defending the articles of confederation a reply to dougherty this reply addresses the issues raised bydougherty in response to my 1999 article in this journal ialso develop a new graphical model of the optimal collectionrate under the articles where states made contributions andcontrast it to the revenue potential from direct taxation ibelieve that despite dougherty s criticisms my argumentremains valid while the articles were not perfect in anabsolute sense that when more properly viewed in acomparative manner that the system of state contributions forraising revenue under the articles was and still is superiorto a system of direct federal taxation

micro incentives and municipal behavior political decentralization and fiscal federalism in argentina and mexico summary this article analyzes the mixed results of political and fiscal decentralization in latin america by comparing taxing and spending policies in six cities in argentina and mexico consistent with previous studies we find that decentralization has been frustrated by overconcentration of power at the provincial level and large vertical fiscal imbalances though we characterize these as functional elements in a system of redistributive policy making that benefits a wide array of provincial and municipal actors we seek to add a new dimension to the literature by arguing that micro level incentives conditions and circumstances particular to specific places are more important determinants of municipal behavior than macro level structures those policy and institutional changes intended to make officials more responsive to local conditions federalism local elections intergovernmental transfers and own source revenues we conclude that the theory of decentralization relies on a flawed conception of the causal mechanisms that are hypothesized to create responsiveness in local officials

institutional competition versus centralization quo vadis europe lots of steep and sometimes blind bends with harsh speed limits and frequent detours but still it has been one that has attracted more and more traffic after a successful period of shaping a customs union and a free trade area following the treaty of rome 1957 europe became infected with euro sclerosis in the seventies owing to an increased intensity of national regulation especially in the labour market the constructionist approach to harmonization from above slowed down the speed of integration almost to a halt only the change of two fundamental rules revitalized the european integration process namely the introduction of majority voting in the ec council and the mutual recognition of national regulations brought about by the 1979 ruling of the european court with the single european act and the launch of the internal market programme europhoria blossomed finally leading to the maastricht treaty which aimed to be the masterpiece of european integration only very recently the danish no and the unconvincing approval by the french voters cooled off hopes for a united states of europe signalling that european integration is at the crossroads once again

do high taxes lock in capital gains evidence from a dual income tax system the purpose of this paper is to study whether investors willingness to realize capital gains falls when the marginal tax rate on capital gains is raised we use a rich register based panel data set covering almost 8 of the swedish population the results indicate that a 10 increase in capital gains tax rate reduces the number of realizations of capital gains with 8 7 and the realized amount given the decision to realize with 1 9 in addition we find that wealthy individuals seem to respond more to changes in capital gains tax rates than less wealthy

secular cost changes and the size of government towards a generalized theory abstract baumol s cost disease account of government growth is contrasted with that of kau and rubin who focus on decreasing costs of tax collection over time the apparent paradox wherein the first theory explains government growth by cost increases and the second by way of cost decreases is technically resolved why both theories seem to be able to stand up to empirical tests even though they use similar data is then explained finally public choice analysis is employed to reveal further potential for the ultimate construction of one all embracing secular cost change theory of government growth

foreign direct investment and the dark side of decentralization countries differ in their government architecture some countries are characterized by a high degree of concentration of fiscal administrative judicial executive and lawmaking powers whereas others have decentralized many functions and responsibilities of government to different jurisdictions and various levels of government the cross country differences in the organization of government are also not static but have been subject to substantial change in many countries the co existence of different organizational patterns of government has created an important debate regarding the determinants of particular government structures as well as questions regarding the optimality of different forms of organization

nash equilibria in models of fiscal competition abstract this paper analyzes nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition small number nash equilibria in which tax rates are the strategic variables are shown not to coincide with nash equilibria in which public expenditure levels are the strategic variables

insecure property rights and government ownership of firms we develop a theory of the ownership of firms in an environment without secure property rights against state encroachment private ownership leads to excessive revenue hiding and state ownership i e national government ownership fails to provide incentives for managers and local governments in a credible way because local government ownership integrates local government activities and business activities local government may better serve the interests of the national government and thus local government ownership may credibly limit state predation increase local public goods provision and reduce costly revenue hiding we use our theory to interpret the relative success of local government owned firms during china s transition to a market economy

expenditures and receipts testing for causality in state and local government finances the results of our tests indicate similarities between the expenditure tax receipt relations of state governments to those previously reported for the federal government in manage and marlow 1986 the results reported here indicate support for the hypothesis that tax receipts cause expenditures at the state level of government for tests utilizing symmetric lag structures ranging from three to five years state expenditures appear to follow state tax receipts for the shortest lag length 2 2 the determination of bidirectional causality does not make us reject the hypothesis that higher spending levels result from higher revenue levels rather the causality appears to be in both directions for the shortest lag length

