Government spending and re-election: Quasi-experimental evidence from Brazilian municipalities

Does additional government spending improve the electoral chances of incumbent politicalparties? This paper provides the first quasi-experimental evidence on this question. Our researchdesign exploits discontinuities in federal funding to local governments in Brazil around severalpopulation cutoffs over the period 1982-1985. We show that extra fiscal transfers resulted in a20% increase in local government spending per capita, and an increase of about 10 percentagepoints in the re-election probability of local incumbent parties. In the context of an agency modelof electoral accountability, as well as existing results indicating that the revenue jumps studiedhere had positive impacts on education outcomes and earnings, these results suggest that expectedelectoral rewards encouraged incumbents to spend additional funds in ways that were valued byvoters.

On the throughput-WIP trade-off in queueing systems, diminishing returns and the threshold property: A linear programming approach

We present a new unifying framework for investigating throughput-WIP(Work-in-Process) optimal control problems in queueing systems,based on reformulating them as linear programming (LP) problems withspecial structure: We show that if a throughput-WIP performance pairin a stochastic system satisfies the Threshold Property we introducein this paper, then we can reformulate the problem of optimizing alinear objective of throughput-WIP performance as a (semi-infinite)LP problem over a polygon with special structure (a thresholdpolygon). The strong structural properties of such polygones explainthe optimality of threshold policies for optimizing linearperformance objectives: their vertices correspond to the performancepairs of threshold policies. We analyze in this framework theversatile input-output queueing intensity control model introduced byChen and Yao (1990), obtaining a variety of new results, including (a)an exact reformulation of the control problem as an LP problem over athreshold polygon; (b) an analytical characterization of the Min WIPfunction (giving the minimum WIP level required to attain a targetthroughput level); (c) an LP Value Decomposition Theorem that relatesthe objective value under an arbitrary policy with that of a giventhreshold policy (thus revealing the LP interpretation of Chen andYao's optimality conditions); (d) diminishing returns and invarianceproperties of throughput-WIP performance, which underlie thresholdoptimality; (e) a unified treatment of the time-discounted andtime-average cases.

Forest fires: Evaluation of government intervention measures

The purpose of this paper is to examine the relation between government measures, volunteer participation, climate variables and forest fires. A number of studies have related forest fires to causes of ignition, to fire history in one area, to the type of vegetation and weathercharacteristics or to community institutions, but there is little research on the relation between fire production and government prevention and extinction measures from a policy evaluation perspective.An observational approach is first applied to select forest fires in the north east of Spain. Taking a selection of fires with a certain size, a multiple regression analysis is conducted to find significant relations between policy instruments under the control of the government and the number of hectares burn in each case, controlling at the same time the effect of weather conditions and other context variables. The paper brings evidence on the effects of simultaneity and the relevance of recurring to army soldiers in specific days with extraordinary high simultaneity. The analysis also brings light on the effectiveness of twopreventive policies and of helicopters for extinction tasks.

Openness, government size and the terms of trade

This paper investigates the relationship between trade openness and the size of government, both theoretically and empirically. We show that openness can increase the size of governments through two channels: (1) a terms of trade externality, whereby trade lowers the domestic cost of taxation and (2) the demand for insurance, whereby trade raises risk and public transfers. We provide a unified framework for studying and testing these two mechanisms. First, we show how their relative strength depends on a key parameter, the elasticity of substitution between domestic and foreign goods. Second, while the terms of trade externality leads to inefficiently large governments, the increase in public spending due to the demand for insurance is optimal. We show that large volumes of trade may result in welfare losses if the terms of trade externality is strong enough while small volumes of trade are always beneficial. Third, we provide new evidence on the positive association between openness and the size of government and test whether it is consistent with the terms of trade externality or the demand for insurance. Our findings suggest that the positive relationship is remarkably robust and that the terms of trade externality may be the driving force behind it, thus raising warnings that globalization may have led to inefficiently large governments.

