Rules, Discretion, and Accountability in Macroeconomic Policymaking

Arguments for rules rather than discretion in macroeconomic policymaking facilitate the understanding of some fundamental issues of democratic theory. This article reviews four such arguments, and relates them to issues of delegation and accountability in representative government.     

From Family Feud to Organised Crime: The Cultural Economy of Cannabis in Northeast Brazil

Abstract — Traditional family feuding and banditry as well as envy-inspired violence associated with capitalised irrigation have been intensified by the introduction of cannabis farming and organised crime in the Sertão of Northeast Brazil to the point that today the cannabis producing zone is one of the most violent places in the world. These three interrelated forms of contemporary violence arose, respectively, in the pre-1940 frontier setting, in the 1940 to 1980 period of rapid Brazilian industrialisation which depressed peasant sectors and stimulated the rise of capitalised irrigation and in the post-1980 period of economic stagnation and social-political crisis in Brazil which depressed consumer markets and induced the State to liberalise foreign trade policy to the detriment of periphery regions like the Northeast.     

Budget Deficits in the States: New York

New York faces large projected budget shortfalls. Although the recession has contributed, a large part of the shortfalls are due to long standing structural imbalances. The structural imbalances result from high spending levels, particularly on Medicaid and education, a volatile revenue structure, and political forces that make it difficult to achieve recurring spending reductions. In the most recent budget session, federal stimulus money allowed legislators to avoid the tough decisions needed to move the state toward long-run fiscal balance, and the adoption of increased income tax rates for high earners is likely to increase revenue volatility moving forward.     

State Saving Behavior: Effects of Two Fiscal and Budgetary Institutions

This paper explores how state saving behavior is affected by two fiscal/budgetary institutions—budget stabilization funds (BSF) and balanced budget requirements (BBR). While adopted for different reasons, BSF and BBR could have significant effects on state savings behavior depending on their design features. We empirically examine the effects of BSF and BBR using a panel data set that covers three business cycles, controlling for budgetary institutions, state economy, social services, politics, and business cycles. The paper finds that adopting BSF and BBR can raise savings by 2 and 3 percentage points, respectively; however, the effects depend crucially on the devices' design.