The usefulness of performance reporting in local government: comparing Italy and Spain

This article presents a comparative analysis of the perceived usefulness of performance information by managers in local authorities in Italy and Spain. Italy and Spain have similar cultural and administrative characteristics and in both countries there are external requirements (from central government) to adopt performance indicators. The adoption of performance indicators was found to be almost symbolic in both states.     

Is globalisation undermining the welfare state?

This paper analyses the evolution of the welfare states in themajority of OECD countries during the pre-globalisation (1946–80)and globalisation (1980–2000) periods. Our purpose isto find out whether globalisation has produced a convergencetowards a smaller welfare state, funded increasingly by non-mobilefactors such as labour, property and consumption rather thanby mobile factors such as capital. The data presented here challengethe claims about such a convergence, showing that social publicexpenditures and public employment have continued to expandduring the globalisation period in most OECD countries. We alsoshow that the welfare states remain rooted in the politicaltraditions that have governed them.     

Total factor productivity and R&D capital in the spanish economy, 1965–1980

A formal model of productivity growth and technical progress is presented. The model takes into account embodied and disembodied technical progress as explanatory variables. The slowdown in productivity growth for the Spanish economy after 1972 is explained for 92% by the decline in the rate of growth of technical progress originated from domestic R&D and technology imports.     

Trend breaks in the research and development process

This work examines the behaviour of the input and output measures of the R&D process in the United States, Germany, France and the United Kingdom, in the second half of the 20th century. The researcher and idea stock series can be construed as stationary fluctuations around a trend function, with a main breakpoint at the end of the 1960s. All the countries exhibit slower growth after their last breaks that during the decades preceding its first breaks. In this connection, the United States and Germany appear to represent the end points in the range of incidence.     

The role of no-arbitrage on forecasting: Lessons from a parametric term structure model

Parametric term structure models have been successfully applied to numerous problems in fixed income markets, including pricing, hedging, managing risk, as well as to the study of monetary policy implications. In turn, dynamic term structure models, equipped with stronger economic structure, have been mainly adopted to price derivatives and explain empirical stylized facts. In this paper, we combine flavors of those two classes of models to test whether no-arbitrage affects forecasting. We construct cross-sectional (allowing arbitrages) and arbitrage-free versions of a parametric polynomial model to analyze how well they predict out-of-sample interest rates. Based on US Treasury yield data, we find that no-arbitrage restrictions significantly improve forecasts. Arbitrage-free versions achieve overall smaller biases and root mean square errors for most maturities and forecasting horizons. Furthermore, a decomposition of forecasts into forward-rates and holding return premia indicates that the superior performance of no-arbitrage versions is due to a better identification of bond risk premium.     

EU Enlargement and Inward FDI

The authors attempt to highlight the effects of the recent surge of FDI in the enlargement states on domestic investment and growth. A similar analysis is carried out for the EU-15 in order to ascertain whether this type of capital inflow has a differential impact in these two regions of the European Union. Empirical analysis, based on dynamic panel data models, suggests the existence of a positive contribution of FDI to greater domestic investment and economic growth in the new member states. The evidence obtained for the EU-15 old member countries confirms the FDI-growth nexus but does not suggest a positive impact of FDI on domestic investment, which would be consistent with these capital inflows being of a different nature for these more advanced economies.     

Does Inflation Influence Fiscal Policies? Effects of Inflation Targeting on Public Expenditure in the Euro Area

International Advances in Economic Research -     

Market Structure And The Adoption Of Innovations: The Case Of The Spanish Banking Sector ‡

This paper is an empirical study of the determinants of adoption time for the teleprocess terminal by Spanish commercial and savings banks. The explanatory variables include the characteristics of the adopting firms, size, and in the case of the savings banks, the structure of the market and concentration. The results indicate that the speed of adoption is maximized at intermediate levels of size and market concentration, confirming one theoretical prediction of models of diffusion: namely, that adoption time is minimized at intermediate levels of market concentration.     

Foreign aid preferences and perceptions in donor countries

We present original survey data on preferences for foreign aid in 24 donor countries from 2005 to 2008. On publicly-funded foreign aid (Official Development Assistance, or ODA), we find patterns that are consistent with a standard model of democratic policy formation, in which donations are treated as a pure public good. Controlling for perceptions of current ODA, we show that individual preferences for ODA are (i) negatively correlated with relative income within a country-year; and (ii) positively correlated with inequality at the country level. We extend the analysis to explain variation in the gap between desired aid and actual ODA, arguing that lobbying by high-income special interest groups can divert resources away from the median voter’s preferred level of aid. Consistent with this, we observe that ODA is significantly lower where policymakers are more susceptible to lobbying. Finally, we present a novel test of competing “crowding out” hypotheses. Self-reported private aid donations are negatively correlated with actual ODA, and positively correlated with perceived ODA. This finding is consistent with an emerging argument in the literature, whereby ODA crowds out private aid by enabling charities to forego fundraising activities and crowds in private aid through a signaling channel.     

Learning about monetary policy rules when the cost-channel matters

We study how monetary policy may affect determinacy and expectational stability (E-stability) of rational expectations equilibrium when the cost channel of monetary policy matters. Focusing on instrumental Taylor-type rules and optimal target rules, we show that standard policies can induce indeterminacy and expectational instability when the cost channel is present. A naïve application of the traditional Taylor principle could be misleading, and expectations-based reaction function under discretion does not always induce determinate and E-stable equilibrium. This result contrasts with the findings of Bullard and Mitra [2002. Learning about monetary policy rules. Journal of Monetary Economics 49, 1105–1129] and Evans and Honkapohja [2003. Expectations and stability problem for optimal monetary policies. Review of Economic Studies 70, 807–824] for the standard new Keynesian model. The ability of the central bank to commit to an optimal policy is an antidote to these problems.