Public Sector Growth in the British Cape Colony: Evidence From New Data on Expenditure and Foreign Debt, 1830-1910

The public expenditure shifts that took place following the discovery of diamonds and gold during the second half of the nineteenth century had far-reaching consequences for southern Africa’s development. Using new data for public expenditure and foreign debt in the Cape Colony and evidence from Cape parliamentary budget debates, we trace and explain the growth of the public sector. We find that the coincidence of mineral discovery in 1867 and the granting of responsible government status rapidly accelerated the growth of the public sector. Owing to strong mining interests, railways accounted for more than 70% of the public works expenditure from the 1880s onwards. Spending on human capital and welfare enhancement remained limited. Both the quantitative and qualitative evidence suggests that the mining elites managed to build coalitions that swayed public expenditure decisions towards self-serving ends.     

To Spend the U.S. Government Surplus or to Increase the Deficit? A Numerical Analysis of the Policy Options

This paper provides a numerical analysis of the likely benefits from adopting alternative ways of reducing the projected fiscal surplus (as of the summer 2001) in the United States economy. Calibrating a small growth model, our results suggest that investing the surplus in public capital is likely to yield the greatest long-run welfare gains, although decreasing the capital income tax is only marginally inferior. Both these options dominate increasing government consumption expenditure or decreasing the tax on labor income. By shifting resources from consumption toward capital the two superior policies involve sharp intertemporal tradeoffs in welfare; significant short-run welfare losses are more than compensated by large long-run welfare gains. By contrast, the two inferior options are gradually welfare-improving through time. A crucial factor in determining the benefits of reducing the government surplus through spending is the size of the government sector relative to the social optimum. We find that the second-best optimum is to increase both forms of government expenditure to their respective social optima, while at the same time restructuring taxes by reducing the tax on capital and raising the tax on wage income to achieve the targeted reduction in the surplus. J. Japan. Int. Econ., December 2002, 16(4), pp. 405–435. Department of Economics, University of Washington, Seattle, Washington; and Department of Economics, Terry College of Business, University of Georgia, Atlanta, Georgia. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: E62, O41.     

Aid Modalities and Budgetary Response: Panel Data Evidence

We investigate the budgetary effects of project and program financing on the behavior of recipient governments. For this purpose, we developed a simple fiscal response model. The solution of the model is then tested using panel data techniques for a relatively large sample of 106 aid-recipient countries spanning the period 1970–2001. With respect to public expenditure, our results suggest that the impacts of project aid and financial program aid on total expenditure are positive and statistically significant. In terms of the composition of total expenditure, we find that project aid flows are associated with increases in capital expenditure while financial program aid is associated with an increase in government consumption. Turning to the revenue side we found no evidence that aid flows, project or financial program aid, are associated with a reduction in taxation effort. The evidence also shows that project aid flows are associated with an increase in trade tax. JEL no. F35, H2, H5     

基础设施建设支出、结构性减税与最优政策选择

财政政策的最优政策选择问题对于国家宏观调控政策的出台具有指导意义。既往的研究忽略了利用动态一般均衡的方法探求具有双重外部性的基础设施建设支出与结构性减税支出的政策选择问题。本文利用引入基础设施建设支出和结构性减税的新凯恩斯DSGE模型,测算比较基建支出和结构性减税的政策福利效应。研究表明：具有双重外部性的基础设施建设支出不仅可以通过提高生产效率的方式促进产出,还可以通过挤入居民消费的方式加强政策福利效应。经过测算,短期的基建支出乘数大于结构性减税的政策乘数。同时,基建支出长期平均产出乘数小于结构性减税的平均产出乘数。与结构性减税政策相比,增加基建支出对于财政资金有限的政府是短期内更加有效的产出刺激政策,但在长期中,结构性减税政策不仅具有较高的政策效应,还可以从消费、劳动、投资等角度实现结构性政策目标。进一步研究发现,地区经济发展水平的不同会导致各地区的最优政策选择存在差异性：发达地区可以通过结构性税收政策解决结构性问题的同时实现长期经济增长;而欠发达地区则更应该注重运用基础设施建设为主的支出政策以促进经济增长;但随着人口逐渐从欠发达地区流出,提高欠发达地区的基建支出是否是可行之策,还需要考虑区域协调发展等诸多因素。     