do external grants to district governments discourage own revenue generation a look at local public finance dynamics in ghana summary using rich panel data on all of ghana s districts local public finances over 11 years this paper investigates the way that intergovernmental and other transfers to local governments affect local governments incentives to collect internally generated revenues and funds igf we find that despite an incentive scheme built into one of the major intergovernmental grants the flow of all grants taken together discourages rather than encourages igf this is reflected both in the depressing effect of transfers on igf levels as well as on igf growth

dilemmas of local governance under the development zone fever in china a case study of the suzhou region this article aims to explore the mechanisms of the development zone fever in the suzhou region located in the fast growing yangtze river delta and investigates from an institutional perspective the practice of relevant intragovernmental governance in the context of rapid industrialisation since the 1990s a specific mode of governance the evaluative economic indicators scheme inherited from the earlier socialist planning system combined with the party state s promotion evaluation system plays an essential role in this transformation of farmland property rights however this model of development is not necessarily helpful for local financial conditions and it results in the disclacement of peasants and the loss of land resources based on the resulting dilemmas of governance it is argued that in addition to the economic paradigm which focuses on consequences of fiscal reforms and devolution scholars should pay more attention to factors such as the party state s promotion evaluation system and

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

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

political business cycles 40 years after nordhaus the aim of this article is to survey the huge literature that has emerged in the last four decades following nordhaus s rev econ stud 42 2 169 190 1975 publication on political business cycles pbcs i first propose some developments in history of thought to examine the context in which this ground breaking contribution saw the light of the day i also present a simplified version of nordhaus s model to highlight his key results i detail some early critiques of this model and the fields of investigations to which they gave birth i then focus on the institutional context and examine its influence on pbcs the actual research agenda finally i derive some paths for future research

heterogeneous vertical tax externalities and macroeconomic effects of federal tax changes the role of fiscal advantage abstract how do state tax rates respond to federal tax shocks this paper presents a novel mechanism of heterogeneous vertical tax externalities across state levels of fiscal advantage showing that tax increases can be expansionary even without their reinvestment states rich in natural resources have a fiscal advantage in the inter state competition over production factors which allows them to respond better to increases in federal taxes and consequently attract capital from other parts of the nation we add heterogeneity in fiscal advantage levels to an otherwise standard model of vertical tax externalities and horizontal tax competition the model shows that irrespective of federal redistribution the contractionary effect of a federal tax increase can be overturned in fiscally advantaged states through an increase in their tax base using the case of the u s and narrative based measures of federal tax shocks a la romer and romer 2010 we provide empirical evidence for the various aspects of this mechanism specifically our baseline estimates indicate that controlling for federal transfers a 1 increase in the gdp share of capital related federal taxes at the beginning of a year increases the growth rate of the per capita tax base by approximately 0 7 in high fiscal advantage states at the end of it

does tax competition tame the leviathan abstract we study the impact of tax competition on equilibrium taxes and welfare focusing on the jurisdictional fragmentation of federations in a representative agent model of fiscal federalism fragmentation among jurisdictions with benevolent tax setting authorities unambiguously reduces welfare if however tax setting authorities pursue revenue maximization fragmentation by pushing down equilibrium tax rates may under certain conditions increase citizen welfare we exploit the highly decentralized and heterogeneous swiss fiscal system as a laboratory for the estimation of these effects while for purely direct democratic jurisdictions which we associate with relatively benevolent tax setting we find that tax rates increase in fragmentation fragmentation has a moderating effect on the tax rates of jurisdictions with some degree of delegated government our results thereby support the view that tax competition can be second best welfare improving by constraining the scope for public sector revenue maximization

redefining rural collectives in china land conversion and the emergence of rural shareholding co operatives as land conversion has led inevitably to socioeconomic dislocations in china a variety of bottom up reforms have been designed to mitigate and contain the resultant conflicts this evolves the cre

public employment decline in developing countries in the 21st century the role of globalization abstract does globalization increases or decreases the size of government compensation versus efficiency hypothesis the debate is re visited with innovative bureaucracy and globalization indicators using panel data for the unexplored period 2000 2016 robust evidence suggests that global competition reduces public employment

eco city development in china addressing the policy implementation challenge over the last few decades china has seen a steep rise in diverse eco city and low carbon city policies recently attention has begun to focus on the perceived shortcomings in the practical delivery of related initiatives with several publications suggesting a gap between ambitious policy goals and the emerging realities of the newly built environment to probe this further in this article we examine based on the policy network approach how the gap between high level national policies and local practice implementation can be explained in the current chinese context we develop a four pronged typology of eco city projects based on differential involvement of key policy actor groups followed by a mapping of what are salient policy network relations among these actors in each type our analysis suggests that within the overall framework of national policy a core axis in the network relations is that between local government and land developers in some cases central government agencies often with buy in from international architecture engineering and consulting firms seek to influence local government planning through various incentives aimed at rendering sustainability a serious consideration however this is mostly done in a top down manner which overemphasizes a rational technocratic planning mode while underemphasizing interrelationships among actors this makes the emergence of a substantial implementation gap in eco city practice an almost predictable outcome consequently we argue that special attention be paid in particular to the close interdependency between the interests of local government actors and those of land and real estate developers factoring in this aspect of the policy network is essential if eco city implementation is to gain proper traction on the ground

