unauthorized immigration and fiscal competition abstract reflecting upon recent enforcement policy activism of us states and countries within the eu towards unauthorized workers we examine the overlap of centralized federal and decentralized state or regional enforcement of immigration policies in a spatial context among other results we find that if interstate mobility is costless internal enforcement is overprovided and border enforcement and local goods are underprovided when regions take more responsibility in deciding policies this leads to higher levels of unauthorized immigration under decentralization interregional migration costs moderate such over underprovision moreover income distributive motives in the host country may shape the design of immigration policies in specific ways the basic model is extended in several ways first we study how the policies change when regions can exclude unauthorized immigrants from the consuming of regionally provided goods or services second we assume that the potential number of unauthorized immigrants is endogenous and finally we examine the effect of considering an alternative spatial configuration that includes border and interior regions

political constraints to growth in an economic union abstract this paper studies the political economy of growth in an economic union such as the eu in the spirit of acemoglu aghion and zilibotti acemoglu d aghion p and zilibotti f 2006a distance to frontier selection and economic growth journal of the european economic association 4 1 37 74 acemoglu d aghion p and zilibotti f 2006b growth development and appropriate versus inappropriate institutions mimeo mit as the economy approaches the world technology frontier structural reforms that increase competition in intermediate goods sectors are necessary to boost innovation and productivity growth reforms however raise the opposition of incumbents and therefore are politically difficult to implement when there are important cross border policy spillover effects national governments are more easily captured by vested interests as they fail to internalize the benefits of reforms on the rest of the union in this situation productivity growth may be sluggish and the economy can fail to converge to the frontier on the other hand when policy is chosen by a union government or a collective body that takes into account union welfare the internalization of spillovers raises the perceived benefit of reforms and consequently lowers the ability of lobbies to obtain high levels of protection

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

assessing the performance of renewable electricity support instruments abstract the performance of feed in tariffs and tradable certificates is assessed on criteria of efficacy efficiency equity and institutional feasibility in the early stage of transition to an energy system based entirely on renewable energy supplies renewable electricity can only thrive if support takes into account the specific technical economic and political problems which result from embedding this electricity in conventional power systems whose technology organizational structure environmental responsibility and general mission differ profoundly from the emerging renewable based system support schemes need to capture the diversity of power supplies the variable nature of some renewable supplies and their different attributes for the purposes of public policy they must take into account the variety of generators including small decentralized generation emerging in a renewable based system and the new relationships between generators and customers renewable energy policies need a clear point of reference because the incumbent power systems are not sustainable they must adapt to the requirements of the renewable ones not the other way round incumbent systems carry the responsibility of paying the transition something that corresponds best with the polluter pays principle

partial fiscal decentralization and demand responsiveness of the local public sector theory and evidence from norway this paper provides an empirical test of a principal tenet of fiscal federalism that spending discretion when granted to localities allows public good levels to adjust to suit local demands the test is based on a simple model of partial fiscal decentralization under which earmarking of central transfers for particular uses is eliminated allowing funds to be spent according to local tastes the greater role of local demand determinants following partial decentralization is confirmed by the paper s empirical results which show the effects of the 1986 norwegian reform

decentralization and intra country transfers in the great recession the case of the european union empirical evidence is found supporting the assignment of the redistribution function to the central government viewing the great recession or recessions in general as a shock it is found that a

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

fiscal federalism and lobbying abstract which government functions should be decentralized resp centralized once lobbying behavior is taken into account we find that the answer largely depends on how the interests of the regional lobbies are positioned with respect to the function to be decentralized resp centralized when regional lobbies have conflicting interests then lobbying is less damaging for social welfare under centralization than under decentralization on the contrary when regional lobbies have aligned interests then lobbying is less damaging for social welfare under decentralization provided that policy spillovers on the non organized groups are not too strong

