Local fiscal multipliers and spillover effects: Evidence from Philippine regions

Fiscal policy in developed countries has been a rich topic since the Great Recession. However, research has remained limited for developing countries despite their similar use of fiscal policy and concerns about the efficiency of public spending. To help address this research gap, this paper provides a case study of multiplier effects of local government spending in regions in the Philippines as well as spillover effects of local government spending across regions. An instrumental variable based on the country’s intergovernmental transfer system is used to identify regional public spending in panel regressions. The local fiscal multiplier is estimated to be above one, where a 1-peso rise in spending by local government units in a region corresponds to a 1.2-peso rise in regional output. Multiplier effects are highest for capital expenditures and appear to be primarily driven by the services sector. Spillover effects are comparatively large, at around 1.8–2.0, highlighting the important role of domestic trade when stimulating regional economic activity.     

Using methods of Multi-Criteria Decision Making to provide decision support concerning local bioenergy projects

The public sector plays an important role in the German “Energiewende”. Besides energy management in municipal properties the local government can also support the switch to renewable energy sources through a change in energy supply structures within in their region. Methods of Multi-Criteria Decision Making (MCDM) from Operations Research are helpful regarding that challenge, as they are able to assess the sustainability of local energy concepts, since they not only offer stakeholders the opportunity to participate, but also consider multiple conflicting criteria. In that way, the acceptance of local energy projects and the participation of stakeholders in the decision process are supported. The case study presented in this paper illustrates the results of a MCDM process employed to identify a sustainable bioenergy concept in a rural village in Lower Saxony, Germany. Our analysis revealed not only the opportunities and challenges associated with executing an MCDM process to support the realization of local bioenergy projects, but also discusses potential limitations of the methods.     

‘Market failure’ arguments are a poor guide to policy

‘Market failure’ is frequently offered as a justification for government intervention in the economy. Proponents of interventions can point to almost limitless examples of markets which do not meet all the criteria for Pareto optimality and argue that government taxation, subsidies or regulation can perfect them, maximising social welfare. But comparing market outcomes with an unattainable and unidentifiable ideal is not useful in a world of imperfect knowledge and government failure. It is better to compare market outcomes against realistic alternatives. Furthermore, even within the market failure paradigm, concepts such as ‘public goods’ and ‘negative externalities’ are routinely misunderstood and inconsistently applied. This leads to predictably poor policy outcomes.     

Public debt management and private financial development

In several developing countries, high and rising public debt is an important source of vulnerability. Strengthening debt management is a priority, but its effects on domestic economies have been hardly analyzed. This paper asks whether better public debt management could have spillover effects on the private sector, leading to more (and more stable) private capital flows and domestic credit. This is a relevant question in a context of financial deepening and increasing private capital inflows, which could be prone to episodes of bonanza, sudden stops and crises. Our results, based on a sample of developing countries, show positive spillover effects from better public debt management to private capital inflows and domestic financial deepening.     

The effects of agglomeration externalities on urban green total-factor productivity in China

For China's urban industrial layout and green development, determining which types of agglomeration externalities are most advantageous to the rise of green total-factor productivity has both theoretical and practical relevance. This research experimentally studies the effects of three types of agglomeration externalities on urban green total-factor productivity using the data of 285 Chinese cities from 2003 to 2018. The findings demonstrate that urban green total-factor output is rising, albeit with certain differences during different time periods. Both the Jacobs externality and the Porter externality are favorable for increasing urban green total-factor production when all cities are evaluated together, although the latter has a stronger promoting influence. The effect of the Marshall-Arrow-Romer externality, on the other hand, is not significant. Furthermore, these effects also depend on the stage of economic development and population size.     

Why Sweden's pension reform was able to be successfully implemented

Governments that do not reform pay-as-you-go (PAYG) pension systems will eventually face a pension crisis. In a democracy, reforms require majority support. The problem is that pension reform requires today's generation to bear the burden to avoid burdening tomorrow's generation. Sweden recently passed pension legislation that specifies a gradual transition from a public defined-benefit plan to a defined contribution plan. Why was Sweden successful in reforming its pension system? We find that a political economy perspective helps to answer this question: there are more winners who would vote in favour of the reform than non-winners who would vote against it. When comparing the net effect (present value of expected benefits minus present value of remaining contributions) of the new and old systems, contributions of the working generation (age < 53) are reduced by more than their expected benefits.     

Spatial welfare economics versus ecological footprint: modeling agglomeration,externalities and trade

A welfare framework for the analysis of the spatial dimensions of sustainability is developed. It covers agglomeration effects, interregional trade, negative environmental externalities, and various land use categories. The model is used to compare rankings of spatial configurations according to evaluations based on social welfare and ecological footprint indicators. Five spatial configurations are considered for this purpose. The exercise is operationalized with the help of a two-region model of the economy, that is, in line with the ‘new economic geography.’ By generating a number of numerical ‘counter-examples,’ it is shown that the footprint method is inconsistent with an approach aimed at maximum social welfare. Unless environmental externalities are such a large problem that they overwhelm all other components of economic well-being, a ‘spatial welfare economic’ approach delivers totally different rankings of alternative land use configurations than the ecological footprint.      

Should the Good and the Selfish be Taxed Differently?*

In this paper, we consider an environment where individual actions have externalities and two types of agents exist: agents with social preferences (the good) and selfish agents. Selfish agents have pay‐off functions that do not take into account social welfare. The pay‐off of an agent is a linear combination of social welfare and the pay‐off of a selfish agent. We demonstrate that the corrective tax rates that maximize social welfare do not depend on the degree of social preferences. Hence, the good and the selfish should not be taxed differently.     

我国公共投资规模效率实证分析

我国公共投资规模连年扩大,改善了生活环境和生产条件,但是否存在投资过度的风险?本文运用生产函数模型分析了公共投资规模效率存在的条件,使用协整的方法分析了大口径和小口径公共投资规模的最优规模,得出我国公共投资规模不足的结论。     

省级社会保障公共支出分类比较研究

中国省级社会保障公共支出存在着类型化的可能。通过选取"社会保障公共支出水平"、"经济发展水平"和"政府力量"三个变量作为分类框架和指标,利用2005—2008年度截面数据测算,可以将各省份区分为东中西三大类型区域。统计分析发现,这三类区域不仅在省级社会保障公共支出相对比重之间存在着显著的差异,而且各区域也形成了不同的社会保障发展机制。