Electoral cycles in perceived corruption: International empirical evidence

I examine whether elections influence perceived corruption in the public sector. Perceived corruption in the public sector is measured by the reversed Transparency International's Perception of Corruption Index (CPI). The dataset includes around 100 democracies over the period 2012–2016, a sample for which the CPI is comparable across countries and over time. The results show that the reversed CPI was about 0.4 points higher in election years than in other years, indicating that perceived corruption in the public sector increased before elections. The effect is especially pronounced before early elections (1.0 points) compared to regular elections (0.4 points). Future research needs to investigate why perceived corruption in the public sector increased before elections.     

Fiscal Transparency,Elections and Public Employment: Evidence from the OECD

There is considerable variation in levels and changes in public employment within and between developed democracies. This article highlights the importance of fiscal transparency in determining changes in public employment. It argues that economic growth increases public employment under low fiscal transparency and that this effect is strongest in years of election. These hypotheses are tested on a panel of 20 OECD countries from 1995 to 2010. The analyses show substantial evidence in favor of the arguments. Fiscal transparency lowers the positive effect of growth on public employment, a relationship, which is most robust in election years.     

Why do only the G7+2 countries among United Nations members discuss about international public goods? A simulation study

This article investigates why only the Group of 7 plus China and Russia (G7 + 2 countries) among 194 United Nations members discuss about international public goods? By simulating the heterogeneity of income, prices and preference parameters on the total provisions and the number of free riders, we find that the number of contributors for international public goods is 15 under the 194 member countries, while the others are free riders. In addition, the contributors are the top 15 powerful countries with largest dropout value over the world. Then, the discussion with only 15 countries for public goods is meaningful. As large as the heterogeneity of parameters is, the number of contributors becomes closer to G7 + 2.     

Dynamic dissolutions and unifications

I reexamine the key results from the literature on the size and number of countries under different political institutions in a simple dynamic model. I find that the canonical static results that democracies lead to too many too‐small countries and that Leviathans lead to too few too‐large countries no longer necessarily hold. The key dynamic element that drives the new results is that public goods are modeled as public capital; this changes the incentives to unify or divide countries. I also show that there are hysteresis effects on the size and number of countries; that is, arbitrary initial configurations of national boundaries may tend to persist because of the initial public capital location decisions they promote.     

Volatility and growth: Governments are key

There exists a persistent disagreement in the literature over the effect of business cycles on economic growth. This paper offers a solution to this disagreement, suggesting that volatility carries not only a positive direct effect, but also a negative indirect effect, operating through the insurance mechanism of government size. Theoretically, the net growth effect of volatility is then ambiguous. The paper reveals the underlying endogeneity of government size in a balanced panel of 90 countries from 1961 to 2010. In practice, the negative indirect channel dominates in democracies, but with less power to choose public services in autocratic regimes the positive direct effect takes over. Consequently, volatile growth rates are detrimental to growth in democracies, but beneficial to growth in autocracies. The empirical results suggest that a one standard deviation increase of volatility lowers growth by up to 0.52 percentage points in a democracy, but raises growth by 1.66 percentage points in a total autocracy. These findings point to a crucial intermediating role of governments in the relationship between volatility and growth. Both the size of the public sector and the regime form assume key roles.     

The democratic (dis)advantage: The conditional impact of democracy on credit risk and sovereign default

Many have argued that democracies are able to make credible commitments to repay their debts and consequently enjoy higher sovereign credit ratings. In contrast to this expectation, I argue that the advantage of democracies in credit ratings is conditional on the countries' level of financial vulnerability and adjustment needs. Because democracies have more diffuse decision-making and are more accountable to the public, they encounter greater difficulty than autocracies in passing unpopular economic adjustment measures. Thus, I argue that democracies with high debt levels and low foreign reserve assets experience worse credit outcomes, whereas democracies with low vulnerability experience more positive outcomes. In a sample of up to 96 developing countries, I show that democracies have worse credit ratings and CDS Spreads and are more likely to default than their autocratic counterparts when foreign reserves are low relative to external debt. Notably, I also show that large debt burdens increase credit risk mainly in more democratic countries. I further test the causal pathway of the democratic advantage by constructing democracy scores of “market-friendly” and “adjustment-difficulty” democracy, finding that democracy worsens debt outcomes due to adjustment difficulty. These findings help to revise and clarify the causal logic surrounding the democratic advantage hypothesis.     

