The electoral budget cycle on municipal police expenditure

This paper analyzes the effects of electoral cycles on municipal police expenditure. We use a database with information on Spanish municipalities with more than 20,000 inhabitants for the period 2001–2008. Our data show that incumbents increase police spending 1 year before the elections, thus we confirm an electoral budget cycle on police expenditure in Spain. We also find that conservative parties are associated with increased spending on public safety. Population has a positive and significant impact on police expenditures per capita, which indicates diseconomies of scale. The theory on sub-national government spending shows that intergovernmental transfers per capita and taxes per capita are believed to impact local expenditures. Our model fits this assumption, showing a significant and positive influence of both variables on police expenditures. Finally, our model reports a positive impact of both immigration and economic level on police spending.     

Trade liberalisation and endogenous growth: Some evidence for Turkey

This paper examines the impact of trade liberalisation on the long-run economic development as measured by the real GDP per capita in Turkey. Based on the ‘endogenous’ growth theory, we employ bivariate and multivariate cointegration analyses to test the long-run relationship among the relevant variables. Results for Turkey suggest a stable, joint long-run relationship among real GDP per capita, an index of trade liberalisation, human and physical capital in accordance with the ‘endogenous’ growth theory. Statistically significant error-correction terms provide further evidence that those variables are indeed cointegrated. This also implies causal effects.     

Finance-growth-poverty nexus: a re-assessment of the trickle-down hypothesis in China

Poverty has remained one of the prominent challenges of humanity. Different solutions have been suggested to curb poverty. Economic growth and financial development are two such crucial tools for overcoming poverty, as frequently pointed out by economists. These tools work through the so-called trickle-down hypothesis, which contends that a well-functioning financial system would enhance poverty reduction by promoting economic growth. One country that appears to have manifested this hypothesis is China. However, the empirical test of the trickle-down hypothesis for China is scant. In addition, most of the existing studies have failed to account for regime-shift in parameters or structural breaks. This paper attempts to fill this void by testing the trickle-down hypothesis for China during the period 1985–2014. We utilized two standard proxies for financial development, namely: the domestic credit to private sector by banks as percentage of GDP, and money and quasi money as percentage of GDP; annual percentage change in real GDP per capita to proxy economic growth; and a standard proxy for poverty reduction namely: the household final consumption expenditure per capita growth. By accounting for structural breaks in our empirical specifications, we found overwhelming support for the trickle-down hypothesis at the national level. That is, we found financial development to cause economic growth, which in turn causes poverty reduction in China at the national level. This has important policy implications.     

Export diversification and economic performance: evidence from Brazil, China, India and South Africa

In this paper we discuss relationship between export diversity and economic performance, focusing on Brazil, China, India and South Africa (BCIS). Using time data on exports over the period 1962?C2000 and Applied General Equilibrium (AGE) models for each country, we note the similarities as well as differences in the patterns of diversification in these countries. We find evidence of a U-shape relationship between per capita income and export specialization in at least China and South Africa, and given that the results from Granger causality testing are inconclusive and not robust with regards to export diversification measures, some preliminary evidence from the results suggest that export diversification Granger causes GDP per capita in Brazil, China and South Africa, but not in India, where it is rather GDP per capita changes that are driving export diversification. From AGE modeling we find that South Africa differs from the other economies in that it is the only case where export diversification has an unambiguously positive impact on economic development while in contrast in Brazil, China and India, it is rather export specialization that is preferred. We show that the manner in which export diversification is obtained may be important: if it is obtained with less of a reduction in traditional exports, the impacts are better (less negative).     

Economic freedom and economic growth in India: What is the empirical relationship?

