The Economic and Social Review, Vol. 33, No. 3, Winter, 2002
http://hdl.handle.net/2262/62010
2018-05-26T06:30:08ZFiscal rules, fiscal institutions, and fiscal performance
http://hdl.handle.net/2262/61832
Fiscal rules, fiscal institutions, and fiscal performance
Von Hagen, Jurgen
Public spending is a story of some people spending other people?s money. In modern democracies, voters elect politicians to make decisions about public spending for them, and they provide the funds by paying taxes. Two aspects of this story are worrying and have received considerable academic interest in recent years. The first is that public spending involves delegation, and, hence, principal-agent relationships. Elected politicians can extract rents from being in office, i.e., use some of the funds entrusted to them to pursue their own interests, be it outright in corruption, for perks, or simply waste. Voters might wish to eliminate the opportunity to extract rents by subjecting
politicians to rules stipulating what they can and must do under given conditions. But the need to react to unforeseen developments and the complexity of the situation makes the writing of such contracts impossible. For the same reasons, politicians cannot realistically commit fully to promises made during election campaigns. Hence, like principal-agent relations in many other settings, the voter-politician relationship resembles an ?incomplete contract? (Seabright, 1996; Persson et al., 1997a, b; Tabellini, 2000).
This paper was delivered as the inaugural F. Y. Edgeworth Lecture at the Sixteenth Annual
Conference of the Irish Economic Association
2002-01-01T00:00:00ZSums and products of indirect utility functions
http://hdl.handle.net/2262/61149
Sums and products of indirect utility functions
Conniffe, Denis
There are relatively few known demand systems that are theoretically satisfactory and practically implementable. This paper considers the possibility of deriving more complex demand systems from simpler known ones by considering sums and products of the component indirect utility functions, an approach that does not seem to have been exploited previously in the literature. While not all sums and products of valid utility functions need yield new valid utility functions, it is possible to usefully extend the range of available utility functions. Some of the demand systems that result are interesting and potentially useful: the simpler (in a parameter parsimony sense) for applied general equilibrium studies and for theoretical explication, while more complex systems have potential for the analysis of real world consumption data.
Paper presented at the Sixteenth Annual Conference of the Irish Economic Association
2002-01-01T00:00:00ZThe effect of current income on aggregate consumption
http://hdl.handle.net/2262/60161
The effect of current income on aggregate consumption
Chakrabarty, Manisha; Schmalenbach, Anke
Using the statistical distributional approach of aggregation by Hildenbrand and Kneip (1999, 2002), this paper attempts to find out to what extent current labour income can explain the relative change in aggregate consumption expenditure. The coefficients of the changes in the income distribution are estimated as an average derivative of the cross-section Engel curve. We use the UK-FES [1974-1993] to estimate these coefficients separately for each year by a nonparametric estimation procedure. It is found that the change in current labour income plays a significant role for the commodity groups services and total nondurable, thereby contradicting the implications of the traditional life-cycle/permanent income hypothesis. For services the inclusion of dispersion in addition to the mean of the income mdistribution improves the goodness-of-fit of the model.
Paper presented at the Sixteenth Annual Conference of the Irish Economic Association
2002-01-01T00:00:00ZAre capital markets efficient? evidence from the term structure of interest rates in Europe
http://hdl.handle.net/2262/60052
Are capital markets efficient? evidence from the term structure of interest rates in Europe
Hughes Hallett, Andrew; Richter, Christian R.
This paper investigates the uncovered interest parity hypothesis in an unusual way. We provide empirical evidence on the efficiency of capital markets using a time domain approach. However, a common prediction from theoretical models is that inefficient capital markets cause greater volatility of the observed time series. By using cross spectral analysis we are able to test this proposition directly. We show, in particular, how this can be done for time-varying models and time-varying spectra. We use our techniques to examine the changing stability of the relationship between British and German interest rates during and following the ERM crisis of 1992/3.
Paper presented at the Sixteenth Annual Conference of the Irish Economic Association
2002-01-01T00:00:00Z