nep-pbe New Economics Papers
on Public Economics
Issue of 2006‒12‒04
28 papers chosen by
Peren Arin
Massey University

  1. Pareto improving interventions in a general equilibrium model with private provision of public goods By Villanacci, Antonio; Zenginobuz, Unal
  2. On the neutrality of redistribution in a general equilibrium model with public goods By Villanacci, Antonio; Zenginobuz, Unal
  3. Public Ignorance and Estate Tax Repeal: The Effect of Partisan Differences and Survey Incentives By Krupnikov, Yanna; Levine, Adam S.; Lupia, Arthur; Prior, Markus
  5. The Sustainability of Budget Deficits in an Inflationary Economy By Harashima, Taiji
  7. Vertical Fiscal Imbalance and Vertical Fiscal Gap: A Study in Sorting the Semantics By Sharma, Chanchal Kumar
  8. Decentralization and environment By Dalmazzone Silvana
  10. Were Bush Tax Cut Supporters "Simply Ignorant?" A Second Look at Conservatives and Liberals in "Homer Gets a Tax Cut" By Lupia, Arthur; Levine, Adam S.; Menning, Jesse O.; Sin, Gisela
  11. Taxes and labour supply under interdependent preferences By Woźny, Łukasz; Garbicz, Marek
  12. On Privatisation and Restructuring By Schröder, Philipp J.H.
  13. MONETARY POLICY RULES AND FISCAL EQUILIBRIUM IN BRAZIL By Helder Ferreira de Mendonça; Manoel Carlos de Castro Pires
  14. Declared vs. revealed yardstick competition: local government efficiency in Norway By Tovmo Per; Revelli Federico
  15. When Does decentralization deliver? The Dilemma of Design By Sharma, Chanchal Kumar
  16. Implementing VAT in India :Implications for Federal Polity By Sharma, Chanchal Kumar
  17. How Elitism Undermines the Study of Voter Competence By Lupia, Arthur
  18. Why Decentralization ? The Puzzle of causation By Sharma, Chanchal Kumar
  19. World Bank Pension reforms and development patterns in the world system and in the "Wider Europe". A 109 country investigation based on 33 indicators of economic growth, and human, social and ecological well-being, and a European regional case study By Tausch, Arno
  21. Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes By Sharma, Chanchal Kumar
  22. When Can Politicians Scare Citizens Into Supporting Bad Policies? A Theory of Incentives with Fear-Based Content By Lupia, Arthur; Menning, Jesse
  23. Abolishing school fees in Malawi: the impact on education access and equity By Al-Samarrai, Samer; Zaman, Hassan
  24. Long-term labour productivity and GDP projections for the EU25 Member States : a production function framework By Carone, Giuseppe; Denis, Cécile; Mc Morrow, Kieran; Mourre, Gilles; Röger, Werner
  25. Independent regulatory agencies in emerging economies By Sosay, Gül; Zenginobuz, Unal
  26. What Citizens Know Depends on How You Ask Them: Political Knowledge and Political Learning Skills By Lupia, Arthur; Prior, Markus
  28. Operationalising Senian capability approach by modelling human development By Canova, Luciano; Grasso, Marco; Vaglio, Alessandro; Di Giulio, Enzo; Migliavacca, Stefania; Lelli, Sara; Pareglio, Stefano

  1. By: Villanacci, Antonio; Zenginobuz, Unal
    Abstract: Most of the literature on government intervention in models of voluntary public goods supply focuses on interventions that increase the total level of a public good, which is considered to be typically underprovided. However, an intervention that is successful in increasing the public good level need not benefit everyone. In this paper we take a direct approach to welfare properties of voluntary provision equilibria in a full blown general equilibrium model with public goods and study interventions that have the goal of Pareto improving on the voluntary provision outcome. Towards this end, we study a model with many private goods and nonlinear production technology for the public good, and hence allow for relative price effects to serve as a powerful channel of intervention. In this setup we show that Pareto improving interventions generally do exist. In particular, direct government provision financed by “small”, or “local”, lump-sum taxes can be used generically to Pareto improve upon the voluntary provision outcome.
