Inflation and the savings ratio across countries

Using cross section data, the paper develops and tests the hypothesis that the savings ratio is positively related to the rate of domestic inflation as long as inflation is mild, but negatively related if inflation is excessive. ‘Optimum’ rates for inflation can be derived, but the point estimates in many samples are not significantly different from zero. The model developed tries to capture any distorting effect that foreign capital inflows may have on the inflation‐saving relation, and also tries to distinguish the inflation hypothesis from other traditional hypotheses such as the life‐cycle hypothesis and the Keynesian ‘absolute’ income hypothesis.     

Industrial development in the Brazilian Northeast and the tax credit scheme of article 34/18 1

In this article we consider a twofold problem: (a) the foreign aid cost of changing a stagnant or ‘trapped’ economy to one which is capable of sustaining its own growth, and (b) the accrued benefits of a family planning programme in achieving this. Specifically, we cite the case of an economy trapped in a so‐called low‐level equilibrium and evaluate the change in the amount of foreign aid that is required to achieve self‐sustained growth when the birth rate declines. By use of a simplified model, we conclude that a general 10 per cent reduction in age‐specific birth‐rates may lead to savings of 2 5–50 per cent in discounted aid requirements.     

Political instability and savings in less developed countries: Evidence from Sub‐Saharan Africa

A four‐equation model is used to investigate the effects of political instability (PI) on the savings rate in Sub‐Saharan Africa. Utilising a comprehensive measure of PI, we find that political instability has a deleterious effect on the savings rate both directly and indirectly through a reduction in investment and economic growth. The negative effects of PI on savings rate occurs contemporaneously as well as with a lag. We also find that economic growth has a stabilising effect on the political system and that not accounting for these effects through a simultaneous equations model results in biased coefficient estimates. These relationships are robust with respect to model specification. The implication of our results is that ‘economic factors’ alone cannot explain the development process in Less Developed Countries.     

The impact of the Owen falls hydro‐electric project on the economy of Uganda 1

Inflation induced by an increase in the money supply may be conducive to economic growth, because it can be positively related to the savings ratio. This relationship is, however, limited by a certain rate of money supply which is associated with the maximum overall savings ratio. Treating money as a consumers’ good based upon Levhari‐Patinkin [1968], this study estimates a quadratic‐form savings function using international cross‐section data. It shows that the optimal rates of money supply are 11–12 per cent and 6–8 per cent in underdeveloped and developed countries respectively.     

Savings at the Periphery of Markets: Evidence from Forager-Farmers in the Bolivian Amazon

Abstract

We used survey and ethnographic data to study savings in a highly autarkic society of native Amazonians in Bolivia (Tsimane’). We equated savings with the amount of maize and rice in storage, area planted with plantains and manioc, and number of edible domesticated animals owned by a household or an adult. We found no large inter-annual change in savings possibly due to low income, impulsivity and a bundle of institutions and norms, such as borrowing, theft and reciprocity norms. The bundle attenuates the need for household formal savings at the periphery of markets.     

Foreign capital inflow and the output growth rate of the recipient country: One‐sector models compared

One of the main issues in the controversy about the desirability of the inflow of foreign capital in LDCs refers to the impact which this capital might have on the output growth rate of the recipient countries. In the first part of this paper we analyze the impact of foreign capital on the growth rate in the context of a savings constrained growth model with neo‐classical technology. In the second part, we study the impact of foreign capital on the growth rate under balance‐of‐payments constrained growth. Two main conclusions are: under neoclassical conditions, foreign capital will have a positive impact on the growth rate of domestic income as long as it grows at a rate higher than the product of the domestic saving rate by the profit rate required by foreign capitalists. Under balance‐of‐payments constrained growth, the growth rate of foreign capital needs to be higher than its own profit rate in order to have a positive impact on the growth rate of territorial income, if foreign trade parameters of overseas and domestic firms are identical.     

Dishonest Government: Local Government Reorganisation,England 2006–2010

‘When I use a word’, Humpty-Dumpty said, in a rather scornful tone, ‘it means just what I choose it to mean – neither more nor less.’ (Lewis Carroll, Through the Looking Glass.)