towards a sustainable electrification in ghana a review of renewable energy deployment policies abstract ghana has been facing perennial power rationing over the years due to fuel supply challenges the country s energy system is likely to suffer additional strain from rising energy demand fueled by population growth rapid urbanization and economic development fortunately there are enormous renewable energy resources which can provide sustainable electrification as backbone to socioeconomic development while curbing global warming ghana s energy strategy targets 100 access to electricity and 10 share of sustainable power in national generation mix by 2020 despite the existence of numerous policies and a renewable energy act current contribution of non conventional renewable energy to electricity generation is less than 1 the right mix of policies to address the unique domestic conditions and achieve its specific development goals remains insufficient this study reviews the regulatory framework financing incentives and other provisions of ghana s renewable energy act it critically examines the policy s strengths weaknesses opportunities and treats based on comparative analysis and lessons drawn from failed and successful implementation of similar policies around the world the study also assesses the impact of policy on project development it was found that the performance of ghana s renewable energy policy on grid connected electricity has been poor compared to its target the fundamental reasons for this unsatisfactory performance may be attributed to partial implementation of policies lack of market driven support schemes lack of pricing policy framework weak grid network limited access to funds and inconsistencies in renewable energy development strategies this study proposes the following countermeasures i ghana should comprehensively harmonize renewable energy regulatory and fiscal policies with domestic electricity pricing regime ii market driven support schemes should be prioritized for cost effectiveness and minimum governmental influence these reforms can help eliminate some of the major barriers to sustainable electrification in ghana while the lessons provide a learning curve for other african countries

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

the implications of competition among jurisdictions does tiebout need politics the paper investigates whether compensation among local jurisdiction is by itself sufficient to ensure efficient provision of local public goods jurisdictions have fixed boundaries and each has an entrenched government with the power to tax and supply the public good residents can move costlessly among jurisdictions it is shown that competition among numerous jurisdictions is not sificient to guarantee public sector efficiency though residents can vote with their feet land is immobile hence governments can unsurp some land rents for their own ends increasing the number of jurisdictions limits but cannot completely eliminate the ability to exercise discretionary governmental power

capture and governance at local and national levels 135 despite the importance of this issue not much systematic research appears to have been devoted to assessing the relative susceptibility of national and local governments to interestgroup capture here we describe a model of two party electoral competition with probabilistic voting behavior and lobbying by specialinterest groups based on david baron 1994 and gene grossman and elhanan helpman 1996 that helps identify determinants of relative capture at different levels of government these include relative levels of voter awareness and interest group cohesiveness electoral uncertainty electoral competition heterogeneity of districts with respect to inequality and the electoral system while some of these uphold the traditional madisonian presumption others are likely to create a tendency for lower capture at the local level so the net effect is theoretically ambiguous this suggests that the extent of relative capture may be context specific and needs to be assessed empirically

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

decentralization political competition and corruption abstract we study the effect of decentralization on corruption in a political agency model from the perspective of a region in a model where corruption opportunities are lower under centralization at each period of time decentralization makes it easier for citizens to detect corrupt incumbents as a consequence the relationship between fiscal decentralization and corruption is conditional on political competition decentralization is associated with lower higher levels of corruption for sufficiently high low levels of political competition we test this prediction and find that it is empirically supported also we show how the preferences of voters and politicians about fiscal decentralization can diverge in situations where political competition is weak

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

a political economy theory of partial decentralization we revisit the classic problem of tax competition in the context of federal nations and derive a positive theory of partial decentralization a capital poor median voter chooses to use redistributive capital taxes to provide public goods the expectation of high capital taxes however results in a small capital stock which lowers returns to redistribution the median voter therefore wants to commit to a lower level of capital taxes she does so by setting a partial degree of decentralization in the constitution the equilibrium degree of decentralization balances the positive effect of tax competition on capital taxes with the loss in redistribution that results we show that the degree of decentralization is nonmonotonic in inequality increasing in the redistributive efficiency of public good provision and decreasing in capital productivity when public goods are heterogeneous in their capacity to transfer funds all voters agree that goods with high redistributive capacity should be decentralized

evaluation of biodiversity policy instruments what works and what doesn t w e review and confirm the claim that credible evaluations of common conservation instru ments continue to be rare the limited set of rigorous studies suggests that protected areas cause modest reductions in deforestation however the evidence base for payments for ecosystem services decentralization policies and other interventions is much weaker thus we renew our urgent call for more evaluations from many more biodiversity relevant locations specifically we call for a programme of research conservation evaluation 2 0 that seeks to measure how programme impacts vary by socio political and bio physical context to track economic and environmental impacts jointly to iden tify spatial spillover effects to untargeted areas and to use theories of change to characterize causal mechanisms that can guide the collection of data and the interpretation of results only then can we usefully contribute to the debate over how to protect biodiversity in developing countries

