Aid Financing of Global Public Goods: an Update

The paper compares different aggregates of aid financed global public goods and detects the presence, for the period 1995-2006, of the substitution effect between these aggregates and traditional aid that was found by former studies for earlier periods. A second focus of the paper is on the differences in the importance that donors attach to the various types of global public goods, trying to detect regular patterns in their choices of financing. Statistical regularities, representative of common historical, social, cultural factors, for groups of countries (Anglo-Saxon, Northern European and Central European) give rise to the existence of a certain clusterized homogeneity in global public goods financing. Potential explanatory variables are examined in a panel analysis, which reveals the dominance of the donors’ wealth, preferences for public goods and public finance constraints in the decision of aid funding of global public goods. Finally, there is evidence that some global public goods with weakest-link technologies have become increasingly important at the global level. The increase in their financing through aid flows could be explained by the rich countries’ fear of an insufficient provision by poor countries, which, increasingly, cannot afford to pay for them: rich countries are therefore stepping in to avoid sub-optimal levels of provision, as already foreseen by Sandler (1998).Foreign aid, Global public goods

Sectorial Selling Product and Sectorial Operating Revenue: an Approach à la Leontief

[En] The main aim is to create a bridge between the typical aggregates of business account and the equivalent derived by the SNA. Using the I-O of Leontief model, the two business concepts of “sectorial selling product” and “sectorial operating revenue” will be expressed through the SNA aggregates. [It] L’obiettivo che ci si propone è quello di mettere in relazione gli aggregati tipici di un bilancio aziendale con i corrispondenti desumibili dalla contabilità nazionale. A tal fine, usando il modello Input-Output di Leontief, si procederà a definire, in termini di contabilità, due concetti tipicamente aziendali: la “produzione vendibile” settoriale ed i “proventi netti” settoriali. [Fr] Le but principal est celui de mettre en relation les agrégats typiques d'un budget d'entreprise avec ses équivalents dans la comptabilité nationale. À tel fin, en employant le modèle I-O de Leontief, on procédera à définir, en termes de comptabilité, deux concepts typiquement d'entreprise: la «production sectorielle commercialisable» et le «chiffre d'affaires de secteur».Input-Output, Selling Product, Operating Revenue, Sector, Business

Budgeting versus implementing fiscal policy:the Italian case

The budgeting process has been recently reformed in Italy (L. 196/2009) in order to improve control of budget and transparency in the provision of clear information on government fiscal policy. Indeed, the general government final expenditures often deviate significantly from the initial forecasted amounts. Therefore, although the initial budget is often formulated in contractionary stance compared with the previous year’s final account, the final outcome turns out to be expansionary. As a consequence, confidence in the reliability of expenditure estimates in the initial budget and in the value of the initial budget as an indicator of the stance of fiscal policy have been undermined. Using real-time data for Italy, reported in the Relazione Previsionale e Programmatica (RPP) and in the Relazione Unificata sull’Economia e la Finanza Pubblica (RUEF), we explore fiscal plans and their implementation for GDP and general government aggregated and disaggregated items of revenue, expenditure and budget balance over the period 1998-2009. Both reports are employed with the aim of measuring the budgetary policy implementation error, following the methodology of Beetsma et al. (2009). We focus on the first year of the fiscal plans because budgetary slippages mainly occur in this year (Balassone et al. 2010). The main findings suggest that implemented budgetary adjustment falls systematically short of planned adjustment for GDP, for primary balance and overall balance. Actually, the main determinants of the implementation error of both primary and overall balance are the expenditures, in particular, the capital expenditures. Moreover, it seems that errors in macroeconomic forecasts cannot be considered the driving force of the budgetary slippages. Our results are in line with the strand of literature (von Hagen 1992; von Hagen and Harden 1994; Alesina and Perotti 1999; Tanaka 2003) according to which credible plans are the conditio sine qua non for healthy budget outcomes and resorting fiscal transparency and accountability. To improve public budgeting in Italy, we deem necessary a renewed commitment by policy makers in term of planning and control of public expenditures.fiscal plans; real-time data; implementation; budget process; expenditure and revenue; Italy

Aid Financing of Global Public Goods: an Update

The paper compares different aggregates of aid financed global public goods and detects the presence, for the period 1995-2006, of the substitution effect between these aggregates and traditional aid that was found by former studies for earlier periods. A second focus of the paper is on the differences in the importance that donors attach to the various types of global public goods, trying to detect regular patterns in their choices of financing. Statistical regularities, representative of common historical, social, cultural factors, for groups of countries (Anglo-Saxon, Northern European and Central European) give rise to the existence of a certain clusterized homogeneity in global public goods financing. Potential explanatory variables are examined in a panel analysis, which reveals the dominance of the donors’ wealth, preferences for public goods and public finance constraints in the decision of aid funding of global public goods. Finally, there is evidence that some global public goods with weakest-link technologies have become increasingly important at the global level. The increase in their financing through aid flows could be explained by the rich countries’ fear of an insufficient provision by poor countries, which, increasingly, cannot afford to pay for them: rich countries are therefore stepping in to avoid sub-optimal levels of provision, as already foreseen by Sandler (1998)

Public finance, fiscal rules and public–private partnerships. Lessons for Post-COVID-19 investment plans

We explore the distribution of public-private partnerships (PPPs) among the European Union countries, with a special focus on fiscal rules and budgetary constraints while controlling for empirically identified drivers. While offering the opportunity to increase innovation and efficiency in the public sector infrastructure, PPPs allow governments to relax their budget and borrowing constraints. We find that the state of public finances influences the government's choice of PPPs and makes them more appealing for reasons other than efficiency. Stringent numerical rules on the budget balance also foster government's opportunism in the choice of PPPs. On the other hand, high levels of public debt increase the country risk, and discourage private investors from PPP contracts. The results highlight the importance of restoring PPP investment choices based on efficiency criteria and adapt fiscal rules to shield public investment while stabilizing private expectations by means of credible trajectories of debt reduction. The findings contribute to the debate on the role of fiscal rules in fiscal policy and of PPPs in infrastructure financing