    Keywords: general equilibrium; private provision of public goods; Pareto improving interventions
    JEL: D51 H41
    Date: 2004–12–15
  2. By: Villanacci, Antonio; Zenginobuz, Unal
    Abstract: Models on private provision of public goods typically involve a single private good and linear production technology for the public good. We study a model with several private goods and non-linear (strictly concave) production technology. We revisit the question of “neutrality” of government interventions on equilibrium outcomes and show that relative price effects that are absent with a single private good and linear production technology become a powerful channel of redistribution in this case. Contrary to previous results, redistributing endowments in favor of contributors is shown to be neither necessary nor sufficient for increasing the equilibrium level of public good.
    Keywords: public goods; private provision; neutrality results; general equilibrium
    JEL: D51 H41
    Date: 2001–05–05
  3. By: Krupnikov, Yanna; Levine, Adam S.; Lupia, Arthur; Prior, Markus
    Abstract: We re-examine whether the broad support for repeal of the estate tax is a result of citizen ignorance. We find that increasing information about the estate tax or politics in general has very different effects on Republicans and Democrats. While high and low-information Republicans support estate tax repeal, Democratic support is higher among those who know less. However, most highly-informed people in both parties support repeal. We also show that standard surveys overestimate the extent of misinformation about the estate tax. Therefore, “ignorance” is not a compelling explanation of why so many people support estate tax repeal.
    Keywords: estate tax; voter competence; survey research; experimental economics; public policy
    JEL: H20 H30 K10
    Date: 2006
  4. By: Samir Cury; Allexandro Mori Coelho
    Date: 2006
  5. By: Harashima, Taiji
    Abstract: This paper examines fiscal sustainability in an inflationary environment, particularly the interrelation between government debt and inflation. A model that explicitly incorporates the political utility/objective function of government is constructed. The government’s borrowing behavior and inflation are determined through the simultaneous optimization of government and households. The sustainable fiscal debt in an inflationary environment was found to equal the present value of primary balances discounted by the time preference rate of government, not by the interest rate. This result raises the question of whether it is appropriate to apply the fiscal sustainability test of Hamilton and Flavin to high inflation countries.
    Keywords: Fiscal sustainability; Inflation; The present-value of primary balances; The fiscal theory of the price level; Leviathan
    JEL: H63 E31
    Date: 2006–11–27
  6. By: Fernando Blanco; Santiago Herrera
    Date: 2006
  7. By: Sharma, Chanchal Kumar
    Abstract: With the intergovernmental relations undergoing considerable strain due to dual phenomenon of globalization and localization, issues regarding the precise meaning applicability, measurement and relevance of Vertical Fiscal Imbalances (VFI) have become too significant to be ignored. This strand of fiscal federalism clearly stands to be redefined. The paper points out that the predicament that researchers have faced all times is that they recognize the weakness of conventional approaches to define and measure VFI yet find themselves constrained to work within that approach. It is shown that the current research demonstrates that much of the confusion with respect to VFI has arisen from a faulty conception of what constitutes a fiscal imbalance which in turn stems from inability or unwillingness to make a distinction between vertical fiscal gap (VFG) and vertical fiscal imbalance. The paper analyses the conventional approaches and the alternative approaches that have been suggested from time to time. It has been argued that it was not until recently that the challenges posed could checkmate the conventional approach. The paper then provides a wholesome appraisal of the post conventional literature that makes a clear conceptual distinction between VFG and VFI. This distinction not only organizes ones thoughts on the subject but also dilutes the ‘rhetoric’ on either side of the federal-regional tug-of-war thereby helping the policy makers to design center-state financial structure in the true spirit of “the principles of co-operative federalism” in such a way that allows the states to exploit the advantages of decentralized decision-making while at the same time ensuring that national objectives are addressed.
    Keywords: vertical fiscal imbalance; vertical fiscal gap; federalism; fiscal federalism; center-state financial relations.
    JEL: Z0 H0 H1 H11 H7 H77 H8 H83
    Date: 2006–06
  8. By: Dalmazzone Silvana (University of Turin)
    Abstract: A part of the literature on fiscal federalism aver the years has dealt with environmental policy as a particular case of the supply of public goods. The centrai issue is the identification of criteria on how to allocate powers and functions aver environmental management at different levels of govemment. The main stream of literature focuses on the conditions needed to establish whether pollution standards and regulatory programs should be set and designed by centraI or rather by local governments. This paper provides a review of the debate and explores a few potential limits of the prevailing line of enquiry.