Cyclicality of Fiscal Policy in Latin America over the period 1990 ‐ 2015

Latin American countries experienced important changes in the 2000s. The implementation of fiscal reforms, public debt reduction and the high level of accumulated reserves gave them more policy space than in the past. As a result, Latin American countries were able to implement countercyclical policies to face the negative economic and social consequences associated with the recent macroeconomic shock. Some countries performed better than others. In particular, Social Democratic and Centrist governments enjoyed more fiscal space; they had realized larger budget surpluses over the good years and were able to cope with the crisis without impairing their fiscal conditions. Yet, Latin America has experienced a public finance deterioration in the most recent years. While governments are showing an increasing ability on taxation they are still facing some problems on the expenditure side. As a result, fiscal policy returned acyclical after the period of the crisis. The sustainability of public accounts may be strengthened increasing tax pressure on the richest, reducing tax evasion and improving current spending efficiency. However, the increasing political problems are putting many questions about future trends of public finance in the region.     

Effects of political institutions on air quality

We empirically test existing theories on the provision of public goods, in particular air quality, using data on sulfur dioxide (SO₂) concentrations from the Global Environment Monitoring Projects for 107 cities in 42 countries from 1971 to 1996. The results are as follows: First, we provide additional support for the claim that the degree of democracy has an independent positive effect on air quality. Second, we find that among democracies, presidential systems are more conducive to air quality than parliamentary ones. Third, in testing competing claims about the effect of interest groups on public goods provision in democracies we establish that labor union strength contributes to lower environmental quality, whereas the strength of green parties has the opposite effect.     

Ownership of individual retirement accounts – an empirical analysis based on SHARE

This paper examines the household retirement saving decisions in what concerns to the ownership of Individual Retirement Accounts (IRAs) in eight European Union (EU) countries. IRAs are more and more seen as an alternative to public pension benefits, which are decreasing. Therefore, understanding the enrolment in IRAs, both the socio-economic factors and over time, is most important. Detailed empirical analysis of the factors that might influence the ownership of IRAs is presented based on Survey of Health Ageing and Retirement in Europe (SHARE), using data from Wave 2 (2006–2007) and Wave 4 (2010–2011). Further, to analyse the impact of legal retirement age in the ownership of IRAs, two subsamples are considered: people aged between 50 and 64 years old (50–64 years) and people aged 65 or over (≥ 65 years). The results suggest that age, years of education, income and ownership of dwelling influence positively and significantly household saving, while number of children, marital status and risk aversion have a negative effect. Marital status and income are not statistically significant for retired people. Policy implications are derived.     

西方发达国家财政体制的启示

西方主要发达国家财政体制经过长期的实践,已经十分成熟,它对中国财政体制改革具有很好的借鉴作用。中国要进一步进行财政体制改革,应借鉴世界上市场经济国家财政体制的实践结合本国当前的实际,建立“二元合一、城乡一体、事权明确、合理分权、体系完善、协调发展”的新型财政体制。     

Indirect taxes: A comparative study of Greece and the EEC

Financing ever-growing governmental services in a non-inflationary manner is one of the main problems of public policy for all governments, including those of Greece and the EEC countries. The accession of Greece to the EEC would require tax reforms, especially in indirect taxes, which include tariffs and turnover or value added taxes. A regression analysis for the postwar years indicate that ‘imports’ is a far more important variable in explaining changes in indirect taxes than ‘private consumption’ and ‘inflation’. Such empirical findings may be useful to related policies on public finance of the countries considered, as well as other countries with similar economic problems.     

Taxation of International Private Capital Flows and Securities Transactions in Developing Countries: Do Public Finance Considerations Augment the Macroeconomic Dividends?

This paper examines policies to tax international private capital flows and securities transactions in developing countries. Many recent studies focus on the macroeconomic dividends associated with these policies (namely, their contribution to macroeconomic and financial stability and lengthened investor time horizons). In this paper I explore whether the potential of these policies to raise much‐needed tax revenues in developing countries augments their well‐known macroeconomic benefits. To my knowledge, there has been no effort to examine systematically the public finance issues related to the taxation of international private capital flows or securities transactions in the developing country context. I conclude that the public finance implications of these policies in middle‐income developing countries offers additional support to the macroeconomic case for them. To different degrees, taxation of international private capital flows and securities transactions has the potential to raise modest revenues in middle‐income countries. However, far more important is the potential of these policies to offer valuable macroeconomic dividends on the national level. These national macroeconomic dividends have the potential to bear fruit globally. This is because experiences with financial contagion over the last decade suggest that global financial stability can be enhanced via the promotion of domestic financial stability in developing countries.     

Behavioral Finance in Joseph de la Vega's Confusion de Confusiones

In this paper, we link Joseph de la Vega's work Confusion de Confusiones, written in 1688, with current behavioral finance and propose that Vega be considered the first precursor of modern behavioral finance. In addition to describing excessive trading, overreaction and underreaction, and the disposition effect, Vega vividly portrays how investors behaved 300 years ago and includes interesting documentation on investor biases, such as herding, overconfidence, and regret aversion.     

