Political Budget Cycles: Evidence from Swiss Cantons

Models of political budget cycles assume that politicians use fiscal policy to increase their chances of re-election. However, empirical results for advanced economies provide ambiguous support for the existence of such electoral cycles. Also, studies focusing on the regional or local level of advanced economies have found a variety of different results. In this paper, we use data at the sub-federal level of Switzerland from 1978 through 2015 to test for the presence of political budget cycles. Swiss regions called cantons are highly autonomous with regard to budgetary policy and have established direct democratic systems with frequent referendums that often affect budgetary issues. In most cantons, there are fiscal policy rules that restrict the budgetary leeway of governments. Against the backdrop of public discussions in several European countries on adopting more direct democratic elements, the Swiss experience on political budget cycles provides an interesting case study. Overall, the system of government is designed to foster consensus seeking and gradual adjustment. These features should make the short-run opportunistic or partisan use of fiscal policy less likely in Swiss cantons. Rather surprisingly, however, we find at least some evidence for an electoral cycle in government spending. For government revenue or the overall budget, our empirical results do not point to an electoral cycle

Political Budget Cycles: Evidence from Swiss Cantons

Models of political budget cycles assume that politicians use fiscal policy to increase their chances of re-election. However, empirical results for advanced economies provide ambiguous support for the existence of such electoral cycles. Also, studies focusing on the regional or local level of advanced economies have found a variety of different results. In this paper, we use data at the sub-federal level of Switzerland from 1978 through 2015 to test for the presence of political budget cycles. Swiss regions called cantons are highly autonomous with regard to budgetary policy and have established direct democratic systems with frequent referendums that often affect budgetary issues. In most cantons, there are fiscal policy rules that restrict the budgetary leeway of governments. Against the backdrop of public discussions in several European countries on adopting more direct democratic elements, the Swiss experience on political budget cycles provides an interesting case study. Overall, the system of government is designed to foster consensus seeking and gradual adjustment. These features should make the short-run opportunistic or partisan use of fiscal policy less likely in Swiss cantons. Rather surprisingly, however, we find at least some evidence for an electoral cycle in government spending. For government revenue or the overall budget, our empirical results do not point to an electoral cycle

Time-Driven Access and Forwarding for Industrial Wireless Multihop Networks

The deployment of wireless technologies in industrial networks is very promising mainly due to their inherent flexibility. However, current wireless solutions lack the capability to provide the deterministic, low delay service required by many industrial applications. Moreover, the high level of interference generated by industrial equipment limits the coverage that ensures acceptable performance. Multi-hop solutions, when combining frame forwarding with higher node density, have the potential to provide the needed coverage while keeping radio communication range short. However, in multi-hop solutions the medium access time at each of the nodes traversed additively contributes to the end-to-end delay and the forwarding delay (i.e., the time required for packets to be processed, switched, and queued) at each node is to be added as well. This paper describes Time-driven Access and Forwarding (TAF), a solution for guaranteeing deterministic delay, at both the access and forwarding level, in wireless multi-hop networks, analyzes its properties, and assesses its performance in industrial scenario

Endogenous preference formation on macroeconomic issues: the role of individuality and social conformity

Macroeconomic events often require individuals and policy-makers to make decisions that they are not accustomed to making. For example, a sovereign debt crisis makes it necessary to either default on government debt, increase taxes, cut public spending or to impose a mixture of these measures. I argue that decisions on such matters are not derived from deep preferences; they require reflections and judgement under uncertainty. Past experiences and the interaction with other individuals are likely to influence the salience of preferences in the situations of decision making. Using a simple model, I illustrate how the salience of preferences changes with different degrees of individuality and conformity. Individuality is associated with the importance of private habits, while conformity is related to the perceived dissonance between initial intuitions and social opinions. The results obtained from simple simulation exercises stress that a high degree of conformity or a low degree of individuality may lead to overreactions when social opinion makers err for a short period of time. At the same time, a low degree of conformity or a high degree of individuality or leads to delayed adjustments to new circumstances

