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on Public Economics |
| By: | Torben M. Andersen; Allan Sørensen (School of Economics and Management, University of Aarhus, Denmark) |
| Abstract: | It is widely perceived that globalization squeezes public sector activities by making taxation more costly. This is attributed to increased factor mobility and to a more elastic labour demand due to improved scope for relocation of production and thus employment across countries. We argue that this consensus view overlooks that gains from trade unambiguously work to lower the marginal costs of public funds, and moreover that globalization via increased trade in intermediaries may actually lower the labour demand elasticity. |
| Keywords: | Globalization, marginal costs of public funds, labour taxation |
| JEL: | F15 F4 H20 H40 |
| Date: | 2008–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2008-08&r=pbe |
| By: | Wolfgang R. Köhler |
| Abstract: | Homeownership rates in suburbs are much higher than in central cities. This paper shows that the systematic difference between homeownership rates causes suburbanization. We consider an economy with several regions: the central city, where most households rent, and the suburbs, where most own. Households migrate and vote on local policies. Renters do not consider the effect of policies on house prices. Therefore, renter dominated central cities provide public goods inefficiently and have high taxes and high debt. Since house prices are lower in the central city, few houses are built and households migrate to the suburbs as houses depreciate. The durability of houses has two effects: it provides owners with incentives to vote for efficient policies and it makes inefficient policies sustainable. |
| Keywords: | Suburbanization, homeownership, migration, local public debt, local public goods, house prices |
| JEL: | H41 H73 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:382&r=pbe |
| By: | Ernst Fehr; Andreas Leibbrandt |
| Abstract: | This paper examines the role of other-regarding and time preferences for cooperation in the field. We study the preferences of fishermen whose main, and often only, source of income stems from using a common pool resource (CPR). The exploitation of a CPR involves a negative interpersonal and inter-temporal externality because individuals who exploit the CPR reduce the current and the future yield for both others and themselves. Accordingly, economic theory predicts that more cooperative and more patient individuals should be less likely to exploit the CPR. Our data supports this prediction because fishermen who exhibit a higher propensity for cooperation in a laboratory public goods experiment, and those who show more patience in a laboratory time preference experiment, exploit the fishing grounds less in their daily lives. Moreover, because the laboratory public goods game exhibits no inter-temporal spillovers, measured time preferences should not predict cooperative behavior in the laboratory. This prediction is also borne out by our data. Thus, laboratory preference measures are useful to capture important dimensions of field behavior. |
| Keywords: | Cooperation, common pool resource, experiments, generalizability, methodology |
| JEL: | B4 C9 D8 O1 |
| Date: | 2008–07 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:378&r=pbe |
| By: | Alan J. Auerbach |
| Abstract: | Like many other developed economies, the United States has imposed fiscal rules in attempting to impose a degree of fiscal discipline on the political process of budget determination. The federal government has operated under a series of budget control regimes that have been complex in nature and of debatable impact. Much of the complexity of these federal budget regimes relates to the structure of the U.S. federal government. The controversy over the impact of different regimes relates to the fact that the rules have no constitutional standing, leading to the question of whether they do more than clarify a government's intended policies. In this paper, I review US federal budget rules and present some evidence on their possible effects. From an analysis of how components of the federal budget behaved under the different budget regimes, it appears that the rules did have some effects, rather than simply being statements of policy intentions. The rules may also have had some success at deficit control, although such conclusions are highly tentative given the many other factors at work during the different periods. Even less certain is the extent to which the various rules achieved whatever objectives underlay their introduction. |
| JEL: | D78 H62 J11 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14288&r=pbe |
| By: | Chikako Yamauchi |
| Abstract: | Community-based selection of social program recipients has the potential to benefit from local knowledge about individuals in need. This informational advantage however might be offset by local elite capture and administrative incompetency. Using Indonesia's anti-poverty program, this paper investigates which pre-program conditions are associated with community-based targeting outcomes. Results show that wealthier and more unequal villages constantly target better. This suggests that, though there is much concern about local capture in communities with large inequality, the ease of identifying the poor could overwhelm the possibly larger political influence of local elites. Also, villages headed by young, educated persons initially exhibit better targeting, but lose this advantage over time, as the monitoring of loan disbursement becomes more difficult for village heads. I explore Indonesia's political context, which provides insight into these findings. |
| Keywords: | targeting, community, inequality, IDT, Indonesia |
| JEL: | D73 H11 H75 O17 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:auu:dpaper:584&r=pbe |
| By: | Lisa R. Anderson (Department of Economics, College of William and Mary); Beth A. Freeborn (Department of Economics, College of William and Mary) |
| Abstract: | We experimentally test a rent seeking model under five levels of competition. At one extreme, a subject’s probability of winning a prize is equal to her share of the total expenditures. At lower levels of competition, a subject’s probability of winning is affected more by her own expenditures than by the expenditures of others. Predicted expenditure levels are positively associated with higher levels of competition. Consistent with previous rent seeking experiments, we find that subjects spend significantly more than the Nash equilibrium prediction at all levels of competition. However, expenditure patterns generally follow the Nash prediction; expenditures decrease as the level of competition decreases. Our experimental design also includes a lottery choice experiment to control for subjects’ risk preference. We find that subjects who are more risk averse spend significantly less in the contest and this effect is particularly strong for female subjects |
| Keywords: | rent seeking, experiment, rent dissipation, political competition |
| JEL: | C9 D72 |
| Date: | 2008–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:75&r=pbe |
| By: | Davide Debortoli; Ricardo Nunes |
| Abstract: | We analyze how public debt evolves when successive policymakers have different policy goals and cannot make credible commitments about their future policies. We consider several cases to be able to disentangle and quantify the respective effects of imperfect commitment and political disagreement. Absent political turnover, imperfect commitment drives the long-run level of debt to zero. With political disagreement, debt is a sizeable fraction of GDP and increasing in the degree of polarization among parties, no matter the degree of commitment. The frequency of political turnover does not produce quantitatively relevant effects. These results are consistent with much of the existing empirical evidence. Finally, we find that in the presence of political disagreement the welfare gains of building commitment are lower. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:938&r=pbe |
| By: | V. Kerry Smith; Carol Mansfield; Aaron Strong |
| Abstract: | This paper reports estimates of consumers' preferences for plans to improve food safety. The plans are distinguished based on whether they address the ex ante risk of food borne illness or the ex post effects of the illness. They are also distinguished based on whether they focus on a public good -- reducing risk of illness for all consumers or allowing individual households to reduce their private risks of contracting a food borne pathogen. Based on a National Survey conducted in 2007 using the Knowledge Network internet panel our findings indicate consumers favor ex ante risk reductions and are willing to pay approximately $250 annually to reduce the risk of food borne illness. Moreover, they prefer private to public approaches and would not support efforts to reduce the severity of cases of illness over risk reductions. |
| JEL: | H42 Q18 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14287&r=pbe |