The Key party in the catalan government

This paper analyzes the different compositions of the catalan governing coalitions during the current democratic period, and offers some predictions about the coalitions that can be expected in the future. During this period, in catalan politics, there have been two main political issues over which the different parties have taken positions: rightist versus leftist with respect to economic policy, and sovereign versus centralist with respect to the power distribution within the state. I find that for any allocation of parliament seats there is a key party: a party that has a clear advantage in terms of being able to decide the composition of the governing coalition. I show the features that allow a party to become the key party and those that affect the size of the advantage of the key party.

In Search of a theory of debt management

A growing literature integrates theories of debt management into models of optimal fiscal policy. One promising theory argues that the composition of government debt should be chosen so that fluctuations in the market value of debt offset changes in expected future deficits. This complete market approach to debt management is valid even when the government only issues non-contingent bonds. A number of authors conclude from this approach that governments should issue long term debt and invest in short term assets. We argue that the conclusions of this approach are too fragile to serve as a basis for policy recommendations. This is because bonds at different maturities have highly correlated returns, causing the determination of the optimal portfolio to be ill-conditioned. To make this point concrete we examine the implications of this approach to debt management in various models, both analytically and using numerical methods calibrated to the US economy. We find the complete market approach recommends asset positions which are huge multiples of GDP. Introducing persistent shocks or capital accumulation only worsens this problem. Increasing the volatility of interest rates through habits partly reduces the size of these simulations we find no presumption that governments should issue long term debt ? policy recommendations can be easily reversed through small perturbations in the specification of shocks or small variations in the maturity of bonds issued. We further extend the literature by removing the assumption that governments every period costlessly repurchase all outstanding debt. This exacerbates the size of the required positions, worsens their volatility and in some cases produces instability in debt holdings. We conclude that it is very difficult to insulate fiscal policy from shocks by using the complete markets approach to debt management. Given the limited variability of the yield curve using maturities is a poor way to substitute for state contingent debt. The result is the positions recommended by this approach conflict with a number of features that we believe are important in making bond markets incomplete e.g allowing for transaction costs, liquidity effects, etc.. Until these features are all fully incorporated we remain in search of a theory of debt management capable of providing robust policy insights.

Fiscal sustainability across government tiers

This paper analyses how fiscal adjustment comes about when both central and sub-national governments are involved in consolidation. We test sustainability of public debt with a fiscal rule for both the federal and regional government. Results for the German Länder show that lower tier governments bear a relatively smaller part of the burden of debt consolidation, if they consolidate at all. Most of the fiscal adjustment occurs via central government debt. In contrast, both the US federal and state levels contribute to consolidation of public finances.

Government information transparency

This paper studies a model of announcements by a privately informed government about the future state of the economic activity in an economy subject to recurrent shocks and with distortions due to income taxation. Although transparent communication would ex ante be desirable, we find that even a benevolent government may ex-post be non-informative, in an attempt to countervail the tax distortion with a "second best" compensating distortion in information. This result provides a rationale for independent national statistical offices, committed to truthful communication. We also find that whether inequality in income distribution favors or harms government transparency depends on labor supply elasticity.

Agency cost of government ownership: a study of voluntary audit comitte formation in China

In this paper, we investigate the agency costs of government ownership and their impact on corporate governance and firm value. China is used as a laboratory because of the prevalent state shareholdings in exchange-listed firms. In this context, we specifically consider the trade-offs involved in the voluntary formation of an audit committee when the controlling shareholder is the state. The decision to improve corporate governance (in this case, introduce an audit committee) is shown to be value relevant and a function of existing agency relationships and non-trivial implementation costs. Our findings are robust to the level of pyramid groups, the ownership-control wedge, and financial leverage. The research adds to the debate regarding the effect of government shareholdings on corporate culture and performance - a topic that hastaken on renewed importance in recent times.

Devolution dynamics of Spanish local government

Over the last few years, ther has been a devolutionary tendency in many developed and developing countries. In this article we propose a methodology to decompose whether the benefits in terms of effciency derived from transfers of powers from higher to municipal levels of government "the "economic dividend" of devolution) might increase over time. This methodology is based on linear programming approaches for effciency measurement. We provide anapplication to Spanish municipalities, which have had to adapt to both the European Stability and Growth Pact as well as to domestic regulation seeking local governments balanced budget. Results indicate that efficiency gains from enhaced decentralization have increased over time. However, the way through which these gains accrue differs across municipalities -in some cases technical change is the main component, whereas in others catching up dominates.

Is it redistribution or centralization? On the determinants of government investment in infrastructure

The dilemma efficiency versus equity, together with political partisan interests, has received increasing attention to explain the territorial allocation of investments. However, centralization intended to introduce or reinforce hierarchization in the political system has not been object as of now of empirical analysis. Our main contribution to the literature is providing evidence that meta-political objectives related to the ordering of political power and administration influence regional investment. In this way, we find evidence that network mode’s (roads and railways) investment programs are influenced by the centralization strategy of investing near to the political capital, while investment effort in no-network modes (airports and ports) appears to be positively related to distance. Since investment in surface transportation infrastructures is much higher than that in airports and ports, and taken into account that regions surrounding the political capital are poorer than the average, we suggest that centralization rather than redistribution has been the driver for the concentration of public investment on these regions.