when fiscal recentralisation meets urban reforms prefectural land finance and its association with access to housing in urban china by retrieving household level information from 127 938 household heads and fiscal data from 177 prefectures located in eastern and central china this research quantifies the net association between land finance and urban housing tenure while the results demonstrate that in 2005 china s urban housing market remained stratified and simultaneously favoured individuals possessing economic political and human capital the key finding is that net of other household and prefecture level effects land finance is significantly and negatively associated with local homeownership moreover both the demand and supply sides of the urban housing market contribute to such net association by demonstrating the internal links between urban housing and local finance this research not only provides a more holistic view of housing stratification during institutional changes but also lends empirical support to conceptual frameworks that explain a territory based coalition between local governments and selective enterprises

do budget maximizing public officials increase the probability of property reassessment county governments in pennsylvania face non binding limits on their property tax rates these are considered non binding because they do not place a limit on tax levies or expenditures assuming local public officials have monopoly power tax rate limits can be circumvented by reassessing the property tax base a two stage process was hypothesized in which the probability of reaching tax rate limits first was determined and the probability of reassessment then was determined the effect of budget maximizing government officials at each stage was tested for 66 pennsylvania counties over the 1970 1995 period the empirical results showed that variables associated with budget maximizing behaviour influenced the choice in each stage public expenditure growth increased the probability of reaching the tax rate limit in the first stage while reaching the tax rate limit increased the probability of reassessment in the second stage the estimates also showed that economic fiscal and taste variables were signific

fiscal decentralization and government size numerous studies have attempted to model the possible factors contributing to universal growth in public sectors this paper analyzes one device that appears capable of controlling some of that growth fiscal decentralization the results reported here also support the use of monopoly government assumptions in models of public policy

land use change and economic growth in urban china a structural equation analysis land use change is not only the consequence of economic growth but also its direct and indirect driver based on official land use change data from 2004 to 2008 this study found substantial land use changes in china with considerable cultivated land conversion into urban industrial and transportation purposes correlation analysis shows a strong association between land use change and absolute gdp expansion structural equation analysis indicates that economic growth drives land use change industrial land expansion directly stimulates economic growth land has been successfully used as a tool to attract foreign investments and to sustain infrastructure investments indirectly triggering economic growth the findings suggest that land is not a simple factor of production but a strategic tool for economic development in urban china

a predictive index for the flypaper effect abstract it is well established that lump sum public grants boost local government spending more than an equivalent increase in private income the flypaper effect one shortcoming of the related literature is that it presumes all communities have an identical propensity to consume from an intergovernmental grant this paper is one attempt to allow for a heterogeneous response the working conjecture is that government expenditure on administrative overhead is a gauge of voter control over fiscal decisions high overhead spending implies a lower provision of public services and a stronger role for revenue maximizing forces in the budget setting process as such the flypaper effect should be more marked in high overhead communities an overhead index is applied to a sample of pennsylvania communities in the philadelphia metropolitan area it is difficult to understand these governments spending propensities from various windfall revenues without the help of the overhead index supportive evidence for this approach because overhead data is widely available the technique here can be used to address important policy questions such as predicting variations in state government responses to the recently created lump sum welfare grants

establishing property rights establishing secure property rights in transition economies amounts to solving two problems inefficiency structures of control rights over assets and poor contract enforcement politicians and bureaucrats still wield excessive control over assets which results in inefficient underinvestment by entrepreneurs corruption is one way of getting around political control but the drawbacks are considerable particularly the limited enforceability of corruption contracts more workable strategies for establishing property rights in transition economies are giving equity to the bureaucrats and other parties that have control reforming the civil service and removing bureaucratic control rights through privatization russia s experience shows how privatization combined with equity incentives for enterprise insiders transfers control rights from the bureaucrats and stimulates political and economic pressures to protect private property rights

economists and the welfare state abstract this paper constrasts the views of the welfare state of economists in the 1940s and 1950s with those of the current generation it is argued that economists as a profession in particular in the scandinavian countries have changed from being strong spokesmen for the welfare state to becoming much more critical the reasons for this are sought both in the expansion of the public sector in recent decades and in the development of economic theory in the areas of public finance insurance and incentives and public choice an attempt is made to evaluate the importance of the empirical and theoretical developments for the changing views of the welfare state

globalization regionalism and labour markets should we recast the foundations of the eu regime in matters of regional rural and urban development globalization has been accused of being the source of many problems some claim that this would justify a fundamental change of the eu regime that takes international competitiveness of the economy as its point of departure this would have consequences for the present set up of the eu cohesion regime and thus also for the policy toolkits of individual regions the article analyses the effects of globalization and regionalism on labour markets it does so on the basis of an extensive review of the theoretical and empirical literature covering various strands of thought the survey shows that fears about negative effects are not justified provided a consistent set of policies is pursued so the review does not support claims for a change of the eu regime neither in matters of the macro aspects nor in matters of regional development and cohesion

