Budget-Balance, Fairness and Minimal Manipulability

A common real-life problem is to fairly allocate a number of indivisible objects and a fixed amount of money among a group of agents. Fairness requires that each agent weakly prefers his consumption bundle to any other agent’s bundle. Under fairness, efficiency is equivalent to budget-balance (all the available money is allocated among the agents). Budget-balance and fairness in general are incompatible with non-manipulability (Green and Laffont, 1979). We propose a new notion of the degree of manipulability which can be used to compare the ease of manipulation in allocation mechanisms. Our measure counts for each problem the number of agents who can manipulate the rule. Given this notion, the main result demonstrates that maximally linked fair allocation rules are the minimally manipulable rules among all budget-balanced and fair allocation mechanisms. Such rules link any agent to the bundle of a pre-selected agent through indifferences (which can be viewed as indirect egalitarian equivalence).

Structural budget balance: methodology and estimation for the Chilean central government 1987-2001

Includes bibliography

Joint estimates of automatic and discretionary fiscal policy for the OECD

Official calculations of automatic stabilizers are seriously flawed since they rest on the assumption that the only element of social spending that reacts automatically to the cycle is unemployment compensation. This puts into question many estimates of discretionary fiscal policy. In response, we propose a simultaneous estimate of automatic and discretionary fiscal policy. This leads us, quite naturally, to a tripartite decomposition of the budget balance between revenues, social spending and other spending as a bare minimum. Our headline results for a panel of 20 OECD countries in 1981-2003 are .59 automatic stabilization in percentage-points of primary surplus balances. All of this stabilization remains following discretionary responses during contractions, but arguably only about 3/5 of it remains so in expansions while discretionary behavior cancels the rest. We pay a lot of attention to the impact of the Maastricht Treaty and the SGP on the EU members of our sample and to real time data.

Joint estimates of automatic and discretionary fiscal policy: the OECD 1981-2003

Official calculations of automatic stabilizers are seriously flawed since they rest on the assumption that the only element of social spending that reacts automatically to the cycle is unemployment compensation. This puts into question many estimates of discretionary fiscal policy. In response, we propose a simultaneous estimate of automatic and discretionary fiscal policy. This leads us, quite naturally, to a tripartite decomposition of the budget balance between revenues, social spending and other spending as a bare minimum. Our headline results for a panel of 20 OECD countries in 1981-2003 are .59 automatic stabilization in percentage-points of primary surplus balances. All of this stabilization remains following discretionary responses during contractions, but arguably only about 3/5 of it remains so in expansions while discretionary behavior cancels the rest. We pay a lot of attention to the impact of the Maastricht Treaty and the SGP on the EU members of our sample and to real time data.

Joint estimates of automatic and discretionary fiscal policy: the OECD 1981-2003

Official calculations of automatic stabilizers are seriously flawed since they rest on the assumption that the only element of social spending that reacts automatically to the cycle is unemployment compensation. This puts into question many estimates of discretionary fiscal policy. In response, we propose a simultaneous estimate of automatic and discretionary fiscal policy. This leads us, quite naturally, to a tripartite decomposition of the budget balance between revenues, social spending and other spending as a bare minimum. Our headline results for a panel of 20 OECD countries in 1981-2003 are .59 automatic stabilization in percentage-points of primary surplus balances. All of this stabilization remains following discretionary responses during contractions, but arguably only about 3/5 of it remains so in expansions while discretionary behavior cancels the rest. We pay a lot of attention to the impact of the Maastricht Treaty and the SGP on the EU members of our sample and to real time data.

Specificity revisited: The role of cross-investments

Previous analysis has shown that traders may opt for specific technologies with nojoint productivity advantage as a way to commit themselves to trading jointly, butonly when long-term contracting is infeasible. This paper proves that speciÞcity canalso be optimal (by relaxing the budget-balance constraint) in settings with long-termcontracting. Traders will opt for specificity when one trader makes a cross-investmentand either (1) this cross-investment has a direct externality on the other trader, (2) bothparties invest, or (3) private information is present. The specificity (e.g. from non-salvageable investments, specific assets and technologies, narrow business strategies,and exclusivity restrictions) is equally effective regardless of which trader's alternativetrade payoff is reduced. Specificity supports long-term contracts in a broad rangeof settings - both with and without renegotiation. The theory also offers a novelperspective on franchising and vertical integration.

