the market value of outstanding government debt 1919 1975 abstract several new series on the market value of outstanding government debt are reported and their methods of construction described the new series on federal debt are compared with other existing estimates and are shown to be markedly superior to them

the implications of financial cooperation in israel s semi cooperative villages abstract financial cooperation through credit sharing and co signing of debts was a source of strength for israel s semi cooperative moshavim in the early decades of their development but such cooperation entails a potential free rider problem when farmers borrowings are uncoordinated and recent events in israel have demonstrated the severe implications it can have this paper presents a theoretical analysis of the externalities generated by financial cooperation and tests its conclusions empirically using israeli data simulation results indicate that the potential instability of financial cooperation is aggrevated when the moshav population is heterogeneous

international evidence on fiscal solvency is fiscal policy responsible abstract we conduct a cross country empirical analysis of fiscal solvency based on dynamic stochastic general equilibrium conditions the results show evidence of fiscal solvency in the form of a robust positive conditional response of the primary balance to changes in public debt in panels for emerging and industrial economies and in a combined panel emerging economies show a stronger response and hence converge to lower mean debt output ratios as observed in the data the results are weaker for countries with debt ratios exceeding panel means and medians hence we can separate countries where fiscal solvency holds from those where it remains in doubt

the u s evidence on optimal taxation over time abstract this paper considers a tax rule in which a uniform tax rate over time becomes optimal its implications are that 1 changes in the tax rate should arise only when there are changes in permanent government expenditures and 2 no variable other than permanent government expenditures should be of any value in predicting the tax rate these implications are tested using u s data for 1937 82 empirical results of the tests reveal that in addition to responding to permanent government expenditures the tax rate also responds to temporary defense purchases the general price level and a time trend

partisan governments the international economy and macroeconomic policies in advanced nations 1960 93 this article examines the impact of parties domestic institutions and the international economy on the conduct of monetary and fiscal policies using time series cross section data from nineteen oecd countries for the years between 1960 and the mid 1990s the results are as follows partisan governments have affected alone and in interaction with the organization of labor markets the pattern of macroeconomic management still their impact has varied over time partly as a function of economic conditions but fundamentally as a function of the degree of financial liberalization and the exchange rate system in place after following broadly similar macroeconomic policies in the 1960s oecd governments pursued divergent monetary and fiscal policies in response to the economic slowdown of the 1970s even when they initially adopted countercyclical measures conservative governments quickly favored tight monetary policies and strove to achieve fiscal discipline by contrast taking advantage of generalized capital controls and floating exchange rates socialist cabinets embraced demand management policies in a systematic fashion mostly through budget deficits in corporatist countries and through both loose monetary and loose fiscal measures in noncorporatist settings as financial liberalization progressed in the early 1980s partisan and institution led differences in macroeconomic policies waned across countries

deficits government expenditures and tax smoothing in the united states 1929 1988 abstract barro s tax smoothing hypothesis tsh implies that the government runs a budget deficit whenever it anticipates the growth rate of national income to increase or the growth rate of its expenditure to decline we test this implication of the hypothesis by examining the implied cross equation restrictions on a vector autoregression var model using u s data for the period ranging from 1929 to 1988 our formal tests reject the hypothesis for the full sample period but cannot reject it for the post 1947 period further investigations show that the statistical rejection should be attributed to sharp differences in the statistical properties of the pre 1947 and the post 1947 data rather than the failure of the hypothesis itself

public debt stabilization the relevance of policymakers time horizons policymakers are stuck in time political short termism policy myopia policy short sightedness and similar words have been coined to emphasize the present centric policy thinking politics tends to produce short time horizons and as a result policymakers often fail to use present opportunities to mitigate future harms focusing on fiscal and monetary strategic interactions given different separate decision makers our paper aims to explore the effects of policymakers time horizons on debt stabilization to formalize our ideas we use the novel concept of nonlinear model predictive control feedback nash equilibrium nfne and find that present centric policy thinking and decision horizons matters under several dimensions