regional decentralization and fiscal incentives federalism chinese style abstract aligning the interests of local governments with market development is an important issue for developing and transition economies using a panel data set from china we investigate the relationship between provincial government s fiscal incentives and provincial market development we report three empirical findings first we find that during the period of fiscal contracting system the discrepancy between ex ante contracts and ex post implementation was relatively small suggesting that the fiscal contracts were credible second we find a much higher correlation about four times between the provincial government s budgetary revenue and its expenditure during 1980s and 1990s as compared to 1970s demonstrating that provincial governments faced much stronger ex post fiscal incentives after reform third we find that stronger ex ante fiscal incentives measured by the contractual marginal retention rate of the provincial government in its budgetary revenue are associated with faster development of the non state sector as well as more reforms in the state sector in the provincial economy this holds even when we control for the conventional measure of fiscal decentralization finally we compare federalism chinese style to federalism russian style

the economic effects of constitutions replicating and extending persson and tabellini persson and tabellini the economic effects of constitutions the mit press cambridge 2003 show that presidential regimes and majoritarian election systems have important economic effects here the number of countries is expanded and more recent data is used in replicating and extending their analyses we find that the effect of presidential regimes vanishes almost entirely with regard to electoral systems the original results are largely confirmed majoritarian as opposed to proportional electoral systems lead to lower government expenditure lower levels of rent seeking but also lower output per worker the institutional details such as the proportion of candidates that are not elected on party lists and district size are particularly important

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

political decentralization and corruption evidence from around the world abstract how does political decentralization affect the frequency and costliness of bribe extraction by corrupt officials previous empirical studies using subjective indexes of perceived corruption and mostly fiscal indicators of decentralization have suggested conflicting conclusions in search of more precise findings we combine and explore two new data sources an original cross national data set on particular types of decentralization and the results of a firm level survey conducted in 80 countries about firms concrete experiences with bribery in countries with a larger number of government or administrative tiers and given local revenues a larger number of local public employees reported bribery was more frequent when local or central governments received a larger share of gdp in revenue bribery was less frequent overall the results suggest the danger of uncoordinated rent seeking as government structures become more complex

nation states vs united empire effects of political competition on economic growth is political fragmentation i e nation states more favorable to economic growth than political unification i e a united empire this study develops an endogenous growth model to analyze the growth effects of fragmentation versus unification under unification the economy is vulnerable to excessive leviathan taxation and possibly subject to the costs of unifying heterogeneous populations under fragmentation the competing rulers are constrained in taxation but spend excessively on military defense if capital mobility is above below a threshold then fragmentation unification would favor growth and this threshold is increasing in the degree of defense competition and decreasing in the costs of heterogeneity

is there a bias toward excess in u s government budgets or deficits do the political institutions of a majoritarian representative democracy and in particular those of the united states systematically produce either levels of public spending or budget deficits that are excessive should u s political institutions be altered by constitutional amendment to deal with these problems i will start by examining the issue of public spending and then turn to the question of budget deficits

on the form of transfers to special interests an important question in political economy concerns the form of transfers to special interests the chicago view is that political competition leads politicians to make such transfers efficiently the virginia position is that lack of information on the part of voters leads politicians to favor inefficient sneaky methods of redistribution this paper analyzes the form of transfers in a model of political competition in which politicians have incentives to make transfers to special interests it shows that when voters have imperfect information about both the effects of policy and the predispositions of politicians inefficient methods of redistribution may be employed

do law enforcement expenditures crowd out public education expenditures as state and local governments have devoted a rising share of their resources to crime related programmes concerns have arisen that spending on other programmes such as education will fall coupled with growing public concerns over performance of the public education system and expectations that prison populations will rise as states pass and enforce more stringent sentencing laws it is not surprising that some view the expansion of crime related programmes as troublesome one hypothesis is that education and crime related programmes directly compete for government expenditures so that what one programme gains the other must lose as in a fixed pie situation a competing hypothesis is that spending on these two public programmes are unrelated and therefore higher crime related spending may also lead to higher taxes or public debt issuance or to reduction in spending on programmes other than education we estimate a three equation model of spending on crime related programmes spending on education and

does government ideology influence deregulation of product markets empirical evidence from oecd countries this paper examines how government ideology has influenced deregulation of product markets in oecd countries i analyze a dataset of non manufacturing regulation indicators covering energy transport and communication industries in 21 oecd countries over the 1980 2003 period and employ two different indices of government ideology the results suggest that government ideology has had a strong influence on the deregulation process market oriented governments promoted the deregulation of the energy transport and communication industries this finding identifies remarkable differences between leftist and rightwing governments concerning the role of government in the economy and basic elements of political order

