run government solvency in brazil at the end of the imperial period

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

sovereign states bondholders committees and the london stock exchange in the nineteenth century 1827 68 new facts and old fictions this paper unpacks the role of foreign bondholders committees in influencing market access following a default during the era before the creation of the british corporation of foreign bondholders cfb in 1868 i argue that many ideas about this period need to be revisited in particular my evidence which uses archival work to describe market microstructures shows the importance of the london stock exchange lse as a court of arbitration i show how the lse general purpose committee set up a system of collective action clauses requiring majority agreement among bondholders to permit market access i argue that unlike what research has argued thus far this created powerful incentives for bondholders to get organized as they did previous models and historical lessons need to be recast copyright 2013 oxford university press

the kantian peace the pacific benefits of democracy interdependence and international organizations 1885 1992 the authors test kantian and realist theories of interstate conflict using data extending over more than a century treating those theories as complementary rather than competing as the classical liberals believed democracy economic interdependence and international organizations have strong and statistically significant effects on reducing the probability that states will be involved in militarized disputes moreover the benefits are not limited to the cold war era some realist influences notably distance and power predominance also reduce the likelihood of interstate conflict the character of the international system too affects the probability of dyadic disputes the consequences of having a strong hegemonic power vary but high levels of democracy and interdependence in the international system reduce the probability of conflict for all dyads not just for those that are democratic or dependent on trade

technical progress inefficiency and productivity change in u s banking 1984 1993 studies often find that on average u s commercial banks are quite inefficient and the authors find that banks became more technically inefficient between 1984 and 1993 from a new decomposition of the malmquist productivity index into changes in pure technical and scale efficiency as well as both pure technical changes and changes in scale of technology they find that much of the inefficiency increase can be attributed to the general failure of banks to adopt technological improvements made by a few banks that advanced the efficient frontier small banks experienced especially large decreases in both efficiency and productivity

integrating and testing models of rivalry duration theory previously separate explanations of rivalry termination based in political shocks security and domestic politics can be integrated in a single model of bargaining between rational decision makers who have multiple goals hypotheses from the previously separate models should be tested together hypotheses security concerns issue salience democracy and democratization regime change and political shocks affect the probability of rivalry termination and in turn rivalry duration duration dependence may also affect rivalry duration methods a parametric hazard model with a weibull specification and time varying covariates is estimated on a data set of sixty three enduring rivalries generated from the latest militarized interstate dispute data results domestic political factors and issue salience are the most likely causes of rivalry termination rivalries also appear strongly and positively duration dependent meaning that the hazard rate in rivalries increases over time and thus that rivalry termination tends to accelerate as rivalries continue findings on political shocks and security concerns are sensitive to operationalization some causal relationships appear to differ between preand post wwii rivalries

welfare measurement and measurement error the approximate effects of measurement error on a variety of measures of inequality and poverty are derived they are shown to depend on the measurement error variance and functionals of the error contaminated income distribution but not on the form of the measurement error distribution and to be accurate within a rich class of error free income distributions and measurement error distributions the functionals of the error contaminated income distribution that approximate the measurement error induced distortions can be estimated so it is possible to investigate the sensitivity of welfare measures to alternative amounts of measurement error and when an estimate of the measurement error variance is available to calculate corrected welfare measures the methods are illustrated in an application using indonesian household expenditure data

war and the economic growth of major powers as part of an ongoing analysis of the expansion of the international system s major powers this study examines the net impact of warfare on the economic growth of five of the system s leading state actors since 1700 a review of earlier efforts suggests the technical utility of box tiao intervention techniques it is also important to distinguish between the historical impacts of global and interstate wars as hypothesized the impact of war on economic growth is primarily temporary however the effects of interstate wars are statisticaly insignificant while global wars tend to create significant impacts the implications of these findings are discussed in terms of the lack of attention allocated to war consequences the theoretical reluctance to differentiate between types of warfare and the longer term relationships between economic and political effects of warfare