an assessment of the stability and growth pact reform in a small scale macro framework abstract this paper contributes to the debate on emu fiscal governance we simulate a small scale macroeconomic model with forward looking agents augmented with a public finance block we account for positive output stabilization and negative via risk premia effects of debt and deficit we compare the working of the fiscal compact with the maastricht 3 deficit limit status quo and a public investment rule we evaluate their performance in terms of output and inflation during fiscal consolidation and following demand and supply shocks at the steady state all rules guarantee long run sustainability the investment rule robustly displays the lowest output loss followed by the status quo the fiscal compact rule appears to be the most recessionary and deflationary

u s deficits since world war i the tax smoothing theory suggests that deficits would respond particularly to recession temporarily high government spending and anticipated inflation my empirical estimates indicate that a relation of this type is reasonably stable in the u s since at least 1916 in particular the statistical evidence does not support the idea that there has been a shift toward a fiscal policy that generates either more real public debt on average or that generates larger deficits in response to recessions further the deficits for 1982 3 and popular projections formed in 1984 for 1984 5 are consistent with the previous structure the high values of these deficits reflect the customary response to substantial recession interacting with big government and to expected inflation

evaluation of the profitability of quality labels in rural tourism accommodation a hedonic approach using propensity score matching abstractin recent years quality labels for the spanish tourism sector have been developed as part of a competitive strategy focused on the differentiation of the product given this development it is interesting to analyse the profitability of quality labels for the accommodation owners and managers in particular this article calculates the profitability of a rural tourism quality label through the use of the hedonic price approach the market valuation of the quality label for rural self catering cottages is obtained this valuation is subsequently compared with the expenses incurred by establishments in achieving the quality label in order to address the usual methodological problems associated with the endogeneity prior to application of the hedonic approach the propensity score matching is used the results indicate that possessing a quality label has a positive impact on the profitability of rural tourism

identifying hedonic models economic models for hedonic markets characterize the pricing of bundles of attributes and the demand and supply of these attributes under different assumptions about market structure preferences and technology see jan tinbergen 1956 sherwin rosen 1974 and dennis epple 1987 for contributions to this literature while the theory is well formulated and delivers some elegant analytical results the empirical content of the model is under debate it is widely believed that hedonic models fit in a single market are fundamentally underidentified and that any empirical content obtained from them is a consequence of arbitrary functional form assumptions the problem of identification in hedonic models is a prototype for the identification problem in a variety of economic models in which agents sort on unobservable to the economist characteristics models of monopoly pricing michael mussa and sherwin rosen 1978 robert wilson 1993 and models for taxes and labor supply james heckman 1974 sorting is an essential feature of econometric models of social interactions see william brock and steven durlauf 2001 in this paper we address the sorting problem in hedonic models nesheim 2001 extends this analysis to a model with peer effects in this paper we note that commonly used linearization strategies made to simplify estimation and justify the application of instrumental variables methods produce identification problems the hedonic model is generically nonlinear it is the linearization of a fundamentally nonlinear model that produces the form of the identification problem that dominates discussion in the applied literature linearity is an arbitrary and misleading functional form when applied to empirical hedonic models our research establishes that even though sorting equilibrium in a single market implies no exclusion restrictions the hedonic model is generically nonparametrically identified instrumental variables and transformation model methods identify economically relevant parameters even 1 without exclusion restrictions multimarket data widely viewed as the most powerful source of identification achieves this result only under implausible assumptions about why hedonic functions vary across markets

determinants of co2 emissions in a small open economy abstract the aim of the paper is to explore the relationship between economic development and carbon dioxide co2 emissions for a small open and industrialized country austria we test whether an environmental kuznets curve relationship also holds for a single country rather than concentrating on panel or cross section data for a set of countries a cubic i e n shaped relationship between gdp and co2 emissions is found to fit the data most appropriately for the period 1960 1999 and a structural break is identified in the mid seventies due to the oil price shock furthermore two variables are additionally significant import shares reflecting the well known pollution haven hypothesis and the share of the tertiary service sector of total production gdp accounting for structural changes in the economy emission projections derived from this single country specification support the widely held opinion that significant policy changes are asked for when implementing the kyoto protocol in order to bring about a downturn in future carbon emissions

