Policy Design as an Irreversible Investment Under Uncertainty: Norwegian Agriculture and the WTO

This paper is concerned with the timing of an agricultural policy reform under uncertainty. The focus is on the opportunity cost of giving up the option to wait when implementing a policy reform. Including the option value in applied policy analysis can help explain why conventional analyses may find observed policies to be Pareto-inferior. Furthermore, it explains why otherwise profitable policy reforms may be delayed. The theoretical model is applied to Norwegian agricultural policy anticipating a prospective WTO agreement. It is argued that the option value should be incorporated into applied policy analysis when high uncertainty prevails.Option value, Policy reform, WTO, Norway, Uncertainty, International Relations/Trade, C61, D78,

Politika lokalnog ekonomskog razvoja u Poljskoj: Odrednice i rezultati

The purpose of this article is to define nature, basis, and the effects of the economic development policy conducted by local governments in Poland. The analyses carried out are designed to define the role of local authorities in the management of economic development in the area. Furthermore, the purpose of this article is to analyse instruments for supporting economic development, which can be potentially used by local governments in Poland. The realization of this objective is possible by using descriptive methods based on a review of literature and the various types of documents and analysis on the policy of both the economic development and activities of local government, which implement this policy. The method of system analysis is also partially used in the article, and some results of surveys conducted among Polish and foreign investors and entrepreneurs in 2011 are presented. The article assumes that in spite of having a number of instruments, both formal and material, for encouraging economic development and business development, most local governments narrowly assess the current state of entrepreneurship and development trends, and perform an insufficient analysis of the potential of their area. Secondly, the formulated goals of economic development are not very innovative, ambitious or concrete. Furthermore, they do not arise directly from the analysis of the micro and macro-environment that affects the position and development of local government.Svrha ovog članka je definirati prirodu, temelj i posljedice politike ekonomskog razvoja koju provode jedinice lokalne samouprave u Poljskoj. Provedene analize dizajnirane su za definiranje uloge lokalnih vlasti u upravljanju gospodarskim razvojem u tom području. Nadalje, svrha ovog članka je analizirati instrumente za podupiranje ekonomskog razvoja, a potencijalno ih mogu koristiti jedinice lokalne samouprave u Poljskoj. Ovaj cilj moguće je ostvariti pomoću deskriptivnih metoda temeljenih na pregledu literature i različitih vrsta dokumenata i analizi kako politike gospodarskog razvoja tako i djelovanja lokalne vlasti, koje provode takvu politiku . U radu se djelomično koristi i metoda analize sustava. Prezentirani su i rezultati istraživanja provedenih među poljskim i stranim investitorima i poduzetnicima u 2011. godini. U članku se polazi od pretpostavke da unatoč tome što ima niz i formalnih i materijalnih instrumenata za poticanje gospodarskog razvoja i razvoja poslovanja, većina jedinica lokalne samouprave usko procjenjuje trenutno stanje poduzetništva i razvoj trendova, te provode nedovoljnu analizu potencijala svojeg područja. Drugo, postavljeni ciljevi gospodarskog razvoja nisu inovativni, ambiciozni i konkretni. Nadalje, oni ne nastaju izravno iz analize mikro i makro-okruženja koji utječu na položaj i razvoj lokalne vlasti

Calibrated Stochastic Dynamic Models for Resource Management

In this paper we develop a positive calibrated approach to stochastic dynamic programming. Risk aversion, discount rate, and intertemporal substitution preferences of the decision-maker are calibrated by a procedure that minimizes the mean squared error from data on past decisions. We apply this framework to managing stochastic water supplies from Oroville Reservoir, located in Northern California. The calibrated positive SDP closely reproduces the historical storage and releases from the dam and shows sensitivity of optimal decisions to a decision-maker's risk aversion and intertemporal preferences. The calibrated model has average prediction errors that are substantially lower than those from the model with an expected net present value objective.Resource /Energy Economics and Policy,

