The EMU Consolidation Game - or: Does 3.0 Really Mean 3.0?

Within the economic profession, it is a widely held view that the fiscal criteria of the Maastricht treaty are arbitrary numbers without economic foundation. Much of this criticism seems to overlook an important aspect - the strategic dimension of the criteria. This paper focuses on one particular question out of this broad strategic complex: How do the criteria change the fiscal bargaining situation on the national level? For this purpose, a bargaining game between a national finance minister and an interest group over budget consolidation is designed. The purpose of this paper is twofold : On the one hand the analysis should contribute to a better understanding of the strategic effects of the fiscal criteria in the pre-EMU period. On the other hand it is to provide insights helpful for the construction of credible and strategically consistent debt limits in the time after the introduction of the Euro. --European Monetary Union,Convergence Criteria,Budget Consolidation,Boundary,Signalling,Conditionality

Towards Inflation Targeting in Egypt: Fiscal and institutional reforms to support disinflation efforts

This paper reviews the prerequisites of inflation targeting, analyses the extent to which they are met in Egypt and examines whether the Egyptian economy, under its current status, is ready to formally adopt an inflation targeting regime. It discusses why developing strong fiscal, financial and monetary institutions is so critical to the success of inflation targeting and explains how, even if the prerequisites are not stringently fulfilled in the beginning of its adoption, the move towards them is believed to contribute to the macroeconomic stability of the country. More particularly, the focus is being put on fiscal balance, the financial sector and central bank independence. Since we believe that the latter is the most important condition in the inflation targeting implementation process, the paper discusses the CBE's independence and underlines the importance of issues related to transparency, credibility, technical capabilities and accountability. Finally, the paper draws some conclusions and formulates some policy recommendations on the adjustments the country should put in place in order to ensure a successful transition towards an inflation targeting regime. Keywords: Egypt, Inflation targetting, Financial reformsEgypt, Inflation targetting, Financial reforms

Too Many Probabilities: Statistical Evidence of Tort Causation

Medical scientific testimony is often expressed in terms of two different probabilities: 1. The increased probability of harm if a person is exposed, for example, to a toxin. 2. The observed relationship is an artifact of the experimental method. This article demonstrates that neither probability, taken alone or together, measures whether the preponderance of the evidence test is met

Factors Influencing Voting Results of Local Transportation Funding Initiatives with a Substantial Transit Component: Case Studies of Ballot Measures in Eleven Communities, MTI Report 01-17

This publication is a follow-up study to MTI publication 00-01, Why Campaigns for Local Transportation Funding Initiatives Succeed or Fail: An Analysis of Four Communities and National Data. The earlier publication was case studies of four local ballot tax measures for transportation packages. The current study, Factors Influencing Voting Results of Local Transportation Funding Initiatives with a Substantial Rail Transit Component: Case Studies of Ballot Measures in Eleven communities, uses the same case study methodology as the prior study, and is expanded to 11 communities from the past four years. Some of the important conclusions identified by the study are as follows: 1) The combination of an energetic and credible opposition and a questionable reputation of the transit agency or transit system make it extremely difficult for a ballot measure to be successful; 2) When a community has no prior rail transit system, a comprehensive rail-only package is unlikely to be successful; 3)Without $1 million or more to spend on a combination of direct mail and television advertising it is difficult for proponents to be successful; 4) Developing a consensus transportation package depends on the specific details of the package and it is very difficult to generalize about the needed details; and 5) Under certain circumstances, voters do not appear to place significant importance on the existence or length of the expiration date of the tax used to fund the transportation package

The economic consequences of a hung parliament : lessons from February 1974

The British general election on 10 May 2010 delivered Britain’s first hung Parliament since February 1974, and in the run-up, the Conservative Party made much of the economic difficulties Britain faced in the second half of the 1970s in order to try and convince voters that anything other than a Tory vote would risk exposing the nation to the discipline of financial markets. The question of how well equipped an exceptional kind of British government is to deal with exceptional economic circumstances is therefore of paramount importance. This paper argues that the Conservative Party made too much of the impact of the 1974 hung Parliament in precipitating subsequent economic crisis and suggests that as such, there is no reason to assume that the Conservative-Liberal coalition government is ill-equipped to manage British economic affairs in difficult circumstances

Tenuous Financial Stability

Many countries fix their exchange rate in order to bring financial stability. Usually, inflation declines and output expands but contractual agreements retain their short time frame, investment is sluggish, and economic growth slows down a few years later. This outcome is often attributed to persistent doubts on the part of agents in the commitment and ability of the government to maintain the peg. Yet direct evidence for credibility is difficult to obtain. Unique survey data from Bulgaria reveal that expectations of devaluation were indeed very much present three, four, and five years after that country achieved financial stability under a currency board regime.http://deepblue.lib.umich.edu/bitstream/2027.42/39925/3/wp540.pd

Too Many Probabilities: Statistical Evidence of Tort Causation

Medical scientific testimony is often expressed in terms of two different probabilities: 1. The increased probability of harm if a person is exposed, for example, to a toxin. 2. The observed relationship is an artifact of the experimental method. This article demonstrates that neither probability, taken alone or together, measures whether the preponderance of the evidence test is met

Inflationary rigidities and stabilization policies

Latin American countries provide the best living laboratory to study inflationary processes and stabilization programs. The purpose of this paper is to analyze the experience with orthodox stabilization policies, which are based on a tight fiscal stance and not supported by a system of price controls. The analysis of these policies is structured as follows. Part I analyzes in detail the question of why purely orthodox policies were especially effective in stopping hyperinflation as opposed to chronic inflation processes. Part II turns to chronic inflation countries and analyzes three basic types of stabilization. The first type is based almost exclusively on fiscal adjustment. The second considers programs which employ nominal anchors in conjunction with fiscal adjustments. The third type examines the exchange rate based stabilizations which often evolve out of a monetary-fiscal package. In the final part of the paper, the authors consider the long run view which extends beyond specific programs and emphasizes the importance of persistence in fiscal discipline and in adherence to nominal anchors.Environmental Economics&Policies,Inflation,Banks&Banking Reform,Economic Stabilization,Economic Theory&Research