Intergovernmental grants and public input provision: theory and evidence from Germany

This paper uses a simple model of fiscal competition between local jurisdictions to analyse the impact of intergovernmental grants on the composition of public spending. We find that a higher degree of redistribution within a system of ?fiscal equalisation? coincides with a smaller overall share of spending on productivity-enhancing public inputs. Furthermore, in order to test the theoretical predictions, we carry out an empirical analysis based on a panel of German states. The results are consistent with the theoretical findings and support the existence of an incentive effect of intergovernmental grants on state expenditure policies. --Fiscal competition,Fiscal equalisation,Intergovernmental grants,Public expenditure,Germany

Social Dumping as Marketization: Management Whipsawing in Europe’s Auto Industry

[Excerpt] The focus of this paper is one slow-burning change in the organization of capitalism in Europe, marketization (Greer and Doellgast 2013, Hauptmeier 2011). We argue that a specific species of marketization, management whipsawing, is causing social dumping in the automotive sector. By management whipsawing we mean the staging of economic competition by large corporations with several production units in a way that extracts labor concessions by pitting local workers against each other in contests for investment and production. Multinational companies (MNC) were the first movers and developed various management whipsawing practices; however, the term was also used historically to describe union whipsawing at large national corporations with several production units (Ross 1948). Management whipsawing presupposes the ability to move production from one location to another, due to (for example) the standardization of production techniques, production of similar products in parallel at different locations, and unutilized production capacity

Political Entrepreneurs and Co-Managers: Labour Transnationalism at Four Multinational Auto Companies

This paper examines labour transnationalism within four multinational automakers. In our sample, we find different forms of labour transnationalism, including transnational collective bargaining, mobilisation, information exchange and social codes of conduct. We explain these differences through the interaction between management and labour in the context of the company structure; of particular importance are transnational coercive comparisons by management and the orientations of worker representatives as political entrepreneurs or co-managers. We conclude that, although intensified worker-side crossborder cooperation were not preventing wage-based competition in general (due to the lack of between-firm coordination), they have reshaped employment relations within these MNCs

Political Insiders and Social Activists: Coalition Building in New York and Los Angeles

[Excerpt] Why have labor movements in New York City and Los Angeles changed so dramatically? And more specifically, why have the activist social coalitions that revitalized the labor movement in Los Angeles not played the same kind of role in New York? Our research persuades us that the relationship between .contrasting coalition types—political and social—is central to explaining the differences. Political coalitions refer to cooperation between unions and parties, politicians, and other social actors, focused largely on elections and policy-making processes. Social coalitions, by contrast, include labor and other social actors such as community, religious, environmental, and immigrant rights groups, focused on a range of political, economic, and social campaigns. A comparison of the two metropolitan areas over the past two decades reveals distinct patterns of coalition building in New York and Los Angeles. In New York, the labor movement is dominated by several powerful local unions, often at odds with one another in contending political coalitions. New social coalitions have developed but are not central to organized labor\u27s political action. The focus of most unions on narrow interest representation contributes to a disconnect between social and political coalitions in which the latter dominate. In Los Angeles, by contrast, the significance of social coalition building stands out as the labor movement has coalesced over the past fifteen years. To be sure, labor in Los Angeles participates actively in political coalitions. In contrast to New York, however, political coalitions move beyond narrow union interests, building on social coalitions that broaden the influence of labor as a whole

Public Debt and Economic Growth: a Granger Causality Panel Data Approach

This paper analyses the Granger-causality relationship between the growth of the real GDP per capita and the public debt, here represented by the ratio of the current primary surplus/GDP and the ratio of the gross Government debt/GDP. Using OECD annual data for 20 countries between 1988 and 2001, we adapt the methodology recently applied by Erdil and Yetkiner (2008) and we conclude that there is clear Granger causality and that it is always bi-directional. In addition, our findings point to a heterogeneous behaviour across the different countries. These results have important policy implications since not only does public debt restrain economic growth, but also real GDP per capita growth influences the evolution of public debt. Key words: panel data; public debt and economic growth

Expenditure reform in industralised countries: a case study approach

This study examines reforms of public expenditure in industrialised countries over the past two decades. We distinguish ambitious and timid reformers and analyse in detail reform experiences in eight case studies of ambitious reform episodes. We find that ambitious reform countries reduce spending on transfers, subsidies and public consumption while largely sparing education spending. Such expenditure retrenchment is also typically part of a comprehensive reform package that includes improvements in fiscal institutions as well as structural and other macroeconomic reforms. The study finds that ambitious expenditure retrenchment and reform coincides with large improvements in fiscal and economic growth indicators. --public expenditure,expenditure reform,economic growth,deficit,debt,employment,case studies,fiscal institutions

Identifying the effects of government spending shocks with and without expected reversal: an approach based on U.S. real-time data

This paper investigates how expectations about future government spending affect the transmission of fiscal policy shocks. We study the effects of two different types of government spending shocks in the United States: (i) spending shocks that are accompanied by an expected reversal of public spending growth below trend; (ii) spending shocks that are accompanied by expectations of future spending growth above trend. We use the Ramey (2011)’s time series of military build-ups to measure exogenous spending shocks, and deviations of forecasts of public spending with respect to past trends, evaluated in real-time, to distinguish shocks into these two categories. Based on a structural VAR analysis, our results suggest that shocks associated with an expected spending reversal exert expansionary effects on the economy and accelerate the correction of the initial increase in public debt. Shocks associated with expected spending growth above trend, instead, are characterized by a contraction in aggregate demand and a more persistent increase in public debt. The main channel of transmission seems to run through agents’ perception of the future macroeconomic environment. JEL Classification: E62, E65, H20Fiscal multipliers, Government spending shocks, real-time data, Spending reversal, Survey of Professional Forecasters

Expenditure reform in industrialised countries: a case study approach

This study examines reforms of public expenditure in industrialised countries over the past two decades. We distinguish ambitious and timid reformers and analyse in detail reform experiences in eight case studies of ambitious reform episodes. We find that ambitious reform countries reduce spending on transfers, subsidies and public consumption while largely sparing education spending. Such expenditure retrenchment is also typically part of a comprehensive reform package that includes improvements in fiscal institutions as well as structural and other macroeconomic reforms. The study finds that ambitious expenditure retrenchment and reform coincides with large improvements in fiscal and economic growth indicators. JEL Classification: H5, H6, O57case studies, debt, deficit, Economic Growth, Employment, expenditure reform, fiscal institutions, public expenditure

Efficient Revenue Sharing and Upper Level Governments: Theory and Application to Germany

Recent literature has emphasized that redistributive grant systems may tend to internalize fiscal externalities arising from tax competition. This paper further explores the conditions under which local grant systems enforced by the state government will enhance efficiency. A system of redistributive grants among governments is introduced into a standard model of tax competition. This basic model is then extended in order to allow for variations in the government objectives at the state level. A subsequent empirical analysis of local tax policy exploits the experience with local fiscal revenue sharing in Germany. The results suggest that attempts of state level governments to extract fiscal resources from the local revenue sharing system exert an upward pressure on tax rates. --Fiscal Equalization,Tax Competition Fiscal Federalism,Germany