the labeling effect of a child benefit system child benefit systems exist in many countries while they show a lot of differences in terms of eligibility rules amounts involved and implementation tax deduction tax credit or direct benefit the common motivation for their existence is to increase children s welfare in the dutch child benefit system the case i focus on in this paperone of the parents usually the mother is entitled to an untaxed child benefit amount which only depends on the child s age and the number of children in the household thus child support does not depend on household income marital status or labor market status as a result child benefit is exogenous to the household given the presence of children this is in contrast with the situation in many other countries including germany france the united kingdom and the united states where government provided child support is partly means tested see jonathan bradshaw et al 1993 in the netherlands child benefit is generally a nonnegligible addition to the household income the median share of child benefit in the total net income of households with children is 8 percent on the national level expenditures on child benefits amount to 1 2 percent of gnp the use of the child benefit is completely at the discretion of the parent there are no legal requirements that a certain amount be spent on particular goods or services nor does the government provide any guidelines regarding expenditure on children a policy question that arises is to what extent children benefit from child benefits standard microeconomic demand theory allows no role for effects of the composition of income given the fungibility of income sources it is only the sum of income components that is relevant in explaining expenditure patterns thus within that framework the answer would be that the marginal propensity to consume child goods from one guilder of child benefits is no different than from one guilder of any other income source in the more general class of gametheoretic models of household behavior however the composition of household income will generally affect expenditure patterns see e g shelly j lundberg and robert a pollak 1993 and martin browning et al 1994 if fathers and mothers have different preferences and mothers have control over child benefits the effect of child benefits on expenditures will differ from the effect of other income sources lundberg et al 1997 provide empirical evidence showing that a transfer of control over child benefits from fathers to mothers in the united kingdom due to a change in legislation resulted in a significant increase in expenditures on child clothing daniela del boca and christopher j flinn 1994 have analyzed the effect of income composition on expenditure decisions of divorced mothers they find that the coefficients associated with child support and alimony income differ from those for other income in engel curves for expenditures on childspecific goods their results can be explained in terms of a noncooperative nash model in which the child support transfer decisions of the noncustodial father and the expenditure decisions of the mother are determined simultaneously in contrast to del boca and flinn s analysis in which child support is a decision variable the present paper focuses on the possible differential effect of government provided child support which is truly exogenous in this paper i analyze the effects of child benefits on expenditures by running regressions in which child benefit enters as a separate explanatory variable the enipirical analysis is based on a time series of 17 cross section consumer expenditure surveys in the netherlands covering the period 1978 through 1994 it is important to note that in a single cross section it department of economics university of groningen p o b 800 9700 av groningen the netherlands e mail p kooreman eco rug nl i am indebted to two anonymous referees for constructive comments helpful comments were also provided by rob alessie maarten allers chris bojke werner de bondt bert schoonbeek and tom wansbeek i thank vincent linderhof for organizing the data financial support was provided by the dutch organization for scientific research nwo homes project grant

the democratic peace and a sequential reciprocal causal arrow hypothesis one of the democratic peace puzzles is the question of whether and to what extent the democracy peace relationship underestimates the possibility that peace precedes democracy the reversed causal arrow hypothesis from a war making state making perspective democratization needs to be viewed as a partial function of external threat and domestic power concentration all three variables are found to be interrelated as predicted and related in turn to the external conflict behavior of major powers from 1816 to 1992 these monadic findings however do not appear to negate the dyadic relationship between democratization and selectively reduced conflict behavior in sum there is substantial support for the reversed causal arrow hypothesis but it does not render the regime type conflict behavior relationships spurious rather it enriches the understanding of the context in which democratization has emerged to have some effect on international politics

robust nonparametric quantile estimation of efficiency and productivity change in u s commercial banking 1985 2004 this article uses a new nonparametric unconditional hyperbolic order quantile estimator to construct a hyperbolic version of the malmquist index unlike traditional nonparametric efficiency estimators the new estimator is both robust to data outliers and has a root n convergence rate we use this estimator to examine changes in the efficiency and productivity of u s banks between 1985 and 2004 we find that larger banks experienced larger efficiency and productivity gains than small banks consistent with the presumption that recent changes in regulation and information technology have favored larger banks

do intergovernmental grants create ratchets in state and local taxes a large literature on the flypaper effect examines how federal grants to states at time period t affect state spending or taxes at time period t we explore the fundamentally different question of how federal grants at time period t affect state tax policy in the future federal grants often result in states creating new programs and hiring new employees and when the federal funding is discontinued these new state programs must either be discontinued or financed through increases in state own source taxes government programs tend to be difficult to cut as goes milton friedman s famous quote about nothing being as permanent as a temporary government program suggesting that it is likely that temporary federal grants create permanent future ratchets in state taxes far from being purely an academic question this argument is why south carolina s governor mark sanford attempted to turn down federal stimulus monies for his state we examine both the impact of federal grants on future state budgets and how federal and state grants affect future local government budgets our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years

defining poverty lines as a fraction of central tendency we show under lognormality that when the gini coefficient is stable over time defining the poverty line as a fraction of a central tendency of the living standard distribution restricts the evolution of the poverty measures to be stable that is poverty does not change if the gini coefficient does not change moreover when the gini coefficient slightly changes most of the poverty change can be considered a change in inequality then the consequences of using different poverty lines are analysed thus important features in studies of poverty change based on these lines may result from methodological choices rather than from economic mechanisms