Public investment, the Stability Pact and the ‘golden rule’

The fiscal rules set in the Treaty of Maastricht and in the Stability and Growth Pact have sometimes been criticised as an excessively binding constraint for appropriate counter-cyclical action. The risk that the rules may permanently reduce the public sector’s contribution to capital accumulation has also been pointed out. In this framework, the adoption of a ‘golden rule’ has been suggested. Starting from the recent debate, this paper tackles two questions: (a) the implications of the Pact for public investment and (b) the pros and cons of introducing a golden rule in EMU’s fiscal framework, given the objectives of low public debts and adequate margins for a stabilising budgetary policy. The analysis suggests that the rules set in the Treaty and in the Pact may negatively influence public investment spending. However, the golden rule, although intuitively appealing, does not seem to be an appropriate solution to the problem.

CHORUS Deliverable 2.2: Second report - identification of multi-disciplinary key issues for gap analysis toward EU multimedia search engines roadmap

After addressing the state-of-the-art during the first year of Chorus and establishing the existing landscape in multimedia search engines, we have identified and analyzed gaps within European research effort during our second year. In this period we focused on three directions, notably technological issues, user-centred issues and use-cases and socio- economic and legal aspects. These were assessed by two central studies: firstly, a concerted vision of functional breakdown of generic multimedia search engine, and secondly, a representative use-cases descriptions with the related discussion on requirement for technological challenges. Both studies have been carried out in cooperation and consultation with the community at large through EC concertation meetings (multimedia search engines cluster), several meetings with our Think-Tank, presentations in international conferences, and surveys addressed to EU projects coordinators as well as National initiatives coordinators. Based on the obtained feedback we identified two types of gaps, namely core technological gaps that involve research challenges, and “enablers”, which are not necessarily technical research challenges, but have impact on innovation progress. New socio-economic trends are presented as well as emerging legal challenges

Scotland: A New Fiscal Settlement

Tax and Expenditure Devolution, Inter-Government Relations, Fiscal Federalism, State Budget, Fiscal Coordination.

Serbia - public sector accounting review : report on the enhancement of public sector financial reporting

The government’s public financial management (PFM) Reform Program 2016-2020 foresees the gradual transition of public sector financial reporting from a cash basis to an accrual basis of accounting and the application of International Public Sector Accounting Standards (IPSAS). This will significantly improve the quality of financial information and should enable better informed decision-making, more efficient use of public funds and resources and improved fiscal performance. This Report on the Enhancement of Public Sector Financial Reporting is one output of the Serbia Public Sector Accounting Reform Technical Assistance project funded by the Swiss State Secretariat for Economic Affairs (SECO) through the Strengthening Accountability and Fiduciary Environment (SAFE) Trust Fund under the Public Sector Accounting and Reporting Program (PULSAR) which provides support for the development and implementation of public sector accounting standards. This report supports the development of a plan towards that goal by assessing the institutional framework for public sector accounting as well as the gap between Serbian public sector generally accepted accounting principles (PS GAAP) and IPSAS

Increasing public expenditures: Wagner's Law in OECD countries

The paper proposes a panel cointegration analysis of the joint development of government expenditures and economic growth in 23 OECD countries. The empirical evidence provides indication of a structural positive correlation between public spending and per-capita GDP which is consistent with the so-called Wagner´s law. A long-run elasticity larger than one suggests a more than proportional increase of government expenditures with respect to economic activity. In addition, according to the spirit of the law, we found that the correlation is usually higher in countries with lower per-capita GDP, suggesting that the catching-up period is characterized by a stronger development of government activities with respect to economies in a more advanced state of development

