The Impact of State Debt Management on Debt Activity

This article addresses the impact that state debt management has on the debt activity of a state debt program. A quantitative measure of state debt management is developed and used in analysis of state debt activity. The study finds that states with decentralized debt management issue more long-term debt as compared to states with other forms of debt management. The study also investigates the impact other institutional variables have on state debt activity and highlights the interaction effects of these variables with the institutional debt management variable. The study finds that the effects of previously tested variables such as the number of public authorities and constitutional debt limitations on debt activity are altered if the form of debt management is considered.     

Financing German Unity: Fiscal Conflict Resolution in a Complex Federation

Unification posed a new challenge to the Federal Republic ofGermany. Two economically different areas were united into onefederal polity. Due to the constitutional command to safeguardequivalency of living conditions throughout the republic, thefederal government as well as the "old" Länder were supposedto support the "new" Länder of East Germany. Until 1994,provisional regulations served to finance East Germany; in 1995,the new Länder were integrated on an equal footing intothe "financial constitution" of the Basic Law. Unification wasnot used for constitutional reform as had been demanded by someLand leaders. Concerning intergovernmental fiscal relations,one can speak of "budgetary adaptation" only. It was not possibleto resolve long-lasting constitutional issues together withthe challenge of unification. German unification has been, andwill be, very costly. Public debt rose from roughly 900 billionGerman marks in 1989 to more than two trillion in 1995. Theargument about burden sharing between the federation and the"old" Länder continues, and the formulas of fiscal equalizationhave been challenges by Bavaria and Baden-Württemberg.     

How to not speak the ‘F‐word’: Federalism between mirage and imperative in the euro crisis

The recent financial and debt crisis has resuscitated the debate about European federalism – a theme that seemed not to have survived the painful constitutional adventure that ended with the ratification of the Lisbon Treaty in 2009. With the adoption of significant policy and institutional measures for tightening macroeconomic and budgetary coordination (including a constitutionally enshrined debt brake), the reforms of the monetary union have undisputedly brought the European Union further on the path towards an ever closer union. In an era where EU integration has been increasingly politicised, and Euroscepticism has been on the rise and exploited by anti‐system parties, national leaders have to face a political hiatus and respond to increased needs for symbolic and discursive legitimation of further federalisation. This is all the more crucial for French and German leaders who have brokered the main decisions during the crisis of the eurozone. Against this background, the purpose of this article is not to assess whether, or to what extent, the recent reforms of economic and monetary union have made the EU more federal. Rather, the purpose is to tackle the following puzzle: How have EU leaders legitimised the deepening of federal integration in a context where support for more European federalism is at its lowest? To elucidate this, a lexicographic discourse analysis is conducted based on all speeches held by the German Chancellor Merkel and the two French Presidents Sarkozy and Hollande, previous to, or after European summits from early 2010 until the spring of 2013. The findings indicate that federalism is both taboo and pervasive in French and German leaders' discourse. The paradox is barely apparent, though. While the ‘F‐word’ is rarely spoken aloud, two distinctive visions co‐exist in the French and German discourse. The coming of age of a political union through constitutional federalism is pictured as ineluctable, yet as a distant mirage out of reach of today's decision makers. At the same time, the deepening of functional federalism in order to cope with economic interdependence is a ubiquitous imperative that justifies further integration. The persisting gap between the constitutional and the functional vision of European federalism has crucial implications. Insofar as the Union is held responsible for not delivering successful economic policy, political leaders will fail to legitimise both functional and constitutional federalism.     

Chess algorithms of supreme court decision making: A bioconstitutional politics analysis

This paper examines, from a biopolitical perspective, the methodologies by which Supreme Court justices have interpreted the Constitution, assessing their decisional algorithms against models owing an intellectual debt to evolutionary theory. The models themselves are drawn from the chess literature, itself the most viable game theoretic context for living constitutional play. A proper appreciation of chess mastery yields the salient conclusion that a functionalist algorithm of data characterization is optimally adaptive for these purposes, usually proving more robust than competing structuralist and heuristic algorithms in resolving complex constitutional issues.     

