Central bank independence, bureaucratic corruption and fiscal responses - empirical evidence

This paper analyses the impact of bureaucratic corruption on fiscal policy outcomes for economies that have constituted to a greater or lessen extent independent central banks. The adverse implications of corruption on debt accumulation are verified using a cross-sectional setting of 77 developed and developing countries. Approximating central bank independence as that point in time that a major central bank reform took effect, we find that more corruption leads to higher debt accumulation. More importantly, complementing the analysis with a measure for the level of independence each reform gave strengthens the results; the impact of corruption is greater, the higher the independence that was granted. The findings are robust to different subsets of the sample and different sets of control variables. Suboptimal institutional quality poses difficulties on the achievement of a balanced debt process, which could obstacle price stability, despite the constitution of independent central banks

Monetary and fiscal policy interactions: the role of the quality of institutions in a dynamic environment

This paper analyses the interaction between fiscal and monetary policy using the original Barro and Gordon (1983) model extended to include fiscal policy, dynamics and the level of institutional quality, measured as bureaucratic corruption. It is found that delegating monetary policy to an independent central bank (i.e. not fiscally dominated) the second best solution of the model is achievable only if there is no bureaucratic corruption. Otherwise, when institutional quality is not optimal, unless a less conservative than the government, regarding output considerations, independent central bank is delegated, the second best is not restored. The government has the incentive to increase debt strategically in an attempt to increase second period inflation. This result is augmented by the quality of institutions and poses difficulties on the achievement of both price stability and a balanced debt process. Quality of institutions, hence, can provide an explanation for the poorer inflation performance, due to debt boosts, of countries with lower institutional quality despite the introduction of central bank independence

The asymmetric effects of waiting time targets in health care

Waiting time targets have been a key policy intervention in many OECD countries, aimed at reducing persistent waiting times for healthcare. What is the impact of targets on the distribution of patients' waiting time? Do they affect healthcare outcomes? We address the first question by developing a theoretical model of healthcare provision and empirically assessing the entire distribution of patients' durations at the hospital level. Our model and empirical evidence identify two distinct admission patterns. Hospitals respond by either treating all patients faster or by `substituting' among short and long waiters, indicating an asymmetric effect across patients. In order to address the impact of targets on healthcare outcomes (mortality, prolonged healthcare, delayed discharge at the patient level) we explore the identified heterogeneity of responses across hospitals. We find supportive evidence of a systematic difference in outcomes of patients treated in hospitals that exhibit asymmetric responses to targets

How consumption carbon emission intensity varies across Spanish households

La prominencia de las políticas de mitigación de emisiones exige una comprensión de su impacto distributivo potencial. Para evaluar la heterogeneidad distributiva, cuantificamos y analizamos la intensidad de emisión del consumo, definida como las emisiones de carbono por unidad de consumo, en los hogares de España. A excepción de los hogares más pobres, la intensidad de las emisiones disminuye con los ingresos y alcanza su punto máximo para los hogares cuya persona de referencia es de mediana edad (40 años). Además, los hogares cuya persona de referencia tiene menos educación y es hombre emiten más por unidad de gasto. Por lo tanto, las políticas de mitigación de emisiones pueden afectar de manera desproporcionada a los hogares de mediana edad cuyos ingresos rondan los 1.000 euros y cuyo cabeza de familia es hombre y tiene menos educación.The prominence of emission mitigation policies calls for an understanding of their potential distributional impact. To assess the distributional heterogeneity, we quantify and analyse the consumption emission intensity, defined as carbon emissions per unit of consumption, across households in Spain. With the exception of the poorest households, emission intensity decreases with income and peaks for households whose head is middle-aged (40 years old). Moreover, households whose main earner is less educated and male emit more per unit of expenditure. Thus, emission mitigation policies may disproportionately impact middle-aged households whose income is around €1,000, and whose head is male and less educated

How inflation varies across Spanish households

La inflación tiene efectos distributivos. Aprovechando los datos sobre el gasto de consumo de bienes en los hogares proporcionados por la Encuesta de Presupuestos Familiares de España, estimamos la inflación específica de los hogares de 2006 a 2021 en España y analizamos cómo varía según las características conocidas de los hogares. Mostramos que los hogares con menores ingresos, un número superior de miembros y un jefe de familia con menos estudios, mayor y varón experimentan una inflación más alta. Finalmente, también describimos los efectos de los aumentos de precios más recientes en los hogares. Las diferencias son sustanciales: en 2021, la inflación para los hogares de menores ingresos (cuartil inferior) fue 2 puntos porcentuales (pp) superior a la de los hogares de mayores ingresos (cuartil superior), mientras que para los hogares cuya persona de referencia es mayor de 60 años fue 1,5 pp mayor que para los hogares más jóvenes.Inflation has distributional effects. Leveraging the data on consumption expenditure on goods across households provided in the Spanish Household Budget Survey we estimate household-specific inflation from 2006 to 2021 in Spain and analyse how it varies according to households’ known characteristics. We show that households with lower income and more members and whose head is less educated, older and male experience higher inflation. Lastly, we also depict the effects of the most recent price increases across households. The differences are substantial: in 2021, inflation for lower-income households (bottom quartile) was 2 percentage points higher than for higher-income households (top quartile), while for households whose head is over the age of 60 it was 1.5 percentage points higher than for younger households

Never let a pandemic go to waste: turbocharging the private sector for development at the World Bank

This article scrutinises the first four months of the World Bank Group’s Covid-19 response and reveals a persistent prioritisation of private over public interests. The Group’s private sector arm, the International Finance Corporation, and its financial sector clients, have prevailed in terms of emergency resource allocations. And, while support from the Group’s public sector arms has been portrayed as aiming to strengthen public systems, recipient countries have been urged not to forego structural reforms in support of the private sector. This includes an enhanced focus on public–private partnerships to deliver ostensibly public services. The institution has seized the current crisis as an opportunity to intensify its “Maximising Finance for Development” approach