    Date: 2006–02
  9. By: Alexandre A. Porsse; Eduardo A. Haddad; Eduardo P. Ribeiro
    Date: 2006
  10. By: Lupia, Arthur; Levine, Adam S.; Menning, Jesse O.; Sin, Gisela
    Abstract: In a recent edition of Perspectives on Politics, Larry Bartels examines the high levels of support for tax cuts signed into law by President Bush in 2001. In so doing, he characterizes the opinions of “ordinary people” as lacking “a moral basis” and as being based on “simple-minded and sometimes misguided considerations of self interest.” He concludes that “the strong plurality support for Bush’s tax entirely attributable to simple ignorance.” Our analysis of the same data reveals different results. We show that for a large and politically relevant class of respondents – people who describe themselves as “conservative” or “Republican” – rising information levels increase support for the tax cuts. Indeed, using Bartels’ measure of political information, we show that the Republican respondents rated “most informed” supported the tax cuts at extraordinarily high levels (over 96%). For these citizens, Bartels’ claim that “better-informed respondents were much more likely to express negative views about the 2001 tax cut” is simply untrue. We then show that Bartels’ results depend on a very strong assumption about how information affects public opinion. He restricts all respondents -- whether liberal or conservative, Republican or Democrat – to respond to increasing information levels in identical ways. In other words, he assumes that if more information about the tax cut makes liberals less likely to support it, then conservatives must follow suit. This assumption is very presumptive about the policy trade-offs that different people should make. Our analysis, by contrast, allows people of different partisan or ideological identities to react to higher information levels in varying ways. This flexibility has many benefits, one of which is a direct test of Bartels’ restrictive assumption. We demonstrate that the assumption is untrue. Examined several ways, our findings suggest that much of the support for the tax cut was attributable to something other than “simple ignorance.” Bartels’ approach is based on a very strong presumption about how citizens should think and what they should think about. We advocate a different approach, one that takes questions of public policy seriously while respecting ideological and partisan differences in opinion and interest. Indeed, citizens have reasons for the opinions and interests they have. We may or may not agree with them. However, we, as social scientists, can contribute more by offering reliable explanations of these reasons than we can by judging them prematurely. By turning our attention to explaining differences of opinion, we can help to forge a stronger and more credible foundation for progress in meeting critical social needs.
    Keywords: tax cut; President Bush; Republicans; conservatives; information; competence; public policy
    JEL: D80 H23 D8
    Date: 2005
  11. By: Woźny, Łukasz; Garbicz, Marek
    Abstract: In this paper we identify how changes in the income tax rate affect the labour supply under interdependent utility functions. To reach that aim we create a model of the economy in which households choosing their optimal labour supply take into account not only their income, tax rate and individual consumption but also so called relative consumption level (Garbicz 1997). Taking into account the last issue we significantly modify the well known Becker model (1965). We conduct a comparative statics exercise using na lattice and supermodular game theory. Thanks to which we show sufficient and necessary conditions for a labour supply to be monotonic function of the income tax rate. We analyze the economic behaviour under static and dynamic setup. Under quite general assumptions concerning the household utility function we show that the higher the tax rate the lower the macroeconomic labour supply. Additionally we show the possibility of multiple equilibria in the economy that offers the explanation of differences in the working time between e.g. European countries and the US as well as discrepancies between micro and macroeconomic elasticity of labour supply (see Alesina, Glaeser, and Sacerdote 2005).
    Keywords: supermodularity; lattice programming; multiplicity; interdependent preferences; labour supply;
    JEL: D11 J22
    Date: 2005–06
  12. By: Schröder, Philipp J.H.
    Abstract: This essay deals with the issues of privatisation and restructuring in transition economies. The topics are addressed in both a descriptive and empirical manner. The centre of the analysis is the interrelation of privatisation, the resulting ownership form and the expected and actual effect on restructuring behaviour of firms. The essay identifies a slow progress in privatisation, paired with an overweight of insider owners. Furthermore substantial evidence on slow restructuring is collected. Overmanning and excessive social assets prevail in the privatised firms - in part regardless of the new ownership structure. Finally, the link to the government’s fiscal situation is drawn, the costs of restructuring to the government budget are identified. In presenting such account of the privatisation and restructuring situation, the essay provides a basis for formal explanations of slow privatisation and sluggish restructuring.
