Information technology,efficiency and productivity: evidence from Korean local governments

This study evaluates the performance of Korean local government by measuring their technical efficiency (TE) and total factor productivity (TFP) growth and, more importantly, examining the impact of information technology (IT) on this performance. The study is different from received analysis in that a unique measure of the state of IT–the Informatization Index–is used to investigate the impact of IT on both TE and TFP growth. Empirical analyses are conducted on data from 222 Korean local governments for the period 1999 to 2001. In particular, data envelopment analysis techniques are applied to calculate TE scores and TFP growth rates for sampled local governments. The empirical findings confirm the positive impact IT has in improving technical efficiency and accelerating productivity growth. The estimated coefficients are correctly signed (with other regional characteristics controlled for) when TE scores and TFP growth rates are regressed on the Index. In addition, the findings indicate that economies of density are present in the production of local public services.     

Public sector efficiency in transition and beyond: evidence from Czech local governments

This article provides the first comparison of public sector efficiency in and beyond transition. We compare the comprehensive efficiency scores of 202 local governments in the Czech Republic in the transition period of 1995–1998 and the post-transition period of 2005–2008 and identify the period-specific determinants of local government efficiency. We observe convergence to the best practice frontier but also a growing efficiency gap between small and large governments. In both periods, municipal size and the main fiscal variables qualitatively affect efficiency in the same direction and in line with the fiscal stress hypothesis. Left-wing ideology is only robustly associated with cost inefficiency in the transition period. The geographic distances begin to matter for efficiency only in the post-transition period.     

有限理性地方政府之间的引资博弈分析

引进外贵促进本地经济发展一直是我国各级地方政府的工作重点之一.外资始终是稀缺的,为获得更多的外资流入本地区,各地方政府之间不可避免地展开了有形或无形的招商引资博弈.在我国现行的地方政府政绩考核指标体系下,地方政府官员的经济人行为导致了地方政府的有限理性,进而导致其引资博弈动机与行为的扭曲,以外资优惠政策为主导的引资博弈策略往往造成地区社会福利的净损失.基于对有限理性地方政府目标函教的创新与分析,本文采用博弈模型详细演绎了有限理性地方政府引资博弈的动机、行为与后果,从中得出问题的症结及改进思路.     

Why governments sell public firms: The Spanish case

This paper compares the goals that the successive Spanish governments have actually pursued (as deduced from the set of privatizations carried out over the last fifteen years) with the standard hypotheses used in economic literature to explain privatization in general. The results show that the cash-collecting goal appears as the relevant explanatory hypotheses for most of the privatizations carried out. Also, all of the state-owned firms that operated under monopoly conditions have actually been privatized but retain, at least partially, their monopoly position (they involve activities where natural monopoly features are present). This has led to establishing new regulatory rules (reregulation) and that privatization, per se, has not resulted in substantial improvements in competition.An earlier version of this paper was presented at the Forty-Eighth International Atlantic Economic Conference, October 7–10, 1999, Montreal, Canada.     

Tax competition,tax exporting and higher-government choice of tax instruments for local governments

This paper presents a theoretical model with tax exporting due to external ownership of a fraction θ of the land in each local jurisdiction. There are n local jurisdictions in a metropolitan area (n≥1) and many metropolitan areas in a world economy. The paper examines the usage of business property taxes and source-based wage taxes by local jurisdictions, first in the presence of and then in the absence of residence-based lump-sum taxes, and how this depends on θ and n. The paper then examines the choice of a world, national or state government as to whether to allow local (metropolitan or sub-metropolitan) governments to use business property taxes, wage taxes or both, assuming that the local governments choose the actual tax rates.     

Growth effects of public expenditure on the state and local level: evidence from a sample of rich governments

There is a vast empirical literature investigating the relationship between government size and economic growth. But the empirical evidence of growth effects of public expenditure using cross-country regressions is still inconclusive. According to a number of authors this is not surprising since the negative relationship only applies for rich countries with a large public sector. Restricting their analysis on rich countries only they can show the predicted negative impact. Naturally, a selection of a sub-sample of rich countries is always somewhat arbitrary. Another possibility is to concentrate on governments within a rich country. However, only few studies investigate the effect of state and local spending on economic growth. This study concentrates on the relationship between public expenditure and economic growth within a rich country using the full sample of state and local governments from Switzerland over the 1981–2001 period. The general finding is a fairly robust negative relationship between government size and economic growth. However, in contrast to public spending from operating budgets there is no significant impact on economic growth by expenditure from capital budgets.     

