Using Fuzzy Rule–Based Systems to Evaluate Overall Financial Performance of Governments: An Enhancement to the Bond Rating Process

Credit ratings remain a key feature of municipal debt management. The primary objective of this article is to develop a new methodology for evaluating the financial performance and creditworthiness of governments and to illustrate this approach for a sample of large American cities. Specifically, we develop a fuzzy rule–based system (FRBS) that uses economic, debt, and other financial information as well as a measure of financial management to produce rankings of city financial performance. The FRBS credit ratings are highly correlated with actual Moody's ratings for these cities. FRBS have the potential of enhancing the rating process by standardizing the information used and encouraging consistent rules about what combinations of inputs result in good, fair, or poor performance.     

Constraints on the turnout gap between high and low knowledge (or income) voters: Combining the Duncan-Davis method of bounds with the Taagepera method of bounds

Countries differ quite substantially in mean turnout levels, and it is equally well known that there may be substantial within-country variation as well, for example, between high income and low-income groupings or between high political knowledge and low political knowledge groupings. It has been hypothesized that the size of such between-group gaps will fall as turnout rises, and conversely (Franklin, 2004. Blais, 2000). However, as Franklin (2004) also noted, there are mathematical constraints on the size of the turnout gap that are related to the level of turnout. For example, in the limit, if turnout is 100%, then all groups must have identical turnout. Here we build on this insight by adapting the classic work on boundary conditions done by two sociologists (Duncan and Davis, 1953) to show precisely what the boundary constraints look like over the entire range of turnout values. Then we show how these constraints can help make sense of the strong relationship found between overall turnout and the size of the gap between voters above and below the median in political knowledge in the Fisher et al. (2008) cross-national study. To do so we draw on ideas in Rein (Taagepera, 2007) and (Taagepera, 2008) about how to use boundary condition information to develop better theoretical models.     

Extending the Confusion About Bayes

In R v T [2010] EWCA Crim 2439, [2011] 1 Cr App Rep 85, the Court of Appeal indicated that ‘mathematical formulae’, such as likelihood ratios, should not be used by forensic scientists to analyse data where firm statistical evidence did not exist. Unfortunately, when considering the forensic scientist's evidence, the judgment consistently commits a basic logical error, the ‘transposition of the conditional’ which indicates that the Bayesian argument has not been understood and extends the confusion surrounding it. The judgment also fails to distinguish between the validity of the relationships in a formula and the precision of the data. We explain why the Bayesian method is the correct logical method for analysing forensic scientific evidence, how it works and why ‘mathematical formulae’ can be useful even where firm statistical data is lacking.     

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.     

Emerging Indicators and Bureaucracy: From the Iron Cage to the Metric Cage

ABSTRACT

Among the New Public Management (NPM) tools that have been implemented, one of the most common is use of indicators. Many studies have argued that imposition of an indicator entails a bureaucratization process. But the scholarly debate on these instruments has been shaped by a vertical perspective and has been focused on the effects of top-down indicators on organizations at the local level. In this paper, we wish to lay the emphasis on an emerging indicator, constructed and used by the actors themselves within a local forest management unit. We wish to draw attention to the manner in which, at the micro-level, a performance measure is worked out. We argue that these emerging indicators place a new locus of power in the hands of rangers but, rather than emphasizing hierarchy and chain of command, such indicators do not contribute to development of a Weberian iron cage. In contrast, there appears a metric cage, a mix of pragmatic rationality (instrumental and communicative), non-fixed rules, and technical-normative authority.