Looking across borders: A test of spatial policy interdependence using local government efficiency ratings

Spatial patterns in (local) government taxation and spending decisions have received a lot of attention. Still, the focus on taxation or expenditure levels in previous studies may be incomplete. Indeed, (rational) individuals are likely to consider the level of spending on (or taxation for) public goods provision simultaneously with how much public goods they actually receive—thus assessing the ‘price/quantity’ of government policies. Therefore, the present paper argues that incumbents may want their ‘price/quantity’ ratio to be close to that in neighbouring regions. Analysing Flemish local governments' efficiency ratings for the year 2000 (which relate total spending to the quantity of locally provided public goods), we confirm the existence of neighbourhood effects in local government policies.     

Growth, debt and public infrastructure

This paper presents a closed economy model of endogenous growth driven by capital externalities arising from both private capital and public infrastructure. The model is calibrated to fit data for India, an approximately closed economy. Simulations suggest that fiscal policy certainly matters and the choice of the income taxation rate, the mix of government spending between infrastructure and public consumption goods, and the long-run government debt/GDP ratio can all significantly affect the long-run growth rate. Intertemporal aspects of fiscal policy are also important and the precommitment (time-inconsistent) and non-precommitment policies differ substantially.     

The system of towns with spatial public goods

In this paper, we introduce a model of ‘spatial public goods’, whose provision costs depend on the size of the benefit area. It is assumed that there are many developers providing spatial public goods in their towns. Each developer chooses the area size of his/her town and the quality of its spatial public good so as to maximize profit, taking the market price system as given. Each consumer chooses the level of the public good, and hence the town that supplies it, so as to maximize his/her utility. We show that the competitive equilibrium allocation of this economy is efficient.     

Voluntary contributions and local public goods in a federation

This paper considers nonneutral effects of government spending in a federation of multiple jurisdictions. Both government spending and private donations finance local public goods, redistributive programs, that provide transfers for the poor. In the standard model, government spending has no effect on the public goods, as donors reduce their donations one for one in response to an increase in government spending. In a federation, donors of a jurisdiction donate, through federal charities, to help the poor in the jurisdiction and the poor in other jurisdictions as well. Jurisdictions are thus linked through donations. Such linkage influences donors' behavior beyond the traditional crowding-out effect. As a result, government spending has nonneutral effects on the level of public goods.     

Congestable local public goods in an urban setting

In this paper, we recognize two types of unpure local public goods (LPGs): congestable and pollutable. This paper and the forthcoming one (Clubs in an urban setting, mimeo, 1980) are devoted to congestable LPGs (CLPG). In Part I we define, classify, and characterize CLPGs. CLPGs may vary in their degree of congestability between zero, in the case of a pure LPG, and one, in the case of a private good. Spatially, we recognize two types of LPGs: the dispersed LPG (DiLPG) and the concentrated LPG (CoLPG). The first is distributed throughout the residential ring and the second is provided in specific locations to which households must travel. The second part of this paper is devoted to the investigation of the properties of a CDiLPG in an urban setting. The properties of CoLPG are investigated in (Clubs in an urban setting, mimeo, 1980). A version of Samuelson's rule as to the optimal allocation of pure public goods is extended on one hand to local dispersed public goods and on the other hand to CLPGs. Two corrective Pigouvian taxes are identified: congestion tolls levied on households, and a residential land tax. These two taxes cover total government expenditure on the LPG. The fraction of the expenses on the LPG covered by congestion tolls is α, and that covered by land taxes is (1 − α), where α is the degree of congestability. Efficiency can also be achieved by zoning the residential ring and regulating the housing density in it. This procedure may replace taxation and its advantage is that we can control a large number of externalities by a single set of zoning rules and regulations. An a posteriori rule to guide the local government as to the desirability of its actions is provided.     

Inactive transfer policies and efficiency in general overlapping-generations economies

I analyze how public debt restores Pareto efficiency in overlapping-generations economies. My model allows non-stationarity across time and accommodates many heterogeneous and multiperiod lived agents per generation and goods per period. I show that efficiency can always be restored by a once-and-for-all augmentation of initial wealth (the introduction of debt) partially financed by a series of ‘small’ taxes (the summation of average tax rates being less than any prescribed tolerance). I reconcile this positive result with well-known counter-examples. To establish my general proposition, I extend to my model Cass' well-known price characterization of efficiency.     