国际税收竞争是21世纪对政府的制约

资本流动 近几十年来，世界各国的经济变得越来越紧密、越来越一体化了。跨国投资方面的高速增长已经成为了这种一体化的一个重要方面。在过去好几十年里，很多国家曾经构建壁垒以阻碍国际投资，但是今天，大多数国r家已经认识到，国际投资意味着新的就业机会的产生、新工厂的建立以及领先技术的掌握。因此，各国政府已经卸掉了以前戴在国际投资流动脚上的镣铐。     

Intergovernmental grants as a tactical instrument: empirical evidence from Swedish municipalities

Are grants to Swedish municipalities tactical, that is, do parties use these in order to get elected? In this paper, the theoretical model of Lindbeck and Weibull and Dixit and Londregan is tested, using panel data on 255 Swedish municipalities for the years 1981–1995. The empirical implication of the theory is that groups with many swing voters will receive larger grants than other groups. In the paper, a new method of estimating the number of swing voters is proposed and used. The results support the hypothesis that intergovernmental grants are used in order to win votes.     

The taming of Leviathan: Competition among governments

This paper assesses the consequences of a high degree of international capital mobility for the behavior of governments. It is argued that countries can be seen as clubs where the government as club management acts as an entrepreneur attempting to attract internationally mobile resources. Within this stylized model it is shown that competition induces the government of a small democratic country to implement policy reforms that increase the welfare of domestic residents if it wants to be reelected. This result suggests that international openness may be a substitute for more overt attempts to contain a government's Leviathan tendencies such as constitutional amendments. Finally, the case against competition among governments is analyzed from the perspective of the club model developed in the paper. An earlier version of this paper appeared as Kiel Working Paper No. 458. The author would like to thank Hartmut Kliemt, Werner Pommerehne, Helmut Reisen, Pierre Salmon, Horst Siebert, Viktor Vanberg as well as seminar participants at the University of Munich, the Free University of Berlin, the OECD Development Centre in Paris and at the 1991 meeting of the European Public Choice Society in Beaune for helpful comments. All remaining errors are mine.     

Local banking and local economic growth in Italy: some panel evidence

This article provides new evidence on the contribution of local banking to local economic growth (i.e. at county level – the Italian ‘province’) in Italy. A comprehensive data set is used, which includes control variables for social capital and human capital as well as indicators of the quality of local infrastructures and the production structure of the local economy. A linear within-estimator technique with fixed effects is applied to a modified version of the so-called Barro regression in order to address the well-known econometric issues of reverse causality and estimation bias resulting from unobserved district-specific influences.     

Post-earnings announcement drift: Spanish evidence

This paper analyses whether earnings announcements in the Spanish stock market are followed in subsequent months by a return drift in the same direction as the earnings surprise. Two alternative earnings surprise measures are used and they both provide strong post-earnings announcement drifts. In order to find an explanation for this anomaly we first make several unconditional adjustments, which include the CAPM, the Fama–French (J Financ Econ 33:3–56, 1993) three-factor model, a liquidity factor, controlling portfolios by size and book-to-market ratio, and controlling for the momentum effect. Second, we make a conditional analysis following two different approaches: (i) studying the relation with the business cycle and (ii) studying whether this phenomenon can be explained through a conditional version of the CAPM and the Fama-French model. None of these adjustments are able to satisfactorily capture the Spanish post-earnings announcement drift. A final analysis offers some slight evidence in favour of the limits-to-arbitrage explanation. A previous version of this paper is available in the Working Paper Series of FUNCAS (no. 221, 2005), who we thank for their collaboration in the research diffusion in Spain. We also acknowledge the financial support of the Ministerio de Ciencia y Tecnología (SEJ2005-09372/ECON), Conselleria d’Empresa, Universitat i Ciència (GV06/196) and University of Alicante (GRJ06-03). This version has benefited from interesting comments made by Gonzalo Rubio, Belén Nieto, Natividad Blasco, Renata Herrerías and Carina Sponholtz, as well as by various anonymous referees. Any remaining errors are the sole responsibility of the authors.     

