Government expenditure,external and domestic public debt,and economic growth

This paper analyzes the relationship between government expenditure, tax on returns to assets, public debt, and growth in an endogenous growth model. Public debt is composed of two components, domestic debt and external debt. We show conditions for existence, uniqueness, and multiplicity of the steady states. More precisely, existence of steady state requires a sufficiently high productivity and a sufficiently low tax on returns to assets. We also provide the effects of an increase in the tax rate on returns to assets on the steady state. In particular, the relation between public spending and the tax rate has a bell shape. Domestic debt unambiguously increases with tax whereas external debt displays an inverted U‐shaped curve. A high tax rate leads to a reallocation of public debt in favor of domestic debt (to the detriment of external debt). The effect of taxation on consumption (and production) also displays a nonlinear pattern when the output elasticity of capital is lower than unity (the effect is monotonously increasing if this elasticity is unity). We also derive the conditions under which a tax increase can boost or reduce the balanced growth rate.     

Functional components of public expenditure,fiscal consolidations,and economic activity

This paper analyses how the functional components of public expenditure and spending‐driven consolidations affect the economic growth, unemployment, and income inequality. A dynamic panel data least squares dummy variable estimator estimator is employed over a sample of 15 European Union countries during the period 1990–2012. The empirical results show that real GDP growth decreases when fiscal austerity measures are implemented, especially if they are spending‐driven. Cuts in public expenditure undermine economic growth, namely if they slash spending on public order, recreation, and education. Spending cuts on education, in particular, affect the investment in human capital, harming not only growth but also economic, social, and human development. The unemployment rate also proved to be significantly boosted when austerity measures restrict spending on education, whereas income inequality rises when social protection expenditures are cut.     

中国财政竞争与地方公共支出结构分析

This article examines the impact of intergovernmental fiscal competition on local public expenditure in China under current performance assessment system in which GDP is a critical factor. First, we present the assignment of public goods and tax burden and the share of foreign direct investment (FDI) of 30 provinces, and we find that current fiscal competition in China has taken the form of public expenditure improvement accompanied by preferential tax policies. Second, we regress the share of FDI on different components of provincial public expenditure, and find that the share of FDI is correlated negatively with the public service, tax burden and health care service while positively with infrastructure development. Therefore, FDI-based infrastructural investment crowds out public services investment, which fails to support the view that fiscal competition improves social welfares.     

Industrial structure and economic performance: The role of productive public expenditure

I consider productive government spending and preference for diversity in an imperfectly competitive macroeconomic framework, and analyze how differences in industrial structure affect economic growth and the welfare level. Two main findings emerge from the analysis. First, the optimal ratio of government spending is related to the extent of public expenditure externalities and preference for diversity. Second, the vertical separation regime leads to a higher economic growth rate and welfare level than the vertical integration regime, provided that the degree of monopoly power is relatively small.     

Natural resource windfalls and efficiency in local government expenditure: Evidence from Peru

We study the role of natural resource windfalls in explaining the technical efficiency of public expenditure. Using a rich dataset of expenditure and public good provision for 1836 municipalities in Peru for the period 2001–2010, we estimate a nonmonotonic relationship between the efficiency of public good provision and the level of natural resource transfers. Local governments that were extremely favored by the boom in mineral prices were more efficient in using fiscal windfalls, whereas those that only benefited from modest transfers were more inefficient. These results can be explained by the increase in political competition associated with the boom. However, the fact that increases in efficiency were related to reductions in public good provision casts doubts on the beneficial effects of political competition in promoting efficiency.     

The influence analysis on public expenditure to the technique efficiency of China

In this paper, we use SFA to estimate the time-variant stochastic frontier model of 31 cities in China. The results tell us that raising the proportion of public expenditure in GDP can lower the technological efficiency, but raising some parts of public expenditure in GDP can promote the technological efficiency. Its realistic meaning is that it is excellent to turn the public expenditure structure to promote the technological efficiency. We computed the technological efficiency of 31 provinces/cities and the results show that the gap between the eastern region and western region is growing much. Finally, we decompose total factor productivity (TFP) and get the following result: from three regions, the biggest influence factor on technological efficiency is the scales economy. Technological progress and allocation efficiency have a smaller influence. From our results, we suggest that technological progress and allocation efficiency from public expenditure and income be raised to influence the TFP rate of change, and have a more efficient public expenditure. __________ Translated from Journal of Finance and Economics (财经研究), 2005, (12) (in Chinese)     

Interregional infrastructure,competition for capital,and local public expenditure policies: Evidence from China's high-speed rail network

Interregional infrastructure promotes market integration and enhances the mobility of capital, thereby intensifying fiscal competition among local governments. Exploiting the expansion of China's high-speed rail (HSR) network as plausibly exogenous shocks, this study examines how Interregional infrastructure affects the fiscal competition among local governments. We find that after connecting with the HSR network, city governments tend to dedicate a lower proportion of public spending to consumption goods, which benefit immobile households, and invest more in productive inputs, which attract mobile firms. We also find that the negative effect of HSR connection on the proportion of consumption goods is more pronounced in peripheral cities than core cities because periphery cities face a larger increase in capital mobility due to the core–periphery effects of trade integration induced by HSR. Our findings indicate that the behavioural responses of local governments should be accounted for when assessing the social welfare of interregional infrastructure.     

The efficiency of social public expenditure in European countries: a two-stage analysis

Do European countries differ in the efficiency of their welfare policies? And which factors can account for such variability? To address these questions, we perform a two-stage efficiency analysis. First, based on a composite output indicator for social protection expenditure, we measure efficiency by means of the Free Disposable Hull and Data Envelopment Analysis techniques. Second, we perform an econometric analysis to identify the factors that can be associated to cross-country differences. We find that countries scoring higher efficiency have higher education and GDP levels, a smaller population size, a lower degree of selectivity of their welfare systems and a lower corruption level.     