output effects of government purchases the theoretical analysis focuses on the distinction between temporary and permanent movements in government purchases under plausible conditions the temporary case involves an output response that is positive less than one to one with the change in government purchases and larger than that generated by an equal sized but permanent shift in purchase the equilibrium real rate of return rise in the temporary case but changes little in the permanent one defense purchases are divided empirically into permanent and temporary components by considering the role of temporary wars no temporary shifts in nondefense purchases were isolated empirical results verify an expansionary output effect for temporary purchases that exceeds that of permanent purchases the results for some other expectational hypotheses are found to be generally supportive of the theory

is the budget deficit too large yes specifically we find that recent spending and taxing policies of the government if continued violate the government s intertemporal budget constraint as a result government spending must be reduced and or tax revenues must be increased these conclusions are based on tests of whether government spending and revenue are cointegrated in addition to examining real spending and revenue we also normalize these variables by real gnp and population for a growing economy these normalized measures are perhaps more pertinent we also test and find support for the hypothesis that deficits have become a problem only in recent years

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

what if alexander hamilton had been argentinean a comparison of the early monetary experiences of argentina and the united states abstract the contrast between the early nineteenth century argentinean experience of high inflation and the american experience of low inflation is interpreted in terms of an optimal taxation model it is argued that the two countries experiences diverged because of the different constraints they faced in financing wartime government expenditures in the presence of frequent wars ever tightening access to foreign capital and an inadequate tax base argentina s use of the inflation tax may be viewed as an optimal solution to its wartime problems by contrast with the exception of the revolutionary war the absence of such constraints in the united states required full tax smoothing with only a temporary use of the inflation tax during wartime such policies were embodied in alexander hamilton s fiscal package of 1790 which allowed the united states to bond finance most subsequent wartime expenditures

fiscal policy over the real business cycle a positive theory this paper presents a political economy theory of the behavior of fiscal policy over the business cycle the theory predicts that in both booms and recessions fiscal policies are set so that the marginal cost of public funds obeys a submartingale in the short run fiscal policy can be pro cyclical with government debt spiking up upon entering a boom however in the long run fiscal policy is counter cyclical with debt increasing in recessions and decreasing in booms government spending increases in booms and decreases during recessions while tax rates decrease during booms and increase in recessions data on tax rates from the g7 countries supports the submartingale prediction and the correlations between fiscal policy variables and national income implied by the theory are consistent with much of the existing evidence from the u s and other countries

budget balance through revenue or spending adjustments abstract the paper provides a historical perspective on the issue of whether budget deficits are typically eliminated by increased taxes or by reduced spending by examining u s budget data from 1792 1988 i conclude that about 50 65 of all deficits due to tax cuts and about 65 70 of all deficits due to higher government spending have been eliminated by subsequent spending cuts while the remainder was eliminated by subsequent tax increases in contrast to previous studies the empirical analysis uses error correction models in a way that the intertemporal budget constraint is imposed in the estimation stage

how to assess debt sustainability some theory and empirical evidence for selected euro area countries in this article we elaborate on the test proposed by bohn 1998 that suggests to study whether the primary surplus relative to gross domestic product gdp is a positive function of the public debt to gdp ratio in order to detect whether debt policies are sustainable we argue that this should be complemented by additional tests for countries with rising debt to gdp ratios we then apply that test to some countries of the euro area in addition we perform stationarity tests with respect to the real deficit inclusive of interest payments in order to gain additional insight we conclude that there is empirical evidence that the chosen paths of fiscal policies are sustainable for the countries we consider although there are country specific differences in debt policies

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

debts and deficits with fragmented fiscal policymaking abstract this paper develops a political economic model of fiscal policy one in which government resources are a common property out of which interest groups can finance expenditures on their preferred items this setup has striking macroeconomic implications transfers are higher than a benevolent planner would choose them to be fiscal deficits emerge even when there are no reasons for intertemporal smoothing and in the long run government debt tends to be excessively high peculiar time profiles for transfers can emerge with high net transfers early on giving rise to high taxes later on

