Addressing the net balances problem as a prerequisite for EU budget reform: a proposal

Conflict among member states regarding the distribution of net financial burdens has been allowed to contaminate the entire design of the EU budget with very negative consequences in terms of equity, efficiency and transparency. To get around this problem and pave the way for a substantive budget reform, we propose to decouple distributional negotiations from the rest of the budget process by linking member state net balances in a rigid manner to relative prosperity. This would be achieved through the introduction of a system of compensating horizontal transfers that would take to its logical conclusion the Commission's proposal for a generalized compensation mechanism. We discuss the impact of the proposed scheme on member states? incentives and illustrate its financial implications using revenue and expenditure projections for 2013 that are based on the current Financial Perspectives and Own Resources Decision.

Budget constrained expenditure multipliers

We show that standard expenditure multipliers capture economy-wide effects of new government projects only when financing constraints are not binding. In actual policy making, however, new projects usually need financing. Under liquidity constraints, new projects are subject to two opposite effects: an income effect and a set of spending substitution effects. The former is the traditional, unrestricted, multiplier effect; the latter is the result of expenditure reallocation to upheld effective financing constraints. Unrestricted multipliers will therefore be, as a general rule, upward biased and policy designs based upon them should be reassessed in the light of the countervailing substitution effects.

Comrades or Culprits? Donor Engagement and Budget Transparency in Aid Dependent Countries

Budget transparency has come to be considered a key aspect of governance. Over the past decade, donors have invested increasing resources in strengthening processes through which budget transparency in developing countries can be enhanced. According to the 2008 Open Budget Index (OBI) Report, however, aid dependency and budget transparency appear to be inversely correlated. This article looks at the role of donor agencies in promoting or preventing budget transparency in aid dependent countries. It analyzes data for a sample of 16 aid-dependent countries included in the OBI, to test some preliminary hypotheses and select six countries for which more detailed findings are then presented. All of these countries have implemented reforms aimed at enhancing budget transparency, with substantial donor support. These, however, often had only limited success, partly because they were not well adapted to the local context, and partly because donors put limited emphasis on improving public access to budget information. Donor efforts were also often offset by other characteristics of donor interventions, namely their fragmentation, lack of transparency, and limited use of program aid modalities such as budget support and pooled sector funding.

Austerity and anarchy: Budget cuts and social unrest in Europe, 1919-2008

Does fiscal consolidation lead to social unrest? Using cross-country evidencefor the period 1919 to 2008, we examine the extent to which societies becomeunstable after budget cuts. The results show a clear correlation between fiscalretrenchment and instability. Expenditure cuts are particularly potent infueling protests; tax rises have only small and insignificant effects. We test ifthe relationship simply reflects economic downturns, using a recently-developedIMF dataset on exogenous expenditure shocks, and conclude that this is not thecase. While autocracies and democracies show broadly similar responses to budgetcuts, countries with more constraints on the executive are less likely to seeunrest after austerity measures. Growing media penetration does not strengthenthe effect of cut-backs on the level of unrest. We also find that austerity episodesthat result in unrest lead to quick reversals of fiscal policy.

Wage curves for Spain evidence from the family budget survey

This study explores the existence of a wage curve for Spain. To quantify this relationship for the Spanish economy, we used individual datafrom the EPF 1990-1991. The results show the presence of a wage curve with an elasticity of -0.13. The availability of very detailed information on wages and unemployment has also shown that less protected labour market groups -young workers, manual workers and building sector workers- have a higher elasticity of wages to local unemployment. These results could be interpreted as a greater facility of firms in these segments to settle wages as a function ofthe unemployment rate

Wage curves for Spain evidence from the family budget survey

This study explores the existence of a wage curve for Spain. To quantify this relationship for the Spanish economy, we used individual datafrom the EPF 1990-1991. The results show the presence of a wage curve with an elasticity of -0.13. The availability of very detailed information on wages and unemployment has also shown that less protected labour market groups -young workers, manual workers and building sector workers- have a higher elasticity of wages to local unemployment. These results could be interpreted as a greater facility of firms in these segments to settle wages as a function ofthe unemployment rate

Genesis and evolution of the Evx and Mox genes and the extended Hox and ParaHox gene clusters