The Mechanics of Responsibility in Government

Robert Garran was Premier Reid's legal and constitutional adviser at the Premiers' Conference in Melbourne in 1899. If Alfred Deakin is to be believed, while there Garran performed in classical fashion the duties of the competent administrator. Out of sight in an adjoining room, he and a financial adviser, Mr Coghlan, awaited Premier Reid who would withdraw from the conference room from time to time for consultation with his advisers. Then Reid would return 'freshly primed to reopen the debate' presumably stating the propositions with which he had been recently furnished. In later years his scholarly and incisive work on the Constitution was a source of sound advice to all those concerned to understand the workings of the organic law under which we live. I acknowledge my debt to his work and I am honoured to deliver an oration that bears his name.     

Provincial intervention outcomes in Makana Local Municipality in the Eastern Cape Province

The main aim of this article is to assess Provincial intervention outcomes in Makana Local Municipality, identify factors, which cause unsuccessful Provincial intervention, and lastly, measure the extent to which these factors played a role during intervention in Makana Local Municipality. Provincial interventions have been granted a legal and constitutional status by South African Constitution, Section 100 – 139 and 216. Therefore, Provincial interventions have been used to assist municipalities that are failing to achieve their constitutional mandate as a result of multiple issues, such as, financial instability, corruption, maladministration, poor leadership and management, and political tensions. Interventions by the Province are therefore meant to find long-term solutions to the problems municipalities find themselves in. It is against this background that this article assess the outcomes of the Provincial intervention in Makana Local Municipality. The research utilized a qualitative approach in a form of documentary sources and open-ended interviews with a range of actors in Makana Local Municipality. The study found that Provincial intervention in Makana has resulted to some extent successful outcomes; however, there are still areas needing further improvements in the municipality as evident by the current state of the municipality. The key findings of the study include an increase of 8 million in Revenue Collection, the development of a clear, firm Creditor Payment Procedure, and the recruitment process to start filling up critical positions; further to this, Makana received a qualified audit opinion in 2015; in addition, the municipality is honoring the Creditors' debt repayment plans in accordance. This is the presentation of findings on the outcomes of Provincial intervention in Makana Municipality. The article concludes by providing lessons for both the Province and Local government for effective interventions.     

Testing Ricardian equivalence under uncertainty

This paper uses experimental methods to analyze Ricardian equivalence when the probability of debt retirement is less than one. The results suggest that the presence of outstanding debt and the probability of debt retirement have a strong influence on savings behavior. When the probability of debt retirement is low, consumption by the current generation increases, as predicted by Keynesian theory. However, as the probability of debt retirement increases, bequests rise to offset the future generation's expected repayment liability, and deficit spending becomes much less expansionary, as predicted by Ricardian theory. In general, the average bequest is significantly larger when an outstanding debt is passed on to the next generation than when no debt exists, regardless of the probability of debt retirement. However, as long as there is some uncertainty about debt repayment, the presence of debt always stimulates some additional consumption, so that strong variants of Ricardian equivalence are not found.     

宪法实施视域中司法裁判宪法援引的实证分析

全面推进宪法实施采用广义的宪法实施内涵,有利于将宪法基本原则和宪法规范贯彻落实到国家与社会生活的各个领域。司法裁判中的宪法援引是宪法实施在司法领域的具体实践,因此,对宪法援引的实证研究能够获得宪法实施的直观印象。借助于新兴的大数据技术,检索含有宪法援引内容的裁判文书,对其进行统计学处理和分析,形成关于宪法援引案件的系统性认知。在此基础上,运用宪法学原理对宪法援引进行解析,以主体为宪法援引的区分标准,将其分解为当事人宪法援引与法院宪法援引两种不同类型,便于深入考察司法实践中宪法援引的具体方式和实际效果,进一步印证宪法援引在推进宪法全面实施过程中所具有的实践价值。     

Do Debt Policies Make a Difference in Finance Officers' Perceptions of the Importance of Debt Management Factors?