THE ROLE OF THE INDUSTRIAL POLICY IN ITALY

The aim of this paper is to match the Italian small-medium firms’ (SMEs) need for technological innovation and the state and regional aid programs aimed at supporting innovation and technology. The purpose is to highlight existing capabilities and new opportunities in support of Italian SMEs requirements in innovation. The paper reports the results of two empirical research projects recently carried out at Ceris-Cnr (Institute of Economic Research on Firms and Growth – Italian National Research Council). After a framework of the most important innovation policies the Italian aid programmes for innovation and technology are described. In particular the role of the Italian Regions is analysed in depth. The empirical research confirmed that the approach to innovation of Italian SMEs tends to satisfy the demand of existing market in the best possible way ompared with competitors. Product improvement follows incremental processes. The most common way of introducing new technology is the purchase of new machines and equipment to reduce costs and improve quality. All the industrialised countries tend to favour the linking of the SMEs with external sources of knowledge. The research shows that such a policy clashes with the SMEs’ capacity for absorbing innovation. Most of them lack the technical structures (technical office, design department, R&D laboratory, prototype department, etc.) and graduate staff capable of interfacing with the research world.

Road to (k)nowhere : policy instrument selection in complex governance arrangements: the case of research and innovation policy in France and Italy

Research and innovation (R & I) are increasingly understood as essential assets in national, and supranational, strategies for economic, social, industrial and technological development. Public engagement in these activities dates back to the pre-WWII period. Nowadays, its relevance has been revitalised as a powerful strategy to respond to major social, economic and environmental challenges (e.g. Grand Challenges). On the other hand, also the private sector has gained greater prominence within the field of scientific, engineering and technological activities employed for economic development (Arnold, Boekholt, 2003). Starting from these evolutions, the present research investigates the politics of policy instrument selection in the R&I sector. This study sheds light on the political dynamics that can explain how (and why) public actors decided to intervene (or not) in governing the field of scientific and technological innovation. Through a comparative analysis between France and Italy, the research investigates how the interplay between institutional characteristics, different policy styles and interest intermediation patterns influence actors\u2019 interactions, their preferences for various instrument mixes and ultimately the evolution of national R&I policy mixes. By adopting policy instruments as a proxy for analysing actors\u2019 preferences, it has been possible to understand different patterns of interaction taking place between governing, and non- governing, actors along the policy design process. In order to disentangle these dynamics a multi-method approach based on the triangulation of different sources (semi-structured interviews, document analysis and national statistics) has been adopted. Then, through a methodological approach to qualitative data analysis inspired by within and cross-case analysis (Miles, Huberman, 1994), thematic (Boyatzis, 1998) and content analysis (Schreier, 2012), national policy instrument selection process have been investigated. The comparative analysis ultimately shows that when we focus only on how governments have used their power to steer target population towards their intended behaviours (e.g. the inducement embedded in instrument action) our two cases share many similarities in their aggregate R&I policy mix features. But if we look at the characteristics of how different instruments exercise social control (e.g. instrument shapes) and the relationship between policy makers and target population (e.g. delivery structure) our results display a greater variety. These differences reflect the alternative approaches the two countries have undertaken to interact with target population, as well as in the political entrepreneurship and organizational capacity of national R&I performers

Fiscal Transparency and Policy Rules in Poland

This paper discusses the link between the deficit bias in public finance and institutional settings. The Polish experience is put in a wider context and provides an extensive discussion of possible institutional reforms that may be implemented to stabilise the path of fiscal policy and reduce the deficit bias. Although substantial improvements have been made in Poland with respect to fiscal transparency standards set by the IMF and EU there is still much scope for enhancement. The recommended change in fiscal policy would involve the implementation of medium-term budgetary framework that would ensure consistency between the budgetary process and medium-term fiscal goals. This should be accompanied by the introduction of binding constraints on fiscal policy. The expenditure rule could be reintroduced to strengthen fiscal discipline, as it could force policymakers to tighten fiscal policy. It seems to be indispensable to maintain fiscal rules at the local government level. The issue of still limited fiscal transparency and unsatisfactory performance of fiscal rules requires the undertaking of various appropriate measures to strengthen the policy framework in Poland. This can be done in our view by involving external institution entitled to examine fiscal transparency and the performance of fiscal rules in the budgetary process. We think that the institution that is fully capable to take the lead in this respect is the NIK, which was granted full independence in 1994 and has since proved to be successful in overseeing public finances. This should, however, be accompanied by simultaneous enhancement of the internal audit.Fiscal Transparency, Fiscal Rules, Fiscal Discipline, Institutions