On the weights of nations: assigning voting weights in a heterogenous union

Consider a voting procedure where countries, states, or districts comprising a union each elect representatives who then participate in later votes at the union level on their behalf. The countries, provinces, and states may vary in their populations and composition. If we wish to maximize the total expected utility of all agents in the union, how to weight the votes of the representatives of the different countries, states or districts at the union level? We provide a simple characterization of the efficient voting rule in terms of the weights assigned to different districts and the voting threshold (how large a qualified majority is needed to induce change versus the status quo). Next, in the context of a model of the correlation structure of agents preferences, we analyze how voting weights relate to the population size of a country. We then analyze the voting weights in Council of the European Union under the Nice Treaty and the recently proposed constitution, and contrast them under different versions of our model.

Unemployment, growth and fiscal policy: new insights on the hysteresis hypothesis

We develop a growth model with unemployment due to imperfections in the labor market. In this model, wage inertia and balanced budget rules cause a complementarity between capital and employment capable of explaining the existence of multiple equilibrium paths. Hysteresis is viewed as the result of a selection between these diferent equilibrium paths. We use this model to argue that, in contrast to the US, those fiscal policies followed by most of the European countries after the shocks of the 1970’s may have played a central role in generating hysteresis.

An instrumental analysis of the European Union's capability to act in conflict response

Descripció i anàlisi dels instruments polítics, econòmics, civils i militars de la Unió Europea per enfrontar qualsevol conflicte.

The Politics of Intergovernmental Fiscal Relations in Argentina

The search for political determinants of intergovernmental fiscal relations has shaped much of the recent literature on the economic viability of federalism. This study assesses the explanatory power of two competing views about intergovernmental transfers; one emphasizing the traditional neoclassical approach to federal-subnational fiscal relations and the other suggesting that transfers are contingent on the political fortunes and current political vulnerability of each level of government. The author tests these models using data from Argentina, a federation exhibiting one of the most decentralised fiscal systems in the world and severe imbalances in the territorial distribution of legislative and economic resources. It is shown that overrespresented provinces ruled by governors who belong to opposition parties can bring into play their political overrepresentation to attract shares of federal transfers beyond social welfare criteria and to shield themselves from unwanted reforms to increase fiscal co-responsibilty. This finding suggests that decision makers in federal countries must pay close heed to the need to synchronize institutional reforms and fiscal adjustment.

The European Union Police Mission: The Beginning of a New Future for Bosnia and Herzegovina?

The creation, reform and/or restructuring of the police in post-conflict societies remains one of the key challenges for practitioners and scholars in the contemporary fields of peace and security, particularly due to the changing nature of conflicts. Since the 1990s the world has witnessed a proliferation of international police missions, with regional organisations gradually acquiring a prominent role. This paper analyses the 2003-2005 period of the European Union Police Mission (EUPM) in Bosnia and Herzegovina. Much is at stake in this mission, both in terms of the development of the EU´s external identity but also for Bosnia and Herzegovina’s road to EU membership and sustainable peace. This paper will argue that by 2005 the balance sheet was mixed. EUPM fell short of fulfilling its overall goal of ‘Europeanising’ Bosnian police services, and of its desire to be seen as providing that additional ingredient in police matters that would set it apart from the earlier UN mission. Nevertheless, despite its shortcomings, the Mission did not merit the harsh criticisms it was faced with. Its lack of success was not entirely the Mission’s doing. The paper focuses on three aspects: political and economic viability and sustainability, security levels in Bosnia and Herzegovina, and institution and capacity building. The explanatory framework used in this paper is based on the democratic policing discourse. In doing so the argument developed here will also shed light on the nature of so-called “best European practices” in police matters.

The Total fiscal cost of indirect taxation: an approximation using Catalonia's recent input-output table

In this note we quantify to what extent indirect taxation influences and distorts prices. To do so we use the networked accounting structure of the most recent input-output table of Catalonia, an autonomous region of Spain, to model price formation. The role of indirect taxation is considered both from a classical value perspective and a more neoclassical flavoured one. We show that they would yield equivalent results under some basic premises. The neoclassical perspective, however, offers a bit more flexibility to distinguish among different tax figures and hence provide a clearer disaggregate picture of how an indirect tax ends up affecting, and by how much, the cost structure.

Fiscal insurance and debt management in OECD economies

Assuming the role of debt management is to provide hedging against fiscal shocks we consider three questions: i) what indicators can be used to assess the performance of debt management? ii) how well have historical debt management policies performed? and iii) how is that performance affected by variations in debt issuance? We consider these questions using OECD data on the market value of government debt between 1970 and 2000. Motivated by both the optimal taxation literature and broad considerations of debt stability we propose a range of performance indicators for debt management. We evaluate these using Monte Carlo analysis and find that those based on the relative persistence of debt perform best. Calculating these measures for OECD data provides only limited evidence that debt management has helped insulate policy against unexpected fiscal shocks. We also find that the degree of fiscal insurance achieved is not well connected to cross country variations in debt issuance patterns. Given the limited volatility observed in the yield curve the relatively small dispersion of debt management practices across countries makes little difference to the realised degree of fiscal insurance.

Els agrocombustibles a Catalunya : mecanismes i efectes de l'europeïtzació en la política pública

En els darrers temps els agrocombustibles s’han promocionat com una alternativa als combustibles fòssils,adquirint un pes important en les agendes polítiques internacionals. Les dues grans potències econòmiques mundials, els Estats Units i la Unió Europea, han impulsat els agrocombustibles a través de diferents estratègies; plans, legislació, però també amb excempcions fiscals i obligacions de barreja amb combustibles fòssils. En aquest marc, Catalunya va ser de les comunitats autònomes de l’Estat espanyol pioneres en la potenciació d’experiències de producció i consum d’agrocombustibles. A partir de l’anàlisi de la política i el debat a Catalunya es pot destacar la gran influència de l’esfera europea a través de diversos mecanismes en el procés, el que s’ha anomenat en la literatura com europeïtzació. Darrerament Europa s’ha convertit en un important centre de producció de polítiques públiques, especialment en polítiques ambientals i agrícoles a partir dels anys 80. És per aquest motiu que resulta rellevant conèixer les dinàmiques europees en una política complexa com la dels agrocombustibles a Catalunya, que presenta components energètics, però també amb altres aspectes relacionats amb el món agràri i el medi ambient.

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.

The Global Dimension to Fiscal Sustainability

This paper examines the issue of fiscal sustainability in emerging market countries and industrial countries. We highlight the importance of the time series properties of the primary surplus and debt, and find evidence of a positive long run relationship. Consequently we emphasise, that especially for emerging markets, it is important to recognise the implications of global capital market shocks for fiscal sustainability, a relationship which has hitherto been ignored in the empirical literature. Using a factor model we demonstrate that the relationship between deficit and debt is conditional upon a global factor and we suggest that this global factor is related to world-wide liquidity. We also demonstrate that this acts as a constraint on emerging market economies’ fiscal policy.

Countercyclical Fiscal Policy and Cyclical Factor Utilization

In a neoclassical growth model with monopolistic competition in the product market, the presence of cyclical factor utilization enhances the stabilization role of countercyclical taxes. The costs of varying capital utilization take the form of varying rates of depreciation, which in turn have amplifying effect on investment decisions as well as the volatility of most aggregate variables. This creates an additional channel through which taxes affect the economy, a channel that enhances the stabilization role of countercyclical taxes, with particularly strong effects in the labor market. However, in terms of welfare, countercyclical taxes are welfare inferior due to reduced precautionary saving motives.