Direct Democracy and Local Public Finances under Cooperative Federalism

In this paper, we exploit the introduction of the right of local initiatives in the German state of Bavaria in 1995 in order to study the fiscal effects of direct democracy. Our identification strategy combines difference‐in‐differences and regression discontinuity methods: we compare municipal expenditure and revenue between pre‐ and post‐reform periods at population thresholds where the signatures needed to launch initiatives and minimum quorum requirements decrease discontinuously (difference‐in‐discontinuities design). The results suggest that stronger direct democratic institutions lead to an expansion of local government size.     

Why sad people like shoes better: The influence of mood on the evaluative conditioning of consumer attitudes

An experimental study investigated the influence of mood on the acquisition of affective consumer attitudes. Within an evaluative conditioning paradigm, participants in happy or sad mood were presented with evaluatively neutral products paired with affectively liked or disliked faces. Subsequent likability ratings revealed that the mere co‐occurrence of a product with the valenced face influenced the evaluation of the previously neutral targets. However, this effect of affective learning was significantly stronger in the sad‐mood condition. A subsequent awareness test indicated that contingency awareness plays a role in the acquisition of consumer attitudes. The implications for consumer research and attitude formation processes are discussed. © 2004 Wiley Periodicals, Inc.     

Origins of reform resistance and the Southern European regime

With a particular interest for Southern Europe, this contribution develops a classification of obstacles to economic policy reforms. This classification covers approaches ranging from classical economics and political-economic explanations to more innovative explanations linked to behavioral economics. The subsequent part analyzes qualitatively and quantitatively to which extent the “Southern European regime” may imply a particular relevance of some of the potential reform obstacles classified before. We derive “reform ability profiles” which quantify several of the reform obstacles (or reform drivers) to compare EU countries in their likely reform predisposition. These profiles confirm particular Southern European weaknesses which tend to reduce the political-economic feasibility of long-term reforms: a low effectiveness in poverty protection, high intertemporal discounting and uncertainty avoidance, a poor information level of the population and deeply shattered trust in national institutions. In a microeconometric analysis based on Eurobarometer survey data, the analysis leaves the highly aggregated level and looks into the individual heterogeneity in reform acceptance. It is shown that several of the reform obstacles identified in theory are also empirically correlated with the individual inclination to accept reforms.     

Price linkages in the international skim milk powder market: empirical evidence from nonparametric and time‐varying copulas

The objective of this article is to assess the integration of the international skim milk powder (SMP) market. This is pursued using monthly data over 2001 to 2014 from the three principal SMP‐producing regions (the EU, the USA and Oceania) and nonparametric kernel‐based and time‐varying copulas. The empirical results point to a strong and an increasing degree of overall price co‐movement and to statistically significant probabilities for joint price crashes and booms. While the EU and Oceania have been the regions with the highest degree of integration, the USA has been catching up with them.     

PROMETHEUS BOUND: POLARIZATION IS POSSIBLE IN THE NEOCLASSICAL GROWTH MODEL

The paper demonstrates that the standard neoclassical model of stochastic growth in the absence of any other modifications is consistent with club convergence contrary to the analysis in Cetorelli (2002, Journal of Economic Dynamics and Control, 27, pp. 29–50). In that sense, it is not necessary to augment the model with a probability of adverse shocks that is inversely related to aggregate capital stock or provide other modifications.     

Aid effectiveness and the soft budget constraint: EU development aid to the former Soviet Union

Aid effectiveness is defined as contractual completeness. EU development aid constitutes the new soft budget constraint in the former Soviet Union. Transnational sovereignty means that development policy is decided by the post-Soviet planner and financed by the European Commission.     

Aristotle vs. Plato: The classical origins of capitalist & socialist political economies*

Competing definitions of justice in Plato's Republic and Aristotle's Politics indicate the existence of two distinct economic systems with different priorities. The three-class society of the Platonic economy (guardians, auxiliaries, producers) gives rise to guardians who by virtue are expected to enforce output targets on producers directly or through auxiliaries. The three-class society of the Aristotelian economy (rich, middle, poor) facilitates the emergence of different ruling coalitions and compensates the efficiency losses of central planning with political gains derived from representative governance. In the Aristotelian economy, the middle class is better off than in the Platonic economy (auxiliaries), because a just society (polity) is achieved under its coalition with the rich. I argue that the equilibrium solutions of the Platonic and Aristotelian economic systems provide analytical insights on the origins of capitalist and socialist political economies.