do the personal characteristics of finance ministers affect changes in public debt using a unique dataset of the personal characteristics of national finance ministers in western europe 1980 2010 i show that a finance minister s experience affects the national debt to gdp ratio the increase in the debt to gdp ratio is smaller if the finance minister stays in office for an additional year this result is robust to the inclusion of the personal characteristics of prime ministers and a measure of political stability however the magnitude of the effect is sensitive to how finance ministers are selected in the econometric model when more than one minister holds office during a particular year the estimation of interaction terms further reveals that experience particularly matters in election years or in times of negative gdp growth because an experienced finance minister has the power to restrict the usual increase in the debt to gdp ratio in contrast a finance minister s educational background and ideological leaning have no significant impact on the debt to gdp ratio

fiscal deficit sustainability of the spanish regions carrion i silvestre j l fiscal deficit sustainability of the spanish regions regional studies the fiscal deficit of the spanish autonomous communities is investigated using non stationary panel data analysis the paper considers the two main approaches in the literature first assessing whether there is a long run relationship between the revenues and expenditures of the autonomous communities and second focusing on the use of fiscal rules the paper shows that it is possible to relate these approaches in a unified framework

how does war shock the economy abstract wartime periods have frequently been treated as natural macroeconomic experiments but the international pooled time series evidence presented here shows that the literature has over emphasized the experience of the united states and the united kingdom wars fought exclusively on foreign soil do have marginally higher real output growth than peacetime periods but real growth during all other wars is sharply below peacetime levels evidence for foreign and domestic wars is consistent with monetarist fiscalist and mixed theories of wartime booms

international evidence of tax smoothing in a panel of industrial countries a panel of industrial countries is examined for evidence of tax smoothing tax smoothing results when governments minimize tax distortions over time the model provides a positive theory of government debt and is due primarily to barro unit root tests are performed in panel data to test the null hypothesis of nonstationary tax rates panel regressions are then undertaken to test the null hypothesis that tax rate changes are unpredictable and test for evidence of an alternative hypothesis political and economic variables are examined for their ability to predict tax rate changes overall the results cannot reject the null hypotheses and support tax smoothing by national governments

debt and tariffs an empirical investigation of the evolution of revenue systems abstract this paper presents a theoretical framework where government chooses fiscal structure so as to maximize political support and where the evolution of fiscal systems is determined by changing economic political and administrative factors estimating equations are derived and the model is used to explain the development of revenue structure in canada from 1871 to 1913 a period when major revenue sources consisted of the tariff debt and excises the empirical analysis distinguishes between government plans and ex post observations of public revenues and places particular emphasis on the derivation of hypotheses linking economic political and administrative variables to revenue structure

a dynamic theory of public spending taxation and debt this paper presents a dynamic political economy theory of public spending taxation and debt policy choices are made by a legislature consisting of representatives elected by geographically defined districts the legislature can raise revenues via a distortionary income tax and by borrowing these revenues can be used tofinance a national public good and district specific transfers interpreted as pork barrel spending the value of the public good is stochastic reflecting shocks such as wars or natural disasters in equilibrium policy making cycles between two distinct regimes business as usual in which legislators bargain over the allocation of pork and responsible policy making in which policies maximize the collective good transitions between the two regimes are brought about by shocks in the value of the public good in the long run equilibrium tax rates are too high and too volatile public good provision is too low and debt levels are too high in some environments a balanced budget requirement can improve citizen welfare

political cycles fiscal deficits and output spillovers in europe this paper investigates whether national elections in europegenerate political cycles in other european countries and ifso whether these spillover effects are likely to surviveinside emu the paper first tests whether elections in germanyaffect macroeconomic outcomes in other european countries andthen investigates the impact of elections on budget deficits the results indicate that german politics significantlyimpacts macroeconomic variables in other european countries and also that politics significantly affects the behaviour ofeuropean budgetary policy the prospect of elections tends toincrease public deficits in recessions whereas left winggovernments tend to be more deficit prone than right winggovernments regardless of the state of the economy moreover the existence of political cycles spillovers among europeancountries suggest that there may be a need for electoralcoordination

land allocation under uncertainty for alternative specifications of return distributions using the expected utility moment generating function approach a land allocation rule is derived which is both independent of the nature of the underlying distribution of each element in the choice set and accounts for all moments of that distribution this decision rule is applied to the choice between cotton and corn in the mississippi delta to demonstrate that consideration of just the first two moments of the distribution can often be unjustified and damaging empirically theoretically and in terms of the utility of the decision maker