Fiscal Policy Institutions and Economic Transition in North Africa

Sound public finances are crucial for ensuring a successful transformation of transition countries to democratic market economies. The transition countries in North Africa are an important example for this. These countries experienced increasing budget deficits in 2011 and 2012. Public finances will probably remain a serious issue in the coming years due to political uncertainties, distributional struggles and weak world economic growth. What kind of institutional rules for the budget process are suitable to limiting the size of these potential budget deficits in a new democracy? In this paper, I argue that numerical fiscal restraints are not the right tool to reduce budget deficits in a new and fragile democracy. Instead, I hold the view that a strong finance minister and a transparent budget process are much more important than numerical fiscal rules. Assigning prerogatives to the finance minister allows limiting the political deficit bias that may arise due to distributional struggles over government spending and revenue. History has shown that numerical policy rules on their own do not lead to desirable outcomes if they are not supported and embedded by the main political parties. If there are weak institutions, fiscal policy rules might even have a perverse effect when politicians – in trying to comply with the rules – use optimistic forecasts and creative accounting, which would lead to a deterioration of the actual budget situation. Therefore, transition countries should first focus on improving the transparency and accountability of the budget process

Il "Sogno d’un tramonto d’autunno": la «decadenza» e il fuoco

The essay connects the one-act play with Il fuoco, born in the same years, pointing out both theme consonances and differences: in the first place, the absence in the play of the superhumanly ideologization of decadence as an urge to the infinite strenghtening of heroic energies and to the artistic creation, which are the core of the novel. At the same time, fire, which in the novel is the symbol of the superhumanly tension of the hero, in the pièce is only the projection of destructive drives of the main character, Gradeniga, against her “double”, the young rival. The cause of these differences can be seen in the fact that the novel, which has a more complex structure, is supposed to carry out the proposal of the superhumanly message, whereas the one-act play is given a minor rensponsibility, and consequently is free from ideological juxtapositions.The essay connects the one-act play with Il fuoco, born in the same years, pointing out both theme consonances and differences: in the first place, the absence in the play of the superhumanly ideologization of decadence as an urge to the infinite strenghtening of heroic energies and to the artistic creation, which are the core of the novel. At the same time, fire, which in the novel is the symbol of the superhumanly tension of the hero, in the pièce is only the projection of destructive drives of the main character, Gradeniga, against her “double”, the young rival. The cause of these differences can be seen in the fact that the novel, which has a more complex structure, is supposed to carry out the proposal of the superhumanly message, whereas the one-act play is given a minor rensponsibility, and consequently is free from ideological juxtapositions

Fiscal Policy Institutions and Economic Transition in North Africa

Sound public finances are crucial for ensuring a successful transformation of transition countries to democratic market economies. The transition countries in North Africa are an important example for this. These countries experienced increasing budget deficits in 2011 and 2012. Public finances will probably remain a serious issue in the coming years due to political uncertainties, distributional struggles and weak world economic growth. What kind of institutional rules for the budget process are suitable to limiting the size of these potential budget deficits in a new democracy? In this paper, I argue that numerical fiscal restraints are not the right tool to reduce budget deficits in a new and fragile democracy. Instead, I hold the view that a strong finance minister and a transparent budget process are much more important than numerical fiscal rules. Assigning prerogatives to the finance minister allows limiting the political deficit bias that may arise due to distributional struggles over government spending and revenue. History has shown that numerical policy rules on their own do not lead to desirable outcomes if they are not supported and embedded by the main political parties. If there are weak institutions, fiscal policy rules might even have a perverse effect when politicians – in trying to comply with the rules – use optimistic forecasts and creative accounting, which would lead to a deterioration of the actual budget situation. Therefore, transition countries should first focus on improving the transparency and accountability of the budget process

How do Different Government Spending Categories Impact on Private Consumption and the Real Exchange Rate?

The macroeconomic literature has found puzzling effects of government spending on private consumption, the real exchange rate and the terms of trade. Some authors find that private consumption increases after a shock to government spending, while others report a decrease. The same ambiguity can be found for the real exchange rate and the terms of trade. Our paper offers an intuitive explanation for these divergent results by distinguishing between productive and unproductive government spending. We show within a calibrated two-sector DSGE model that the two government spending categories have different effects on private consumption, the real exchange rate and the terms of trade. Hence, our findings suggest that the composition of government spending matters not only for long-run growth, but also impacts on the short-run