rights equity and economic efficiency the adelman morris premise that economic development and equity are incompatible is not supported by the evidence of a strong relationship between equality of rights and the income distribution the premise that equity requires the denial of individual rights and the affirmation of state control is an oxymoron what has been overlooked in the literature on growth and equity is the effect of the rights structure on both economic efficiency and on the income distribution the evidence is that free societies have much larger shares of income going to the middle 60 percent of the distribution than is observed in societies where men are not free to choose in politically open societies compared to politically closed regimes the share of income to the middle three quintiles is q2 10 7 vs 8 0 q3 16 0 vs 11 5 and q4 22 9 vs 17 9 in the aggregate the shares to the middle quintiles are 49 6 vs 37 4 in nations that obey the rule of law compared to regimes in which the rights of the state relative to the individual are paramount the comparisons are q2 11 2 vs 7 4 q3 16 3 vs 10 6 q4 23 0 vs 17 3 summing the three quintiles yields a comparison of 50 5 vs 35 3 in countries that have private property market allocation of resources and minimum intervention by the state compared to command economies the shares of income to the middle quintiles are q2 10 8 vs 8 0 q3 16 0 vs 11 1 and q4 22 8 vs 17 7 aggregated the shares of the middle class in regimes with high levels of economic liberty are 49 6 vs 36 8 for regimes with restricted private economic rights

industrial capitalisation and spatial transformation in chinese cities strategic repositioning state owned enterprise capitalisation and the reproduction of urban space in beijing this study examines the urbanisation of capital in the context of a socialist economy undergoing profound market transition it identifies the dynamics of state capital as a missing link in understanding the variegated forces shaping chinese cities through a case study of beijing china s capital city contrary to the popular perception of the rolling back of state owned enterprises soes as a natural outcome of capital switching from a declining primary circuit to a booming secondary circuit this empirical study of urban transformation in the beijing metropolis identifies an intriguing trajectory of capitalisation without privatisation whereby the commodification of the land and housing market has been accompanied by a growing share of capital assets under the ownership control of soes and a spatial concentration of state capital toward the city centre since the turn of the new century the development experience centred on the capitalisation of soes is shown to be reflective of the new strategic

federalism as a commitment to reserving market incentives the authors advance a new perspective in the study of federalism their approach views federalism as a governance solution of the state to credibly preserving market incentives market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures the salient features of federalism decentralization of information and authority and interjurisdictional competition help provide credible commitment or these purposes in addition the authors suggest that some federalism are self sustaining

land leasing and local public finance in china s regional development evidence from prefecture level cities by analysing the evolution of local governments roles in different periods of china s growth in transition this paper explores local fiscal incentives to use subsidised land and infrastructure as key instruments in regional competition for manufacturing investment since the mid 1990s local land development behaviour is related to china s current land use institutions and intergovernmental arrangements on the basis of panel data covering prefectural level cities from 1999 to 2003 the paper empirically identifies and compares the fiscal impacts of different forms of land leasing by negotiation versus by auction tender policy implications are drawn from this analysis for the further reform of china s urban land system and fiscal institutions

the limits of tax and expenditure limits tel implementation as a principal agent problem previous scholarship has shown that tax and expenditure limits tels often fail to constrain government growth this paper views the implementation of tels as a principal agent problem agency theory predicts that delegation is affected by the preferences of agents and the costs of monitoring those agents using panel data for the us states from 1970 through 2008 i conduct an empirical test of the validity of the principal agent model for tels i find that state spending limitations are only effective at cutting the growth of state and local spending under the direction of agents who have a preference for limited government additionally state property tax limitations are only effective when monitoring does not require costly coordinated action these findings contradict an alternative theory of tel implementation that looks towards the policy s origin my research suggests that the arrangements of delegation determine when and under what conditions tels effectively reduce government growth

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

leviathan in a dual economy this paper studies the policies of a leviathan state with an ambition to make money and to stay in power the economic framework is a developing country characterized by dual markets government revenue is raised by taxing the agricultural sector part of this revenue is offered to the politically influential urban population in the form of low productive but well paid public sector employment i calculate the optimal level of rural taxation from the point of view of the leviathan and investigate its effects on migration industrialization public sector employment and urban unemployment in different political scenarios

interdependencies between transport fuel demand efficiency and quality an application to austria abstract this paper focuses on the interdependencies between technical efficiencies and energy demand which are often either treated in isolation or do not get the sufficient attention in the literature more precisely this paper uses technical efficiencies as one crucial determinant of energy demand in order to integrate at least two issues that are usually investigated separately from each other the rebound effect resulting from improved technical efficiencies and the asymmetry of energy demand in this regard our paper sets out a theoretical framework which has the following implications higher efficiency increases service demand first order rebound low fuel prices and higher efficiency increases the demand for quality second order which in turn increases service demand further third order ceteris paribus energy price shocks should increase scrapping rates fuel prices direct the rd those on engine efficiency are irreversible which has the consequence that energy price elasticities depend on the history of energy prices rather than being asymmetrical derived implications are subsequently tested on austrian data in particular the purchasing decision diesel versus gasoline powered cars allows to refute the myth that consumers apply high implicit rates for discounting the future benefit from efficient cars