a political economy theory of fiscal policy and unemployment this paper presents a political economy theory of fiscal policy and unemployment the underlying economic model is one in which unemployment can arise but can be mitigated by tax cuts and public spending increases such policies are fiscally costly but can be financed by issuing government debt policy decisions are made by a legislature consisting of representatives from different political districts the theory provides a positive account of the simultaneous determination of fiscal policy and unemployment the most important implication of the theory is that debt and unemployment levels should be positively correlated some evidence in support of this prediction is provided using data from a panel of developed countries

non linear budgetary policies evidence from 150 years of italian public finance we investigate the sustainability of italy s public nances from 1862 to 2012 adopting a non linear perspective speci cally we employ the smooth transition regression approach to explore the scope for non linear scal adjustments of primary surpluses in response to the accumulation of debt the empirical results show the occurrence of a signi cantly positive reaction of primary surpluses to debt when the debt gdp ratio exceeded the trigger value of 110 percent the afterthreshold positive response implies that the path of italy s scal policy is su ciently consistent with the intertemporal budget constraint

environmental amenities as a source of market power site specific environmental amenities can provide a source of product differentiating market power using estimates from hedonic price equations and residual demand models our analysis recovers firm specific estimates of price markups as measures of market power and uses these markups to estimate the implied marginal value for access to coastal beaches the application involves rental price and occupancy data for several thousand beach properties along a portion of the north carolina coastline during the 1987 to 1992 rental seasons

explaining u s federal deficits 1889 1998 i introduction seater 1993 attempted to provide a common basis for assessing empirical studies of the effects of deficit spending he concluded that evidence of the existence of appreciable effects of u s deficits on macroeconomic variables is questionable in other words the data do not allow for a confident rejection of ricardian equivalence in a world with no macroeconomic effects from deficit spending full information and no distinctions between political and economic markets fluctuations in deficits merely reflect government financing considerations of secondary importance in contrast to this view of the world deficits and surpluses are treated as an important topic in everyday affairs and discourse politicians talk about deficits and surpluses regularly when calling for higher or lower taxes more or less spending revisions in social security funding and other changes in public policy economists and political analysts continue to debate why deficits became a regular feature of federal fiscal management from the late 1960s into the 1990s these debates have spurred divergent theories and conjectures leading to different empirical hypotheses and variables of interest moreover existing empirical studies of the subject have utilized diverse econometric techniques and specifications as a result the competing hypotheses concerning deficit spending have not been tested against one another in a systematic fashion in this article our principal aim is to analyze the different explanations of u s federal deficits jointly estimating competing hypotheses about deficit fluctuations in a generalized reduced form empirical model to achieve this goal we collected and utilized a time series of data running from 1889 to 1998 the apparent paradox between the seemingly innocuous effects of deficits and the political preoccupation with them may owe its existence to one or more reasons limited and noisy information among voters differences between economic and political markets inaccuracy in the measured macroeconomic effects of deficits or other reasons we do not attempt an explanation of why deficits which seemingly exhibit no or small real effects ricardian equivalence could lead politicians and voters to treat deficits as if the ricardian hypothesis were rejected instead we treat explanations of deficits that stem from ricardian premises as one of several hypotheses to be tested ii competing hypotheses we first describe the leading explanations of deficit spending organizing them around common theoretical principles 1 tax smoothing the explanation of deficits which follows directly from a ricardian equivalence theory is the tax smoothing theory developed by barro 1979 2 if deficits generate no real macroeconomic effects and the influences of political institutions and politicians are ignored then optimal public financing considerations govern the use of deficit spending simply put fiscal authorities raise revenue to meet spending needs through income taxation but both spending and income the tax base are subject to uncertain and temporary movements minimization of the deadweight costs of raising a given amount of revenue requires keeping tax rates steady in the face of purely temporary changes in income or spending this is accomplished by running deficits when income is temporarily low or spending is temporarily high and running surpluses in the opposite case imposing a binding no ponzi game npg constraint leads to similar long term behavior of deficits as implied by optimal finance models the npg condition requires that the present value of taxes must equal the present value of spending plus the initial value of debt spending and revenue must share a long term common trend so that primary deficits will be stationary over a long time series deficits and surpluses will offset each other