Optimal flat-rate taxes on capital - a re-examination of Lucas' supply side model

We examine the transitional dynamics of Lucas' supply side modelof the US economy in order to specify the effects of capitaltaxation on economic growth and welfare. We restrict the analysisto policy plans characterized by constant capital taxes andrequire the government to maintain a balanced budget. Underthese restrictions, the optimal tax rate on capital is shownto be positive and sensitive to the government expenditure rule.Welfare can be further increased by the introduction of a taxon asset holdings.     

Foreign aid,government behaviour,and fiscal policy in Papua New Guinea

The paper explores a number of long standing questions surrounding how foreign aid has influenced the fiscal behaviour of the PNG Government. This includes whether grant aid has encouraged the PNG government to be less fiscally responsible and accumulate higher levels of foreign debt; whether grant aid has tended to lower the PNG government's domestic revenue raising efforts; whether grant aid has drawn government expenditures away from key service delivery sectors; and whether budget support and project and program aid have had differential effects with respect to any of the foregoing questions. The analysis reveals several important insights regarding the interplay between foreign aid and public sector fiscal behaviour including evidence that grant aid has been an important source of debt reduction during this period. However, grant aid has tended to erode the domestic tax base, which has limited the government's ability to increase aggregate expenditure levels. Evidence is also found that suggests a significant portion of budget support was spent on key development sectors, although it also undermined domestic revenue collection. A number of policy implications follow.     

Rebalancing in China: A taxation approach

The rebalancing of the Chinese economy is analyzed through a heterogeneous taxation of various types of firms. Based on a two-country dynamic general equilibrium model, the paper applies tax reforms to raise consumption, reduce some firms' overinvestment (overcapacities) and maintain a high level of welfare.To rebalance consumption and investment, taxation may allow reallocating a part of the labor force to firms that are not overinvesting (via business taxes and social security contributions). Moreover, the correction of distortions in production factor costs (capital and labor) is necessary during certain reforms applied in the model; that is, on the one hand, higher credit costs for firms that face soft budget constraints (via financial transactions taxes) and, on the other hand, a catch-up of foreign firms' wages by domestic firms (via social security contributions).These tax reforms bring welfare benefits to households and stabilize the welfare reaction to productivity shocks. Another interesting result is that in this framework, the rebalancing of the domestic demand in China does not require the readjustment of the external financial position. Indeed, the aggregate savings rate remains high and the supply of domestic assets is reduced.Finally, another model proposes a heterogeneous taxation of consumption across home and foreign goods to enhance consumption.     

The Performance of Simple Fiscal Policy Rules in Monetary Union

The paper analyses the stabilising potential of simple fiscal policy rules for a small open economy in monetary union in a 2-region DSGE model with nominal and real rigidities. We consider simple fiscal instrument rules for government purchases, transfers, and consumption, labour and capital taxes in analogy to interest rate rules in monetary policy. The paper finds a dichotomy in the welfare effects of fiscal policy for liquidity-constrained and intertemporal optimising households, i.e. policies enhancing the welfare of one group tend to reduce the welfare of the other one. The moderate average welfare gains from optimal policy contrast with potentially large welfare losses from non-optimal policy. Fiscal rules that respond to employment fluctuations may be preferred to fiscal rules responding to indicators of price competitiveness, because optimal policy corresponds more closely to the idea of countercyclical stabilisation in the former case. The simulations also emphasise the crucial impact of the budgetary closure rule on the welfare consequences of fiscal business-cycle stabilisation.     