Challenges for Monetary Policy in the Enlarged European Monetary Union

The eastward enlargement of the Euro area entails significant implications for the accession candidates in Central and Eastern Europe (CEE), the existing Euro system and the monetary policy of the European Central Bank (ECB). The present analysis assesses the challenges and critical aspects in monetary policy modeling with special emphasis to enlargement. The focus is on the difficulty of implementing a unique currency policy in view or growing heterogeneity within the enlarged monetary union, and secondly the issue of the voting mechanism within the ECB. When analyzing those two issues, it is conclusive that the difficulties for the ECB and the current Euro zone members will increase. For the enlarged Euro zone, which is becoming more divergent, it will be very hard to find adequate recipes to meet the needs and requirements of all. The big question is: whether centralisation of monetary policy is a sustainable and superior solution?European Monetary Union, EU enlargement, Monetary policy, ECB reform

Decentralization with Property Taxation to Improve Incentives: Evidence from Local Governments’ Discrete Choice

Decentralization of government with property tax financing is the standard recipe for public sector reform. Fiscal competition is assumed to stimulate efficiency and hold down the tax level. Property taxation offers additional incentives for efficiency. We study the incentive mechanisms involved using data for decentralized governments and in a setting where they can choose to have property taxation or not. The empirical analysis addresses whether fiscal competition and political control problems influence the choice of having property taxation. The results indicate that both incentive mechanisms are relevant and consequently support the standard advice. Fiscal competition generates a distinct geographic pattern in local taxation and political fragmentation seems to motivate property taxation to control common pool problems. The main methodological challenge handled concerns spatial interaction with discrete choice.property taxation; fiscal competition; political fragmentation; Bayesian analysis; spatial autoregressive model

Separation of Powers and Political Budget Cycles

From a theoretical viewpoint, political budget cycles (PBC) arise in equilibrium when rational voters are imperfectly informed about the incumbent's competency and the incumbent enjoys discretionary power over the budget. This paper focuses on the second condition, examining how executive discretion is affected by the budgetary process under separation of powers. We specifically model PBC in the composition of government spending. The main result is that effective checks and balances in the budgetary process curb PBC. The institutional features of the executive-legislature bargaining game, namely, the actual agenda-setting authority, the status quo location and the degree of legislative oversight and control of the implementation of the budgetary law, play critical roles for the existence and the size of PBC. These results are consistent with recent empirical findings, which show that PBC are more pronounced in developing countries, where there are also less effective checks and balances.Rational political budget cycles; budget composition; separation of powers; checks and balances; budgetary process.

State intervention, local indebtedness, investment overheating and their systemic background during global crisis in China

This paper focuses on the immediate economic and systemic reasons of steadily increasing local government indebtedness and investment overheating in China. These two phenomena emerged between 2008 and 2011 as a direct consequence of an external shock caused by the global crisis and the subsequent internal reaction in the form of intensified stimulating state intervention. New chances for resource distribution and investments through state intervention mobilized distribution priorities and politically rational economic behavior of actors, characteristic to party-state systems. Locations of mobilization were defined by the decentralized Chinese system specifics along the intertwined institutional party-state structure. Systemic characteristics and its Chinese specifics together resulted in investment overheating, and steadily growing local indebtedness through large and state-owned enterprises and local governments. This process was further amplified by the characteristics of transforming economy in China as actors in the private sphere were mobilized by the increased input demand of those privileged by the systemic priorities of state intervention

Strategic Interaction in United States Fishery Management Councils

A two-stage model of interactions within Regional Fishery Management Councils was developed in which management targets were set which may deviate from levels needed to achieve management policy. The first stage modeled bargaining solutions between Council members (harvesters, conservationists, and government) for management targets, and the second stage addressed litigation of those solutions. Results indicate that bargaining power favoring one constituent group could lead to Council outcomes that deviate from management policy. This, in turn, creates incentives for the aggrieved constituent group to litigate. Tradeoffs between benefits and costs of litigation and governmental strategies to address these issues are explored.fishery management, cooperative and non-cooperative games, Resource /Energy Economics and Policy, C71, C72, D73, D78,