财政透明化背景下的政府治理变革

财政透明度是民主社会中更为广泛的公众知情权和政府信息披露制度的重要组成部分。中国财政透明度同发达国家相比存在很大的差距，甚至落后于许多发展中国家。本文通过对财政透明度的基础理论分析，认为财政透明化作为政府治理变革的核心，对于政府治理效率的提高有积极性影响。为了适应经济全球化发展趋势，在更多领域内参与国际竞争与合作，就必须规范政府行为，实现政府治理再造，     

USING COMMERCIAL DISCIPLINE TO IMPROVE AUSTRALIAN DEFENCE PROCUREMENT: MISPLACED ENTHUSIASM?

Australia, like other democracies, has long sought to improve the efficiency and effectiveness of procurement for national defence. A recent review exhorted Defence procurement managers to exert greater “commercial discipline.” Similar calls have been made in other countries. This paper tests such public sector emulation of commercial practice by comparing the relative effectiveness of procurement via in‐house arrangements; a public procurement agency detached from Defence; and privatized provision. We show that what matters is not public or private ownership but how ownership and management are integrated and what incentive structures are applied. (JEL H44)     

Democracy,dictatorship, and transformation: A proposal for a constitution-guided systematic change in formerly Soviet republics

A system transformation contains complicated social dilemmas and special-interest problems. Thus it is frequently suggested that democratic decisionmaking is inappropriate for introducing a market economy in the former socialist countries. In this paper I argue that this view rests on a nirvana approach, because it neglects the dynamics of authoritarian governments. It is shown that dictatorships tend to serve even narrower special interests than democracies and are therefore usually less likely to pursue a consistent transformation policy. However, a dictatorship could, under certain cultural and social conditions, have some advantages over democracies. But those conditions are barely present in the formerly socialist countries. Moreover, a dictatorship can by its very nature not be committed and cannot even commit itself to a certain public policy. Hence, there is only one instrument to mitigate social dilemmas in transformation countries: a set of constitutional rules. Some basic properties of a constitutional approach of system transformation are introduced in the last section of the paper.     

Does accrual accounting improve municipalities’ efficiency? Evidence from Germany

The stressed financial situation in the public sector and the continuous aspiration for austerity in western governments and public bodies is omnipresent. As one core element in the New Public Management shift, Germany, like many other countries, has experienced significant reforms in public sector accounting and reporting in the last decade. We analyse the effect of new accounting and budgeting regimes. We therefore analyse the cost efficiency of German local governments in the state of North Rhine-Westphalia over 3 years using a stochastic frontier approach. This study presents evidence for increased efficiency amongst municipalities due to the adoption of accrual accounting.     

The endogeneity of the Optimum Currency Area criteria in East Asia

The Asian financial crisis in mid-1997 has increased interest in policies to achieve greater regional exchange rate stability in East Asia. It has renewed calls for greater monetary and exchange rate cooperation. A country's suitability to join a monetary union depends, inter alia, on the trade intensity and the business cycle synchronization with other potential members of the monetary union. However, these two Optimum Currency Area criteria are endogenous. Theoretically, the effect of increased trade integration (after the elimination of exchange fluctuations among the countries in the region) on the business cycle synchronization is ambiguous. Reduction in trade barriers can potentially increase industrial specialization by country and therefore resulting in more asymmetry business cycles from industry-specific shocks. On the other hand, increased trade integration may result in more highly correlated business cycles due to common demand shocks or intra-industry trade. If the second hypothesis is empirically verified, policy makers have little to worry about the region being unsynchronized in their business cycles as the business cycles will become more synchronized after the monetary union is formed. This paper assesses the dynamic relationships between trade, finance, specialization and business cycle synchronization for East Asian economies using a Generalized Method of Moments (GMM) approach. The dynamic panel approach improves on previous efforts to examine the business cycle correlations — trade link using panel procedures, which control for the potential endogeneity of all explanatory variables. Based on the findings on how trade, finance and sectoral specialization have effects on the size of common shocks among countries, potential policies that can help East Asian countries move closer toward a regional currency arrangement can be suggested. The empirical results of this study suggest that there exists scope for East Asia to form a monetary union.     

One reason countries pay their debts: renegotiation and international trade

I estimate the effect of sovereign debt renegotiation on international trade. Sovereigns may fear the trade consequences of default; because creditors deter default, or because trade finance dries up. I use an empirical gravity model of trade and a panel data set covering 50 years, over 150 countries, and other factors that influence bilateral trade. Debt renegotiation is associated with an economically and statistically significant decline in bilateral trade between a debtor and its creditors. The decline in bilateral trade is approximately 8% a year and persists for around 15 years.     

中国农村公共品供给与农村财政制度创新

近年来我国以农业发展缓慢、农民负担沉重、农村社会问题突出为主要表象的“三农”问题,虽然原因是多方面的,但是农村公共品供给不力是其中最重要的方面。这就要求我们从公共财政学的角度科学地安排农村公共品的供给,进行农村财政制度创新。