Inequality, Fiscal Capacity and the Political Regime: Lessons from the Post-Communist Transition

Using panel data for twenty-seven post-communist economies between 1987-2003, we examine the nexus of relationships between inequality, fiscal capacity (defined as the ability to raise taxes efficiently) and the political regime. Investigating the impact of political reform we find that full political freedom is associated with lower levels of income inequality. Under more oligarchic (authoritarian) regimes, the level of inequality is conditioned by the state’s fiscal capacity. Specifically, oligarchic regimes with more developed fiscal systems are able to defend the prevailing vested interests at a lower cost in terms of social injustice. This empirical finding is consistent with the model developed by Acemoglu (2006). We also find that transition countries undertaking early macroeconomic stabilisation now enjoy lower levels of inequality; we confirm that education fosters equality and the suggestion of Commander et al (1999) that larger countries are prone to higher levels of inequality.http://deepblue.lib.umich.edu/bitstream/2027.42/57211/1/wp831 .pd

Involvement of the Metabotropic Glutamate Receptor mGluR5 in NMDA Receptor-Dependent, Learning-Facilitated Long-Term Depression in CA1 Synapses

Learning-facilitated synaptic plasticity describes the ability of hippocampal synapses to respond with persistent synaptic plasticity to the coupling of weak afferent stimulation, which is subthreshold for the induction of plasticity, with a spatial learning experience. The metabotropic glutamate receptor subtype 5 (mGluR5) is critically involved in enabling the persistency of multiple forms of hippocampal synaptic plasticity. We compared the effects of pharmacological allosteric antagonism of mGluR5 in learning-facilitated plasticity with plasticity that had been induced solely by patterned afferent stimulation of the Schaffer collateral pathway to the CA1 stratum radiatum of adult freely behaving rats. Intracerebroventricular injection of the selective mGluR5 antagonist 2-methyl-6-(phenylethynyl)pyridine (MPEP) had no effect on basal synaptic transmission but significantly prevented both long-term depression (LTD) elicited by electrical stimulation and LTD facilitated by novel object-place configuration learning. NMDA receptor antagonism also prevented learning-facilitated LTD. Habituation to the objects was prevented by MPEP application. Whereas reexposure to the object-place configuration (after 7 days) failed to facilitate LTD in control animals, those who had been treated previously with MPEP expressed LTD, suggesting that inhibition of learning contributed to the initial prevention of LTD. These data support a pivotal role for mGluR5 in both hippocampal LTD and the acquisition of object-place configurations

Latin Hypercube Sampling with Dependence and Applications in Finance

In Monte Carlo simulation, Latin hypercube sampling (LHS) [McKay et al. (1979)] is a well-known variance reduction technique for vectors of independent random variables. The method presented here, Latin hypercube sampling with dependence (LHSD), extends LHS to vectors of dependent random variables. The resulting estimator is shown to be consistent and asymptotically unbiased. For the bivariate case and under some conditions on the joint distribution, a central limit theorem together with a closed formula for the limit variance are derived. It is shown that for a class of estimators satisfying some monotonicity condition, the LHSD limit variance is never greater than the corresponding Monte Carlo limit variance. In some valuation examples of financial payoffs, when compared to standard Monte Carlo simulation, a variance reduction of factors up to 200 is achieved. LHSD is suited for problems with rare events and for high-dimensional problems, and it may be combined with Quasi-Monte Carlo methods

A Spatial Interpretation of the Persistency of China's Provincial Inequality

China's rapid economic growth in recent decades has not led to balanced income distribution: inter- and intra-provincial income inequality have been increasing and their respective contribution to the total income inequality remains relatively stable. Based on a new set of prefectural database during a relatively longer period from 1994 to 2008 on Chinese economic development, this paper investigates the nexus between the spatial dependence and income inequality in China on a prefectural level. Using the decomposition results of the inequality and spatial dependence of inter- and intra-provincial groups, and also the choropleth maps of clusters in China, this paper reaches the conclusion that clusters of prefectures and provinces with high positive spatial association are persistent over years in China, and the resulting highly correlated income disparity on both inter- and intra-provincial levels might be lasting for a relatively longer period, implying that spatial dependence is a contributing factor to the regional income inequality in a spatial context