(Minimally) 'epsilon'-incentive compatible competitive equilibria in economies with indivisibilities

We consider competitive and budget-balanced allocation rules for problems where a number of indivisible objects and a fixed amount of money is allocated among a group of agents. In 'small' economies, we identify under classical preferences each agent's maximal gain from manipulation. Using this result we find the competitive and budget-balanced allocation rules which are minimally manipulable for each preference profile in terms of any agent's maximal gain. If preferences are quasi-linear, then we can find a competitive and budget-balanced allocation rule such that for any problem, the maximal utility gain from manipulation is equalized among all agents.

Self-defeating austerity? Assessing the impact of fiscal consolidations on unemployment

The great recession of 2008/2009 has had a huge impact on unemployment and public finances in most advanced countries, and these impacts were magnified in the southern Euro area countries by the sovereign debt crisis of 2010/2011. The fiscal consolidation imposed by the European Union on highly indebted countries was based on the assumptions of the so-called expansionary austerity. However, the reality so far shows proof to the contrary, and the results of this paper support the opposing view of a self- defeating austerity. Based on the input-output relations of the productive system, an unemployment rate/budget balance trade-off equation is derived, as well as the impact of a strong fiscal consolidation based on social transfers and the notion of neutral budget balance. An application to the Portuguese case confirms the huge costs of a strong fiscal consolidation, both in terms of unemployment and social policy regress, and it allows one to conclude that too much consolidation in one year makes consolidation more difficult in the following year.

Le ricadute dei vincoli di bilancio europei sugli Enti territoriali. Nuove norme per la stabilità.

La disciplina del pareggio di bilancio è in continua evoluzione, soprattutto a fronte delle nuove esigenze finanziarie per contrastare la pandemia. Questo elaborato, studiando la governance economica strutturata dopo la crisi dei debiti, le derivanti scelte italiane in materia di costituzionalizzazione del pareggio di bilancio e le conseguenze sulle autonomie locali, dimostra come il sistema di gestione delle finanze pubbliche a livello comunitario si stia completando, generando un rapporto normativo ciclico tra il livello europeo e quello locale. Ne è emersa una conflittualità tra le Regioni e lo Stato, che è analizzata al fine di comprendere la giustiziabilità costituzionale del pareggio di bilancio, osservando le esigenze di bilanciamento tra l’equilibrio finanziario e la tutela dei diritti sociali. La Corte Costituzionale ha recentemente conferito, in via giurisprudenziale, alla Corte dei Conti la potestà di svolgere un controllo diretto di costituzionalità del rispetto dell’equilibrio di bilancio degli enti nazionali e territoriali. Particolare attenzione viene data, poi, a seguito degli effetti della pandemia da Covid-19 sui bilanci degli Stati. A fronte della crisi pandemica, per la prima volta dall’approvazione del TSCG, la Commissione ha attivato la clausola di salvaguardia generale per sospendere il Patto di Stabilità (c.d. escape clause). Questa clausola ha permesso ai Paesi di ricorrere agli scostamenti di bilancio. Viene infine analizzato il piano “Next Generation EU”, che centralizza i prestiti verso gli Stati membri nel bilancio dell’Unione ed attinge dal mercato dei capitali le risorse necessarie per finanziare un totale di 750 miliardi, attraverso l’emissione di obbligazioni “Eu Bills”. Per la prima volta nella storia, l’Unione, nelle parole della Commissione, agisce sui mercati come se fosse uno Stato. La portata straordinaria del NGEU, con l’emissione di titoli europei, porta ad una sostanziale mutualizzazione dei debiti ed appare come un passo fondamentale verso il completamento dell’UEM e di un sistema federale.