Government Spending Cycles: Ideological or Opportunistic?

ands. The time series analysis, covering the period 1953–1993, allows for different types of government spending. In general, spending is inspired by ideological and opportunistic motives: all government expenditure categories show an upward drift during election times and the partisan motives behind government spending are clearly revealed: left-wing cabinets attach greater importance to social security and health care than right-wing cabinets and right-wing cabinets value expenditure on infrastructure and defense more than left-wing parties. Constructive comments by Frans van Winden, Wilko Letterie, Peter Cornelisse, Arie Ros, André de Moor, Harry ter Rele and an anonymous referee are gratefully acknowledged

Beyond econophysics (not to mention mainstream economics)

Econophysics has produced innovative and empirically relevant results in at least four areas of research: financial markets, growth and distribution of firms and countries, the distribution of income and wealth, and contagion, robustness and resilience of networks. All these results are inexplicable by the actual mainstream economic model. Yet econophysics requires not only a new economy, but also a “new” physics, which is based on non-ergodicity, on social dynamics whose elementary constituents are heterogeneous interacting social agents linked by networks

Information technology and the welfare cost of anticipated inflation

I numerically study inflation’s welfare cost in a model in which there are two ways of mediating trade: money and information technology (IT), a probabilistically updated public record of agents’ histories. I find that a higher updating probability either brings the incentive-constrained output closer to its unconstrained value, or triggers the abandonment of money. In the first case the higher updating probability induces both higher inflation and a lower welfare cost of inflation. In the second case, welfare is higher than with the lower updating probability, but inflation’s welfare cost measured in a standard way is also higher. Copyright Springer Science+Business Media, LLC 2007Money, Inflation, Information technology, Welfare cost of inflation, E0, E52,

Prizes for basic research: Human capital, economic might and the shadow of history

Global economic trends, Basic research, Human capital, Winner-takes-all, F15, F21, O3, N4,