外资综合评价指标体系初探——以东部沿海十省市为例

本文试图建立一套较为完整的外资效益评价指标体系,并将之分为引资能力、外资效率与外资国民福利贡献三个层面。在实证分析中,本文利用因子分析法对东部沿海十省市的外资利用状况作出评价。结果表明,沿海省市确实存在外资数量与引资收益负相关的现象。这说明我国要全面提升对外开放的水平,就需要调整利用外资政策,提高利用外资的质量和水平。     

Subsidy policies in a fertility choice model

This paper compares the effects that a subsidy to health expenditure or a subsidy to child-rearing costs has in a fertility choice model in which mortality is also endogenously determined. Whichever subsidy is instituted, the population growth rate rises. While a subsidy to health expenditure reduces welfare, a subsidy to child-rearing costs might increase welfare. The welfare analysis also suggests that a subsidy to health expenditure should be financed by a capital income tax, while a subsidy to child-rearing costs should be financed by a consumption tax.     

CAPITAL FLOWS AND EXPORT EXTERNALITIES: AN EAST ASIAN CURE FOR THE DUTCH DISEASE?*

The analysis so far suggests several conclusions regarding policy under externalities in tradables production. It shows that conventional profit-maximizing solutions lead to too much investment, too much “up front” consumption, high period 1 real exchange rates, and underproduction of tradables. In this setting, it is possible that an improvement in an economy's access to foreign capital will lead to welfare losses. These distortions are most efficiently corrected by a tradables output subsidy, equal to the externality. This subsidy should be increased if the economy's access to foreign capital markets improves. In the absence of such subsidies, however, incentives to reduce investment and postpone consumption may be appropriate second-best policies. These policies, in effect, drive a wedge between rates of return on investment and foreign interest rates. Therefore the optimal policy will also require controls on foreign capital seeking to take advantage of higher interest rates at home than abroad.     

分税制改革20年对民族地区社会经济的影响

我国从1994年开始实行的分税制改革增强了中央政府的宏观调控能力,但却使地方政府承担了更多的支出责任。虽然分税制改革增强了民族地区地方政府的财力,增加了民生支出,使得民族地区基本公共服务均等化功能不断增强,居民收入水平不断提高,但同时民族地区仍然存在财力不足、中央与地方政府财权与事权划分不合理、转移支付制度不完善等问题。因此,本文认为应转变政府和财政职能,优化财政支出结构;合理划分各级政府事权范围,进一步明确各级财政支出职责;建立转移支付的激励约束机制;加强县级政府提供基本公共服务的财力保障。     

国外经济援助的有效性:基于代际利他视角的研究

消费者是否具有代际利他动机,直接影响消费者的消费和储蓄决策。在本文中,作者利用一个具有代际利他动机的交叠世代模型研究国外经济援助的有效性。作者发现,国外经济援助对于受援国资本积累的影响是非线性的,具有一定的临界值效果。这一发现从一个不同的侧面支持了当代跨国经济增长研究中的"临界值效果"观点,有助于解释关于国外经济援助有效性的经验研究文献中广泛存在的争议;同时,也为进一步的计量研究指出了一个新的模型设定方向。     

Foreign Transfers and Real Exchange Rate Adjustments in a Financially Constrained Dependent Economy

This paper investigates the role of the real exchange rate in determining the effects of foreign transfers. If capital is perfectly mobile between sectors, a pure transfer has no long-run impact on the real exchange rate. A decline in the traded sector occurs because the transfer, being denominated in traded output, substitutes for exports in financing imports. While a pure transfer causes short-run real exchange appreciation, this response is temporary and negligibly small. Transfers allocated to productivity enhancement do generate permanent real exchange rate adjustments in response to the sectoral reallocation of productive factors. The analysis, which employs extensive numerical simulations, emphasizes the tradeoffs between real exchange adjustments, long-run capital accumulation, and economic welfare, associated with alternative forms of transfers.