decentralizing antipoverty program delivery in developing countries we study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program while governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture centralized delivery systems are additionally prone to bureaucratic corruption owing to problems in monitoring bureaucratic performance decentralizing the delivery system promotes cost effectiveness and improves intraregional targeting at low program scales but interregional targeting may deteriorate as central grants to high poverty regions shrink owing to high capture of local governments by local elites in such regions

corporate dollar debt and depreciations much ado about nothing abstract emerging markets firms often carry foreign currency debt on their balance sheets following a depreciation the expanding peso value of dollar liabilities could via a net worth effect offset the expansionary competitiveness effect to assess which effect dominates we use accounting data including the currency composition of liabilities for 450 nonfinancial firms in five latin american countries in the 1990s we find that firms holding more dollar debt do not invest less than their peso indebted counterparts following a depreciation we also show that these firms match the currency denomination of their liabilities with the exchange rate sensitivity of their profits

the real effects of capital controls firm level evidence from a policy experiment abstract this paper evaluates the effects of capital controls on firm level stock returns and real investment using data from brazil on average there is a statistically significant drop in cumulative abnormal returns consistent with an increase in the cost of capital for brazilian firms following capital control announcements large firms and the largest exporting firms appear less negatively affected compared to external finance dependent firms and capital controls on equity inflows have a more negative announcement effect on equity returns than those on debt inflows overall the findings have implications for macro finance models that abstract from heterogeneity at the firm level to examine the optimality of capital control taxation

centralization versus decentralization as a risk return trade off abstract this paper characterizes the choice between centralization and decentralization as a risk return trade off and examines it in a model that integrates ideas from committee decision making and portfolio theories centralization by pooling expertise rarely yields erroneous decisions however when it fails the consequences are global in contrast in a decentralized system erroneous decisions are more frequent but their consequences are locally confined we assess the relative desirability of de centralization in various scenarios with independent versus interdependent risks we further discuss the robustness of the model and the relevance of our results for policymaking

public input competition abstract public investment in infrastructure may help create agglomeration economies by attracting mobile factors such as skilled labour competition among regions in public investment can then be destructive this paper analyzes the nash equilibria to a simple model of public input competition even though the regions are assumed identical the equilibrium may not be symmetric the problem with non cooperative behaviour is not only that regions invest too much but that too many regions may choose to invest depending on the parameter values the nash equilibrium may be efficient may be inefficient or may not exist at least not in pure strategies better mobility among regions leads to more aggressive competition the analysis suggests that rents from public investment may be dissipated by governments competition to attract mobile factors

inefficiency in legislative policymaking a dynamic analysis this paper develops an infinite horizon model of public spending and taxation in which policy decisions are determined by legislative bargaining the policy space incorporates both productive and distributive public spending and distortionary taxation the productive spending is investing in a public good that benefits all citizens e g national defense and the distributive spending is district specific transfers e g pork barrel spending investment in the public good creates a dynamic linkage across policymaking periods the analysis explores the dynamics of legislative policy choices focusing on the efficiency of the steady state level of

what lessons have been learned in reforming the renewables obligation an analysis of internal and external failures in uk renewable energy policy abstract despite operating a delivery programme for res e since 1990 uk targets and policy goals have not been achieved in response the government reformed the ro this article re examines uk renewable energy policy by analysing the internal and external failures of the various mechanisms to determine if government has learnt from previous experience in reforming the ro government did not learn from their own actions during the nffo ro transition evidenced by high levels of similarity in internal external failures the reformed ro is expected to significantly increase deployment has provided a renewables package by comprehensively addressing both internal external failures but major internal failures price financial risk still remain resulting in contiguous failures over two decades and two mechanism changes nffo ro ro reformed ro success will again be heavily dependent on a select few technologies and new untested measures to combat external failures mechanism extension to 2037 is probably the single most important factor underlying potential deployment increases however introducing a fit like system via the sheer number of bolt on reforms to counter policy failures indicates loss of direction and clarity overall although government appears to have learnt some of its lessons from the past two decades significant doubt remains whether renewable energy policy objectives will be met via the latest mechanism change

natural resource federalism preferences versus connectivity for patchy resources we examine the efficiency of centralized versus decentralized management of spatially connected renewable resources when users have heterogeneous preferences for conservation versus extraction resource mobility induces a spatial externality while spatial preference heterogeneity drives a wedge between users privately optimal extraction rates we first address these market failures analytically and show that the first is most efficiently handled with centralized planning while the second is best tackled with decentralized management except in special cases neither approach will be first best but which arises as second best depends on the relative strength of preference heterogeneity versus spatial mobility of the resource we illustrate the theory and test its robustness with a numerical example