This article explores the importance of various debt policy factors using a national survey of government finance officers. Further, it examines whether the presence of a particular factor in a debt policy influences finance officers' perception of its importance. We find that debt policies tend to be technical in nature and that broad policy issues are most often not included in debt policies. Moreover, we find that the inclusion of debt management factors in debt policies has a powerful influence on their perceived importance by public managers.     

Debt administration in Small Island‐States

Public debt management is an infrequent focus of public administration studies. Yet without appropriate debt management, administrators have few financial resources for public service provision. Island‐state administrators face an enhanced service provision challenge. The peculiarity of island‐state economies, the unpredictability of exogenous events and the state's endogenous choices increase debt administration's importance. Via its focus on debt management office location and the administrative constraints posed by brain drain, transparency and regionalization, this paper goes beyond typical debt management studies to engage debt administration spaces. The result is a framework for studies of debt administration in Small Island‐States.     

Constitutional political economy in the European Union

This article surveys recent research in constitutional political economy in Europe. Although not all of the works discussed necessarily focus only on European constitutional issues or are written by Europeans, European constitutional issues figure importantly in each area surveyed. The article examines the literatures linking constitutional institutions to economic growth, government size, government deficits and corruption, bicameralism, direct democracy and federalism. Three exclusively European topics also are covered: constitutional issues in the transition countries, the structure of the European Union and the draft constitution for the European Union.     

THE FINANCIAL MANAGEMENT STRATEGY OF THE VICTORIAN COALITION GOVERNMENT

Abstract: This article reviews the budget sector financial management strategy of the Victorian Coalition government in the crucial period from its election in October 1992 up to the 1993–94 budget. The twin goals set by the Coalition were the elimination of the current account deficit, and the reduction of debt levels. Given infrastructure pressures, the debt reduction goal will be a difficult one to achieve. More precisely, it will be a difficult one to achieve without relying upon instruments such as assets sales, which the Coalition has viewed as artificial debt reduction techniques. The capital expenditure plans embodied in the 1993–94 state budget were not consistent with the debt reduction plans specified only months earlier by the Coalition. Victoria's debt levels are quite moderate even by OECD standards. What makes debt levels a real issue for the state is the narrowness of the tax bases of the Australian states, and the fact that Victoria is taxing at something like its maximum levels (at least, without coordinated multi-state tax increases). It is argued that, if the states could be confident that their revenue positions would hold firm (concretely, that revenue and grants as a proportion of GSP would remain constant), the appropriate debt policy goal for Victoria would be stabilisation — rather than reduction — of its debt/GSP ratio. However, the foreshadowed trend reduction of real commonwealth grants, as part of the so-called national savings campaign, makes it appropriate for Victoria — given the circumstances in which it finds itself — to target the reduction of debt/GSP levels.     

The effect of monetary unification on public debt and its real return

We explore the implications of monetary unification for real interest rates and (relative) public debt levels. The adoption of a common monetary policy renders the risk-return characteristics of the participating countries’ public debt more similar. The implied reduction in the scope for risk diversification raises the average expected real return on the debt. Also, the share of the union-wide debt issued by relatively myopic governments or of countries that initially have a relatively dependent central bank increases after unification. This may put the political sustainability of the union under pressure. A transfer scheme that penalizes debt increases beyond the union average is able to undo the interest rate effect of unification, but magnifies the spread in relative debt levels.     

Debt and the Local Economy: Problems in Benchmarking Local Government Debt Affordability

Debt creation imposes an obligation to repay borrowed funds from a wealth base that for most local governments is capitalized in property values. Therefore, the ability to afford debt is tied to the local economy, a factor often overlooked by localities in the analyses of their own position. However, debt levels are also relative, as the many debt affordability studies among governments and by bond rating agencies suggest. We argue here that economic concentration and interjurisdictional coordination fundamentally provide a broader analytical approach to the question a locality asks: can we afford more debt?     