    Keywords: Privatization; Restructuring; Transition; Central adn Eastern Europe
    JEL: P2 P31 P26 L33
    Date: 2000
  13. By: Helder Ferreira de Mendonça; Manoel Carlos de Castro Pires
    Date: 2006
  14. By: Tovmo Per; Revelli Federico (University of Turin)
    Abstract: This paper investigates whether the production efficiency of Norwegian local governments exhibits a spatial pattern that is compatible with the hy­pothesis of yardstick competition. In order to check whether yardstick com­petition is really responsible far the observed spatial pattern, and to rule out alternative theoretical explanations, the paper exploits unique information from a survey on Norwegian local governments, where local public officials are explicitly asked whether they compare their own performances in the provision of public services to those of other governments (benchmarking). Merging the latter information - "declared" yardstick competition - with the observed interdependence in local efficiency measures - "revealed" yardstick competition - the paper provides evidence that comparative performance evaluation generates spatial auto-correlation in local efficiency indicators.
    Date: 2006–05
  15. By: Sharma, Chanchal Kumar
    Abstract: Decentralization since early 1990s has become one of the buzzwords of the development paradigms. Among all ingredients of decentralization, the fiscal component of it has a special significance. Not surprisingly the literature unanimously recognizes that it is the regulation of intergovernmental relationships in the fiscal arena that can strike the right balance among different objectives of each level and resolve tensions between them. Thus, the fiscal decentralization is in vogue. The trend that began in 90s has only gained momentum at the turn of the century. Yet the outcome of adopting similar policies has not been uniform across the globe. Some have succeeded, some are stumbling and some others have failed. In fact, the success of decentralization depends on its design. The paper looks into various questions associated with the dilemma of designing decentralization instruments for the success of fiscal decentralization These include the question of designing the right mix of policies, the questions of sequencing and synchronization, the question of pace and that of balancing the contrasting forces of centralization and decentralization. The paper offers the insight to the policymakersthat while designing fiscal decentralization they should not try to replicate any ‘idealtype’ solution. Though the ideal types can be powerful analytical tools, yet they do not lead to solutions for specific situations Real world fiscal arrangements rarely follow the idealized model; they are loaded with historical developments and political ad hocsolutions. It is simply not realistic to start from tabula rasa. The paper emphasizes that there is no “one size fits all” type answer to decentralization question. All systems will have to work out their own style of going about decentralization and restructuring of intergovernmental relations depending on the context and conditions peculiar to their own situation. The paper also argues that any attempt towards fiscal decentralization must be firmly grounded in the basic principles of fiscal federalism, irrespective of the fact whether the country in question is an officially declared federal state or not. Thus while implementing decentralization policies, the need isto ‘bring the federal back in’.
    Keywords: Decentralization; Centralization; Design; Sequence; Instuments; Federalism
    JEL: H77 H7 H0 H1 H11 H8 H83
    Date: 2005–01
  16. By: Sharma, Chanchal Kumar
    Abstract: Over the last few years, many attempts have been made to implement VAT in India. Initially, all states were to move to VAT system by 2000, but administrative problems and concern over the revenue implications of the change delayed the scheduled implementation. It has been postponed for five times in past five years. In fact, introduction of a full fledged VAT in India seem to present numerous administrative and constitutional difficulties, including the vexed question of union-state relations. In addition to this, implementing VAT in India in context of economic reforms has paradoxical dimensions. On one hand economic reforms have led to more decentralization of expenditure responsibilities which in turn demands more decentralization of revenue raising powers if fiscal accountability is to be maintained. But on the other hand the process of implementation of VAT can lead not only to revenue loss for the states but can also steal away the states’ autonomy indicating more centralization. Thus the need is to develop such a ‘federal friendly model’ of VAT (along with a suitable compensation package) that can be implemented in India without compromising federal principles.
