Journal of Government and Economics最新文献

A Hobbesian society is modeled to study how the market emerges from violence. From a Cournot military contest for wealth, primitive markets emerge when Rousseau's Garden of Eden or an arms race is the equilibrium rather than war. Politically-dominated (e.g., socialist) or Smithian markets with a government results from war or an arms race. The study reveals the roads to diverse political-market systems (e.g., the market economy), explains the integrated political and economic nature of the market, and demonstrates the value of viewing violence as an industry. It enlightens issues such as the classic Hobbesian-Rousseau debate, the causes of wealth, and the Coasian bargain.

The choice of instruments for mitigating economic volatility is a serious consideration for policymakers and important question in government and economics. Using a DSGE model with endogenous technology creation, we show that efficient financial markets are more effective than conventional economic policies, such as fiscal interventions, in reducing economic volatility. Our findings are consistent with data from the Chinese and the US economies who contrast in structure perfectly for the purpose of our comparison. The implication is that rather than focusing on conventional economic policies, a government should help establish efficient financial markets to allow producers a hedge into equity finance during times of financial stress.

This paper introduces a dataset that gathers information on whether and how Latin America and the Caribbean (LAC) have complied with or deviated from implemented fiscal rules. It provides annual data on fiscal rules for 14 LAC countries from 2000 to 2020, and it considers the design features of the rules and information about numerical compliance. It provides descriptive statistics reflecting the panorama of the fiscal rules implemented in LAC countries. Additionally, it calculates compliance rates across countries, years, and rules. On average, this study finds that compliance with rules aiming to constrain debt ratios and structural balances is the highest, while compliance with fiscal balance and expenditure rules is the lowest. Furthermore, the data collection process revealed that LAC countries still have room for discretion even when they subject their fiscal policy to rules. To address this problem, the paper proposes an adjusted compliance index that considers different elements that add degrees of discretion to the rule. The study finds that the numerical compliance rates of each country are likely to be over-estimated once discretionary actions are accounted for.

Why different national governments have different policies regarding globalization? This is an important research topic of government and economics. In the paper, I analyze how different income groups have different attitudes towards globalization; and how such attitudes shape government policy. A standard example is that more openness in trade benefits the owners of a country's abundant factor, while reducing the income of the owners of the scarce factor. Welfare-state policy depends on which income group is politically dominant. The paper adopts the framework of a small open economy trading in goods and financial securities with the rest of the world, to provide a general-equilibrium analysis of income-based globalization attitudes for national welfare-state government policies. The analysis shows that different income groups have varied attitudes towards globalization, depending on trade-related and macro-related fundamentals. They are: (i) the degree of trade border frictions, (ii) the degree of international finance frictions, (iii) the relative factor abundance that determines the capital intensity of the country's exports; and, (iv) the domestic saving propensity on one hand, and the productivity of domestic investment, on the other hand-determining whether the country is a financial capital exporter or importer.

Corruption is an important topic for governments and economics. A widely held belief is that exposure to international trade helps reducing corruption. In this article we show through theory and evidence that the relationship between trade and corruption is more nuanced. We show that firm level corruption actually increases when exports experience booms or busts. The reason is that export booms result in stronger incentives to favor production rather than corruption in low export settings, and vice versa in high export settings. Consequently, export busts when exports are very low, and export booms when exports are high, lead both to higher corruption. We corroborate these findings with an extensive database of some 45,000 firms from 72 developing and transition economies, surveyed over 2006–2017. We also confirm the corruption-deterrent effect of institutional quality.

This paper explores whether the establishment of data markets based on individual data portability can result in better societal outcomes. The results suggest that markets where individuals can sell data generated through their online engagement to third parties, could result in pareto improving outcomes for subscribers to digital platforms and purchasers of targeted advertising services. Data markets would enable third parties to combine their own proprietary data with other individual level data and produce information for targeted advertising, reducing the market power of Big Tech firms. However, successful data markets require strong regulatory measures by governments that ensure privacy and that data collected by Big Tech firms are considered the property of individuals. Such policies have the potential to guarantee that the benefits of Big Data are not confined to a few large firms.

This paper explores the dynamic relationship among defense and non-defense government spending, the government debt, and the output gap in the United States. We estimate structural vector auto-regression (SVAR) models for the full sample (1947:Q1 to 2021:Q1), as well as two sub-samples: (1947:Q1-1980:Q1), during which debt-to-GDP ratio was falling, and (1981:Q1- 2021:Q1), during which the debt-to-GDP ratio was rising. The impulse responses (IRF) and forecast error variance decomposition (FEVD) are computed to analyze the dynamics objectively and systematically. The impulse responses for the full sample and the second sub-sample indicate that non-defense spending responds to a shock to the output gap in a counter-cyclical fashion. Moreover, we find significant evidence of the impact of debt-to-GDP ratio on both defense and non-defense spending. A shock to a debt-to-GDP ratio causes non-defense spending to rise on impact and fall over the forecast horizon in all three time intervals. Defense spending, however, responds differently to this shock. While it is not significantly impacted in the full sample, it decreases in the first sub-sample and increases in the second sub-sample. The results from variance decomposition also show that a shock to debt-to-GDP ratio can explain most of variations in non-defense spending and part of the variations in defense spending. These results confirm that debt to GDP ratio is an important determinant of both defense and non-defense spending especially in the most recent years, as both categories tend to decline in response to a shock to debt to GDP ratio. This reinforces the idea that policy makers should focus mostly on reducing debt and therefore reducing interest payments associated with debt accumulation to have greater flexibility in spending on different categories.

Soft budget constraint refers to the phenomenon that money losing inefficient projects keep on getting subsidies and operating. It was first phrased and analyzed by the late Hungarian economist Janos Kornai when he studied former socialist economies and by now, economists generally have agreed that soft budget constraint also exists extensively in market economies. As an important area of research in government and economics, existing explanations of soft budget have focused on the government's lack of commitment to terminate inefficient investment projects. In this paper, we propose a new theory in which soft budget constraint is an optimal governmental mechanism to induce greater effort in project selection. The idea is that if a manager (banker) selects a bad project, he has to keep on subsidizing it and lose more. Anticipating this, soft budget constraint makes the manager work hard to avoid choosing bad projects. Our theory sheds light on research in government and economics from the perspective of mechanism design.