public good provision in indian rural areas the returns to collective action by microfinance groups self help groups shgs are the most common form of microfinance in india the authors provide evidence that shgs composed of women only undertake collective actions for the provision of public goods within village communities using a theoretical model this paper shows that an elected official whose aim is to maximize re election chances exerts higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods this effect occurs although government and private contributions are assumed to be substitutes in the technology of providing public goods using first hand data on shgs in india the paper tests the prediction of the model and shows that in response to collective action by shgs local authorities tackle a larger variety of public issues and are more likely to tackle issues of interest to shgs the findings highlight how the social behavior of shgs can influence the governance of rural indian communities

are local agreements on equalization grants possible a bargaining model with quasi linear local preferences on local public goods abstract the art 13 of the italian law n 42 2009 theoretically allows for local negotiations between municipalities on the allocation of equalization funds however in the subsequent practice and legislation such form of local negotiation has never been adopted a question arises from the italian experience in the presence of a predetermined equalization scheme decided by the central government are local agreements on equalization transfers possible in this paper we show that in the presence of quasi linear local preferences on public goods there is no space for alternative local agreements on the allocation of equalizing transfers in the presence of predetermined schemes decided by the central government our results suggest that similar practices when allowed are destined to have scarce success we also show that if the central government does not provide a predetermined scheme local agreement on equalization funds are viable

trade credit and the propagation of corporate failure an empirical analysis using an exhaustive data set on claims held by trade creditors suppliers on failed trade debtors customers we quantify the importance of trade credit chains for the propagation of corporate bankruptcy we show that trade creditors experience significant trade credit losses due to trade debtor failures and that creditors bankruptcy risks increase in the size of incurred losses by exploring the roles of financial constraints and creditor debtor dependences we infer that the trade credit failure propagation mechanism is driven by both credit losses and demand shrinkage finally we show that the documented propagation mechanism constitutes a significant part of the overall bankruptcy frequency suggesting that it has measurable implications for the aggregate level

do real exchange rate appreciations matter for growth the impact of exchange rate changes on growth a long standing key issue in international macroeconomics has received renewed attention in recent years owing to weaker growth rates and the debate on currency wars the connection between real exchange rates and growth remains however an unsettled question in the academic literature we fill this gap by providing an empirical assessment based on a broad sample of emerging and advanced economies we assess the impact of appreciations productivity booms and capital inflows surges using a propensity score matching approach to address causality issues appreciations associated with higher productivity have a larger impact on growth than those associated with capital inflows furthermore appreciations per se tend to have a negative impact on growth we provide a simple theoretical model that delivers a contrasted growth appreciation pattern depending on the underlying shock the model also implies adverse effects of shocks to international capital flows so concerns about an appreciation are not inconsistent with concerns about a depreciation while the presence of an externality through firms destruction leads to inefficient allocations addressing the inefficiency does not dampen exchange rate movements

the economics of split ticket voting in representative democracies in u s elections voters often vote for candidates from different parties for president and congress voters also express dissatisfaction with the performance of congress as a whole and satisfaction with their own representative the authors develop a model of split ticket voting in which government spending is financed by uniform taxes the benefits from this spending are concentrated while the model generates split ticket voting overall spending is too high only if the president s powers are limited overall spending is too high in a parliamentary system the authors model can be used as the basis of an argument for term limits copyright 1997 by american economic association

application of fuzzy q learning for electricity market modeling by considering renewable power penetration abstract by increasing renewable resource penetration the need for developing fast and reliable market modeling approaches in the presence of these resources has gained greater attention in this paper fuzzy q learning approach is proposed for hour ahead electricity market modeling in presence of renewable resources the proposed approach is implemented on ieee 30 bus test system the effectiveness of the proposed approach is evaluated and compared with q learning approach for both normal and stressful cases simulation results indicate that the proposed approach is able to model electricity market for a range of continuous multidimensional renewable power penetration in considerably less iterations compared with q learning approach moreover the probability of finding nash equilibrium is becoming higher by using fuzzy q learning approach while the other indices such as average social welfare average of locational marginal prices lmps and average standard of deviation of lmps do not change considerably