The recent moves of the Indian economy towards further opening up of the economy with less government control has brought about changes in its policy structure. The objective of this study is to test the hypothesis that greater economic freedom leads to higher levels of economic growth in a federal system like India where business regulations, taxation, and government spending differ widely across states. Pooled linear regression model is applied to categorical data containing economic freedom and its three components as independent variables, and growth rates of income per capita and gross state domestic product as dependent variable, for a panel of twenty states for three time periods, 2004/2005, 2006/2007 and 2009/2010. While examining this relationship, the variables like initial income per capita, initial literacy rate, sectoral composition, and inflation rate are taken as control. The results tend to establish the fundamental effects of economic freedom in fostering economic growth. Three individual dimensions of economic freedom namely size of government, strong rule of law, and flexible regulations governing credit, labour, and product markets are likely to exert beneficial impacts on income growth. Initial income per capita exerts a positive impact, thus proving the prevalence of regional divergence on this front. High human capital, greater share of the services and inflation exert direct impact on growth.     

Macroeconomic Development and Civil Litigation

This paper contributes to the explanation of the tremendous rise in civil litigation activity in Austria over the last four decades by analysing the influence of macroeconomic conditions on civil litigation. We find that the number of transactions per individual—proxied by the level of real per capita GDP—positively influences the amount of litigation per capita. Inertia in litigious behavior reinforces effects. In the short run, however, we observe a countercyclical pattern of litigious activity. Cointegration analysis confirms the short run negative association, and a long run cointegrating relationship between GDP and civil litigation. Several robustness tests corroborate our results. Rent-seeking interpretations, and possible detrimental effects on the long run growth prospects cannot be excluded.     

Finance growth nexus across Indian states: evidences from panel cointegration and causality tests

The paper deals with finance-growth relationship across Indian states over 1980–2011 in panel cointegration and causality framework. We apply Engle–Granger two-step procedure for cointegration test in panel setting which takes care of cross-sectional dependence and heterogeneity across states. For panel Granger causality analysis, we employ Dumitrescu and Hurlin (Econ Model 29:1450–1460, 2012) method and apply bootstrapping to account for cross-sectional dependence. We find robust evidence of cointegration between per capita income and credit per capita. Using panel FMOLS, we find that 1 % change in credit per capita results in 0.14 % change in per capita income. Panel Granger causality test reveals that there is bi-directional causality (feedback effects) in the absence of cross-sectional dependence. However, with cross-sectional dependence, we find evidence in favour of supply leading hypothesis. Probable policy implication calls for inclusive financial development and growth strategies in order to mitigate uneven income levels across states.     

Total factor productivity and the role of entrepreneurship

The absence of evidence in the scholarly literature for a tested long-term relationship between entrepreneurship and economic growth is at odds with the importance attributed to entrepreneurship in the policy arena. The present paper addresses this absence, introducing entrepreneurship using four different and accepted models explaining the total factor productivity of twenty OECD countries with data for the period 1969–2010. Traditionally, entrepreneurship is not addressed in these models. We show that in all models—as well as a joint one—entrepreneurship has a significant influence while the remaining effects largely stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita).     

International integration and the determinants of regional development in China

Concerns about the duration of China??s growth and hence the question of a permanent significant contribution of China to world economic growth relate, amongst other things, to the problem of reducing regional disparity in China. While China??s high average growth is driven by a small number of rapidly developing provinces, the majority of provinces have experienced a more moderate development. To obtain broad continuos growth it is important to identify the determinants of provincial growth. Therefore, we introduce a stylized model of regional development which is characterized by two pillars: (1) International integration indicated by FDI and/or trade lead to imitation of international technologies, technology spill overs and temporary dynamic scale economies, and (2) domestic factors indicated by human and real capital available through interregional factor mobility. Using panel data analysis and GMM estimates our empirical analysis supports the predictions from our theoretical model of regional development. Positive and significant coefficients for FDI and trade support the importance of international integration and technology imitation. A negative and significant lagged GDP per capita indicates a catching up, non steady state process across China??s provinces. Highly significant human and real capital identifies the importance of these domestic growth restricting factors. However, other potentially important factors like labor or government expenditures are (surprisingly) insignificant or even negative. Extending the model using an unbalanced panel leads to a positive effect of the quality of governance and institutions on development.     