u s federal indebtedness and the conduct of fiscal policy abstract this paper examines whether the conduct of u s fiscal policy since the 1920s has been influenced by constraints on the accumulated stock of outstanding federal debt the evidence is affirmative during most of the inter and post war period policy in effect stabilized the federal debt relative to gnp but after 1981 large debt and debt service costs failed to produce deficit reductions consistent with the pattern of previous decades

politico economic determinants of public debt growth a case study for austria based on a number of economic andparticularly politico economic arguments we examine the reasons for the growth ofthe central government s debt in austriausing time series data for the period 1960 to 1999 starting with an empiricaltest of bohn s theory of sustainability offiscal policy which is based on barro stax smoothing model we extend the model toaccount for several politico economicvariables suggested by public choicetheories keynesian stabilization policyobjectives influences of ideology andpolitical parties the form of governmentand the political business cycle are testedregarding their ability to explain thegrowth of public debt in austria there issome empirical evidence for systematicinfluence of government behavior inaccordance with recent public choicetheories however it seems that the mostimportant influence on austrian fiscalpolicy is the unemployment rate which has asignificant influence on the decisions madeby policy makers concluding we brieflydiscuss the implications of these resultsfor the prospects of reducing public debtin austria in the near future

collective choice pareto optimality and the organization of cooperatives the case of agricultural credit associations abstract the internal allocation of costs and benefits in a cooperative association is regulated by allocation rules selected by the membership through majority voting the paper examines the class of rules allowing distribution free pareto optimal dfpo choice of parameters a sufficient condition for such rules and the derivation of dfpo values by means of a bergson samuelson social welfare function are presented since the values of such parameters are unanimously adopted regardless of members distribution the power to make parametric choices can be profitably delegated to the professional management the findings are illustrated for the case of agricultural credit associations

the costs of equal land distribution the case of the israeli moshavim equal land distribution achieved by government policy may adversely affect aggregate output israeli moshavim cooperative villages operate under an equal land allocation rule this study assesses the production and distributional consequences of three alternative hypothetical allocation rules a free market allocation a value maximizing policy of distributing land to current farmers and a policy that maximizes value added without discrimination based on nativity or ethnicity production and supply functions are estimated using sample data on israeli family farms then the four allocation rules are simulated the output loss from distributing land equally is found to be modest compared to the income inequality generated by the other rules

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

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

hedonic pricing of agriculture and forestry externalities in this study the hedonic price method was used toidentify and monetarize some of the external effectsof agricultural and sylvicultural activities weexamined the renting price of ruralself catering cottages or gites intensivelivestock farming caused the renting price ofgites to decrease whereas permanent grassland hadthe opposite effect

fiscal regimes and fiscal sustainability in sri lanka this paper employs the regime switching model based fiscal sustainability test which relaxes the linear fiscal reaction function approach there is evidence of a regime switching fiscal rule in sri

a positive model of reserve requirements and interest on reserves a clearinghouse interpretation of the federal reserve system this paper develops a positive model of reserve requirements and interest on reserves based on the observation that congress exempted the fed from a legal restriction that had prevented private clearinghouses from issuing their own currency eliminating the restriction provided the fed with a source of revenue that could be used to finance general government outlays and to pay implicit interest on reserves the model implies that the government s financing requirements help explain reserve requirement movements and that interest rates on reserves vary with market loan rates cointegration error correction and granger causality tests provide supporting evidence

u s states the medicaid program and tax smoothing this paper tests the tax smoothing theory by focusing on its implication that a change in permanent government spending should result in an equal sized change in the tax rate the effect of medicaid a state administered federal and state funded medical insurance program for the poor on state tax rates is investigated the medicaid program provides a natural experiment for this test as states are required to cover certain groups in order to receive federal matching money additionally during the 1980s a series of federal mandates greatly increased state medicaid expenditures two stage least squares is used on a panel of u s states 1978 1994 to test whether changes in permanent state medicaid expenditures resulted in equal sized tax rate changes tax smoothing as a positive theory of state government behavior is rejected additionally it is found that this rejection cannot be attributed to the stringency of balanced budget rules