economic theories of political dis integration abstract this paper surveys the recent political economy literature on countries incentives to form international unions and or to disintegrate in smaller jurisdictions the main factors that affect these incentives are i economic integration ii the international order iii international spillovers and iv the institutional setting some implications are drawn for the current debate in europe on the political effects of economic integration on the enlargement process and on the distribution of prerogatives between the european union and national governments

geographical variations in expenditure of learning disability services in england this article investigates the determinants of local authority learning disability ld expenditure in england it adopts a reduced form of demand and supply model extended to account for possible interdependence between municipalities risk factors such as people aged under 14 mortality rate and lone parents seem to play an important role in explaining geographical variation of spending further labour municipalities on average allocate lower resources on ld than do other political parties finally results corroborate recent findings in economics that authorities interact with each other when allocating public resources

the politics of 1992 fiscal policy and european integration the internal market in europe will greatly increase the international mobility of resources how will this affect fiscal policy in different countries we consider taxation of capital in a two country model where a democratically chosen government in each country chooses tax policy higher capital mobility changes the politico economic equilibrium in two ways on the one hand it leads to more tax competition between the countries this economic effect tends to lower tax rates in both countries on the other hand it alters voters preferences and makes them elect a different government this political effect offsets the increased tax competition although not completely

village elections public goods investments and pork barrel politics chinese style a key issue in political economy concerns the accountability that governance structures impose on public officials and how elections and representative democracy influence the allocation of public resources in this paper we utilise a unique set of survey data set from nearly 2450 randomly selected villages describing china s recent progress in village governance reforms and its relationship to the provision of public goods in rural china between 1998 and 2004 two sets of questions are investigated using an empirical framework based on a theoretical model in which local governments must decide to allocate fiscal resources between public goods investments and other expenditures the empirical analysis both in the descriptive and econometric analyses suggests that when the village leader is elected directly ceteris paribus the provision of public goods rises compared to when the leader is not elected directly by villagers thus in this way it is possible to conclude that democratisation at least at the village level in rural china appears to increase the quantity of public goods investment second we seek to understand the mechanism that is driving the results also based on the survey data we find that when village leaders who had been directly elected were able to implement more public projects during their terms of office they as the incumbent were more likely to be re elected in this way we argue that the link between elections and investment may be a rural china version of pork barrel politics

school decentralization helping the good get better but leaving the poor behind abstract the decentralization of public services is a major feature of institutional innovation the main argument in support of decentralization is that it brings decisions closer to the people thereby alleviating information asymmetries and improving accountability however decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences in this paper we analyze the average and distributional effects of school decentralization on educational quality in argentina we find that decentralization had an overall positive impact on student test scores the decentralization gains however did not reach the poor thus although bringing decisions closer to the people may help the good get better the already disadvantaged may not receive these benefits

reforming an asymmetric union on the virtues of dual tier capital taxation the tax competition for mobile capital in particular the reluctance of small countries to agree on measures of tax coordination has ongoing political and economic fallouts within europe we analyse the effects of introducing a two tier structure of capital taxation where the asymmetric member states of a union choose a common federal tax rate in the first stage and then non cooperatively set local tax rates in the second stage we show that this mechanism effectively reduces competition for mobile capital between the members of the union moreover it distributes the gains across the heterogeneous states in a way that yields a strict pareto improvement over a one tier system of purely local tax choices we also discuss the effects of diverging capital endowments within the union and capital flows to third countries

experimentation in federal systems will decentralization lead to a laboratory in policy experimentation or is centralization necessary to prevent free riding in the innovation process we present a model where experiments have two dimensions all prefer quality but preferences

the timing of elections in federations a disciplining device against soft budget constraints we introduce political economics into the soft budget constraint problem by asking if the timing of elections has the potential to harden budget constraints specifically we ask under which circumstances the soft budget constraint problem is worse with synchronized elections i e simultaneous central and regional office terms or with staggered elections i e terms of office that do not coincide we find that staggered elections clearly improve fiscal discipline at the local level as well as welfare