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

joint liability lending and the rise and fall of china s township and village enterprises abstract we present a new explanation for the rise and fall of collectively owned enterprises based on the changing lending preferences of banks until the mid 1990s bank loans to collective firms exhibited the key features of joint liability lending supported by the sanctioning ability of local government leaders however subsequent changes in collateral firm performance interest rates and financial competition led banks to prefer individual lending to private firms this explanation is supported by empirical analysis of the determinants of bank lending preferences the involvement of township leaders in lending and the ability of firms to obtain loans

optimal central banker contracts and common agency this paper considers the contracting approach to centralbanking in a simple common agency model we suggest thatcentral banker contracts that do not consider the possibilityof more than one principal existing are incomplete contracts such incomplete contracts can be a poor form ofmonetary policy delegation under common agency we develop amodel with two principals society government and ageneric interest group whose objective conflicts withsociety s ex ante preferences by incorporating an inflationarybias we determine when the government offered orinterest group offered contract dominates the central banker sdecision the results largely depend on whether theinterest group offered contract is written in terms of outputor inflation

the evidence on globalisation globalisation is blamed for many socioeconomic shortcomings i discuss the consequences of globalisation by surveying the empirical globalisation literature my focus is on the kof indices of globalisation that have been used in more than 100 studies early studies using the kof index reported correlations between globalisation and several outcome variables studies published more recently identify causal effects the evidence shows that globalisation has spurred economic growth promoted gender equality and improved human rights moreover globalisation did not erode welfare state activities did not have any significant effect on labour market interaction and hardly influenced market deregulation it increased however within country income inequality the consequences of globalisation thus turn out to be overall much more favourable than often conjectured in the public discourse

politicians decision making with re election concerns abstract we study the impact of elected officials re election concerns on their decisions on whether to undertake new projects the value of a project to a jurisdiction depends in part on its elected official s uncertain ability at providing some public goods our main result is that the elected official s willingness to pay for the project differs from voters willingness to pay if the incumbent official expects to lose win the election then she is willing to pay more less than the project s total value to voters we show how our analysis can be applied to bidding wars among jurisdictions for firms

did government decentralization cause china s economic miracle many scholars attribute china s market reforms and the remarkable economic performance they have fostered in part to the country s political and fiscal decentralization political decentralization is said to have stimulated local policy experiments and restrained predatory central interventions fiscal decentralization is thought to have motivated local officials to promote development and harden enterprises budget constraints the locally diversified structure of the prereform economy is said to have facilitated liberalization reexamining these arguments the authors find that none establishes a convincing link between political or fiscal decentralization and china s successes they suggest an alternative view of the reform process in which growth enhancing policies emerged from competition between promarket and conservative factions in beijing

the evolution of tax structures certain themes recur throughout this paper the traditional account of the evolution of tax structures through the interaction of increasing efficiency and the claims of special interests plays a role but is not the whole story different taxes create tradeoffs between the costs of administration and compliance specification of these costs creates a framework in which long term trends like the growth and centralization of revenues and the increasing dependence on direct taxation can be understood this framework applies to observable collective decisions to alter tax structures uncertainty about ultimate incidence plays a major role in such decisions it also applies to the decentralized context of adjustment and resistance this framework can be used to investigate the extent of redistribution within tax systems and of the requirement of frequent reforms to sustain redistribution against resistance the simultaneous consideration of economic and political aspects of taxation can only improve future research

does competition among public schools benefit students and taxpayers comment school choice policies promise to align the incentives of school administrators with the demands of parents and may therefore lead to more efficient educational production milton friedman 1962 geoffrey brennan and james buchanan 1980 john chubb and terry m moe 1990 absent a large scale school voucher program in the united states however this prediction has been difficult to test several authors e g melvin v borland and roy m howsen 1992 clive r belfield and henry m levin 2002 have suggested studying the effects of tiebout choice the use of the residential location decision to select among local monopoly education providers the idea here is that fragmented governance induces competition among school districts analogous to that which would occur among schools with nonresidential choice in an influential paper caroline m hoxby 2000 points out that current governance structures are potentially endogenous to school productivity and proposes that variation in topography which may have influenced optimal jurisdiction size before modern transportation technologies provides a source of exogenous variation she estimates instrumental variables regressions of individual test scores and school spending on a metropolitan level tiebout choice index defined as one minus a herfindahl concentration index with districts enrollments as their market shares using as excluded instruments the number of larger and smaller streams in the area she reports substantial positive effects of district fragmentation on student test scores and negative effects on spending this comment presents a reanalysis of hoxby s test score results which form the core of her empirical analysis these results turn out to be quite sensitive to plausible alterations to hoxby s specification in particular the large significant effect of choice on achievement obtains

from hong kong s capitalist fundamentals to singapore s authoritarian governance the policy mobility of neo liberalising shenzhen china shenzhen special economic zone sez has been the flagship labouratory of deng xiaoping s reform and open door policy and the forerunner of china s capitalist transformation the initiation of the shenzhen sez was driven by the imperative of political and economic survival along the state hierarchy and was informed by the international practices of export processing zones epzs shenzhen s capitalist fundamentals such as the commodification of land and labour were largely established through imitating its big master hong kong across the border however shenzhen s policy learning style has gradually shifted from laissez faire hong kong to authoritarian singapore propelled by the aspiration shared among policy making party elites across china s administrative hierarchy of perpetuating the single party rule theoretically this paper demonstrates how policy mobility is shaped path dependently by the pre structured institutional ideological regime in what ways the idiosyncratic geographical historic

