The impact of economic openness on the vertical structure of the public sector

The aim of this paper is to investigate the impact of economic openness on the vertical structure of the public sector within a country. To tackle this issue we set up a simple theoretical model of fiscal federalism, where both central and local public spending enter the objective functions of both a central government and an aggregate local public sector, accommodating a wide range of behaviours. The degree of economic openness is assumed to erode central tax revenues and through this channel to affect the size of central spending, the size of grants paid to local governments and the optimal amount of local public spending. Consequences on the degree of decentralization are investigated. The main findings are that for a large subset of parameters an increase in economic openness leads to: a) a lower level of central government expenditures; b) a lower level of general government expenditures; c) a higher level of local taxation; d) a higher degree of public sector decentralization.openness, decentralization, fiscal federalism, public sector, government size.

Tax Decentralisation and local Government size

The aim of this paper is to re-examine the relationship between fiscal federalism and the size of local governments. Traditionally, the empirical studies have focused on the different accountability power of grants and local taxes, concluding that the former encourages the growth and the latter contributes to contain local public spending. Yet, the existing literature is more silent about the possibility that different types of tax autonomy may still have differential impacts on the expansion of the local public sector. The paper addresses this issue by introducing a new testable hypothesis - the “Tax Separation Hypothesis” (TSH) - according to which tax decentralisation organised on tax bases used only by local governments would favour most the containment of local public expenditures, while that organised on tax base sharing (i.e. piggybacking mechanisms) is not expected to have a significant impact on the local government size. Using an unbalanced panel data set of OECD countries, we adopt the novel approach of disentangling the impact of local taxes - on income, property, and goods and services - on the size of the local public sector. In particular, property taxes only - mostly based on a “tax separation” scheme - seem to have a negative impact on the size of local government. Instead, both income taxes and general taxes on goods and services – often shared with central governments – have uncertain impacts on the size of local governments (and more frequently positive). We conclude that tax decentralisation is a necessary condition to contain local public expenditures, yet it is not sufficient, as a tax separation scheme would in fact be required.Fiscal decentralisation; Tax sharing; Tax separation; Property taxes; Local government size.

Technology transfer, institutions and development

The trade and capital flows across the national borders of developing countries have recently accelerated and produced the conditions for faster transmission of knowledge. While the economic literature has mainly focused on how international technology transfer affects standard economic performance, less attention has been paid to a broader development perspective. This paper fills this gap by addressing two main issues. It investigates whether the technology transfer conveyed by international trade flows has positively influenced the development paths of developing countries. It also focuses on whether country-specific structural features and institutional quality support the positive impulse of technology transfer on development.Technology Transfer, International Trade, Human Development, Institutions

Economic integration and government size: a review of the empirical literature

This paper reviews the empirical literature concerning the impact of economic integration on the size and the composition of the public budget. From a theoretical perspective, a pessimistic view highlights the threat that economic integration constitutes to the action of the public sector. An optimistic view, instead, emphasizes the beneficial effects of integration in stimulating efficiency – enhancing public policies. Despite some well-established theoretical results, the empirical evidence on this topic is rather controversial. Some studies support the hypothesis that taxes and public spending may increase in order to compensate losers for the risks of a more open economic environment. Other studies support the opposite idea, that the public sector retrenches when having to face increasing mobility of the production factors. Yet, comparability of the wide empirical evidence on the topic is not straightforward and empirical regularities are hard to find.tax revenue, public spending, government size, trade openness, capital openness, economic integration, globalisation

Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Crossing Generalised Lorenz Curves

This paper illustrates how Crossing Generalised Lorenz (GL) curves can be used to identify the best income distribution on social welfare grounds within a set of alternative income distributions generated by different policy options. It starts by illustrating two alternative income distributions resulting from policy changes that lead to income increases for some individuals and decreases for others. GL curves are then calculated for the alternative distributions to rank them on welfare grounds on the basis of Shorrocks’ Theorem. After observing that Shorrocks’ Theorem is not applicable, because GL curves cross once, necessary additional conditions, such as restrictions on the features of the Social Welfare Function (SWF) and the shape of income distributions, are set and discussed. Subsequently, a step-by-step procedure to use GL curves to infer welfare judgments when GL cross once, is provided and illustrated with some simple numerical examples.crossing generalised lorenz (GL) curves; social welfare; income distribution; poverty; Shorrocks’ Theorem; social welfare funtion; Rawlsian; diminishing transfers; utilitarian preferences;