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

political centralization and government accountability boffa acknowledges financial support from the free university of bolzano ww82 piolatto from the spanish ministry of science and innovation eco 2012 37131 and the government of catalonia 2014 sgr 420 ponzetto from the spanish ministry of science and innovation jci 2010 08414 and eco 2011 25624 the spanish ministry of economy and competitiveness ryc 2013 13838 the government of catalonia 2009 sgr 1157 and 2014 sgr 830 the barcelona gse and the bbva foundation through its first grant for researchers innovators and cultural creators

corporate debt firm size and financial fragility in emerging markets abstract the post global financial crisis period shows a surge in corporate leverage in emerging markets and a number of countries with deteriorated corporate financial fragility indicators altman s z score firm size plays a critical role in the relationship between leverage firm fragility and exchange rate movements in emerging markets while the relationship between firm leverage and distress scores varies over time the relationship between firm size and corporate vulnerability is relatively time invariant all else equal large firms in emerging markets are more financially vulnerable and also systemically important consistent with the granular origins of aggregate fluctuations in gabaix 2011 idiosyncratic shocks to the sales growth of large firms are positively and significantly correlated with gdp growth in our emerging markets sample relatedly the negative impact of exchange rate shocks has a more acute impact on the sales growth of the more highly levered large firms

environmental policy in majoritarian systems abstract this paper sheds new light on the determination of environmental tax policies in majoritarian federal electoral systems such as the u s and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental taxes in the absence of majority bias the socially preferred policy would be federal district level taxation which accounts both for cross boundary pollution and differences in industry concentration across districts in majoritarian systems however where the legislature consists of geographically distinct electoral districts the majority party at the national or state level favors home districts depending on the location of polluting industries and the associated damages the majority party may therefore impose sub optimally high or low pollution taxes due to a majority bias majority bias can influence the social welfare ranking of alternative environmental tax policies in some cases majority bias may make decentralized or federal uniform taxation the preferred solution

decentralization and pollution spillovers evidence from the re drawing of county borders in brazil decentralization can improve service delivery but it can also generate externalities across jurisdictional boundaries we examine the nature and size of water pollution externalities as rivers flow across jurisdictions panel data on water pollution in brazilian rivers coupled with county splits that change the locations of borders allow us to identify the spatial patterns of pollution as rivers approach and cross borders controlling for fixed effects and trends specific to each location the theory of externalities predicts that pollution should increase at an increasing rate as the river approaches the downstream exit border that there should be a structural break in the slope of the pollution function at the border and that a larger number of managing jurisdictions should exacerbate pollution externalities we find support for all four predictions in the data satellite data on growth in night time lights along rivers show that local authorities allow more settlements to develop close to rivers in the downstream portions of counties which is the likely underlying mechanism the border effects on pollution are not as pronounced when the cost of inter jurisdictional coordination is lower

scotland and small country independence the assessment this paper reviews some of the issues consequent on the formation of new states through secession while its particular focus relates to the potential withdrawal of scotland from the united kingdom it discusses preference heterogeneity as a potential cause of the break up of states relating that to recent developments in the economics of identity it examines some macroeconomic issues particularly debt and currency and reflects on how these might influence secession it examines alternatives fiscal decentralization to secession and considers the strategies that those arguing for and against secession may deploy it also explains the structure of this issue explaining how the different contributions come together

global financial risk aggregate fluctuations and unemployment dynamics abstract we use a panel structural vector autoregression methodology to study the impact of global financial risk shocks in emerging market economies emes versus small open advanced economies soaes the short term responses of gdp investment and un employment are similar in emes compared to soaes but their medium term responses differ considerably in emes the shock propagates less across gdp and investment and the response of unemployment is prominently more subdued further analysis suggests that while in emes these dynamics can be traced back to the response of country interest rates to global financial risk shocks and to the average degree of firm informality in soaes these factors are not at play instead for soaes the dynamics of bank credit can matter to some degree but more broadly a global financial risk shock passes through more directly into the economy

