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.

Radial measures of public services deficit for regional allocation of public funds

The goal of this paper is to present an optimal resource allocation model for the regional allocation of public service inputs. Theproposed solution leads to maximise the relative public service availability in regions located below the best availability frontier, subject to exogenous budget restrictions and equality ofaccess for equal need criteria (equity-based notion of regional needs). The construction of non-parametric deficit indicators is proposed for public service availability by a novel application of Data Envelopment Analysis (DEA) models, whose results offer advantages for the evaluation and improvement of decentralised public resource allocation systems. The method introduced in this paper has relevance as a resource allocation guide for the majority of services centrally funded by the public sector in a given country, such as health care, basic and higher education, citizen safety, justice, transportation, environmental protection, leisure, culture, housing and city planning, etc.

The First privatization : selling SOEs and privatizing public monopolies in fascist Italy, 1922-1925

[cat] El primer govern feixista d’Itàlia va aplicar una política de privatització a gran escala entre 1922 i 1925. El govern va privatitzar el monopoli estatal de llumins, el monopoli estatal d’assegurances de vida, va vendre la major part de la xarxa i serveis de telefònica pública a empreses privades, va reprivatitzar el major productor de productes metàl·lics, i va atorgar concessions a empreses privades per construir i explotar autopistes de peatge. Tot i que algunes consideracions ideològiques van poder tenir alguna influència, la privatització va ser usada sobre tot com un instrument polític per construir confiança amb els grans industrials i per augmentar el suport al govern i al Partito Nazionale Fascista. La privatització també va contribuir a equilibrar el pressupost públic, qüestió aquesta que va ser el principal objectiu de la primera fase de la política econòmica feixista.

The First privatization : selling SOEs and privatizing public monopolies in fascist Italy, 1922-1925

[cat] El primer govern feixista d’Itàlia va aplicar una política de privatització a gran escala entre 1922 i 1925. El govern va privatitzar el monopoli estatal de llumins, el monopoli estatal d’assegurances de vida, va vendre la major part de la xarxa i serveis de telefònica pública a empreses privades, va reprivatitzar el major productor de productes metàl·lics, i va atorgar concessions a empreses privades per construir i explotar autopistes de peatge. Tot i que algunes consideracions ideològiques van poder tenir alguna influència, la privatització va ser usada sobre tot com un instrument polític per construir confiança amb els grans industrials i per augmentar el suport al govern i al Partito Nazionale Fascista. La privatització també va contribuir a equilibrar el pressupost públic, qüestió aquesta que va ser el principal objectiu de la primera fase de la política econòmica feixista.

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.

Should fiscal authorities cooperate in a monetary union with public deficit targets?

In this paper we analyse the setting of optimal policies in a monetary union with one monetary authority and various fiscal authorities that have a public deficit target. We will show that fiscal cooperation among the fiscal authorities, in the presence of positive supply shocks, ends up producing higher public deficits than in a non-cooperative regime. JEL No. E61, E63, F33, H0. Keywords: monetary union, fiscal policy coordination.

The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU

This paper develops a comprehensive framework for the quantitative analysis of the private and fiscal returns to schooling and of the effect of public policies on private incentives to invest in education. This framework is applied to 14 member states of the European Union. For each of these countries, we construct estimates of the private return to an additional year of schooling for an individual of average attainment, taking into account the effects of education on wages and employment probabilities after allowing for academic failure rates, the direct and opportunity costs of schooling, and the impact of personal taxes, social security contributions and unemployment and pension benefits on net incomes. We also construct a set of effective tax and subsidy rates that measure the effects of different public policies on the private returns to education, and measures of the fiscal returns to schooling that capture the long-term effects of a marginal increase in attainment on public finances under c

Social capital and government in the production of public goods

As a response to the rapidly growing empirical literature on social capital and the evidence of its correlation with government performance, we build a theoretical framework to study the interactions between social capital and government's action. This paper presents a model of homogeneous agents in an overlapping generations framework incorporating social capital as the values transmitted from parent to child. The government's role is to provide public goods. First, government expenditure is exogenously given. Then, it will be chosen at the preferred level of the representative agent. For both setups the equilibrium outcomes are characterized and the resulting dynamics studied. Briefly we include an analysis of the effect of productivity growth on the evolution of social capital. The results obtained caution caution against both the crowding out effect of the welfare state and the impact of sustained economic growth on social capital.

Personal redistribution and the regional allocation of public investment

How should an equity-motivated policy-marker allocate public capital (infrastructure) across regions. Should it aim at reducing interregional differences in per capita output, or at maximizing total output? Such a normative question is examined in a model where the policy-marker is exclusively concerned about personal inequality and has access to two policy instruments. (i) a personal tax-transfer system (taxation is distortionary), and (ii) the regional allocation of public investment. I show that the case for public investment as a significant instrument for interpersonal redistribution is rather weak. In the most favorable case, when the tax code is constrained to be uniform across regions, it is optimal to distort the allocation of public investment in favor of the poor regions, but only to a limited extent. The reason is that poor individuals are relatively more sensitive to public trans fers, which are maximized by allocating public investment efficiently. If! the tax code can vary across regions then the optimal policy may involve an allocation of public investment distorted in favor of the rich regions.

Unemployment and wage formation in a growth model with public capital

We study the relation between public capital, employment and growth under different assumptions concerning wage formation. We show that public capital increases economic growth, and that, if there is wage inertia, employment positively depends on both economic growth and public capital.