Abstract

The local government reorganisation process introduced by the Labour government in England in the 2006–2010 period is characterised by a range of disturbing characteristics, in particular the misuse of the English language, the disjunctive between rhetoric and reality and a failure to distinguish between what is ‘lawful’ and what is proper. These claims are justified on the basis of an independent assessment of the government's claims regarding the costs and savings associated with a move to unitary authorities, a review of the court cases involved, which all involved serious criticism of the government's approach, and a critical review of the various contradictory statements made by government ministers during the course of the process. The evidence of the way the government handled the process has serious implications for the way in which public administration needs to be reformed.     

Exchange Rate Pass-through to Import Prices,and Monetary Policy in South Africa

Abstract

Understanding how import prices adjust to exchange rates helps anticipate inflation effects and monetary policy responses. This article examines exchange rate pass-through to the monthly import price index in South Africa during 1980–2009. Short-horizon pass-through estimates are calculated using both single equation equilibrium correction models and systems (Johansen) models, controlling for both domestic and foreign costs. Average pass-through is incomplete at about 50 per cent within a year and 30 per cent in six months, and in the long-run, from the Johansen analysis including feedback effects, is about 55 per cent. There is evidence of slower pass-through under inflation targeting; pass-through is found to decline with recent exchange rate volatility and there is evidence for asymmetry, with greater pass-through occurring for small appreciations.     

Contracting out local road and park services: economic effects and their strategic,contractual and competitive conditions

ABSTRACT

The economic rationale for contracting out local services is increasingly contested by empirical research. This article aims to contribute to this literature, first by scrutinising the economic effects of contracting out in local road and park services and, second, by exploring how characteristics such as markets, contracts, municipal strategies and contracting history influence these outcomes. Drawing on original survey data from Danish municipalities, we find that competitive tendering has on average reduced costs. Further analysis shows that savings are not associated with lower quality, thus indicating that ‘quality shading’ was not taking place. Another finding is that municipalities that repeatedly contract the services experience smaller savings, suggesting that competitive tendering is subject to declining marginal returns. Finally, we find that larger municipalities and those emphasising expenditure cuts realise larger savings, whereas the characteristics of markets and contracts do not seem to explain variations in cost savings.     

Automatic cost-of-living adjustments and the structural federal budget deficit

The mounting budget deficit is both economically and politically in supportable Projections of the unified federal budget deficit and the structural unified federal budget deficit and the structural deficit and the structural deficit converge in the next few years, indicating that nearly all of the deficit is the result of policy choices.

Efforts to significantly reduce the deficit must focus on the largest componenet of federal spending, entitlements such as social security, federal retirements, and medicare. Entitlements account for 45 percent of federal spending. About two-thirds of the growth in these programs arises from automatic cost of living adjustments (COLAs). Each one percent COLA increase adds $23 billion to the deficit over the next two decades.

It is debated whether COLA restraint should be included in deficit reduction efforts. Advocatesargue that COLAs are a major cause of deficits , tha trestraint is fair after a decade in which benefits grewfaster than in flation and wages, and that restraint improves the solvency of major programs. COLA restraint also reduces the deficit quickly, spread s the burden of deficit reduction over a very large group, and allows nominal benefits to remain at current levels, or even to grow, albeit more slowly. Opponents of restraint argue that COLAs are a fundamental program feature, that COLAs are needed to maintain beneficiaries purchasing power, and that recipients would experience economic hardship if COLAS were reduced.

Common approaches to restrain COLAs emphasize either short-term budget savings or long-term program reform. Past successful efforts to restrain COLAs have been related to ensuring program solvency or ensuring equal treatment of individuals in different programs.Proposals to slow COLA growth to achieve budgetary savings haven ot been successful.

Three types of COLA options seem viable under current economic and political conditions: A one-year COLA freeze, a cap on the COLA at two-thirds the rate of

inflation, and a cap on the COLA at two percentage points less than the rate of inflation. The one-year COLA freeze reduces the deficit most quickly, but produces less savings in the long-run than the other options.