legislative representation bargaining power and the distribution of federal funds evidence from the us congress this article investigates the relationship between representation in legislatures and the geographic distribution of federal funds in a legislative bargaining model we demonstrate that funds are concentrated in high representation areas and two channels underlie this result the proposal power channel reflects the role of representation in committee assignments and the vote cost channel reflects the role of representation in coalition formation in our empirical analysis we find that small states relative to large states receive more funding in the us senate relative to the house we also find empirical support for the two channels underlying this relationship throughout the history of federations and international organisations a key consti tutional design question involves how jurisdictions of different sizes are represented in legislative bodies and how their votes will ultimately be weighted large jurisdictions typically argue for delegation sizes or voting weights that are roughly proportional to population whereas small jurisdictions typically argue for an equal number of delegates or votes for each jurisdiction this conflict over representation is presumably driven at least in part by a belief that increased representation strengthens bargaining power in the battle over the geographic distribution of funds authorised by these legislative bodies in this article i analyse the relationship between legislative representation bar gaining power and the geographic distribution of federal funds from both a theoretical and empirical perspective in addition to investigating the existence of a relationship between representation and federal funds i also explore the underlying mechanisms that is i ask which political institutions such as agenda control provided to commit tees and the formation of coalitions under majority rule shape the bargaining power of jurisdictions in central legislatures and thus facilitate the relationship between repre sentation and the distribution of federal spending to provide a framework for analysing these issues i begin by developing a simple theoretical model of a central legislature that determines the crossjurisdiction distri bution of local public goods which are financed by a national tax base both delegation sizes and population are variable allowing me to consider a variety of institutional arrangements for jurisdictional representation legislators represent local interests and given the common pool problem associated with concentrated benefits and dis persed tax costs attempt to increase ownjurisdiction spending but to restrain spending elsewhere the model follows a recent literature on legislative bargaining in which a proposer must secure a majority of votes in order to pass legislation and due to the

domestic credit growth and international capital flows during the pre crisis period europe experienced substantial cross country variation in domestic credit growth and cross border capital flows we investigate the inter relations between domestic credit growth and international capital flows during the period 1993 2008 with a special focus on the boom period of 2003 2008 we establish that domestic credit growth in european countries is strongly related to net debt inflows but not to net equity inflows this pattern also holds for an extended sample of 54 advanced and emerging economies

accountability and decentralisation in government an incomplete contracts model this paper approaches the question of the appropriate level of decentralisation of power in government as a problem in the allocation of control rights under incomplete contracts the model of the paper compares allocations of power to local central and regional government as alternative means of motivating governments to act in the interests of citizens centralisation allows benefits from policy coordination but has costs in terms of diminished accountability which can be precisely defined as the reduced probability that the welfare of a given region can determine the re election of the government the model is extended to allow for conflicts of interest within regions and externalities between central and local governments in a federation it is also applied to determining levels of fiscal transfer between localities and to circumstances where governments may act as leviathans appropriating resources for their own use

decentralization and the productive efficiency of government evidence from swiss cantons advocates of fiscal decentralization argue that among other benefits it can increase the efficiency of delivery of government services this paper is one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the productive efficiency of government using a data set of swiss cantons we first provide careful evidence that expenditure decentralization is a powerful proxy for legal local autonomy further panel regressions of swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment we also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing for the swiss case the gender education gap

the global crisis and intergovernmental relations centralization versus decentralization 10 years on there is a growing empirical literature on the effects of the global financial and economic crisis on intergovernmental relations this paper contributes to this literature by focusing on conventio

economic aspects of constitutional change the case of belgium is belgium threatened by secession in this article we highlight why belgium is unlikely to experience the secession of flanders and investigate belgium s journey to federalism we first call upon tools provided by economic theory then we turn to facts first having a look at belgium s history and second presenting the six reforms of the state which occurred between 1970 and 2013 progressively increasing the autonomy of belgian regions and communities and making belgian federalism an evolutionary maybe endless repeated game whose players have different strategies an offensive one for the north and a conservative one for the south then we examine the contemporary dangers and discuss the outcome of belgian game from the point of view of fiscal federalism and subsidiarity

harmonization and side payments in political cooperation for two districts or countries that try to internalize externalities i analyze a bargaining game under private information i derive conditions for when it is efficient with uniform policies across regions with and without side payments and when it is efficient to prohibit side payments in the negotiations while policy differentiation and side payments allow the policy to better reflect local conditions they create conflicts between the regions and thus delay the results also describe when political centralization outperforms decentralized cooperation and they provide a theoretical foundation for the controversial uniformity assumption traditionally used by the fiscal federalism literature

