Introduction to “Economic and Financial Governance in the European Union after a decade of Economic and Political Crises.”

ABSTRACT

This paper offers the Introduction to the Special Issue “Economic and Financial Governance in the European Union after a decade of Economic and Political Crises.” We introduce the five papers. We distill three important lessons they offer for EU integration.     

AGRICULTURAL POLICY AT THE CROSSROADS—AGAIN

American agriculture is suffering from severe structural adjustments and from its worst financial depression since landmark price and income policies were legislated more than half a century ago. As much as one-third of the $220 billion in agricultural debt is now delinquent, nonaccrual, or subject to renegotiation. Land values have fallen precipitously in the past few years. Farm foreclosures are near 1930 Depression levels. The congressional debate over programs that could determine the course of U.S. agriculture for the remainder of the century began in the summer of 1985.     

Time,congestion, and public goods

This paper considers intermediate and final public goods as stocks from which consumers obtain a flow of services by expending scarce time. The services so obtained depend on the time other individuals spend utilizing these same goods. Optimality conditions are derived for both stock levels and flow usage where tolls are required to cover costs. The elasticities in the resulting formulae are endogenous in the sense that only certain values are permissible. In the intermediate good case, at the optimum, the public good will always be locally optimally supplied and locally underutilized to a degree which depends on the congestion parameter.     

The hydroelectricity consumption and economic growth in Asian countries - evidence using an asymmetric cointegration approach

ABSTRACT

This study examines the four commonly tested hypotheses in hydroelectricity consumption – economic growth literature for 12 Asian countries. Our results from a recently developed hidden cointegration technique uncover rich and significant relationships between negative and positive components of the variables under consideration. In particular, we find evidence to support the neutrality hypothesis in five countries (Bangladesh, Indonesia, Pakistan, Philippines, and Thailand), the growth hypothesis in four countries (India, Japan, South Korea and Taiwan), and both growth and conservation hypotheses in three countries (China, Malaysia, and New Zealand). These findings suggest that appropriate economic policies should be elaborated on the basis of the country’s specific hydroelectricity consumption–growth nexus. Finally, our new evidence suggests that the lack of stable relationship between hydroelectricity consumption and economic growth documented in previous studies for some of these countries could be due to the failure to properly account for the nonlinearity property in the data.     

Why Punish? Social reciprocity and the enforcement of prosocial norms

Recently economists have become interested in why people who face social dilemmas in the experimental lab use the seemingly incredible threat of punishment to deter free riding. Three theories with evolutionary microfoundations have been developed to explain punishment. We survey these theories and use behavioral data from surveys and experiments to show that the theory called social reciprocity in which people punish norm violators indiscriminately explains punishment best.JEL Classification: C91, C92, D64, H41 Correspondence to: Jeffrey P. CarpenterWe thank Carolyn Craven, Corinna Noelke and two referees for comments, and Middlebury College for financial assistance. In addition, Carpenter acknowledges the support of the National Science Foundation (SES-CAREER 0092953).     

Analysis and Forecast of the State of Environmental Protection in Russia

The main purpose of the present study is to analyse the emission dynamics of atmospheric and water pollutants in Russia and cost of their removal in the 1980s and early 1990s, and to forecast them by means of a Dynamic Input–Output Model according to different scenarios of future economic development till 1998. Main results of the work are:– methodological principles have been elaborated for singling out the environmental protection sector within the national economy;– a method has been offered for including the ecological block into a Dynamic Input–Output Model of the Russian economy;– a method of data preparation has been elaborated for the ecological block of the above-named model, the data base which characterizes the ecological situation in Russia has been formed and analysed;– calculations for 1994–1998 have been executed for forecasting the economic and ecological development of Russia using the above-mentioned model and the results obtained have been analysed. The results showed that if the existing tendencies towards low environmental protection capital costs remain the same, then the negative environmental impact will increase. In order to implement ecological programs and international agreements, to increase the proportion of removed pollutants, it is necessary to increase substantially expenditures on purifying water and air resources. The proportion of environmental protection investments in the total amount of the national economy capital costs should increase by up to 12–40% according to different scenarios of the economic development and different purposes of the environmental protection policy.     

How hospital ownership affects access to care for the uninsured

This article addresses the effect of hospital ownership on the delivery of service to uninsured patients. It compares the volume of uninsured patients treated in for-profit and nonprofit hospitals by regarding hospital ownership and service as endogenous. Instrumental variable estimates are used to predict the percentage of patients who are uninsured, controlling for hospital ownership and service. The study shows that when for-profit and nonprofit hospitals are located in the same area, they serve an equivalent number of uninsured patients, but for-profit hospitals indirectly avoid the uninsured by locating more often in better-insured areas.     

Controlling utilization through a selective participation PPO

A selective participation PPO, which blends the fee-for-service payment system with the HMO concept, may offer an effective approach to controlling dental care costs.     

Making competition in health care work

Health care reform in the United States is on a collision course with economic reality. Most proposals focus on measures that will produce one-time cost savings by eliminating waste and inefficiency. But the right question to ask is how to achieve dramatic and sustained cost reductions over time. What will it take to foster entirely new approaches to disease prevention and treatment, whole new ways to deliver services, and more cost-effective facilities? The answer lies in the powerful lessons business has learned over the past two decades about the imperatives of competition. In industry after industry, the underlying dynamic is the same: competition compels companies to deliver constantly increasing value to customers. The fundamental driver of this continuous quality improvement and cost reduction is innovation. Without incentives to sustain innovation in health care, short-term cost savings will soon be overwhelmed by the desire to widen access, the growing health needs of an aging population, and the unwillingness of Americans to settle for anything less than the best treatments available. The misguided assumption underlying much of the debate about health care is that technology is the enemy. By assuming that technology drives up costs, reformers neglect the central importance of innovation or, worse yet, attempt to slow its pace. In fact, innovation, driven by rigorous competition, is the key to successful reform.