THE RELATIONSHIP OF POLICE AND CRIME

This study develops a model to measure the impact of police expenditure on crime rates across cities. It specifically allows for the two-way relationship between police and crime. Other things being equal, cities with more police per capita should have lower crime rates, if police reduce crime. Simultaneously, the higher the crime rate, the greater the public demand for police. In its final formations, the model contains two identifiable equations with two endogenous variables, police expenditure per capita and the crime rate. Following a discussion of the reliability of crime statistics, the model is estimated by two-stage least squares, using FBI crime data for 119 cities in 1960. These two-stage results are compared with ordinary least-square estimation results and are found to be clearly superior.     

Credible plea bargaining

This paper demonstrates that the role of plea bargaining as a screening device depends neither on the commitment to trial nor on the commitment to some prosecutorial expenditures. In a situation where a prosecutor cannot commit to trial nor spends resources to obtain more evidence, I find a semi-separating equilibrium in which the prosecutor makes an offer that can be accepted only by the guilty defendant with some positive probability, and then, if the offer is rejected, he proceeds to trial, based on his updated belief. I also consider the prosecutor’s decision to choose the amount of (per capita) prosecutorial expenditures both in the commitment case and in the noncommitment case, and argue that an increase in the per capita expenditure may reduce the gross expenditures on prosecution by lowering the chance of trial.     

Analysis of energy consumption and indicators of energy use in Bangladesh

Rapid growth in the demand for commercial energy in Bangladesh poses serious development constraints in recent years. Per capita energy consumption of Bangladesh is one of the lowest in the world (252 kgoe in 2005). This paper undertakes an empirical investigation to find out the trends in energy intensities by comparing the energy consumption per capita and energy consumption per GDP for agriculture, industry, commercial, and transport sectors of Bangladesh and investigate their conditions over the long run. Only 43% of total population has access to electricity facility. Though natural gas provides two-third of the nation’s commercial fossil fuel supply, only 4% households have access to natural gas networks. Biomass fuels are estimated to account for about 73% of the country’s primary energy supply. The daily electricity output totals around 3800 MW against the demand of 6000 MW, leaving a supply crunch of 2200 MW. Natural gas has so far fuelled more than 90% of the power plants of the country. Hydro-electricity contributes only 3% of the total energy supply in Bangladesh. More than 90% of the oil and petroleum products are imported. The country has a substantial potential for coal, most of which has yet to be explored. Overall energy intensity increased approximately twofold from 1980 to 2005. The findings of the study show that change in energy intensity is due to structural effect, while increase in aggregate energy consumption is due to both the activity effect and structural effect. Renewable energy sources will largely mitigate the dire energy crisis in rural areas of Bangladesh. Over 400,000 Solar Home Systems (SHSs) have been installed so far, benefiting over 4 million rural people. More fiscal and other incentives should be included in the recently formulated Renewable Energy Policy to investors for rapid development of clean energy. In addition, regional cooperation should be enhanced specially in case of hydro-power and natural gas. Finally, coal based power plant should be set up as early as possible.     

发挥政府的转移支付职能缩小贫富差距

贫困是世界普遍存在的问题,缩小贫富差距是各国政府都极其重视的问题,充分发挥政府转移支付的职能,是缩小贫富差距的、有效的、基本的方式之一。转型期我国的财力还有限,在这种情况下,如何实现转移支付的效用最大化,调整政府财政支出结构,减少政府投资性支出,降低行政成本,向教育科技文化、公共卫生医疗、社保、农业等领域倾斜是唯一的选择。     

关于加强政府财政支出管理以提升政府生产力的探讨

不断变化的行政环境会对政府提出各种不同的要求,不断发展的社会经济对政府生产力提出更高的要求。即政府能用最少的资源投入生产出尽可能多的公共产品或公共服务以更好地满足公众的需要。本文从财政支出管理角度分析,探讨要达到提升政府生产力的目的,政府在财政支出方面应当尽可能地做出努力。     