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

supermajority rule and bicameral bargaining this paper revisits the claim that supermajority rules and bicameral legislative structures restrain excessive government spending and taxation our analysis suggests that the extension effect of a supermajority rule that requires logrolling across additional members increases with the ratio of seats in the house relative to seats in the senate using a panel of us states 1970 2008 we find that the ratio of house to senate seats has a robust positive impact on the tendency of a supermajority rule to inflate the budget our finding implies that a supermajority rule can have a perverse effect on budget outcomes in bicameral legislatures owing to two factors the geographic overlap between chambers and the low price elasticity of demand for public goods

saving the euro mitigating financial or trade spillovers this paper analyzes through what channels the euro crisis affected firms and the efficacy of policies to mitigate the crisis it analyzes stock price responses for 3 045 nonfinancial firms in 16 countries to four key policy events during 2010 11 using precrisis benchmarks it separates financial effects from trade effects and examines how bank and trade linkages propagated shocks it finds that policy measures affected financially dependent firms more particularly in creditor countries with greater bank exposure to peripheral euro countries in statistically and economically significant ways trade linkages with peripheral countries played little role although euro movements meant some differential effects

distributive politics and the costs of centralization this paper studies the choice between centralization and decentralization of fiscal policy in a political economy setting with centralization regional delegates vote over agendas comprising sets of region specific projects the outcome is inefficient because the choice of projects is insufficiently sensitive to within region benefits the number of projects funded may be non monotonic in the strength of project externalities the efficiency gains from decentralization and the performance of constitutional rules such as majority voting which may be used to choose between decentralization and centralization are then discussed in this framework weaker externalities and more heterogeneity between regions need not increase the efficiency gain from decentralization

the economics of fiscal decentralization there is no complete overview or discussion of the literature of the economics of federalism and fiscal decentralization even though scholarly interest in the topic has been increasing significantly over recent years this paper provides a general brief but comprehensive overview of the main insights from the literature on fiscal federalism and decentralization in doing so literature on fiscal federalism and decentralization is grouped into two main approaches first generation approach and an emerging second generation approach the discussion generally covers the two notions of fiscal decentralization fiscal autonomy and fiscal importance of subnational governments as the background of the most recently developed index of fiscal decentralization in vo the relevance of this discussion to any further development of a fiscal decentralization index is briefly noted

rent seeking spillovers and the benefits of decentralization abstract in the presence of spillovers decentralized provision of local public goods may lead to a higher surplus than centralized provision even though localities have identical preferences indeed free riding costs associated to decentralization can be lower than the costs of rent seeking and influence activities under centralization actually centralization yields a higher level of regional surplus only if both the spillover effect from local public spending is sufficiently large and the elasticity of the influence function is sufficiently small

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

strategic delegation in a legislative bargaining model with pork and public goods abstract this paper examines the incentives of voters to appoint legislators with different preferences from their own the paper adopts an underlying legislative bargaining model proposed by volden and wiseman 2007 in which legislators with heterogeneous preferences divide a fixed budget between a public good and pork projects local public goods we show that voters have an incentive to strategically delegate to affect how the budget is divided at the legislative level when voters preferences for pork are not too strong the incentives for strategic delegation exist to appoint representatives who will direct more money to the public good and not to pork projects this generally results in at least as many representatives as districts that favor the public good the comparative statics predict that when strategic delegation occurs increasing the size of the legislature increases the fraction of the budget spent on the public good

modeling and analysis of renewable energy obligations and technology bandings in the uk electricity market in the uk electricity market generators are obliged to produce part of their electricity with renewable energy resources in accordance with the renewable obligation order since 2009 technology banding has been added meaning that different technologies are rewarded with a different number of certificates we analyze these two different renewable obligation policies in a mathematical representation of an electricity market with random availabilities of renewable generation outputs and random electricity demand we also present another alternative banding policy we provide revenue adequate pricing schemes for the three obligation policies we carry out a simulation study via sampling a key finding is that the uk banding policy cannot guarantee that the original obligation target is met hence potentially resulting in more pollution our alternative provides a way to make sure that the target is met while supporting less established technologies but it comes with a significantly higher consumer price furthermore as an undesirable side effect we observe that a cost reduction in a technology with a high banding namely offshore wind leads to more co2 emissions under the uk banding policy and to higher consumer prices under the alternative banding policy

international currency exposures valuation effects and the global financial crisis abstract we examine the evolution of international currency exposures with a particular focus on the 2002 12 period during the run up to the global financial crisis there was a widespread shift towards positive net foreign currency positions such that relatively few countries exhibited the archetypal emerging market short foreign currency position on the eve of the global financial crisis during the crisis the upheaval in currency markets generated substantial currency generated valuation effects much of which were not reversed there is some evidence that the distribution of valuation effects was stabilizing in the sense of showing a negative covariation pattern with pre crisis net foreign asset positions