A major attraction of formula reductions in the COLA is that the concept may be extended to other areas of the federal budget and greatly reduce the federal deficit. A plan to limit growth to two percentage points less than in flation on COLAs, other entitlements,national defense, discretionary domestic programs, and income tax indexing would reduce the deficit by one-half by 1990. An overall budget reduction plan based on CCLA restraint may be the only approach left for policy-makers who have exhausted other approaches to reducing the deficit.     

Exchange Rate Pass-Through in Developing and Emerging Markets: A Survey of Conceptual,Methodological and Policy Issues,and Selected Empirical Findings

Abstract

Global integration has increased the international linkages of financial markets for emerging market countries. A key channel for the international transmission of inflation and economic cycles is from exchange rate movements to domestic prices, known as exchange rate pass-through (ERPT). This article reviews the conceptual, methodological and policy issues connected with ERPT in emerging market and developing countries, and critically surveys selected empirical studies. A key contribution is to categorise and compare the heterogeneous methodologies used to extract ERPT measures in the empirical literature. Single equation models and systems methods are contrasted; frequent misspecifications that produce unreliable ERPT estimates are highlighted. The discerning policy-maker needs to ascertain by which methods ERPT measures were calculated, the controls and restrictions applied, and the time frame and stability of the estimates.     

A Balanced Budget with Side Effects—A Case Study of Implementation of a Hospital Cost Savings Program in Sweden

This study examines the implementation of a hospital cost savings program in a Swedish county hospital to understand how and why a downsizing intervention works and what outcomes it produces. Data were gathered from interviews and documents. Substantial differences were found among the healthcare professionals’ perceptions of the downsizing process. These diverse perceptions likely limited the scope of staffs’ participation and innovations of new savings strategies. Our findings stress the need for impact analyses addressing both intended aims and unintended side effects. Full attention should be paid to communication processes required to establish a trustful and committed change climate.     

Inflation in China: Old Versus New Phillips Curves

Among the few papers that have examined the determinants of inflation dynamics in mainland China, the majority of those that have investigated this matter argue that the traditional Phillips curve does not fit China's data. Some authors, however, conclude that the New Keynesian Phillips Curve does a better job of describing Chinese inflation behaviour in recent decades. This paper conducts an analysis of China's inflation behaviour from the late 1980s onwards by estimating both traditional and new Phillips curves using improved econometric techniques. We find that the New Keynesian Phillips Curve performs poorly in explaining China's inflation behaviour, whereas the traditional ‘old’ Phillips curve does significantly better.     

The Return to Foreign Aid

Abstract

We estimate the average rate of return on investments financed by aid and by domestic resource mobilisation, using aggregate data. Both returns are expected to vary across countries and time. Consequently we develop a correlated random coefficients model to estimate the average returns. Across different estimators and two different data sources for GDP and investment our findings are remarkably robust; the average gross return on ‘aid investments’ is about 20 per cent. This is in accord with micro estimates of the economic rate of return on aid projects and with aggregate estimates of the rate of return on public capital.     

Merging county administrations – cross-national evidence of fiscal and political effects

ABSTRACT

While many central governments amalgamate municipalities, mergers of larger county administrations are rare and hardly explored. In this article, we assess both fiscal and political effects of county mergers in two different institutional settings: counties act autonomously as upper-level local governments (Germany), or counties being decentralised branches of the state government (Austria). We apply difference-in-differences estimations to county merger reforms in each country. In both cases, some counties were amalgamated while others remain untouched. Austrian counties (Bezirke) and German counties (Landkreise) widely differ in terms of autonomy and institutions, but our results are strikingly similar. In both cases, we neither find evidence for cost savings nor for staff reductions. Instead, voter turnout consistently decreases in merged counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh fiscal null benefits of county merger reforms – independent of the underlying institutional setting.     