Optimizing International Investment and Trade Under Golden Rule Conditions

In a two-country, two-factor world, each is assumed to choose a golden rule path, but these paths differ because of divergent growth rates for labor (in efficiency units). In order to maintain these, it becomes necessary to impose a tax on the return to foreign-owned capital equal to the difference between the lower foreign rate and the higher home rate of the capital-importing country. It is also necessary to prevent undercutting of this difference in capital returns via adjustment of domestic production, as in the HOLS theorem. This is done by means of a supporting tariff on trade. When foreign investment also involves the transfer of technology, the tax is accordingly reduced. It is also shown, using the calculus of variations, that if and only if social planners have a discount rate on future consumption of zero does the golden rule follow.     

政府财政政策对经济增长的影响——基于一个资本积累与创新相互作用模型的分析

政府财政政策对经济增长和社会福利的影响,是经济增长理论和宏观公共财政理论研究的重点,已经有大量的研究。本文在一个资本积累与创新相互作用的框架下内生化劳动力供给,假设政府通过征收平滑的收入税为公共支出融资,并且将政府公共支出区分为资本性支出和研发性支出,从而考察了税收和财政支出结构对经济增长的影响及其作用机制。研究发现,当政府通过征收收入税为生产性公共支出融资时,收入税税率与经济增长率之间存在一个倒U形的关系,从而回到了Barro(1990)的结论,尽管本文强调的政府财政政策作用于经济增长的机制与Barro(1990)差别较大;在基准经济(benchmark economy)的参数环境下,财政支出结构与经济增长率之间存在一个倒U型关系,从而经济中存在一个最优的财政支出结构。     

我国公共医疗卫生支出绩效分析

近年来,我国卫生总费用的绝对数每年都在上升,但政府预算的公共卫生支出所占比重却逐年减少,与其他国家相比显得总量不足。本文分别从经济、公平、效率三个方面对绩效进行分析,说明我国公共卫生支出的绩效不容乐观,必须重新审视公共卫生支出规模与结构,重新思考应该如何分配有限的资源,提高全民福利水平。     

Aid Volatility and Real Business Cycles in a Developing Open Economy

This article analyzes the impact of the unpredictability of foreign aid on macroeconomic fluctuations in the recipient country. I build a small open‐economy business cycle model that accounts for foreign aid shocks, with no preference shocks. The model is calibrated to reflect the structural empirical regularities of Cote d'Ivoire, a typical aid‐dependent developing country. The parameters of the exogenous shocks are estimated using Bayesian methods and time series data for Cote d'Ivoire. The model produces business cycle patterns that are consistent with the data and key stylized facts. Specifically, the excess volatility of consumption with respect to output is successfully replicated. The results suggest that the unpredictability of foreign aid contributes to explain the volatility of business cycles in the recipient economy and has negative welfare effects.     

Market reforms and consumption puzzles in China

China exhibits above average savings and below average consumption as shares of total economic activity when compared with other countries. At the same time, to create more balanced growth at home and rebalance key bilateral trade and capital flow relationships, China's leadership is trying to increase domestic demand. To complement studies that investigate the high rate of savings in China, this study focuses on the variation in consumption as a share of GDP across provinces between 1979 and 2004. Drawing on well-established consumption theories and work done on savings behavior in China, this paper develops an empirical investigation of the variables hypothesized to influence the pattern of consumption across regions.We find that the normal, economic variables have a small explanatory power if significant at all, while the key variables influencing the macro consumption share are structural, and mostly related to government behavior. For example, local government expenditure on health and education is significant and has a relatively large effect on consumption. Consistent with this we also find a positive relationship between consumption shares and the size of the state sector and the share of tax revenue in GDP. We also find some evidence that financial development has a positive effect on consumption shares. Our results suggest that in order for domestic consumption to be increased in the future, new public and private options to replace the declining security and responsibility of the prior state-dominated system will be needed.     

Economic subsidies and incentives in education for low-income people

Conclusion First, education is both a private and a public good. We may specify a social welfare function for education as a social good with externalities and internalities, social costs, and social benefits. We may also analyze education as a private good and specify production functions, consumption functions, investment functions, and capital accumulation functions for it. Both micro and macro relations are involved in its production and use. Stock-flow-stock variables are involved in the theory and applications. Economic education is no less important for low income people than it is for the nonpoor and the rich in a conservative capitalistic system.