The Economic Convergence Performance of Central and Eastern European Countries

A critical discussion of a comparative growth analysis about Central and Eastern European (CEE) countries is performed. The main conclusion is that there was economic convergence for most CEE accession candidates, but not between them and Western Europe. Results do justify a separation into first and second-wave accession countries, but also undermine differences in Central and Eastern Europe between accession and non-accession countries. This paper critically examines theories and empirical studies for three types of convergence, namely β,σ and club convergence. Each can be in absolute terms or conditional to the long-term equilibrium (steady state) for each country. Empirical results are provided for all types of convergence from 1996 to 2000, both with population-weighted and non-weighted data. The analysis is performed for differently framed country subgroups considering even Western Europe for better comparability. Once absolute convergence is found through a unit root test about a standard deviation time series of cross-sectional income per capita, the regression coefficient for initial income per capita with the average growth over the sample period as dependent variable (β convergence) establishes the speed of this process. The same method applies to the conditional version by using the distance of the income from the corresponding steady state instead of the level of GDP. Then Markov chain probability matrixes (club convergence) provide information about the past behaviour of the whole cross-sectional income distribution over time, but also about intra-mobility of single countries.     

Are We Getting Value for Money from Behavioral Interventions for Offenders? A Research Note Reviewing the Economic Evaluation Literature

Public expenditure on the criminal justice system represents a significant fiscal burden to government worldwide, making the economic evaluation of interventions aimed at improving justice outcomes critical to informing resource allocation. This study systematically reviews and assesses the scope and quality of economic evaluations of behavioral interventions aimed at reducing reoffending. Only seventeen studies met the inclusion criteria, with wide variation in methodological approaches, including differences in costing perspectives, study design, and the definition of cost and outcome measures. The majority of behavioral interventions for offenders remain unevaluated from an economic perspective, representing a significant evidence gap for informing cost-effective and efficient allocation decision. Based on the studies reviewed, economic benefit can be derived from investing in offender behavioral programs. However, whether this investment represents ‘value for money’ remains unclear. What is clear is that economic evaluations in the justice health sector lag behind research in other areas of public policy.     

Does higher level of education of the labor force cause growth? Evidence from Bulgaria

This study tries to give new evidence on the relationship between human capital and output per capita in the former centrally-planned economies. Educational attainment of the labor force is used as a proxy for the human capital stock in Bulgaria. The empirical models are based on the extended Cobb–Douglas production function with labor, human capital as well as physical capital. In addition, the reduced form specifications include export and foreign direct investments. The econometric outcome suggests that an increase of the share of people with upper secondary education in the labor force is not related to the rate of long-run growth. Moreover, it is inversely related to the shortrun changes in real output. On the contrary, a positive impact is derived for tertiary education. In general, the study does not fully support the hypothesis that the higher average educational level of the population fosters growth. Export, physical capital and foreign direct investments turn out to be the driving forces of Bulgaria’s growth. A partial correlation analysis implies that the quality of human capital measured by foreign language proficiency could explain the insignificant effect of secondary education.     

Interest groups and state Medicaid drug programs

A simultaneous equations model is estimated to analyze the interaction between state Medicaid pharmaceutical drug reimbursement rates, drug recipients per capita, and expenditures per drug recipient. Interest groups are shown to have a strong positive impact on pharmacy reimbursement rates, which, in turn, have an impact on pharmacy participation rates and drug utilization and expenditure patterns. Finally, a strong inverse relationship exists between expenditures per recipient and program size. The results verify the existence of substantial variation in state Medicaid programs and point to potentially growing disparities as a result of current policies.     

Economic growth and government spending in Malaysia: a re-examination of Wagner and Keynesian views

By making use of annual data from Malaysia for the period 1970 to 2006, this paper examines Wagner’s law and the Keynesian hypothesis concerning the link between real government spending and real GDP. Unlike most existing studies, we utilize both a bivariate and a multivariate model. In addition, we consider two cases: one that focuses on the link between aggregate government spending and GDP and the other where the link between government spending on education and GDP is considered. The use of a multivariate model serves to reduce the problem of serious misspecification which appears to have been ignored by most existing studies. The presence of cointegration is investigated by means of Auto Regressive Distributed Lag (ARDL) approach. This approach also allows one to distinguish between the short and the long-run relationships. Within the context of a bivariate model, our empirical analysis reveals that aggregate government spending Granger causes the real GDP which supports Wagner’s law. However, in a multivariate framework, we found support for the Keynesian hypothesis suggesting that omitted variables bias can significantly alter the validity of Wagner’s law.