National policies towards biotechnology

The ‘new biotechnology’ is still a very young technology - half-in, half-out of the research laboratory. This paper surveys the policies that have been emerging towards this new technology from six governments - those of the United States, Japan, the United Kingdom, France, West Germany and the Netherlands. It suggests that the publicity ‘hype’ associated with the new biotechnology firms of the U.S., and the naming of biotechnology as a ‘next generation base technology’ by the Japanese government, together played a seminal role in pressurising governments into a positive policy stance. Looking across national policies, eight common characteristics of policy are identified: substantial support for basic research; increasing emphasis on applied research; expansion of traditional policies for supporting R & D; a new emphasis on linkage between academic and industrial research; gradual convergence towards corporatist or quasi-corporatist policies; the popularity of the collaborative approach; the promotion of small firms and the venture capital market; concern with the regulatory environment.     

How economic integration affects the vertical structure of the public sector

This paper investigates the impact of economic integration on the vertical structure of the public sector within a country. To tackle this issue we set up a model of fiscal federalism, where economic integration is assumed to affect central government tax revenues. The main findings are that when an increase of the impact of economic integration brings about a reduction in central government tax revenues, under certain conditions: (a) it reduces central government expenditure; (b) it reduces general government expenditure; (c) it increases local taxation; (d) it increases the degree of public sector decentralization. Quite interestingly, these results are consistent with different patterns of local public spending and grants to local government.     

Optimal fiscal policy for a state or local government

State and local government services are enjoyed by, and taxes borne by, two groups, residents and non-residents. This paper addresses the question: if state and local governments maximize their residents' welfare, and cannot distinguish between individual residents and non-residents but know the aggregate characteristics of the two groups, what set of taxes (subsidies) and public goods should they choose? Some of the results obtained are: (i) even when all commodities are taxable and equity is ignored, the existence of non-resident consumption makes uniform taxation non-optimal; (ii) in some cases, whether a commodity should be taxed or subsidized is independent of its own-price elasticity; (iii) central cities may be subsidized by suburban residents; and (iv) the ability of state and local governments to redistribute is inversely proportional to the openness of the economy.     

On the dynamic selection of mechanisms for provision of public projects

How do individuals' spatial decisions affect the institutions for public goods provision over time? This paper describes a dynamic model in which the provision mechanism for a public project is itself the object of locational choice of individuals. Individuals in an ongoing society must choose between a location with a Majority Rule mechanism and one with a Voluntary Contribution mechanism. Each mechanism determines a funding decision for a local public project which is repeated over time. Generations of individuals asynchronously supercede their ‘parents’, creating an entry/exit process that allows individuals with possibly different beliefs to enter society. A self-confirming equilibrium (SCE) belief process describes an evolution of beliefs in this society consistent with a self-confirming equilibrium (Fudenberg and Levine, 1993) of the repeated location/provision game. It is shown that the process with belief mutation as new individuals enter society results in a globally absorbing state in which the Majority Rule mechanism is the unique survivor of the two.     

PRINCIPLES AND THEORIES OF LOCAL GOVERNMENT

The role of local government is viewed in the context of the overall role of government per se. A particular advantage of local government lies in its ability to arrange for the provision of local public goods in line with local tastes and preferences. A number of arguments suggest that local governments should be assigned adequate powers of local taxation to finance their expenditure responsibilities rather than having to rely on central government grant.     

Monetary and fiscal policy under deep habits

Allowing habits to be formed at the level of individual goods – deep habits - can radically alter the fiscal policy transmission mechanism as the counter-cyclicality of mark-ups this implies can result in government spending crowding-in rather than crowding-out private consumption in the short run. We explore the robustness of this mechanism to the existence of price discrimination in the supply of goods to the public and private sectors. We then describe optimal monetary and fiscal policy in our New Keynesian economy subject to the additional externality of deep habits and explore the ability of simple policy rules to mimic fully optimal policy. We find that the presence of deep habits at empirically estimated levels can imply large externalities that significantly affect the conduct of monetary and tax policy. However, despite the rise in government spending multipliers implied by deep habits, government spending is barely used as a stabilisation tool under the optimal policy.     