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

strategic interaction in local governments industrial land supply evidence from china land is an important tool for local governments to attract investments and promote local economic growth in china based on panel data of chinese prefecture level cities from 2003 to 2012 this paper employs spatial panel data models to examine the strategic interaction among local governments in industrial land supply and to indentify its possible sources the empirical results show that there exists strategic interaction among local governments in industrial land leasing price local governments industrial land leasing price is significantly impacted by the action of neighbouring cities they mimic each other in terms of industrial land leasing price to attract outside investments empirical evidence reveals that the strategic interaction comes from both yardstick competition and resource flow effects local governments react more to their neighbours industrial land leasing price during political cycle periods

reviving leviathan fiscal federalism and the growth of government this article revisits the influential leviathan hypothesis which pos its that tax competition limits the growth of government spending in decentralized countries i use panel data to examine the effect of fiscal decentralization over time within countries attempting to distinguish between decentralization that is funded by intergovernmental transfers and local taxation first i explore the logic whereby decentralization should restrict government spending if state and local governments have wide ranging authority to set the tax base and rate especially on mobile assets in countries where this is most clearly the case decentralization is associated with smaller government second consistent with theoretical arguments drawn from wel fare economics and positive political economy i show that governments grow faster as they fund a greater portion of public expenditures through intergovernmental transfers

sources of inefficiency in a representative democracy a dynamic analysis this paper studies the efficiency of policy choice in representative democracies it extends the citizen candidate model of democratic policy making to a dynamic environment equilibrium policy choices are shown to be efficient in the sense that in each period conditional on future policies being selected through the democratic process there exists no alternative current policy choices which can raise the expected utilities of all citizens however policies that would be declared efficient by standard economic criteria are not necessarily adopted in political equilibrium the paper argues that these divergencies are legitimately viewed as politicalfailures

municipal annexation and local monopoly power we have found that the fiscal power of a city can be increased by extension of its borders within a land area that is homogeneous with respect to earning opportunities even when numerous rival jurisdictions exist in the area we hypothesized that extending municipal boundaries will have a positive effect on discretionary outlays and on expenditures per capita the evidence presented supports these hypotheses furthermore municipal wages appear to be significantly increased in cities experiencing annexation growth therefore we would expect to find that municipal employees are more inclined to favor annexation than the rest of the electorate from a policy standpoint this study suggests that significant perverse effects on fiscal efficiency may follow adoption of legal reforms that facilitate the ability of municipalities to extend their borders or that restrict the formation of new municipalities

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

developing by borrowing inter jurisdictional competition land finance and local debt accumulation in china although the investment oriented development model for economic growth adopted by chinese governments has generated spectacular results the risks of debt financed urbanisation and economic development have recently become evident in mounting local debts that are undermining the financial system triggering concerns with respect to local governments indebtedness financial stability and sovereign risk in china in this paper we portray the uneven spatial and temporal dynamics of local government debt in china and examine the ways in which it is intertwined with institutional political and economic factors our analysis shows that while global and national economic conditions have resulted in a dramatic increase in local government debt particularly in the late 2000s and the early 2010s the spatial variation of local debt accumulation in china could be partly explained by two institutional factors land finance and inter jurisdictional competition we argue that the behaviour of local governments may

tackling the european migration problem this paper will begin by examining the historical pattern of migration and the empirical dimension of western europes migration problem a next step examines the labor market issues and impacts on natives as western europe perceives them the paper concludes with a discussion of policy issues and options excerpt

tax structure and public sector growth abstract it has been hypothesized that a jurisdiction s tax structure exerts an indipendent effect upon the growth of its public sector we test this hypothesis by examining the relationship between the growth of state general expenditure and the elasticity of tax revenues with respect to income the work takes advantage of a very careful set of income elasticities for the personal income and sales tax systems for each state for every year from 1978 to 1983 the main conclusion is that the data do not support the notion that the form of the tax structure exerts an independent effect on public sector growth

emerging spaces of neoliberal urbanism in china land commodification municipal finance and local economic growth in prefecture level cities this study examines the popular practices of chinese urbanism in which commodification of urban land has been actively pursued by municipal governments as a means of revenue generation in the era of neoliberalisation the research identifies a complex diverse and self conflicting internal dynamics that characterised the chinese state reveals the political and financial motives of local governments to engage in urbanism and maps out the emerging geography of neoliberal urbanism land commodification has become a main source of municipal finance accounting for over 30 of total municipal budgetary revenue and nearly 40 of the fund for urban maintenance and construction an inverse u shaped relationship is found between the importance of land commodification to municipal finance and the level of urban economic growth a similar relationship is identified for land based municipal finance and degree of openness

