Credible Criminal Enforcement

Economic models of crime and punishment implicitly assume that the government can credibly commit to the fines, sentences, and apprehension rates it has chosen. We study the government's problem when credibility is an issue. We find that several of the standard predictions of the economic model of crime and punishment are robust to commitment, but that credibility may in some cases result in lower apprehension rates, and hence a higher crime rate, compared to the static version of the model.

Credible Commitments and Post-Conflict Refugee Return: A Statistical and Network Analysis

I examine determinants of refugee return after conflicts. I argue that institutional constraints placed on the executive provide a credible commitment that signals to refugees that the conditions required for durable return will be created. This results in increased return flows for refugees. Further, when credible commitments are stronger in the country of origin than in the country of asylum, the level of return increases. Finally, I find that specific commitments made to refugees in the peace agreement do not lead to increased return because they are not credible without institutional constraints. Using data on returnees that has only recently been made available, along with network analysis and an original coding of the provisions in refugee agreements, statistical results are found to support this theory. An examination of cases in Djibouti, Sierra Leone, and Liberia provides additional support for this argument.

Incompatibilidade distributiva e desenvolvimento auto-sustentado

Effective macroeconomic stability and sustained economic growth will only be achieved in Brazil when the country settles the distributive inconsistency that arose in the 1970s. Since then the state and the nation started to incur respectively in high domestic and foreign debt. Wages grew at much slower rate than productivity, and income concentrated in the hands of business entrepreneurs and particularly of rentiers. Sheer populist practices, or disguised combination of neo-liberal and neopopulist policies were unable to address the problem. Budget deficits and high inflation, or exchange rate overvaluation and financial crises were the typical outcome. To settle distributive inconsistency by compensating in the short term workers for their income losses is not realistic. Only a consistent growth strategy and a credible commitment to share future growth benefits, combined with active social policies oriented to the poor, will do the job.

Inglorious revolution : sovereign debt, tropical credibility, and financial underdevelopment in imperial Brazil

In 1824 the creation of institutions that constrained the monarch’s ability to unilaterally tax, spend, and debase the currency put Brazil on a path toward a revolution in public finance, roughly analogous to the financial consequences of England’s Glorious Revolution. This credible commitment to honor sovereign debt resulted in successful long-term funded borrowing at home and abroad from the 1820s through the 1880s that was unrivalled in Latin America. Some domestic bonds, denominated in the home currency and bearing exchange clauses, eventually circulated in European financial markets. The share of total debt accounted for by long-term funded issues grew, and domestic debt came to dominate foreign debt. Sovereign debt yields fell over time in London and Rio de Janeiro, and the cost of new borrowing declined on average. The market’s assessment of the probability of default tended to decrease. Imperial Brazil enjoyed favorable conditions for borrowing, and escaped the strong form of “original sin” stressed by recent work on sovereign debt. The development of vibrant private financial markets did not, however, follow from the enhanced credibility of government debt. Private finance in Imperial Brazil suffered from politicized market interventions that undermined the development of domestic capital markets. Private interest rates remained high, entry into commercial banking was heavily restricted, and limited-liability joint-stock companies were tightly controlled. The Brazilian case provides a powerful counterexample to the general proposition of North and Weingast that institutional changes that credibly commit the government to honor its obligations necessarily promote the development of private finance. The very institutions that enhanced the credibility of sovereign debt permitted the systematic repression of private financial development. In terms of its consequences for domestic capital markets, the liberal Constitution of 1824 represented an “inglorious” revolution.

Os limites do desenho institucional: uma investigação empírica dos mecanismos da influência presidencial sobre as agências reguladoras independentes no Governo Federal brasileiro

O trabalho investiga empiricamente o tema da influência presidencial sobre as agências reguladoras independentes (ARIs) no Governo Federal brasileiro, no período 1997-2014, como foco nos processos de nomeação para os cargos de direção destes órgãos, por meio de um método misto de caráter sequencial, combinando técnicas qualitativas e quantitativas. Primeiramente, utilizando a técnica do process tracing, uma análise histórico-comparativa da gênese e consolidação das dez ARIs federais no Brasil busca demonstrar a importância das hipóteses do credible commitment e da emulação institucional como variáveis explicativas da adoção do modelo. Em seguida, a influência política presidencial sobre as ARIs é mensurada analisando-se o padrão das vacâncias de cargos de direção, taxas de conclusão de mandato, bem, como o processo de aprovação das indicações presidenciais pelo Senado Federal. Por fim, são analisados os dados empíricos relativos ao perfil dos nomeados para cargos de direção nas ARIs no período estudado, incluindo variáveis como filiação partidária e qualificação profissional, buscando-se ainda verificar indícios de existência de trade-off entre estas duas dimensões.

Establishing electoral administration systems in new democracies

The difficulty of holding fair elections continues to be a critical problem in many newly democratized countries. The core of the problem is the electoral administration's lack of political autonomy and capability to regulate fraud. This paper seeks to identify the conditions for establishing an autonomous and capable electoral administration system. An electoral administration system has two main functions: to disclose the nature of elections and to prevent fraud. We argue in this paper that an autonomous and capable electoral administration system exists if the major political players have the incentive to disclose the information on the elections and to secure the ruler's credible commitment to fair elections. We examine this argument through comparative case studies of Korea and the Philippines. Despite similar historical and institutional settings, their election commissions exhibit contrasting features. The difference in the incentive structures of the major political players seems to have caused the divergence in the institutional evolution of the election commissions in the two countries.

