nep-pbe New Economics Papers
on Public Economics
Issue of 2009‒12‒05
eight papers chosen by
Oliver Budzinski
Philipps-University of Marburg

  1. Voluntary Public Goods Provision, Coalition Formation, and Uncertainty By Nicholas E. Burger; Charles D. Kolstad
  2. Confusion and Reinforcement Learning in Experimental Public Good Games By Ralph-C Bayer; Elke Renner; Rupert Sausgruber
  3. The Road to Power: Partisan Loyalty and the Centralized Provision of Local Infrastructure By Marcelin Joanis
  4. Endowments, Fiscal Federalism, and the Cost of Capital for States: Evidence from Brazil, 1891-1930 By André Martínez; Aldo Musacchio
  5. Conflict Prevention and Decentralized Governance By Grasa, Rafael; Camps, Arnau
  6. Leading and losing the tax competition race By Grégoire ROTA-GRAZIOSI; Hubert KEMPF
  7. Improvement of Government Financing through Non-Conventional Methods: Reducing the Administrative Costs in the Public Sector By Matei, Ani; Dinu , Teodora
  8. On the Way to Modernization: The 'Good Enough' Governance Making in Romania By Matei, Lucica; Iancu, Diana Camelia

  1. By: Nicholas E. Burger; Charles D. Kolstad
    Abstract: The literature on voluntary provision of public goods includes recent theoretical work on the formation of voluntary coalitions to provide public goods. Theory is ambiguous on the equilibrium coalition size and contribution rates. We examine the emergence of coalitions, their size, and how uncertainty in public goods provision affects contribution levels and coalition size. We find that contributions decrease when public good returns are uncertain but increase when individuals can form a coalition to provide the good. Contrary a core theoretical result, we find that coalition size increases when the public good benefits are higher. Uncertainty has no effect on coalition size.
    JEL: C7 C91 C92 H23 H4 H41 Q5 Q54
    Date: 2009–11
  2. By: Ralph-C Bayer (School of Economics, University of Adelaide); Elke Renner (School of Economics, University of Nottingham); Rupert Sausgruber (Department of Economics, University of Copenhagen)
    Abstract: We use a limited information environment to mimic the state of confusion in an experimental, repeated public goods game. The results show that reinforcement learning leads to dynamics similar to those observed in standard public goods games. However, closer inspection shows that individual decay of contributions in standard public goods games cannot be fully explained by reinforcement learning. According to our estimates, learning only accounts for 41 percent of the decay in contributions in standard public goods games. The contribution dynamics of subjects, who are identi?ed as conditional cooperators, di®er strongly from the learning dynamics, while a learning model estimated from the limited information treatment tracks behavior for subjects, who cannot be classi?ed as conditional cooperators, reasonably well.
    Keywords: public goods experiments, learning, limited information, confusion, conditional cooperation
    JEL: C90 D83 H41
    Date: 2009–10
  3. By: Marcelin Joanis
    Abstract: This paper sets out a simple dynamic probabilistic voting model in which a government allocates a fixed budget across electoral districts that differ in their loyalty to the ruling party. The model predicts that the geographic pattern of spending depends on the way the government balances long-run ‘machine politics’ considerations and the more immediate concern to win over swing voters. Empirical results obtained from a panel of electoral districts in Québec provide robust evidence that districts which display loyalty to the incumbent government receive disproportionately more spending, especially close to an election, at odds with the standard ‘swing voter’ view. <P>Cet article développe un modèle dynamique simple de vote probabiliste dans lequel un gouvernement répartit un budget fixe entre des circonscriptions électorales qui diffèrent selon leur degré de loyauté au parti au pouvoir. Le modèle prédit que la répartition géographique des dépenses dépend de la manière dont le gouvernement assure l’équilibre entre des considérations de long terme de type « machine électorale » et des considérations plus immédiates de victoire dans les circonscriptions pivot. Des résultats empiriques obtenus à partir d’un panel de circonscriptions électorales au Québec montrent que les circonscriptions qui sont loyales au parti au pouvoir reçoivent plus que leur part de dépenses, particulièrement à l’approche d’une élection, contrairement à la vision théorique traditionnelle prédisant plus de dépenses dans les circonscriptions pivot.
    Keywords: partisan loyalty, swing voters, political competition, local public goods, distributive politics, long-run relationships. , loyauté partisane, électeurs pivot, concurrence électorale, biens publics locaux, clientélisme politique, relations de long terme.
    JEL: D72 H41 H54
    Date: 2009–11–01
  4. By: André Martínez; Aldo Musacchio
    Abstract: In this paper, we contribute to the discussion of what determines country risk by arguing that an important explanatory factor is the impact that commodities have on the capacity to pay. We use a newly created data base with state-level fiscal and risk premium data for Brazil states between 1891 and 1930 to show that Brazilian states with natural endowments that allowed them to export commodities that were in high demand ended up having higher revenues per capita and, thus, lower cost of capital. We also explain that the variation in revenues per capita across states was both a product of the variation in natural endowments and a commodity boom that had asymmetric effects among states. We end by running instrumental variable estimates using indices of export prices for each state to instrument for revenues per capita. Our IV estimates confirm our results that states with commodities that had higher price increases had lower risk premia.