Social Welfare Analysis of Income Distributions: Ranking Income Distributions with Lorenz Curves

This paper illustrates how Lorenz Curves can be used to identify the best income distribution on social welfare grounds, within a set of alternative income distributions generated by different policy options. After highlighting some drawbacks of using specific functional forms of the Social Welfare Function (SWF) to infer welfare judgments, the rationale for using Lorenz Curves to rank income distributions is provided in a step-by-step procedure and is illustrated with some simple numerical examples. This module also points out the limitations of Lorenz dominance and highlights how, in some circumstances, it is necessary to use Generalised Lorenz (GL) Curves.lorenz curve; social welfare function; generalised lorenz curves; income distributions; inequality; poverty; lorenz dominance; atkinsons theorem;

Charting Income Inequality: The Lorenz Curve

This paper explains how to build Lorenz Curves for income distributions and discusses their use for inequality measurement. A short conceptual background, a step-by-step procedure and a simple numerical example illustrate how to calculate and draw Lorenz Curves. A discussion on the use of Lorenz Curves to represent inequality is also provided. It highlights that the Lorenz Curve is one of the most used ways of representing income distributions in empirical works thanks to its immediate comparability with a “natural” benchmark, the Equidistribution line, representing the most egalitarian distribution. The concepts of Lorenz dominance and intersection of Lorenz Curves are also discussed. Furthermore, the appendix provides a detailed presentation of the properties of the Lorenz Curves.Lorenz curves; income distribution; inequality measures; Lorenzo dominance; equidistribution line; inequality; poverty;

A NEW PORTABLE INSTRUMENT TO EVALUATE SOFT FLOORING MATERIALS IN DAIRY COW HOUSING

The improvement of flooring materials performance on animal health and welfare requires the support of reliable testing techniques. This is particularly relevant with the synthetic soft coverings used for walking areas since the friction coefficient is not only dependent on the surface characteristics, but also on the penetration of the animal hoof into the material. The paper presents the functioning of a new instrument capable of reproducing more closely the real interaction between the floor surface and the animal foot. The instrument is simple and portable and is suitable both for laboratory measurements and real housing conditions. The measurement is made in two steps: first a probe, shaped as a cow hoof and contacting the testing floor surface, is loaded with a vertical force to obtain a pressure similar to that exerted by the animal; then a pushing force parallel to the floor is applied, at a constant speed, producing a displacement along the surface. The values of the vertical and horizontal strengths required for skidding and the angle of the instrument are continuously measured and by them various parameters can be calculated. The results of the tests carried out in the laboratory and in real dairy houses are presented and, through the analysis of various calculated physical parameters, the main floor properties – more suitable for a previous estimate of the effect on animal welfare – are determined and discussed. In particular, the IPF parameter has been the only one able to predict also the foot escape among all the considered parameters

GDP and beyond: an implementation of welfare considerations to the distribution of earnings in Italy

The aim of this paper is to implement distributional considerations in comparing the economic well-being of individuals over time and living in different regions in Italy. Both Absolute Lorenz Curves (ALC) and standard Lorenz curves are used to address this issue from both a national and regional perspective. Since only partial results are obtained from dominance conditions, the analysis of Gini (ANOGI) is also introduced. We found that differences among subpopulation distributions accentuate over time and that when South and Islands are used as a reference group, North-West and North-East form two relatively more distinct groups.Inequality, Welfare, Gini, GDP, Earning Distribution.

Quality service in banking: a longitudinal approach

The association between service quality and customer satisfaction represents one of the fundamental relationships in marketing research. Although cross-sectional analysis has been commonly applied in such a context, the shift to a more dynamic approach appears to be a worthwhile change. A broad range of statistical methods exist for the management of data that arises from longitudinal designs. Based on pseudo-panel data collected from the banking sector, a latent growth curve model is proposed for the analysis of service quality in order to capture both intra-individual and inter-individual changes in customer satisfaction over time. Results also describe the impact of reliability on overall satisfaction for different customers’ profile