does the opening of central and eastern europe threaten employment in the west t he opening up of central and eastern europe posed a profound economic challenge for the european union eu virtually overnight eu countries were confronted with a group of neighbouring countries with structurally very different economic conditions the economic system of the central and eastern european countries ceec was built on nearly 50 years of centrally based planning and even more important was the huge gap in income wages and productivity compared to the gradual process that characterises post war european integration the demise of the communist legacy represented an abrupt shock after a deep recession in the early nineties several transition countries are now doing well if this trend continues some of the ceec including poland hungary and the czech republic will turn into fast growing high performing countries in western europe this prospect is not greeted with enthusiasm by those policymakers business and trade union representatives who fear the competition of the newly emerging economies in central and eastern europe not surprisingly the adjustment to this new reality has become a key issue on europe s policy agenda not in the least because poland hungary the czech republic slovenia and estonia have started negotiations to join the eu in the near future most of the policy concerns relate to employment eastern europe represents a large reservoir of low wage labour in the eu s backyard there is a concern that

housing price fluctuations and financial risk transmission a spatial economic model financial risk derived from housing price fluctuations in china garnered much public concern recently based on the theoretical analyses of the transmission of financial risk from housing price flu

political economy of mechanisms we study the optimal mirrlees taxation problem in a dynamic economy in contrast to the standard approach where the taxation mechanism is operated by a benevolent planner with full commitment power we focus on economies in which policy decisions are made by self interested politicians who cannot commit to policies the society controls politicians using elections we show that the provision of incentives to politicians can be partly separated from redistribution across agents and that political economy constraints can be modeled as introducing additional aggregate distortions in the dynamic mirrlees problem we provide conditions under which the political economy distortions persist or disappear in the long run if the politicians are as patient as the agents the best sustainable mechanism leads to an asymptotic allocation where the aggregate distortions arising from political economy disappear in contrast when politicians are less patient than the citizens positive aggregate labor and capital taxes remain even asymptotically we conclude by providing a brief comparison of centralized

federalism chinese style the political basis for economic success in china china s remarkable economic success rests on a foundation of political reform providing a considerable degree of credible commitment to markets this reform reflects a special type of institutionalized decentralization that the authors call federalism chinese style this form of decentralization has three consequences first it fosters competition not only in product markets but also among local governments for labor and foreign capital this competition in turn encourages local government experimentation and learning with new forms of enterprises regulation and economic relationships second it provides incentives for local governments to promote local economic prosperity finally it provides a significant amount of protection to local governments and their enterprises from political intrusion by the central government

public choice social choice and political economy since world war ii a large literature has arisen that uses the methodology of economics to examine the behavior of governments and the actors in them some scholars refer to their research as public choice some as social choice and still others as political economy this article discusses the distinctions among these three terms it concludes that all of the research falling under these three headings has much in common and that people who refer to their work as public choice or political economy are essentially employing identical methodologies contributions to public choice narrowly defined are more often positive and empirical analyses of government behavior than those in social choice narrowly defined

inter country distancing globalisation and the coronavirus pandemic originating in china the coronavirus has reached the world at different speeds and levels of strength this paper provides an initial understanding of some driving factors and their consequences since transmission requires people the human factor behind globalization is essential globalization a major force behind global wellbeing and equality is highly associated with this factor the analysis investigates the impact globalization has on the speed of initial transmission to a country and on the scale of initial infections in the context of other driving factors our cross country analysis finds that measures of globalization are positively related to the spread of the virus both in speed and scale however the study also finds that globalized countries are better equipped to keep fatality rates low the conclusion is not to reduce globalization to avoid pandemics but to better monitor the human factor at the outbreak and mobilize collaboration forces to curtail diseases

fiscal competition and the pattern of public spending much attention has been given to the impact of fiscal competition on the level of public expenditure but relatively little to the impact on its composition using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital this paper establishes a systematic bias in public spending patterns starting from the non cooperative equilibrium and holding tax rates constant welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers c 1997 elsevier science s a

bailout for sale the vote to save wall street this paper provides a public choice analysis of the 2008 banking bailout in the united states the paper introduces heterogeneity of congressional districts into the common agency problem in special interest politics district heterogeneity implies district specific electoral constraints on legislators ability to collect rents from and cast dissonant votes in support of special interests an empirical analysis examines legislative voting on the initial bailout proposal using campaign contributions to legislators from special interest groups and the importance of financial services for employment within congressional districts as the main explanatory variables the empirical analysis corrects for possible endogeneity bias using valid instruments and considers several intuitive sub sample estimations as alternative methods for addressing the endogeneity issue the paper provides empirical evidence that campaign contributions from the financial services sector influenced legislative voting on the banking bailout