Relevance of corruption on the effect of public health expenditure and taxation on economic growth

We investigate whether corruption distorts the positive effect of public health expenditure and taxation on growth through panel data analysis of 75 developing countries for the period from 1995 to 2014. The findings indicate that, although both public health expenditure and taxation can increase economic growth, in countries with more corrupt governments this effect is reduced.     

Monopoly,economic efficiency and unemployment

The objective of this paper is to analyze the efficiency consequences of monopoly from the perspective of an efficiency-wage model of unemployment based on Shapiro and Stiglitz (1984). An important feature of our model is that a firm can raise the probability that a shirking worker is detected by increasing its effort or investment in the monitoring of workers. Using this model we study how a monopolist's decision with regard to employment, output and monitoring is affected by exogenous variables such as job separation rate, technological advances, market size, and unemployment benefits. Furthermore, by comparing with the competitive equilibrium we find that monopoly is associated with higher unemployment rate, smaller output, and less monitoring. Surprisingly, however, monopoly does not necessarily lead to lower welfare level.     

A test for allocative efficiency in the local public sector

This paper develops a test for Pareto-efficiency in the local public sectorusing the analytical result that aggregate property value is maximized at the public output level which satisfies the Samuelson condition for efficiency. By using cross-section data, it is possible to deduce whether a representative community provides its public goods in a property-value-maximizing (and hence efficient) fashion. The empirical results show no systematic tendency to either under- or over- provide public goods in a sample of Massachusetts communities.     

The Internet,R&D expenditure and economic growth

We examine the effect of the Internet on the relationship between R&D expenditure and economic growth. Data for 105 countries over the period 1994–2014 are used for panel data analysis. The effect of R&D expenditure on economic growth proves to be affected positively by the Internet and the effect of the Internet on the economic growth is positively strengthened by an increase in R&D expenditure.     

Political expenditure cycles and election outcomes: Evidence from disaggregation of public expenditures by economic functions

We analyze electorally motivated public spending using disaggregated expenditure data. Election cycles in total expenditures and in specific sub-categories mainly exist in newly democratized Eastern European countries. However, electorally motivated spending policies are ineffective means to enhance the re-election probability.     

Symbolic values, occupational choice, and economic development

Channeling human resources into occupations with high social productivity has historically been a key to economic prosperity. Occupational choices are not only driven by the material rewards associated with the various occupations, but also driven by the esteem that they confer. We propose a model of endogenous growth in which occupations carry a symbolic value that makes them more or less attractive; the evolution of symbolic values is endogenously determined by purposive transmission of value systems within families. The model sheds light on the interaction between cultural and economic development and identifies circumstances under which value systems matter for long-run growth. It shows the possibility of culturally determined poverty traps and offers a framework for thinking about the transition from traditional to modern values.     

Property rights,entrepreneurship, and economic development

The Review of Austrian Economics - The disparity in economic progress across nations still confound economists. However, economists know that institutions play a significant role in economic...     

政府发展性支出、产业集聚与绿色能源效率

为了探索政府发展性支出在产业集聚影响能源效率过程中的边界,本文从理论和实证两个角度验证了政府发展性支出在产业集聚影响能源效率过程中的调节机制和门槛效应,研究发现:(1)理论上政府发展性支出在产业集聚影响能源效率过程中存在调节效应,伴随着政府发展性支出的不断增加,产业集聚对能源效率的影响呈倒"N"型作用路径。表明过低或过高的政府发展性支出都会导致产业集聚扭曲,不能发挥其应有的正外部性,进而抑制能源效率的改善,只有适度的政府发展性支出才能发挥产业集聚应有的绩效,有助于能源效率的提升;(2)利用中国2004—2017年268个地级市的城市面板数据,在规避内生性问题的基础上,通过静态面板交互效应模型,验证了政府发展性支出在产业集聚影响能源效率过程中存在调节效应的理论假说;(3)采用面板门槛模型,验证了产业集聚影响能源效率的过程中存在政府发展性支出的双重门槛效应,门槛值分别为0.2517和0.2946,对不同政府发展性支出水平进行分组计量回归,结果与理论分析中产业集聚对能源效率的影响呈倒"N"型路径相吻合。表明,过高或过低的政府发展性支出趋向于抑制能源效率的提升,适度的政府发展性支出有利于能源效率的改善。     

Effort,efficiency, and incentives in economic organizations

This paper establishes the possibility of achieving both efficiency and incentive compatibility within a hierarchical organization, even when managers are effortaverse, as long as efficiency is defined as incorporating managers' effort disutilities as opportunity costs of production. It is further argued that this approach yields the same (i.e., Pareto) type of efficiency as achieved by the perfectly competitive price system when managerial disutility of effort is allowed. Thus, the negative results published by Miller and Murrell hold because of the non-Paretian objective functions assumed for central planners.     

Labour markets, social justice and economic efficiency

In conventional economic theory, a trade-off supposedly existsbetween social justice and economic efficiency. In reality,market and other economic institutions are dominated by powerrelations, so that the sponsorship of social justice is a productivefactor. Neo-liberal economic policies, by lifting the constraintson the exercise of unequal power, increased injustice and triggereda downward economic and social spiral. Reversing this requiresa revolution in economic theory and policy focused on full employment,the working of labour markets, the organisation of work, andhousehold organisation, social provision and self-sufficiency.