    Keywords: VAT; India; Federal Polity; subnational vat; national vat; dual vat
    JEL: Z0 H29 H0
    Date: 2004–06–25
  17. By: Lupia, Arthur
    Abstract: A form of elitism undermines much writing on voter competence. The elitist move occurs when an author uses a self-serving worldview as the basis for evaluating voters. Such elitism is apparent in widely cited measures of “political knowledge” and in common claims about what voters should know. The elitist move typically limits the credibility and practical relevance of the analysis by leading writers to draw unreliable conclusions about voter competence. I propose a more constructive way of thinking about what voters know. Its chief virtue is its consistency with basic facts about the relationship between information and choice.
    Keywords: information; search; competence; political knowledge; public policy
    JEL: H00 D8
    Date: 2006
  18. By: Sharma, Chanchal Kumar
    Abstract: Most countries especially the developing ones around the world are facing external as well as internal pressures to decentralize and are actually becoming part of the trend which if not universal is nonetheless the dominant trend. General causes include systemic forces like democratization and economic development; specifc causes however are different for different countries. In some countries the policies of opening up of economy and policies devised to deal with the challenges posed by new ‘globalized’ world are interacting with domestic political and economic institutions in such a way so as to create incentives for decentralization. In addition there is external pressure coming from IMF and WB who implicitly and explicitly have declared ‘decentralization’ as their most favoured policy prescription especially for the developing world.
    Keywords: Decentralization; Causes; Globalization; IMF; WB
    JEL: Z0 H1 H11 H7 H77 H8 H83
    Date: 2004–05–17
  19. By: Tausch, Arno
    Abstract: This research paper compares the cross national effects of pension reform on 33 indicators of social, economic, political and ecological well-being of nations with the effects on these 33 variables by dependency, the adherence to the advice by international financial institutions, world political or world cultural identities; the aging process; feminism, militarism; the public education effort and the development level. Traditionally, world system approaches explain human and economic misery by the dependent insertion of the periphery and the semi-periphery into the global economy. It is true that the ascending countries of East Asia, whose investment is often much higher than their savings rate, are at the winning side in the global social equation. It is also true that unequal exchange (1/ERDI) is still an important phenomenon, significantly explaining many processes of development. However, the privatization of public education, especially at the Third level, the developmental negative consequences of female distribution coalitions as well as the imperative of pension reform have been up to now neglected in cross-national devel-opment research. Interestingly enough, „economic freedom“ as such is also not as relevant as pension reform in explaining economic or social success in the world system. We can say that foreign savings and pension reforms are among the most highly influential positive determi-nants of development today, while culturalist theories and dependency theories fail to achieve the levels of significance we had originally expected when compared to the new cross-national variable “pension reform”. These findings have important repercussions for the European debate on pension reform and the Lisbon strategy to catch up with the US by 2010 to make Europe the most competitive region in the world economy. European Union membership years by themselves are lamentably enough a rather negative determinant of the processes of development due to the cumbersome mechanisms and distri-bution coalitions that European institutions present, and the reliance of many countries in the European Union on publicly financed systems of education also has to be re-considered. Po-litical feminism is another master variable of the European political discourse and it is the main loser in the 1990s and the early years of the 21st Century, indicating again that political distribution coalitions are likely to lose today and tomorrow. The results reported clearly indi-cate that world systems studies would be well advised to take the processes of pension reform very seriously. To neglect pension funds in investigations about the capitalist world economy would be mis-leading at any rate. Private pension funds already amount to 44 % of current world GDP, with countries like the United States; Japan; United Kingdom; Netherlands; Canada; Switzerland; Australia; Sweden; Ireland; Finland; and Denmark taking the lead in fund development either via the introduction of a “World Bank” three pillar models or simply via a strong element of private pensions (“the third pillar”) besides the first, traditional PAYGO pillar (like presently in the United States of America). Slow pension fund development in most countries of the €-zone determines that the overall share of private pension funds from the €-zone is just over 2 % of world GDP. If Europe wants to fulfill its Lisbon agenda of catching up with the United States, it must overhaul its pension systems and introduce some form or other of private pen-sion funds, which are a major force in financing technological advance in the capitalist world economy today. Our investigations also clearly show that World Bank pension reforms are associated in a positive way with the rates of change of a country’s performance to the better.
