How Big Was the Effect of Budget Consolidation on the Australian Economy in the 1990s?

This article evaluates the effects of budget consolidation on the Australian economy in the 1990s. As the economy recovered from the 1991–92 recession, the need to improve the fiscal balance to lift national saving became the dominant influence on fiscal policy. The article argues that spending cuts by the Australian federal government announced in 1996 had immediate effects on financial markets, with reduced long‐term interest rates of about 50 basis points in 1996–97. Using a modified version of the Treasury macroeconometric model of the Australian economy (TRYM), the article simulates the net macroeconomic effects of the expenditure cuts, fiscal consolidation and lower long‐term interest rates. The article finds that the program of budget consolidation had a sizeable short‐ and medium‐term impact on the economy, raising Gross Domestic Product by up to three‐quarters of a percentage point and reducing unemployment by 0.3 percentage points over the next two to three years.     

The Prosecution of Public Figures and the Separation of Powers. Confusion within the Executive Branch – A Conceptual Framework

Criminal investigation and prosecution of politicians, top civil servants and other public figures are topics frequently discussed in the media. The nature of the investigating or prosecuting authority varies between countries – from the general public prosecutor, through magistrates to independent counsels or parliamentary investigation commissions. This paper analyzes the role and status of public prosecutors within the separation of powers-concept. Prosecutors are usually part of the executive and not the judicial branch, which implies that they do not enjoy the same degree of independence as judges, and are ultimately subordinated to the directives of the minister of justice or the government. Conflicts of interest may hence arise if members of government can use the criminal process for their own or partisan interests. The incentives of public prosecutors in different jurisdictions are compared.     

The Bank of England quarterly model of the UK economy

The Bank of England first acquired a macroeconomic model of the UK economy in early 1973, and used it for forecasting in June and July of that year. The initial model was obtained from the London Business School (LBS), but the last 14 years or so have, on the part of both the Bank and the LBS, led to developments which now make the models no closer to each other than to other large scale models of the UK. This article describes the structure and central properties of the current version of the Bank model, which has some 663 variables, 134 of which are modelled by behavioural equations, 153 by technical equations, 212 identities and 164 exogenous variables. In order to provide a transitional step between the kind of models with which most macroeconomists are familiar and the full scale version of the Bank model, one part of the article presents a very simple stylized version of the full model. This is a stepping stone to the full model which is described and analysed on a sectoral basis in Part 3, with a complete listing of equations in Part 4. Some of the simulation properties, and hence full model dynamic responses, are considered in Part 5.     

The dynamics of some duopoly games involving the Market Share and Nichol strategies

The paper analyses the dynamics of some duopoly output games involving the Cournot, Market-Share and Nichol strategies. The model assumes linear price and cost functions and supposes that outputs are adjusted instantaneously at discrete time intervals. For all games considered, equilibrium is either reached after a finite number of moves or a stable approach to equilibrium occurs as t → ∞. In fact, apart from a few uninteresting cases, arising from the oversimplified form of the Market-Share strategy, all equilibrium points lie on specified parts of the firms' Cournot loci.     

Extraction in Four Dimensions: Time,Space and the Emerging Geo(-)politics of Deep-Sea Mining

ABSTRACT

Despite the truism that less is known about the deep-sea than outer space, deep-sea mining (DSM) is being promoted as the next frontier of resource extraction. In 2019, Nautilus Minerals hopes to become the world’s first company to mine the deep seabed in the waters off Papua New Guinea (PNG). DSM thus stands at the threshold of becoming a matter of politics; it has provoked a wide range of geopolitical imaginaries variously relating to ‘resource security’ and ‘progress’, on the one hand, and environmental disaster and precaution on the other. However, these accounts do little to address the specific ‘nature’ of the deep-sea, seabed and their extreme location and materialities, and are instead framed by classic geopolitical concerns with interstate relations. Against this background and illustrated by examples centred on PNG, this paper argues that future engagements with the geopolitics of DSM are more accurately conceptualised by an engagement with time as well as three dimensional space. This includes the multiple spatial and temporal registers through which both the geology and ecologies of seabed and seawater operate. By highlighting the importance of resource temporalities, it suggests that the geopolitics of both DSM and extraction in extreme places more generally is not only spatially complex, it is also a matter of time.     

The Case of the Missing Pollution Haven Hypothesis

One particularly vexing puzzle for economists and policymakers over the past several decades concerns the empirical significance of the theoretically predicted pollution haven hypothesis. While neoclassical theory and conventional wisdom both surmise that local economies will suffer deleterious effects from stricter environmental regulations, empirical studies have largely failed to validate such claims. This study utilizes the method of matching to show that the impact of stricter regulation is heterogeneous spatially, varying systematically based on location-specific attributes. Previous studies that assume a homogenous response may therefore inadvertently mask the overall impact of more stringent regulations by pooling unaffected and affected regions.JEL Classification: Q25, Q28, H00, L51, R1The authors wish to thank to Michael Crew, Anthony Heyes, an anonymous referee, Werner Antweiler, Randy Becker, Wayne Gray, Shelby Gerking, Michael Greenstone, Vern Henderson, and Arik Levinson. Participants at various university seminars and conferences also lent useful insights to this line of research.     

Development Dynamics: Economic Integration and the Demographic Transition

This paper examines the influence of economic integration—widening of the trading area—on economic development and the demographic transition. Economies produce with different technologies depending on their scale. Greater integration between regions (greater extensive scale) is instrumental in changing rates of return, which generates an industrial revolution and provokes changes in child bearing behavior. The demographic transition follows from the mortality response to income and birth response to greater scale. The model is calibrated and simulated using historical data from Europe. Historical evidence is cited to support the idea that integration precedes the dramatic rise in economic growth rates.     

Immigration and the Trade of Provinces

A link between immigration, imports, and exports has been found by a number of papers that have used the gravity equation to analyze bilateral trade patterns. We discuss what this research implies about the mechanisms through which immigrants expand trade and identify strengths and weakness of the various approaches. This paper also contributes to this literature by estimating immigrant effects for Canada using cross‐province variation in international trade and immigration patterns. We derive an alternative functional form capturing the relationship between immigration and trade based on the proposition that immigrants use their connections and superior 'market intelligence' to exploit trade opportunities that non‐immigrants do not access. We find that the average new immigrant expands exports to his/her native country by $312 and expands imports by $944.     

An efficient budget allocation policy for decentralisation of responsibility for site decontamination projects

Selection and execution of site decontamination projects is often best left to local authorities, in accordance with the subsidiarity principle, even though the budget for such projects is made available through a central authority. In this paper we suggest a practical budget allocation policy which a central authority can employ to allocate budgets to local authorities, while still optimising the central authority's environmental objective function. The procedure is fully consistent with the principle of decentralisation of responsibility for selection and execution of projects, and requires a minimum information exchange between local and central levels. Despite the information asymmetry between local and central levels, incentive compatibility problems can be (partially) prevented by choosing an appropriate evaluation mechanism. At the same time, the procedure is computationally effective and efficient, and can guarantee a fair budget allocation, making it easy to implement and politically acceptable.     

Tax‐deferred savings plans and interest deductibility

Abstract.  Programs that defer taxes on savings (e.g., RRSPs or 401(k)s) are supposed to move income tax systems closer to the more efficient consumption tax. Whether or not RRSPs move income tax systems away from or closer to a consumption tax depends on whether or not interest on debts incurred to make RRSP contributions is deductible for income tax purposes. If people optimize as assumed in simple life‐cycle models, then it may be that governments can convert a non‐linear income tax system to a proportional consumption tax system. I argue this is plausible for some Canadian households. JEL classification: H21, H24