    Keywords: State public debt, fiscal decentralization, endowments, public revenue.
    JEL: H71 H74 N26 N46 N96
    Date: 2009–11
  5. By: Grasa, Rafael; Camps, Arnau
    Abstract: Is there a link between decentralized governance and conflict prevention? This article tries to answer the question by presenting the state of the art of the intersection of both concepts. Provided that social conflict is inevitable and given the appearance of new threats and types of violence, as well as new demands for security based on people (human security), our societies should focus on promoting peaceful changes. Through an extensive analysis of the existing literature and the study of several cases, this paper suggests that decentralized governance can contribute to these efforts by transforming conflicts, bringing about power-sharing and inclusion incentives of minority groups. Albeit the complexity of assessing its impact on conflict prevention, it can be contended that decentralized governance might have very positive effects on the reduction of causes that bring about conflicts due to its ability to foster the creation of war/violence preventors. More specifically, this paper argues that decentralization can have a positive impact on the so-called triggers and accelerators (short- and medium-term causes).
    Keywords: decentralization; conflict prevention; federalism
    JEL: H77 D74 H7
    Date: 2009–09
  6. By: Grégoire ROTA-GRAZIOSI (Centre d'Etudes et de Recherches sur le Développement International); Hubert KEMPF
    Abstract: In this paper we extend the standard approach of horizontal tax competition by endogenizing the timing of decisions made by the competing jurisdictions. Following the literature on the endogenous timing in duopoly games, we consider a pre-play stage, where jurisdictions commit themselves to move early or late, i.e. to fix their tax rate at a first or second stage. We highlight that at least one jurisdiction experiments a second-mover advantage. We show that the Subgame Perfect Equilibria (SPEs) correspond to the two Stackelberg situations yielding to a coordination problem. In order to solve this issue, we consider a quadratic specification of the production function, and we use two criteria of selection: Pareto-dominance and risk-dominance. We emphasize that at the safer equilibrium the less productive or smaller jurisdiction leads and hence loses the second-mover advantage. If asymmetry among jurisdictions is sufficient, Pareto-dominance reinforces Risk-dominance in selecting the same SPE. Three results may be deduced from our analysis: (i) the race to the bottom is less severe than predicted; (ii) the smaller jurisdiction leads; (iii) the `big-country-higher-tax-rate' rule does not always hold.
    Keywords: Endogenous timing, Risk dominance., Stackelberg, Strategic Complements, first/second-mover advantage, tax competition
    Date: 2009
  7. By: Matei, Ani; Dinu , Teodora
    Abstract: The paper aims to emphasize the relative recent preoccupations of several European states and even of EU about reducing the administrative costs and contribution of this process to local and national development, increasing the GDP etc. Recent appreciations of the European officials reveal estimations that a reduction by 25% of the administrative costs could lead to an increase of GDP by 2-3%. Mechanisms of coordination for national policies are already operational even if their results are not yet visible. Oriented mainly towards the private sector, the issue of reducing the administrative costs remains up-to-date also in the public sector. Moreover, even in the context of the current economic crisis, the reduction of the administrative costs represents an important resource for financing the development of the public sector at local level and the macro-economic policies. Therefore, in this context, the paper comprises: -Synthetic and comparative analyses about the content and results of the national policies for reducing the administrative costs. -Considerations concerning the enlargement of the mentioned policies on the economic and social processes specific for the public sector. -Models to evaluate the impact of reducing the administrative costs on financing the public sector, based on input-output analysis materialised through the production function. -Emphasizing the effects on long term of reducing the administrative costs and substantiating the policies for financing national or local governance
    Keywords: administrative costs; EU policies and programs; public sector
    JEL: H72 H53 G28
    Date: 2009–06–13
  8. By: Matei, Lucica; Iancu, Diana Camelia
    Abstract: ‘To be or not to be good governance' has probably been a question of interest to scholars for many centuries now; the issue of how to measure it as to offer alternatives for governmental actions however became of interest only recently. In this respect, this paper explores the concept of 'good enough' governance in the context provided by Robert Dahl's theory on democratization. In doing so, it elaborates the idea according to which good enough governance may be interpreted as a minimal democratic system in need of a minimal democratic administrative practice. The validation of this theoretical tool is to be completed against the Romanian administrative reform as assessed by the national strategic documents and the European Commission Regular and Monitoring Reports of 1998-2006. The larger scope of the paper is to offer a comprehensive image of the 'good enough' governance inside the spectrum of the building of a consolidated democracy
    Keywords: good enough governance; policy making; European integration
    JEL: G18 H83
    Date: 2009–04–25

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