Fiat money, intrinsic properties and government transaction policy

Why do people coordinate on the use of valueless piecesof paper as generally accepted money? A possible answeris that these objects have intrinsic properties that make them better candidates to be used as media of exchange. Another answer stresses the fact that unconvertible fiat money will not easily appear unless there is a centralized institution that favors its use.The main objective of the paper is to analyze these questions. In order to do this, we take a model of commodity money in which fiat money does not play any significant role and modify it to examine under which circumstances fiat money might come to circulate as medium of exchange. Some of the results obtained from the model differ in a rather substantial way from previous related literature.

Understanding the effects of government spending on consumption

Recent evidence suggests that consumption rises in response to an increase in government spending. That finding cannot be easily reconciled with existing optimizing business cycle models. We extend the standard new Keynesian model to allow for the presence of rule-of-thumb consumers. We show how the interaction of the latter with sticky prices and deficit financing can account for the existing evidence on the effects of government spending.

Government consumption and private consumption correlations

This paper examines whether the introduction of government consumptionexpenditure in a standard one good model of the international real businesscycle is sufficient to reconcile the theory with the existing pattern ofinternational consumption and output correlations. I calibrate the model totwo different pairs of countries and generate the simulated distribution ofconsumption and output correlations implied by several specifications of themodel. It is shown that the model can account for existing internationalconsumption correlations only under very specific assumptions about the sizeof effect of government expenditure on agents' utility or the variabilityof government expenditure shocks. Crucial parameters are identified and thesensitivity of the results discussed.

Banks, government bonds, and default: what do the data say?

We use data from Bankscope to analyze the holdings of public bonds by over 18,000 banks located in 185 countries and the role of these bonds in 18 sovereign debt crises over the period 1998-2012. We find that: (i) banks hold a sizeable share of their assets in government bonds (about 9% on average), particularly in less financially developed countries; (ii) during sovereign crises, banks on average increase their bondholdings by 1% of their assets, but this increase is concentrated among larger and more profitable banks, and; (iii) the correlation between a bank's holdings of public bonds and its future loans is positive in normal times, but turns negative during defaults. A 10% increase in bank bond-holdings during default is associated with a 3.2% reduction in future loans, and bonds bought in normal times account for 75% of this effect. Our results are consistent with the view that there is a liquidity benefit for banks to hold public bonds in normal times, which is critical for understanding bank fragility during sovereign crises.

State Government E85 Use Plan, December 31, 2007

Governor Culver issued Executive Order 3 on June 21st, 2007. The Executive Order directs that at least 60 percent of fuel purchases in state flexible fuel vehicles be E85 by June 30, 2009. The Order also directed “the Director of the Office of Energy Independence, in consultation with the Director of Administrative Services, shall submit a State Government E85 Use Plan.” The following recommendations are immediate actions that can be taken to ensure that the state reaches the Governor’s goal of 60 percent E85 fuel use by June 30, 2009

Governor's Task Force on Efficiencies and Cost-Effectiveness in Iowa State Government,Final Report, December 1983

A special task force was formed and worked through its various committees to uncover and investigate possible areas for cutting costs and saving money in State Government operations. A total of 81 recommendations are made in this report, with potential savings of over $32 million during the next several years.

A Report on the Restructuring and Downsizing of Iowa State Government, prepared by Peat, Marwick, Mitchell & Co., 1985.

This report investigates the structure, form, and financial situation of the Executive branch of the State of Iowa. And makes suggestions on how to reduce infrastructure in order to reach the goal of saving money and balancing the budget.

Executive Order Number Seventeen, September 25, 2009

This Executive Order expects the State of Iowa executive agencies and Regent Institutions own, purchase, build and lease property, including office space, worth billions of dollars for educational, correctional, recreational, conservation, transportation, communication, public health, workforce and related public functions and the placement of state offices in historic central business districts "downtown" can strengthen and revitalize Iowa's cities and towns.

Executive Order No. 4, March 30, 1961

Requesting that all Department Heads of all Agencies of the State Government compile an inventory of all property in their deparments or under the control of their department.