MAKING WORK INVISIBLE: NEW PUBLIC MANAGEMENT AND OPERATIONAL WORK IN CRITICAL INFRASTRUCTURE SECTORS

Based on a study of reliability consequences of New Public Management (NPM) reforms in Norwegian critical infrastructure sectors, this article suggests that the discourse of work found in NPM renders essential aspects of operational work invisible—including practices that are known to be of importance for reliability. We identify two such organizationally ‘invisible’ characteristics of operational work: the ongoing situational coordination required for keeping a water supply system or an electricity grid running, and the aggregating operational history within which this happens. In the reorganized infrastructure sectors, these crucial aspects of operational work fit poorly in market oriented organizational models and control mechanisms. More generally, our analysis contributes to the understanding of how some types of work fit poorly within the discourse of work found in NPM.     

Crony capitalism in the Palestinian Authority: a deal among friends

Abstract

This article interrogates the multifaceted political–economic networks entrenched within the multiple structures of the West Bank-based Palestinian Authority (PA). The main argument of this article is that crony capitalism is a defining feature of the PA’s relations with a handful of capitalists and business groups. The demonstration of this argument is exhibited through the large-scale public and private monopolistic practices in strategic sectors of the Palestinian economy, which function within the framework of Israel’s settler-colonial reality and the persistent patterns of international aid to the occupied West Bank. While acknowledging the existence of cronyism as a feature of the capitalist system in its diverse typologies, crony capitalism may be more pronounced in situations characterised by political uncertainty, whereby political–business collusion strategizes the expansion of neo-patrimonial networks and rent-seeking opportunities as a meta-mechanism for social control and political stabilisation. In the Occupied Palestinian Territories, crony capitalism was developed as part of the political allegiances and economic alliances that underpin the structures created by the Oslo process, which are fostered by Israeli policies and the international donor community to maintain the cohesiveness of the PA regime.     

Pakistan's industrial families: The extent,causes, and effects of their economic power

There has been much interest lately in the phenomenon of industrial growth in Pakistan and in the leading industrial families who were in the centre of that growth. [G. F. Papanek, 1967; G. F. Papanek, 1971; H. Papanek, 1972]. There have been few efforts, however to measure directly the importance of these families and the causes and effects of their economic power. This article will attempt to provide some of these measures.

Section I estimates the overall concentration in the manufacturing sector in Pakistan and provides a few international comparisons. Section II will provide estimates of the more traditional concentration by industry, along with estimates of the leading families’ roles in those industries. Section III discusses the origins of both kinds of concentration. And Section IV will analyze the consequences ‐economic and non‐economic ‐ of this concentration. The data in this article relate mostly to 1968.¹     

Two-dimensional legislative conflict: unique implications for the effectiveness of local councils

ABSTRACT

Organisational scholars argue there are two distinct types of conflict found in the private-sector workplace. One is referred to as task conflict and the other relational conflict. We use their insights to devise our own measures of conflict on local elected councils. As opposed to ‘task conflict’ we use the term ‘policy conflict’ and keep the same nomenclature ‘relational conflict.’ We will contend it is important to not conflate the two. In this work, we test our unique operationalisations of conflict on an established measure of Governing Board Effectiveness. Because of concerns over using the same survey instrument to measure both explanatory variables and the dependent variable we also test our thesis regarding two-dimensional legislative conflict on entirely exogenous measures of ‘healthy cities.’ We find that higher levels of policy conflict comport with good governance outcomes, while relational conflict provides no measurable benefit.     

Pluralising global governance: Analytical approaches and dimensions

This paper argues that a significant reframing of global poverty is likely to emerge in the next decade as world poverty becomes less about the transfer of aid and more about domestic distribution and thus domestic politics. This proposition is based on a discussion of the shift of much of global poverty towards middle-income countries. There are questions arising related to how countries are classified and to administrative capacities, as well as to domestic political economy, but it is argued that many of the world’s extreme poor already live in countries where the total cost of ending extreme and even moderate poverty is not prohibitively high as a percentage of gdp. By 2020, even on fairly conservative estimates, most of world poverty may be in countries that do have the domestic financial resources to end at least extreme poverty; this could imply a reframing of global poverty.