An Empirical Approach for Evaluating Soft Budget Constraints

In this paper, we develop an empirical framework for detecting the existence and estimating the magnitude of the softness of a budget constraint. The defining feature of a soft budget constraint is a subordinate organization’s expectations of being bailed out by a superior organization in case of financial trouble. This implies that one has to link the organization’s expectations for being bailed out to its fiscal behavior in order to quantify the extent of the soft budget constraint. We postulate that expectations for bailouts are formed rationally and make use of an instrumental variable method to get consistent estimates of the parameters of interest. We argue that past own experience of being bailed out and bailouts of other subordinate organizations can be used to construct credible instruments for the formation of bailout expectations. We apply our empirical approach to a unique panel data set of 286 Swedish local governments where the central government provided a total of 1,697 bailouts between 1974 and 1992. Our results strongly suggest the existence of a soft budget constraint; a local government increases its level of debt by 6-10 percent if it expects to be bailed out with probability one as compared to when the likelihood is zero due to previous experience of being bailed out, while the effect on debt from bailouts of its geographical neighbors is roughly four times as large.Soft budget constraint; Bailout; Fiscal distress; Intergovernmental relations

The Maraca: a tool for minimizing resource conflicts in a non-periodic railway timetable

While mathematical optimization and operations research receive growing attention in the railway sector, computerized timetabling tools that actually make significant use of optimization remain relatively rare. SICS has developed a prototype tool for non-periodic timetabling that minimizes resource conflicts, enabling the user to focus on the strategic decisions. The prototype is called the Maraca and has been used and evaluated during the railway timetabling construction phase at the Swedish Transport Administration between April and September 2010

The Intertemporal Spending Behavior of Local Governments: A Comparative Analysis of the Scandinavian Countries

The paper investigates the intertemporal spending behavior of Scandinavian local governments with particular attention to liquidity constraints imposed by balanced-budget-rules and other regulations. The main finding is that Danish local governments are more able to smooth current expenditures than their Norwegian and Swedish counterparts. Whereas the permanent-income hypothesis cannot be rejected for Denmark, it is in most cases rejected for Norway and Sweden. The Swedish system of market-based control and the Norwegian system of administrative control seem to produce similar results in terms of consumption smoothing.Local government consumption; Intertemporal decision-making

Scalability through Cultivation:

The objective of this paper is to discuss how to use Information Technology to enable the staff at a mission-critical order packaging department to cope with a drastically increasing scale of operation. To reduce the risk of interrupting the production, a cultivation approach is adopted. We use co-ordination theory to analyse the current work setting and present a design proposal. The basic building blocks of the analysis and the design are co-ordination mechanisms. This facilitates the understanding of today\u27s way of working, as well as the design of a new setting, enabling the department to cope with the larger scale of operation. The underlying approach for the change process is cultivation, which is a softer, less disruptive approach compared to more radical methods for organisational change. Based on the results, we argue that it is the co-ordination work that is lacking, not the actual productive work performed. Even though co-ordination theory has been criticised for being difficult to apply in practice, we find that it is indeed fruitful to use in this real-world case. The cultivation approach facilitates a design that allows implementation of changes without disrupting the throughput at the department

Proxy Lady: Mobile Support for Opportunistic Communication

Proxy Lady is a mobile system for informal, opportunistic face-to-face communication, running on a PDA equipped with a radio transceiver, Opportunistic communication is anticipated by one party but it only occurs when the parties happen to meet each other. Proxy Lady supports such communication by providing notifications about possible candidates for interaction in the environment. The user specifies candidates for interaction by associating people with an information item (currently an email or a task). When candidates for interaction enter the proximity ofthe user, ProxyLadynotifies and makes the information item accessible. According to our fieldwork, evaluation sessions, and a literature survey, opportunistic communication is an important type ofcommunication that has not been supported previously. This paper describes the interface and use ofProxy Lady and the results from an evaluation study

Power Properties of the Sargan Test in the Presence of Measurement Errors in Dynamic Panels