    Keywords: Pension reform; World Bank;
    JEL: J32 H55 G23 F5
    Date: 2005
  20. By: Nelson Barbosa-Filho; Codrina Rada; Lance Taylor; Luca Zamparelli
    Date: 2006
  21. By: Sharma, Chanchal Kumar
    Abstract: Though decentralization for past one and half decade or so has become the most favoured policy priority among the policy makers yet the countries around the world differ dramatically in the degree of decentralization that is accommodated. While diversity in degree of decentralization across the world is a fact yet there is no consensus in the empirical literature over the questions like ‘which country is more decentralized?’ This is because decentralization is defined and measured differently in different studies. In fact, a true assessment of the degree of decentralization in a country can be made only if a comprehensive approach is adopted and rather than trying to simplify the syndrome of characteristics into the single dimension of autonomy, interrelationships of various dimensions of decentralization are taken into account. Thus it is to be realized that there is no simple one dimensional, quantifiable index of degree of decentralization in a given country. As there is wide diversity in the studies on degree of decentralization so is the case with the literature on outcomes of it. Outcome varies not only because decentralization can appear in various forms and combinations across countries but also because different instruments may have very different effects in different ccircumstances. Thus arriving at the precise definition of decentralization and associating it with particular outcomes is neither possible nor desirable for the simple reason that generalization of any kind can create pitfalls that can obscure rather than clarify the facts. What is more important is the need for a strictly contextual yet comprehensive approach while going beyond the blunt measures like expenditure decentralization and taking politics and institutional arrangements of the specific case under investigation also into account.
    Keywords: Decentralization; measurement; outcome
    JEL: Z0 H0 H1 H11 H7 H77 H8 H83
    Date: 2004–07–26
  22. By: Lupia, Arthur; Menning, Jesse
    Abstract: Analysts make competing claims about when and how politicians can use fear to gain support for suboptimal policies. Using a model, we clarify how common attributes of fear affect politicians’ abilities to achieve self-serving outcomes that are bad for voters. In it, a politician provides information about a threat. His statement need not be true. How citizens respond differs from most game-theoretic models – we proceed from more dynamic (and realistic) assumptions about how citizens think. Our conclusions counter popular claims about how easily politicians use fear to manipulate citizens, yield different policy advice than does recent scholarship on counterterrorism, and highlight issues (abstract, distant) and leaders (secretive) for which recent findings by political psychologists and public opinion scholars will – and will not – generalize.
    Keywords: emotions; behavioral economics; game theory; political science; incentives
    JEL: D83 H30 C72
    Date: 2005
  23. By: Al-Samarrai, Samer; Zaman, Hassan
    Abstract: In 1994, the newly elected Government in Malawi abolished primary school fees. Using household survey data from 1990/91 and 1997/98 this paper assesses the impact this major policy change, combined with increased Government spending on education, has had on access to schooling by the poor. This paper shows that enrolment rates have increased dramatically over the 1990s, at both the primary and secondary levels, and that crucially these gains have been greatest for the poor. In order to sustain and build-on these gains the paper suggests cutting back on the informal ‘contributions’ that are widely prevalent in primary school and improving the allocation of secondary school funding. Furthermore, the focus of policy reform, particularly at primary, should shift towards raising the quality of education. Finally the paper argues that careful advance planning and piloting of the reform in selected areas are useful strategies that other countries considering abolishing primary school fees could take to cope with the associated surge in enrolments.