Background: Hox and ParaHox gene clusters are thought to have resulted from the duplication of a ProtoHox gene cluster early in metazoan evolution. However, the origin and evolution of the other genes belonging to the extended Hox group of homeobox-containing genes, that is, Mox and Evx, remains obscure. We constructed phylogenetic trees with mouse, amphioxus and Drosophila extended Hox and other related Antennapedia-type homeobox gene sequences and analyzed the linkage data available for such genes.Results: We claim that neither Mox nor Evx is a Hox or ParaHox gene. We propose a scenariothat reconciles phylogeny with linkage data, in which an Evx/Mox ancestor gene linked to aProtoHox cluster was involved in a segmental tandem duplication event that generated an arrayof all Hox-like genes, referred to as the `coupled¿ cluster. A chromosomal breakage within thiscluster explains the current composition of the extended Hox cluster (with Evx, Hox and Moxgenes) and the ParaHox cluster.Conclusions: Most studies dealing with the origin and evolution of Hox and ParaHox clustershave not included the Hox-related genes Mox and Evx. Our phylogenetic analyses and theavailable linkage data in mammalian genomes support an evolutionary scenario in which anancestor of Evx and Mox was linked to the ProtoHox cluster, and that a tandem duplication of alarge genomic region early in metazoan evolution generated the Hox and ParaHox clusters, plusthe cluster-neighbors Evx and Mox. The large `coupled¿ Hox-like cluster EvxHox/MoxParaHox wassubsequently broken, thus grouping the Mox and Evx genes to the Hox clusters, and isolating theParaHox cluster.

A segmentation analysis and segments profile of budget air travelers

Many Spanish destinations are now considering low cost airlines (LCA) important for attracting tourists. However, there is little evidence on the characteristics travelers using low cost airlines and their flight preferences. Typical segmentation of air travelers are business versus leisure travelers and business versus tourist fares. The aim of this paper is to obtain a deeper understanding of the demand of LCA through a segmentation analysis, based on 808 foreign travelers who used Girona airport, that focuses on low cost travelers’ valuations of different flight attributes and trip related characteristics

The global carbon budget:a conflicting claims problem

Despite global environmental governance has traditionally couched global warming in terms of annual CO2 emissions (a flow), global mean temperature is actually determined by cumulative CO2 emissions in the atmosphere (a stock). Thanks to advances of scientific community, nowadays it is possible to quantify the \global carbon budget", that is, the amount of available cumulative CO2 emissions before crossing the 2oC threshold (Meinshausen et al., 2009). The current approach proposes to analyze the allocation of such global carbon budget among countries as a classical conflicting claims problem (O'Neill, 1982). Based on some appealing principles, it is proposed an efficient and sustainable allocation of the available carbon budget from 2000 to 2050 taking into account different environmental risk scenarios. Keywords: Carbon budget, Conflicting claims problem, Distribution, Climate change. JEL classification: C79, D71, D74, H41, H87, Q50, Q54, Q58.

Broken colinearity of the amphioxus Hox cluster.

Background In most eumetazoans studied so far, Hox genes determine the identity of structures along the main body axis. They are usually linked in genomic clusters and, in the case of the vertebrate embryo, are expressed with spatial and temporal colinearity. Outside vertebrates, temporal colinearity has been reported in the cephalochordate amphioxus (the least derived living relative of the chordate ancestor) but only for anterior and central genes, namely Hox1 to Hox4 and Hox6. However, most of the Hox gene expression patterns in amphioxus have not been reported. To gain global insights into the evolution of Hox clusters in chordates, we investigated a more extended expression profile of amphioxus Hox genes. Results Here we report an extended expression profile of the European amphioxus Branchiostoma lanceolatum Hox genes and describe that all Hox genes, except Hox13, are expressed during development. Interestingly, we report the breaking of both spatial and temporal colinearity for at least Hox6 and Hox14, which thus have escaped from the classical Hox code concept. We show a previously unidentified Hox6 expression pattern and a faint expression for posterior Hox genes in structures such as the posterior mesoderm, notochord, and hindgut. Unexpectedly, we found that amphioxus Hox14 had the most divergent expression pattern. This gene is expressed in the anterior cerebral vesicle and pharyngeal endoderm. Amphioxus Hox14 expression represents the first report of Hox gene expression in the most anterior part of the central nervous system. Nevertheless, despite these divergent expression patterns, amphioxus Hox6 and Hox14 seem to be still regulated by retinoic acid. Conclusions Escape from colinearity by Hox genes is not unusual in either vertebrates or amphioxus and we suggest that those genes escaping from it are probably associated with the patterning of lineage-specific morphological traits, requiring the loss of those developmental constraints that kept them colinear.

Estimating the effects of fiscal policy under the budget constraint

I reconsider the short-term effects of fiscal policy when both government spending and taxes are allowed to respond to the level of public debt. I embed the long-term government budget constraint in a VAR, and apply this common trends model to US quarterly data. The results overturn some widely held beliefs on fiscal policy effects. The main finding is that expansionary fiscal policy has contractionary effects on output and inflation. Ricardian effects may dominate when fiscal expansions are expected to be adjusted by future tax rises or spending cuts. The evidence supports RBC models with distortionary taxation. We can discard some alternative interpretations that are based on monetary policy reactions or supply-side effects.

Fiscal sustainability across government tiers: an assessment of soft budget constraints

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.