This paper investigates the power properties of the Sargan test in the presence of measurement errors in dynamic panel data models. The general conclusion from the Monte Carlo simulations is that the Sargan test, in many cases, leads the econometrician to accept misspecified models with sometimes severely biased parameter estimates as a result. This is especially true when the number of cross-sectional units is small and when there are measurement errors in the dependent variable. To investigate if the simulation results have any bearing in real applications, we used the data in Arellano and Bond (1991) and re-estimated their employment equations with the difference that we deliberately imposed additive and multiplicative measurement errors in the employment and wage variables. It turned out that the Sargan test always accepted the misspecified models while we at the same time ended up with biased parameter estimates. The conclusion from this paper is that in the very likely case of measurement errors in either the dependent or any of the independent variables, we will, if we rely on the Sargan test, quite likely accept a misspecified model and end up with biased results

The declining spadefoot toad Pelobates fuscus: calling site choice and conservation

We investigated whether local biotic and abiotic conditions could explain the occurrence of calling males of the declining spadefoot toad Pelobates fuscus in 72 ponds in southern Sweden. The ponds covered the entire distribution range of P. fuscus and were monitored during the breeding season in 2000. Calling males were found in 33 ponds. representing ca 50% of all known ponds for the species ill Sweden. They had a non-random distribution and a discriminant analysis including 19 environmental variables successfully classified 86% of the ponds as with or without calling males A stepwise discriminant analysis selected eight of these variables and classified 85% of the ponds correctly. ponds with calling males were classified mainly on characteristics of the ponds, whereas composition of the terrestrial habitat close to the ponds and traffic load within 500 in had little influence on the distribution of calling males. Ponds with P. fuscus were large, permanent and eutrophic with high concentrations of oxygen and high spring temperatures. They also had a high proportion of shoreline with steep banks. Permanent ponds with calling males typically had a low abundance of predatory fish and crayfish: only two of the ponds with P. fuscus contained predatory fish. The results of this study indicate that interactions between physical factors (e.g. pond drying) and predation determine the presence of P. fuscus. Because P. fuscus has specific habitat requirements necessary for its survival and high site fidelity, it is particularly vulnerable to local changes in the condition of its natural breeding ponds. The situation is particularly serious for this species because the majority of the ponds that are within its dispersal range do not seem to be suitable for P. fuscus because of physical constraints

Subnational Government Bailouts in OECD Countries: Four Case Studies

We present four case studies of bailouts of subnational governments in Australia, Germany, Italy and Sweden. The case studies show that bailouts can occur in a diverse set of institutions shaping the relations between central and subnational governments. Surpisingly, there is little evidence in favor of the `too big to fail` argument explaining bailouts. In contrast, elements of political favoritism play some role in most cases. The cases also indicate the importance of properly designing principal-agent relationships in the decentralization of public finances. Constitutional mandates for uniform provision of public services and attempts by the central government to dominate subnational governments in matters of fiscal policy seem to be conducive to bailouts.

Diamanter - Ett lands bästa vän?

Teorin om resursförbannelsen är ett välstuderat område och det finns nästan lika många slutsatser som det finns forskning. Då forskningen inte är enig har vi gjort en studie för att analysera resursförbannelsens förklaringsgrad. Vi har valt att göra en jämförande fallstudie över Centralafrikanska republiken och Botswana, som är varandras motsatsexempel när det gäller resursförbannelsen. Botswana kallas ofta för en solskenshistoria medan Centralafrikanska republiken är ett av världens fattigaste länder. Förutom resursförbannelsen har två andra teorier använts: starka institutioner och grannskapsfällan. Genom att jämföra skillnader i dessa tre teorier på de två länderna har en slutsats nåtts om vilken av teorierna som haft bäst förklaringsgrad. Resultatet blev att samtliga teorier påverkade utfallet i viss grad. Teorin om starka institutioner blev dock den dominerande förklaringsvariabeln just för att institutioner visade sig ha störst betydelse för huruvida de utvalda länderna klarade sig undan resursförbannelsen