    Keywords: Malawi; education; fee abolition; incidence analyis
    JEL: I22 I38 H52
    Date: 2000
  24. By: Carone, Giuseppe; Denis, Cécile; Mc Morrow, Kieran; Mourre, Gilles; Röger, Werner
    Abstract: This paper presents the results of long run labour productivity and GDP growth rate projections (until 2050) for each of the 25 EU Member States and provides a detailed overview of the forecast methodology used. These projections were undertaken in order to provide an internationally comparable macroeconomic framework against which to assess the potential economic and fiscal effects of ageing populations. The projections presented in this paper, using a common production function methodology for all 25 countries, show the GDP growth rate effects of an assumptions-driven extrapolation of recent trends in employment and labour productivity. These base case projections reflect the working assumption of “no policy change”.Various sensitivity tests are carried out to check the GDP per capita impact of some factors which have been excluded from the baseline scenario for reasons of simplicity or because of a lack of consensus in the academic literature. Some of the interesting conclusions that emerge from these sensitivity tests include : • Firstly, the GDP per capita impact of changes in the participation rate assumption used in the projections is much greater than for assumed changes in the share of part-time employment (i.e. in average hours worked per worker). • Secondly, the negative effect of a change in the age-structure of the population is fairly limited, although it is accepted that the labour productivity of an individual is likely to decline after the age of 55. A very strong fall in the productivity of older workers compared with that of prime-age workers would be required to significantly depress total labour productivity. Such an outcome, on the basis of current evidence, appears rather unlikely. • Thirdly, changing the TFP growth rate targets (e.g. use of the 1990’s average instead of the long-term 1970-2004 average) could strongly affect the projections. • Finally, an assumption of productivity convergence in levels substantially alters the projections for most EU10 countries but leaves the EU15 almost unchanged. JEL classific
    Keywords: Productivity; ageing; long-term projections; production function; labour productivity; older workers
    JEL: J1 O47 J21 H55 J26 D24
    Date: 2006–08
  25. By: Sosay, Gül; Zenginobuz, Unal
    Abstract: While the diffusion of independent regulatory agencies (IRAs) across economically advanced countries has attracted much scholarly attention in recent years, systematic work on their spread across developing countries is still scarce. In an effort to address this gap in literature, this paper aims to analyze the diffusion of regulatory agencies in emerging economies in Latin America, Asia, and Central and Eastern Europe. At this early stage of our research, we aim to emprically map out regulatory agencies in economic regulation sectors (e.g. competition, finance, and utilities/infrastructure) enjoying some degree of autonomy or independence in emerging economies, rather than limiting our focus solely on those that meet all the criteria for independence in the strictest definition of the term. Such exploratory analysis constitutes the first step towards studying processes of diffusion in general and the mechanisms that lead to the creation of regulatory agencies in these economies in particular. The second objective of this paper is to examine the mechanisms which we expect to be at work in the spread of IRAs in the selected emerging economies. We argue that despite the creation of a number of agencies in the countries concerned before 1990, diffusion has become evident and “interdependent”, as opposed to spurious in the 1990s.
    Keywords: independent regulatory agencies; emerging economies
    JEL: L50 H83
    Date: 2005–09–05
  26. By: Lupia, Arthur; Prior, Markus
    Abstract: Surveys provide widely-cited measures of political knowledge. Do unusual aspects of survey interviews reduce their relevance? To address this question, we embedded a set of experiments in a representative survey of over 1200 Americans. A control group answered political knowledge questions in a typical survey context. Respondents in treatment groups received the same questions in different contexts. One group received a monetary incentive for answering questions correctly. Others were given more time to answer the questions. The treatments increase the number of correct answers by 11-24 percent. Our findings imply that conventional knowledge measures confound respondents’ recall of political information and their motivation to engage the survey question. The measures also provide unreliable assessments of respondents’ abilities to access information that they have stored in places other than their immediately available memories. As a result, existing knowledge measures likely underestimate peoples’ capacities for informed decision making.
    Keywords: political knowledge; economic knowledge; experimental economics; incentives; survey
    JEL: H30 H31 C90
    Date: 2005
  27. By: Rodrigo Menon S. Moita; Claudio Paiva
    Date: 2006
  28. By: Canova, Luciano; Grasso, Marco; Vaglio, Alessandro; Di Giulio, Enzo; Migliavacca, Stefania; Lelli, Sara; Pareglio, Stefano
    Abstract: Abstract: In this paper we model sustainable human development as intended in Sen’s capability approach in a system dynamic framework. Our purpose is to verify the variations over time of some achieved functionings, due to structural dynamics and to variations of the institutional setting and instrumental freedoms (IF Vortex). The model is composed of two sections. The ‘Left Side’ one points out the ‘demand’ for functionings in an ideal world situation. The real world one, on the ‘Right Side’ indicates the ‘supply’ of functionings that the socio-economic system is able to provide individuals with. The general model, specifically tailored for Italy, can be simulated over desired time horizons: for each time period, we carry out a comparison between ideal world and real world functionings. On the basis of their distances, the model simulates some responses of decision makers. These responses, in turn influenced by institutions and instrumental freedoms, ultimately affect the dynamics of real world functionings, i.e. of sustainable human development.
    Keywords: Capabilities; Instrumental Freedoms; Sustainable Human Development
    JEL: H53
    Date: 2005

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