Educational growth: An analysis of distribution among Brazilian municipalities

This study analyzes the distribution of education in terms of quality and quantity in Brazilian municipalities during the first decade of 2000 to investigate how educational improvement was distributed to municipalities with different levels of income and education. Given the considerable educational heterogeneity and the lack of studies at the municipal level, the aim is to contribute to this debate by (1) applying the pro‐poor growth measurement methodology to indicators of educational quantity and quality (2) using the Brazilian municipalities as units of analysis, and (3) conducting estimations using the Growth Incidence Curve. The results indicate that there was an improvement in the quantity and quality of education and that, on average, educational growth can be considered pro‐poor.     

Tax policy endogeneity: evidence from R&D tax credits

This paper estimates the causal effect of research and development (R&D) tax incentives on R&D expenditures using new data on U.S. states. Identifying tax variation comes from changes in federal corporate tax laws that heterogeneously and, due to the simultaneity of state and federal corporate taxes, automatically affect state-level tax laws. Instrumental variables regressions indicate that a 1% increase in R&D tax incentives causes a statistically significant 2.8–3.8% increase in R&D. Alternatively, ordinary least squares (OLS) regressions of R&D expenditures on R&D tax incentives, which do not correct for the policy endogeneity of R&D tax incentives, indicate that a 1% increase in R&D tax incentives causes a statistically insignificant 0.4–0.7% increase in R&D. One possible explanation for these results is that tax policies are implemented before an economic downturn.     

Implications of manager replacement: evidence from the Spanish mutual fund industry

We analyse the financial consequences of manager replacement in a sample that includes all domestic and European equity funds in Spain. Specifically, we examine a total of 104 funds of the sample that experience manager turnover over the period 1999–2009. We find that underperforming funds in the pre-replacement period experience a significant improvement in the excess returns and performance after the manager change, an improvement that lasts over time for domestic equity funds. The analysis of the risk profile indicates that funds experiencing a manager change do not show significantly different levels of risk before the replacement dates although they tend to show an increase in the level of total risk after the change. Finally, the pool-regression analysis of the investment flows confirms that manager changes tend to impact negatively on subsequent flows of those funds with manager turnover.     

The causal effect of coalition governments on fiscal policies: evidence from a Regression Kink Design

Proportional election systems are widespread across countries and often lead to coalition governments. This creates interest in how the form of government (single-party or coalition governments) causally influences fiscal policies. It is difficult to estimate this causal effect empirically because the form of government is not randomly assigned to political units. I overcome this problem by using a Regression Kink Design which exploits that there is a slope change in the treatment probability at the 50% vote share of the strongest party. This method is applied to a large panel data set of German local governments. I find that contrary to the theoretical prediction, coalition governments significantly decrease expenditures.     

Asymmetries in the flypaper effect: empirical evidence for the Flemish municipalities

Recent empirical work on US governments indicates an asymmetry in the flypaper effect: the elasticity of public spending with respect to changes in grants differs significantly for positive and negative changes. Using a panel of data on Flemish municipalities covering the period 1989–1996, we also find clear evidence of asymmetrical reactions. More precisely, the results suggest the presence of a fiscal replacement type of asymmetry: when grants grow, municipalities spend most of the additional revenue. However, when grants fall, spending is unaffected and municipalities compensate the loss through additional taxation.     

Tax and subsidy incidence equivalence theories: experimental evidence from competitive markets

A basic tenet in microeconomics is tax incidence equivalence, which holds that the burden of a unit tax on buyers and sellers is independent of who actually pays the tax. By contrast, policymakers and the public often mistake statutory incidence for economic incidence. Using competitive laboratory markets, I test both tax incidence equivalence and an analogous theorem for subsidies. For sufficiently large markets, the results show strong support for both theories; there is little to no evidence, even in the short run, of the popular misperception that statutory incidence equals economic incidence. In smaller markets in which competitive forces are weaker and relative bargaining strengths may play a role, the evidence for tax incidence equivalence is weaker as minor price discrepancies may persist between markets.     

Financing choice and local economic growth: evidence from Brazil

Journal of Economic Growth - We study how financing non-traditional local activities, conceived here as a proxy for activity diversification, is associated with economic growth. We use...