Turkey's Experience with Disinflation: Where did All the Welfare Gains Go?

Cataloged from PDF version of article.This article measures the welfare gains from disinflation in Turkey during the 2000s. Estimated welfare gains exceed the real output gains, which is likely to arise from persisting allocative inefficiencies, pointing at the need for further structural and institutional reforms for the benefits of price stability to be utilized towards achieving sustainable development

Modeling institutional evolution

Cataloged from PDF version of article.This paper proposes a formal framework to analyze the process of institutional evolution in relation with economic progress. Institutions have both formal (F) and informal (N) aspects that may exhibit varying processes of change. N is hypothesized to evolve with the level of capital stock, as in learning by doing, whereas F is chosen optimally by a government that maximizes output subject to social and political costs. F and N together define the production technology and affect the income level. Consistent with evidence, simulations of the model's solution reveal that optimum F exhibits a punctuated pattern. © 2012 Elsevier B.V

Monetary institutions and inflation performance: cross-country evidence

Cataloged from PDF version of article.This paper presents an empirical investigation of the effectiveness of the institutional frameworks of monetary policy in achieving and maintaining price stability. The institutional frameworks considered are central bank independence (CBI), inflation targeting (IT), currency boards (CB) and monetary unions (MU). Against the vast literature that argues for the price stabilizing effects of each of these institutions, the empirical evidence presented here suggests that countries that have adopted the IT and CB regimes have, on average, been associated with lower inflation rates than others during the past decade. This finding is robust to various control variables, while governance appears to be a substitute to formal mechanisms

Fiscal Decentralization and Deficits: International Evidence

Cataloged from PDF version of article.This paper investigates macroeconomic effects of fiscal decentralization, which has been a neglected area of research. Panel evidence for 16 countries over 1980-1998 indicates that expenditure and revenue decentralization reduce budget deficits. A principal finding is that the fiscal disciplining effect of fiscal decentralization increases with population size. Interestingly, absence of local elections is associated with greater effectiveness of fiscal decentralization. The benefits of expenditure decentralization decrease with ethnolinguistic fractionalization and quality of governance. (C) 2010 Elsevier B.V. All rights reserved

Fiscal Decentralization, Central Bank Independence and Inflation

Cataloged from PDF version of article.We reinvestigate the relationship between revenue decentralization (RD), central bank independence (CBI) and inflation by modifying the paper by (ECO 72 (2001) 95). We show that, in contrast to the earlier findings, RD has a negative impact on inflation if accompanied by both CBI and local accountability. In low inflation countries, however, RD has a negative impact on inflation even without these additional factors, though CBI accentuates this effect. (C) 2003 Elsevier B.V. All rights reserved

Bank regulation and supervision and its welfare implications

Cataloged from PDF version of article.This study provides a general equilibrium model to explore the welfare implications of bank regulation and supervision (RS). The model supports the basic expectations regarding the positive effects of RS on the growth rate, output, credit, investment, wages and profits; and its negative effects on the interest rate. In addition, RS is observed to lead to a convergence effect. Furthermore, it is observed that the decision of banks to monitor and charge differentiated interest rates to firms depends on the distribution of firm-specific moral hazard rates; bank monitoring increases profits as the distribution of producer type improves. (C) 2011 Elsevier B.V. All rights reserved

Macroeconomic Impact of Bank Regulation and Supervision: A cross-country investigation

Cataloged from PDF version of article.Bank regulation and supervision (RS) is a formal institutional mechanism that aims to reduce the adverse selection and moral hazard risks in the banking sector. This paper offers an empirical exploration of the relationship between banking-sector performance and RS using data on the legal quality of bank regulation and supervision. The main channels via which RS affects bank performance are considered to be depositor trust, investment mobilization, and borrower discipline. An event study of up to fifty-three countries provides robust evidence that RS has significant positive effects on bank deposits and investment rate and significant negative effects on nonperforming loans

Trends in Workers' Remittances: A Worldwide Overview

Increasing economic integration around the world bestows workers' remittances a growing potential importance as a source of financing foreign transactions. This paper investigates trends in workers ' remittances in developed and less developed countries since the 1980s. Both the magnitude of workers' remittance flows, in comparison to some other major aggregates, such as gross domestic product and foreign direct investment flows, and the relative stability of workers' remittances reveal that policies to attract workers' remittances bear great importance for especially less developed economies

Educate or Adjudicate? Socioeconomic Heterogeneity and Welfare

I present a formal framework to explore the welfare and distributional effects of a government’s optimal choice over two types of public spending in a closed economy: domestic security (DS) and investment in social capital (SC). Production is characterized as a function of social and physical capital stocks that both vary across the regions. DS stands for total factor productivity, while SC stands for human capital and civic cooperativeness combined. SC accumulates via public spending on universal primary education, cultural, and civic events and such, and is exposed to regional spillover effects. Numerical simulations of the static solution of the government’s welfare maximization problem reveal that the optimal rate of spending on SC (m*) is negatively related with the income share of physical capital, SC spillovers and fiscal decentralization. Simulations also show that SC homogeneity is positively associated with both the level and equitability of aggregate income. The maximum attainable levels of income, welfare and social cohesion and the most equitable incomes are all observed to realize at some intermediate range of m* values. In case DS augments SC, however, social cohesion improves and welfare declines monotonously in m*. © 2016 Informa UK Limited, trading as Taylor & Francis Group