Fiscal foresight and the effects of government spending

We study the effects of government spending by using a structural, large dimensional, dynamic factor model. We find that the government spending shock is non-fundamental for the variables commonly used in the structural VAR literature, so that its impulse response functions cannot be consistently estimated by means of a VAR. Government spending raises both consumption and investment, with no evidence of crowding out. The impact multiplier is 1.7 and the long run multiplier is 0.6.

Tax evasion, technology shocks, and the cyclicality of government revenues

This paper analyzes the behavior of the tax revenue to output ratio over the business cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding fine. Under the empirically plausible assumptions that the intertemporal elasticity of substitution exhibits a sufficiently small value and that productivity shocks are serially correlated, we show that the elasticity of government revenue with respect to output is larger than one, which agrees with the empirical evidence. This result holds even if the tax system displays flat tax rates. We extend the previous setup to generate larger fiscal deficits when the economy experiences a recession.

E-Government and Online Government-Citizen Interaction

En l'última dècada, les administracions públiques han fet un esforç especial per desenvolupar portals d'administració i oferir serveis en línia. L'objectiu d'aquest article és crear un marc teòric i analític per a investigar els efectes dels nous canals d'interacció basats en la tecnologia entre els governs i els ciutadans en l'estructura organitzativa i les dinàmiques de les administracions públiques i, finalment, en el lliurament de serveis. També assenyala possibles enfocaments metodològics que podrien resultar útils en la recerca futura sobre aquest tema.

E-government and Public Services : a Case Study of the Inter-administrative Portal CAT365. Research report (sythesis document)

Aquest estudi analitza els usos de les TIC a l'administració autonòmica catalana. De forma més específica, l'estudi se centra en la interacció entre l'ús d'un vessant concret de les TIC, la xarxa Internet, per part de l'administració pública, i determinats aspectes centrals d'aquest tipus d'institucions: la seva organització i estructura internes, la provisió de serveis públics o la relació amb altres agents socials. Hem analitzat, doncs, el fenomen del govern electrònic en el marc particular de la Generalitat de Catalunya, estudiant-ne el grau de desenvolupament i penetració, les seves característiques més remarcables i els problemes més importants que s'hi plantegen. El projecte de recerca es concreta en un estudi de cas sobre un projecte d'innovació específic però de gran abast, que es trobava en el moment de realització de l'estudi en la seva primera fase d'implementació: el projecte Administració Oberta de Catalunya (AOC). Concretament ens hem centrat en el vessant d'aquesta iniciativa pública que es concretava en la creació d'un portal interadministratiu a Internet, el portal www.cat365.net, destinat a proveir electrònicament serveis públics de totes les administracions que operen a Catalunya. L'estudi analitza les transformacions internes de l'administració que s'hi poden trobar associades i els elements que les condicionen, tant positivament com negativa. Igualment, intentem analitzem el que aquestes transformacions poden suposar per a la relació entre els ciutadans i les institucions públiques.

The Effects of government spending on the distribution of consumption

We study the effects of government spending on the distribution of consumption. We find a substantial degree of heterogeneity: consumption increases at the bottom and falls at the top of the distribution, implying a significant temporary reduction of consumption inequality. The effects of the shock display correlations of around -0.7/-0.9 with the percentage of stockholders within the decile. We interpret the results as in line and yielding support to models of limited participation where, while the Ricardian equivalence holds for rich households, for poor household, with no access to capital markets, the Keynesian multiplier is at work.

Fiscal foresight, forecast revisions and the effects of government spending in the open economy

This paper investigates the effects of government spending on the real exchange rate and the trade balance in the US using a new VAR identification procedure based on spending forecast revisions. I find that the real exchange rate appreciates and the trade balance deteriorates after a government spending shock, although the effects are quantitatively small. The findings broadly match the theoretical predictions of the standard Mundell-Fleming model and differ substantially from those existing in literature. Differences are attributable to the fact that, because of fiscal foresight, the government spending is non-fundamental for the variables typically used in open economy VARs. Here, on the contrary, the estimated shock is fundamental.

Government and the distribution of skills

Individuals' life chances in the future will very much depend on how we invest in our children now. An optimal human capital model would combine a high mean with minimal variance of skills. It is well-established that early childhood learning is key to adult success. The impact of social origins on child outcomes remains strong, and the new role of women poses additional challenges to our conventional nurturing approach to child development. This paper focuses on skill development in the early years, examining how we might best combine family inputs and public policy to invest optimally in our future human capital. I emphasize three issues: one, the uneven capacity of parents to invest in children; two, the impact of mothers' employment on child outcomes; and three, the potential benefits of early pre-school programmes. I conclude that mothers' intra-family bargaining power is decisive for family investments and that universal child care is key if our goal is to arrive at a strong mean with minimal variance.

Policy Making in Divided Government. A Pivotal Actors Model with Party Discipline.

This article presents a formal model of policy decision-making in an institutional framework of separation of powers in which the main actors are pivotal political parties with voting discipline. The basic model previously developed from pivotal politics theory for the analysis of the United States lawmaking is here modified to account for policy outcomes and institutional performances in other presidential regimes, especially in Latin America. Legislators' party indiscipline at voting and multi-partism appear as favorable conditions to reduce the size of the equilibrium set containing collectively inefficient outcomes, while a two-party system with strong party discipline is most prone to produce 'gridlock', that is, stability of socially inefficient policies. The article provides a framework for analysis which can induce significant revisions of empirical data, especially regarding the effects of situations of (newly defined) unified and divided government, different decision rules, the number of parties and their discipline. These implications should be testable and may inspire future analytical and empirical work.