Bilevel Comparative Regional Analysis - Performances in Structural Grid

Il metodo proposto mira ad analizzare il contesto regionale europeo (UE 15), in base agli indicatori introdotti nel Rapporto di Primavera 2004, disponibili a livello regionale, e usati a livello europeo per valutare i progressi compiuti dai diversi paesi ed in questo caso per evidenziare le best practises ed identificare gruppi regionali omogenei rispetto ai quali svolgere comparazioni. A tal fine si propone un nuovo metodo di analisi comparativa regionale i.e. Bilevel Comparative Regional Analysis - Performances in Structural Grid (BiCRA-PSG) volto a superare le problematiche di natura comparativa causate dall’eterogeneità delle unità statistiche considerate e alternativa rispetto alle insoddisfacenti proposte fino ad ora adottate.Regional Economic Activity, Comparative Analysis, European Regional policy, Factor Analysis, Cluster Analysis

Microeconomic determinants of losses in financial institutions during the crisis

In this study we try to explain the inclusion of banks in the WDCI list proposed by Bloomberg. This list collects a group of more than 100 banking institutions which, during the crisis, suffered losses. We explain the probability of being part of the list (to suffer severe or highly severe losses) by their structure and performance. These aspects are represented by 4 variables: ROA, tier1 ratio, number of employees and total assets, referred to the two years preceding the crisis, of a larger sample of more than 400 banks comprehending the banks in and outside the list. By considering the heterogeneity among the banks of the list, an explanation of the probability of highly sever losses is offered by considering the previous variables with the addition of interbanking assets. By using a probit model we find a confirmation of the new rules, inspired by the Basel 3 Accord and by the Financial Stability Board, requiring a solid patrimonial structure, in particular for the “too big to fail” financial institutions, accompanied by a medium return in order to assure a low probability to suffer losses

Microeconomic determinants of losses in financial institutions during the crisis

In this study we try to explain the inclusion of banks in the WDCI list proposed by Bloomberg. This list collects a group of more than 100 banking institutions which, during the crisis, suffered losses. We explain the probability of being part of the list (to suffer severe or highly severe losses) by their structure and performance. These aspects are represented by 4 variables: ROA, tier1 ratio, number of employees and total assets, referred to the two years preceding the crisis, of a larger sample of more than 400 banks comprehending the banks in and outside the list. By considering the heterogeneity among the banks of the list, an explanation of the probability of highly sever losses is offered by considering the previous variables with the addition of interbanking assets. By using a probit model we find a confirmation of the new rules, inspired by the Basel 3 Accord and by the Financial Stability Board, requiring a solid patrimonial structure, in particular for the “too big to fail” financial institutions, accompanied by a medium return in order to assure a low probability to suffer losses

Public finances and Public Private Partnerships in the European Union

We analyse the Public Private Partnerships (PPPs) in order to account for their uneven distribution among the European Union countries and to identify the motivations of the public actor in selecting PPPs. We focus on the fiscal incentives to overcome budget and borrowing constraints, taking also into account of the political features and institutional frameworks of the countries. Using IMF data over the years 1990-2015, we confirm that the state of public finances impacts on the government’s choice of PPPs: financially constrained governments find the PPP option more attractive due to the possibility of off-balance accounting, while high-debt countries reduce the private investors’ interest in PPP. Fiscal rules increased the PPP bias in the pre-crisis period, while the post-crisis reforms and the increased surveillance seem to better discipline PPP employment. PPPs are, also, confirmed to be under the influence of political competition and government’s preferences for current expenditures

Budgeting versus implementing fiscal policy:the Italian case

The budgeting process has been recently reformed in Italy (L. 196/2009) in order to improve control of budget and transparency in the provision of clear information on government fiscal policy. Indeed, the general government final expenditures often deviate significantly from the initial forecasted amounts. Therefore, although the initial budget is often formulated in contractionary stance compared with the previous year’s final account, the final outcome turns out to be expansionary. As a consequence, confidence in the reliability of expenditure estimates in the initial budget and in the value of the initial budget as an indicator of the stance of fiscal policy have been undermined. Using real-time data for Italy, reported in the Relazione Previsionale e Programmatica (RPP) and in the Relazione Unificata sull’Economia e la Finanza Pubblica (RUEF), we explore fiscal plans and their implementation for GDP and general government aggregated and disaggregated items of revenue, expenditure and budget balance over the period 1998-2009. Both reports are employed with the aim of measuring the budgetary policy implementation error, following the methodology of Beetsma et al. (2009). We focus on the first year of the fiscal plans because budgetary slippages mainly occur in this year (Balassone et al. 2010). The main findings suggest that implemented budgetary adjustment falls systematically short of planned adjustment for GDP, for primary balance and overall balance. Actually, the main determinants of the implementation error of both primary and overall balance are the expenditures, in particular, the capital expenditures. Moreover, it seems that errors in macroeconomic forecasts cannot be considered the driving force of the budgetary slippages. Our results are in line with the strand of literature (von Hagen 1992; von Hagen and Harden 1994; Alesina and Perotti 1999; Tanaka 2003) according to which credible plans are the conditio sine qua non for healthy budget outcomes and resorting fiscal transparency and accountability. To improve public budgeting in Italy, we deem necessary a renewed commitment by policy makers in term of planning and control of public expenditures