Debt Diligence: How States Manage the Borrowing Function

State-level indebtedness is large and persistent and bond issuance has become increasingly complex. In light of these conditions, professional standards have been proposed by some organizations (including the Government Finance Officers Association) seeking to persuade members to codify sets of desirable practices into policies for debt issuance. We surveyed state government debt managers to assess the comprehensiveness and prevalence of debt policies. We find little evidence of the adoption of comprehensive formal debt policies. Instead, states rely more heavily upon the guidance provided by their own sets of standard practices or "rules of thumb."     

The Impact of Fiscal Illusion on Housing Values: An Australian Test of the Debt Illusion Hypothesis

The debt illusion hypothesis holds that taxpayers may underestimate the present discounted value of future tax liabilities under debt finance. The empirical question arises as to whether debt illusion at the local government level can affect housing values. This proposition is evaluated by investigating whether local fiscal variables are fully capitalized into housing values by means of a pooled time-series, cross-sectional analysis of twenty-seven metropolitan municipalities in Sydney, Australia, for the period 1989 to 1991. The results indicate that municipal debt is under-capitalized into housing values and, accordingly, suggests that local government expenditure may be systematically biased upwards.     

A call for budget reform

This article calls for reform of the U.S. Federal budget from two perspectives, preparation and content. The first aspect of reform proposes to amend the Budget and Accounting Act of 1921 by eliminating the requirement for an executive budget. It proposes replacing the executive budget submission with a budget prepared by a joint executive-legislative council. While the decision-making process for approval of the budget would remain the same, the council-proposed budget would eliminate several time consuming issues of disagreement such as whose economic estimates are used. The second aspect of reform proposes an examination of the contents of the budget. The current budget focuses on agency appropriations and the debt/surplus figure. Many more issues such as unfunded pension liabilities, true costs of credit, value of government-owned assets and the number of appropriations are largely neglected. This aspect of the budget should be examined by a non-partisan group of experts to make recommendations for an improvement in the informational content of the budget. Improved information could help support sound decisionmaking. The article contends that we can preserve the constitutional separation of powers dealing with the budget while we simply improve the methods used to prepare the document itself, and once the document is prepared it would be structured so it can be examined in a meaningful manner by interested citizens in order to ascertain the financial conditions of the country.     

Fiscal Consolidation and Australia's Public Debt

Australia has experienced one of the fastest growing public debt levels in the world post‐Global Financial Crisis due to a series of large federal budget deficits driven by high government spending. In this paper we examine the balance sheet implications of this escalating public debt, before proposing some macro‐fiscal objectives for determining its sustainable level. These objectives are to (i) restore the federal government's solvency; (ii) eliminate foreign public debt; and (iii) achieve budgetary balance over the business cycle. Empirically, we first examine how much fiscal consolidation is required for debt stabilisation at current levels, before considering what sized budget balances are needed to achieve the target debt to GDP ratios consistent with the proposed objectives. The results show that no target debt to GDP level consistent with the optimal levels will be met on current fiscal settings in the medium term. This implies significantly greater fiscal consolidation is required to minimise future fiscal risk.     

State Debt Limits: How Many Are Enough?

There is a growing concern among state policy makers that unrestrained debt may exceed politically acceptable or financially sustainable levels of debt. Many states have established limits to restrict debt, but many of these limits are circumvented through issuing more complex and specialized bonds. In this article, we focus on the use of debt limits as an instrument to manage a state's debt in context of two key questions: (1) under what circumstances should a state consider multiple debt limits and (2) if multiple limits are established, what factors should be considered in setting such multiple limits. In addressing these issues, we consider the theoretical and conceptual issues associated with setting debt limits, we highlight current state debt limit policies, and discuss factors that appear to be influencing decisions to establish and set multiple limits.     

Blood,Baath and Beyond: the Constitutional Dilemma of Iraq

The constitutional choicefacing Iraq is addressed by drawing uponinsights from public choice theory andconstitutional economics. Whether the oneor the other constitutional framework isadopted may potentially have importantlong-term consequences for the country andthe region. The U.S. administration'sdecision to revise its initial strategy, soas now to proceed with elections beforeputting a constitutional framework in placeseems to get things wrong and ispotentially a recipe for long-termdisaster.