Did the German court do Europe a favor? Bruegel Working Paper 2014/09, July 2014

The European Central Bank’s Outright Monetary Transactions (OMT) programme was a politically-pragmatic tool to diffuse the euro-area crisis. But it did not deal with the fundamental incompleteness of the European monetary union. As such, it blurred the boundary between monetary and fiscal policy. The fuzziness of this boundary helped in the short-term but pushed political and economic risks to the future. Unless a credible commitment to enforcing losses on private creditors is instituted, these conundrums will persist. The German Federal Constitutional Court has helped by insisting that such a dialogue be conducted in order to achieve a more durable political and economic solution. A study of the European Union Court of Justice’s Pringle decision (Thomas Pringle v Government of Ireland, Ireland and The Attorney General, Case C-370/12, ECJ, 27 November 2012) suggests that the ECJ will also not rubber-stamp the OMT – and, if it does, the legal victory will not resolve the fundamental dilemmas.

European integration and democratic consolidation: Spain, Poland and Turkey in comparative perspective

The study explored when, under what conditions, and to what extent did European integration, particularly the European Union’s requirement for democratic conditionality, contribute to democratic consolidation in Spain, Poland, and Turkey? On the basis of a four-part definition, the dissertation examined the democratizing impact of European integration process on each of the following four components of consolidation: (i) holding of fair, free and competitive elections, (ii) protection of fundamental rights, including human and minority rights, (iii) high prospects of regime survival and civilian control of the military, and (iv) legitimacy, elite consensus, and stateness. To assess the relative significance of EU’s democratizing leverage, the thesis also examined domestic and non-EU international dynamics of democratic consolidation in the three countries. By employing two qualitative methods (case study and process-tracing), the study focused on three specific time frames: 1977–1986 for Spain, 1994–2004 for Poland, and 1999–present for Turkey. In addition to official documents, newspapers, and secondary sources, face-to-face interviews made with politicians, academics, experts, bureaucrats, and journalists in the three countries were utilized. The thesis generated several conclusions. First of all, the EU’s democratizing impact is not uniform across different components of democratic consolidation. Moreover, the EU’s democratizing leverage in Spain, Poland, and Turkey involved variations over time for three major reasons: (i) the changing nature of EU’s democratic conditionality over time (ii) varying levels of the EU’s credible commitment to the candidate country’s prospect for membership, and (iii) domestic dynamics in the candidate countries. Furthermore, the European integration process favors democratic consolidation but its magnitude is shaped by the candidate country’s prospect for EU membership and domestic factors in the candidate country. Finally, the study involves a major policy implication for the European Union: unless the EU provides a clear prospect for membership, its democratizing leverage will be limited in the candidate countries.

Learning from Incredible Commitments: Evolution and Impact of Bilateral Investment Treaties

Ostensibly, BITs are the ideal international treaty. First, until just recently, they almost uniformly came with explicit dispute resolution mechanisms through which countries could face real costs for violation (Montt 2009). Second, the signing, ratification, and violation of them are easily accessible public knowledge. Thus countries presumably would face reputational costs for violating these agreements. Yet, these compliance devices have not dissuaded states from violating these agreements. Even more interestingly, in recent years, both developed and developing countries have moved towards modifying the investor-friendly provisions of these agreements. These deviations from the expectations of the credible commitment argument raise important questions about the field's assumptions regarding the ability of international treaties with commitment devices to effectively constrain state behavior.

Contraprestaciones por los servicios financieros del Consulado de México y sus miembros: los fondos extraordinarios para la guerra contra Gran Bretaña, 1779-1783

Nueva España aportó la mayor parte de los recursos que sostuvieron a las fuerzas armadas españolas durante la guerra contra Gran Bretaña que se desarrolló en el Caribe entre 1779 y 1783. En el artículo se analizan las medidas a las que recurrieron las autoridades reales para obtener recursos extraordinarios del Consulado y varios mercaderes de la ciudad de México. Asimismo se exponen algunas de las contraprestaciones que negociaron a cambio de dichos servicios financieros y se plantean diversas hipótesis acerca de los motivos económicos, sociales y políticos que los llevaron a colaborar con el monarca, teniendo en cuenta los negocios que realizaban durante el conflicto bélico y la forma en que eran afectados por la reciente apertura comercial.

Central bank balance sheet concerns and credible optimal escape from the Liquidity trap

I show that when a central bank is financially independent from the treasury and has balance sheet concerns, an increase in the size or a change in the composition of the central bank's balance sheet (quantitative easing) can serve as a commitment device in a liquidity trap scenario. In particular, when the short-term interest rate is up against the zero lower bound, an open market operation by the central bank that involves purchases of long-term bonds can help mitigate the deation and a large negative output gap under a discretionary equilibrium. This is because such an open market operation provides an incentive to the central bank to keep interest rates low in future in order to avoid losses in its balance sheet.