Organized crime and public spending: a panel data analysis

The aim of this paper is to investigate, empirically, what components of public spending imply a decreasing effect on organized crime and what components create opportunities for organized crime, discussing also the role of government efficiency. Using a panel data analysis, the results show a strikingly consistent pattern for the EU Member States. Organized crime mainly operates in the distribution of government spending for local public goods and public provision of private services. There is a decreasing effect on organized crime of the public expenditure devoted to education and social policy. Government efficiency in public spending is beneficial to limit the opportunities of the organized crime.     

'Public Goods' from the Market

In the mounting criticism of 'government failure', a role for government is stubbornly argued by statist-minded economists on the ground that only government can supply public goods - from defence to (some) research (p. 34). Frank van Dun of the University of Ghent argues that public goods have the same disadvantages of monopoly, restriction of choice, confiscation by taxation, pressure group distortion, as non-public goods unnecessarily supplied by government. Moreover, technical progress will make it possible to supply more public goods in the market by creating separable benefits that can be financed by pricing.     

Optimal property taxation in the presence of interregional capital mobility

A single region's optimal property tax policy is examined in a model with interregional capital mobility. In this model, property taxation is used to finance local public expenditures. Different tax rates may be imposed on property used to produce goods which are traded between regions and property used to produce nontraded goods (e.g., residential property). The key determinants of the difference between the optimal tax rates are identified, and it is argued that there exists a bias towards relatively low tax rates on property used to produce traded goods. The role of labor mobility is also investigated.     

Self-organized criticality in evolutionary systems with local interaction

This paper studies a stylized model of local interaction where agents choose from an ever increasing set of vertically ranked actions, e.g. technologies. The driving forces of the model are infrequent upward shifts (‘updates’), followed by a rapid process of local imitation (‘diffusion’). Our main focus is on the regularities displayed by the long-run distribution of diffusion waves and their implication on the performance of the system. By integrating analytical techniques and numerical simulations, we come to the following two main conclusions. (1) If non-coordination costs are sufficiently high, the system behaves critically, in the sense customarily used in physics. (2) The performance of the system is optimal at the frontier of the critical region. Heuristically, this may be interpreted as an indication that (performance-sensitive) evolutionary forces induce the system to be placed ‘at the edge of order and chaos’.     

Voice,exit and local capture in public provision of private goods

We developed a simple model on publicly provided private goods, such as health or education that highlights a vicious cycle faced by many developing countries. When public services are not of high quality due to mismanagement or corruption, the wealthy may switch to private alternatives. Their exit weakens the influence of citizen voice over politicians, since that leaves the poor as the only constituent with a stake in good governance. As the civic control over local governments weakens, government’s concern for social welfare declines even further, leading to more corruption and more corrosion in the quality of public services. Our model shows that establishing institutions (such as local taxation) that spread the costs and benefits of governance across the whole society is crucial for the success of local governments. Empirical results from the Philippines support this hypothesis.     

The latin model of welfare: Do ‘insertion contracts’ reduce long-term dependence?

This paper aims to present an assessment of the welfare policies implemented in most South European countries. Welfare programs in these countries try to combine a basic level of economic protection and measures favoring life and labor skills (‘insertion benefits’) of low-income households. We focus on a specific program set up with the twofold strategy of cash and ‘insertion benefits’ (Madrid's IMI) and, more precisely, on the so-called ‘insertion projects’, consisting in a gradual mix of job search assistance, training and subsidized jobs. We evaluate the effects of these ‘insertion projects’ on welfare recidivism and the duration of off-welfare spells using propensity score-matching methods. Our results suggest that propensity score estimators appear to reduce selectivity due to non-random participation. Both recidivism rates as well as the duration of off-welfare spells suggest potentially successful interventions.     

论国家审计信息产品的属性和价格

国家审计信息产品属性分为纯公共产品、准公共产品和私人产品,它们在一定条件下相互转化.纯公共产品审计信息的价格为税收.在准公共产品审计信息中,依照申请人要求而公开的审计信息的价格为收费;其他审计信息没有价格.在私人产品审计信息中,二次开发的审计信息的价格为市价;其他审计信息没有价格.国家审计信息的最优公开范围为纳税的边际成本等于边际收益.