nep-pbe New Economics Papers
on Public Economics
Issue of 2011‒07‒02
five papers chosen by
Keunjae Lee
Pusan National University

  1. In Government We Trust: The Role of Fiscal Decentralization By Ligthart, J.E.; Oudheusden, P. van
  2. Social capital dynamics and collective action: the role of subjective satisfaction By Leonardo Becchetti; Stefano Castriota; Pierluigi Conzo
  3. Measuring Fiscal Decentralization - Exploring the IMF’s Databases By Phebby Kufa; Carlos A Gutierrez Mangas; Claudia Helene Dziobek
  4. Dynamics of Provision of Threshold Public Goods By Arnaud Dragicevic; Jim Engle-Warnick
  5. A New Action-based Dataset of Fiscal Consolidation By Daniel Leigh; Andrea Pescatori; Jaime Guajardo; Pete Devries

  1. By: Ligthart, J.E.; Oudheusden, P. van (Tilburg University, Center for Economic Research)
    Abstract: We measure the contribution of fiscal decentralization to trust in government. Using repeated cross-country survey data of individuals on several measures of trust in govern- ment over the 1994-2007 period, we estimate an ordered response model of the government trust and fiscal decentralization nexus. We control for unobserved country characteristics, macroeconomic determinants, and individual characteristics. Our main finding is that fiscal decentralization increases trust in government. More specifically, a one percentage point increase in fiscal decentralization causes roughly a four-fifths of a percentage point increase in government trust. The beneficial effect of fiscal decentralization on trust in government is neither limited to nor necessarily large for relatively decentralized countries.
    Keywords: Fiscal Decentralization;Government Trust;Social Capital
    JEL: D70 H11 H70 H72
    Date: 2011
  2. By: Leonardo Becchetti (Department of Economics, Universitˆ Tor Vergata); Stefano Castriota (Department of Economics, Universitˆ di Perugia); Pierluigi Conzo (Università di Roma Tor Vergata & EIEF)
    Abstract: In low income countries grass-root collective action is a well known substitute for government provision of public goods. In our research we wonder what is its effect on the law of motion of social capital, a crucial microeconomic determinant of economic development. To this purpose we structure a ?sandwich? experiment in which participants play a public good game (PGG) between two trust games (TG1 and TG2). Our findings show that the change in trustworthiness between the two trust game rounds generated by the PGG treatment is crucially affected by the subjective satisfaction about the PGG rather than by standard objective measures related to PGG players? behavior. These results highlight that subjective satisfaction after collective action has relevant predictive power on social capital creation providing information which can be crucial to design successful self-organized resource regimes.
    Keywords: trust games, public good games, randomized experiment, social capital, subjective wellbeing
    JEL: O12 C93 Z13
    Date: 2011–06
  3. By: Phebby Kufa; Carlos A Gutierrez Mangas; Claudia Helene Dziobek
    Abstract: Conventional wisdom postulates that there are benefits from decentralizing government finances but there is little empirical evidence about actual country practices. This paper presents data on fiscal decentralization for about 80 countries over a period of about 20 years (1990-2008) from the IMF’s Government Finance Statistics Yearbook (GFSY), the only global database with fiscal data for several levels of government. The data show that in many countries, revenue collection remains relatively more centralized than expenditures and that employment tends to be concentrated in lower levels of government. Except for transition economies, the levels of decentralization are relatively stable over the time period. The findings are shown by degree of economic development, constitutional power arrangements, and geographic area, broadly confirming key factors identified in the literature as determining the extent of fiscal decentralization.
    Date: 2011–06–02
  4. By: Arnaud Dragicevic; Jim Engle-Warnick
    Abstract: Agents face an ambiguous risk of biodiversity survival as well as ambiguous expected losses from its extinction. As a collectivity, agents are faced with the option of privately funding the protection of biodiversity for biomedical research. We propose two evolutionary models of threshold public goods game and public goods option market, where we consider population dynamics with proportional fair-share contributors versus free-riders. In the first model, we find that agents contribute both in null and ambiguous survival scenarios. In the second model, in case of ambiguous survival, the public good is provided when the agents exchanging option contracts are equally divided into buyers and sellers. This result holds for a specific market belief over the species survival. However, the absence of surplus captured on the option market condemns its raison d’être. Low risk will provoke unconditional social free-riding in both models. <P>Les agents font face à un risque ambigu quant à la survie de la biodiversité ainsi qu’à des pertes espérées ambiguës de par leur extinction. En tant que collectivité, les agents ont la possibilité de financer, à titre privé, la protection de la biodiversité à des fins de recherche biomédicale. Nous proposons deux modèles évolutionnaires de jeu du bien public avec seuil et de marché des options sur bien public, où nous considérons la dynamique des populations composées de contributeurs – à hauteur de leur juste part proportionnelle – et de passagers clandestins. Dans le premier modèle, nos résultats montrent que les agents contribuent aussi bien dans les scénarios de survie nulle que de survie ambiguë. Dans le second modèle, le bien public est fourni lorsque les agents négociant les contrats d’options sont identiquement divisés entre acheteurs et vendeurs. Ce résultat se vérifie pour une croyance spécifique du marché sur la survie des espèces. Néanmoins, l’absence de surplus capté sur le marché des options condamne sa raison d’être. Un risque faible provoquera un comportement de passager clandestin inconditionnel dans les deux modèles.
    Keywords: biodiversity, ambiguity, threshold public goods, option markets, prediction markets, evolutionary game theory, biodiversité, ambiguïté, biens publics avec seuil, marchés d’options, marchés de prédiction, théorie des jeux évolutionnaires
    JEL: C73 D81 H41 Q57
    Date: 2011–06–01
  5. By: Daniel Leigh; Andrea Pescatori; Jaime Guajardo; Pete Devries
    Abstract: This paper presents a new dataset of fiscal consolidation for 17 OECD economies during 1978-2009. We focus on discretionary changes in taxes and government spending primarily motivated by a desire to reduce the budget deficit and not by a response to prospective economic conditions. To identify the motivation and budgetary impact of the fiscal policy changes, we examine contemporaneous policy documents, including Budgets, Budget Speeches, central bank reports, Convergence and Stability Programs submitted by the authorities to the European Commission, and IMF and OECD reports. The resulting series can be used to estimate the macroeconomic effects of fiscal consolidation.
    Date: 2011–06–02

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