Towards a Puviani’s Fiscal Illusion Index

This paper presents an index of Fiscal Illusion for 68 democratic countries from 1960 to 2006. The theory of Fiscal Illusion studied relates to a wrong perception of government budget aggregates from the voters’ and taxpayers’ perspectives. In the construction of the index, methodological issues were carefully taken into account. The results obtained reveal that Fiscal Illusion varies greatly around the world. Countries such as Mali, Pakistan, Russia, and Sri Lanka have the highest average values over the time period considered, while Austria, Luxembourg, Netherlands, and New Zealand have the lowest. Regarding the time dimension, between 1980 and 1995 there was a significant decrease in the average value of the index across countries, suggesting a reduction in the adoption of Fiscal Illusion practices during this period. After 1995, the index remained stable in most countries.Fiscal Illusion; Indexes/Indicators; Democracy.

Has Trade Openness Increased all Portuguese Public Expenditures? A Detailed Time-Series Study

This work aims at identifying the public outlays that has been influenced by the growth of Portuguese trade openness since the end of World War II. For the Portuguese reality, it is one of the first attempts to discuss a large set of simultaneously tested control variables. For this purpose, the methodology started from a model that tries to the public expenditures to a system of simultaneous macroeconomic forces and, for testing, it followed the steps associated with cointegration analysis. Using the most convenient techniques, a restrictive set of four expenditures (subsidies, interest payments, other current expenditures, and total public expenditures as a proportion of GDP) was found among the wider set suggested by the Literature. The nature of these expenditures supports the claim that, for the Portuguese case, a particular validity of the compensation hypothesis has been observed. The achieved evidence promotes an important rule: in addition to there being a long-term relation between (some) public expenditures and trade openness, short-term relations may also appear.globalization, economic policy, government expenditure composition

The importance of the regional development on the location of professional soccer teams. The Portuguese case 1970-1999

This work aims at testing the hypothesis “The economic development level of a region influences the presence of professional soccer teams in the country’s first league, which have their head offices in that region”. Using a rational choice model and working with binary time-series cross-section data, this work focuses on the Portuguese case, from 1970 to 1999. The results corroborate the main importance of three factors, which increase the probability that a municipality has the head office of a team that plays in the first league: the per capita revenue, the level of infrastructures and the demographic dimension.Regional development; Sports; BTSCS; logit models

Elasticities of Regional and Local Administrations Expenditures - the Portuguese case

This work analyses the evolution of real public expenditures of local and regional administrations (LRA), in Portugsl, in the period after the Second World War. It also aims to estimate the elasticities associated to determinants, which explain the found growth. As most relevant results, it is focused that real public espenditures of LRA did not increase in a constant way - the most significant period of growth was between 1974 and 1990. A long-term relation was found among real public expenditures of LRA ( as a proportion of real Gross National Product), the Number of Employees in Public Administration, the Number of Unemployed and Public Revenues. These results are consistent with the bureaucracy being a source of discouragement referring to the decentralized public expenditures.Public Expenditures; Cointegration; Decentralization

Sins of the elder: Fiscal illusion in democracies.

This work discusses the implications of democratic maturity on levels of Fiscal Illusion. Its main contribution is to identify the relevance of good-governance institutions that prevent incumbents in established democracies from degenerating into electoral rent-seekers. This work develops a model that converges with a Gordon (1989) type theorem. This theorem predicts that some countries ruled by incumbents are more likely to revert to FI practices as the electorate’s maturity increases and if there are no strong restrictions on the social acceptance of political rents. Our empirical results show that democratic maturity tends to diminish fiscal illusion.Democratic maturity; Fiscal Illusion; rent-seeking.

Measuring export competitiveness: revisiting the effective exchange rate weights for the euro area countries

This article addresses the competition faced by exporters as a particular motivation to compute an effective exchange rate, discussing some important implications of the simplifying assumptions usually made regarding the selection of competitors and differences in product specialization. Firstly, the selection of competitors is not limited to the countries initially chosen according to their share in exports. Secondly, competition in third markets is evaluated in order to account for the different product specialization of each country. This different approach is then applied to the 12 euro countries using data for 2004.

Elections, Fiscal Policy and Fiscal Illusion

This paper tests the joint hypotheses that policymakers engage in fiscal policy opportunism and that voters respond by rewarding that opportunism with higher vote margins. Furthermore, it investigates the impact of fiscal illusion on the previous two dimensions. Empirical results, obtained with a sample of 68 countries from 1960 to 2006, reveal that opportunistic measures of expenditures and revenues generate larger winning margins for the incumbent and that the opportunistic manipulation of fiscal policy instruments is larger when the current government is less likely to be reelected. Furthermore, fiscal illusion contributes to the entrenchment of incumbent policymakers in office and promotes opportunistic behaviour.fiscal policy, voting, opportunism, fiscal illusion

Generation of field mediated three qubit entangled state shared by Alice and Bob

A scheme to generate shared tripartite entangled states, with two-trapped atoms in a cavity held by Alice (qubits A1 and A2) entangled to a single trapped atom in a remote lab owned by Bob (B), is proposed. The entanglement is generated through interaction of trapped atoms with two mode squeezed light shared by the two cavities. The proposed scheme is an extension of the proposal of ref. [W. Son, M. S. Kim, J. Lee, and D. Ahn, J. Mod. Opt. 49, 1739 (2002)], where the possibility of entangling two remote qubits using a bipartite continuous variable state was examined. While the global negativity detects the free entanglement of the three atom mixed state, the bound entanglement is detected by the negativity calculated from pure state decomposition of the state operator. The partial negativities calculated by selective partial transposition of the three atom mixed state detect the pairwise entanglement of qubit pairs A1B, A2B, and A1A2. The entanglement of three atoms is found to be W-like, no GHZ like quantum correlations being generated.Comment: 14 pages, 06 figures, section IV revised, Other minor changes to improve readabilit