Pressures to increase public expenditure and patterns of procyclical expenditure

This paper draws on the literature that explains why governments spend procyclically, to predict the pattern of cyclical expenditure across government budgets. Procyclical expenditure increases at a faster rate than income in economic upturns and falls at a faster rate in recessions. The more politicians indulge pressures to increase expenditure in an economic upturn, the more they find it difficult to sustain expenditure in a recession. In this paper, differences in politicians' willingness to increase expenditure in an economic upturn are relevant when predicting patterns of cyclical expenditure across budgets. Predictions are tested with reference to expenditures from government budgets in 23 OECD countries (over the period 1995-2006). Central government capital expenditure and sub-central government expenditure are systematically more procyclical than expenditures from other budgets

Fiscal illusion and cyclical government expenditure: State government expenditure in the United States

© 2016 Scottish Economic Society. A well-established literature argues that fiscal illusion increases the level of government expenditure. This article focuses on the proposition that fiscal illusion also influences the cyclicality of government expenditure. Predictions are formed with reference to government reliance on high income elasticities of indirect tax revenues and on intergovernmental transfers. Predictions are tested with reference to the expenditures of 36 states in the United States from 1980 to 2000. Government expenditures are more likely to be procyclical when citizens systematically underestimate the cost of taxation

TOWARDS MORE SOCIALLY RESPONSIBLE COCOA TRADE

Cocoa is a classic Third World cash crop. It is produced mostly by small, poor farmers in Africa, while its products - chocolate and sun tan oil - are consumed by rich consumers in North America and Europe. A few West African economies are highly dependent on foreign exchange earned from cocoa sales. It has therefore been targeted by Oxfam's Fair Trade initiative, and IITA's Sustainable Tree Crops Program (STCP) is launching an effort of become more aligned with consumer's social preferences. The most obvious dimension to addressing consumer demand for cocoa products is to insure provision of high quality products, which has become problematic since structural adjustment programs have dismantled the African parastatals governing cocoa production and exports. Cocoa production would also likely meet requirements for organic certification in many instances, but legitimately obtaining that certification would be costly. Cocoa also offers several dimensions through which consumers might, by their market choices, insure more socially responsible outcomes. Both the STCP and Fair Trade initiatives focus on the potential for poverty alleviation and on achieving sustainable development for poor African farmers. Those farmers are stewards of the rain forest, and their production decisions can determine whether cocoa remains a rain forest friendly crop, so global environmental impacts can also be influenced by cocoa markets. The most recent, most widely publicized, and most intractable issue to hit the cocoa market is the allegation that child labor may be used on those poor African cocoa farms. The first objective of this paper will be to describe this situation, and the problems of cocoa markets, focusing on what has been happening in Africa. Particular attention will be paid to the problems of implementing structural adjustment reforms, and the increasing role played by multi-national processors as they backward integrate into the African marketing systems. Then the Fair Trade and STCP initiatives will be described. Finally, a conceptual examination of marketing systems between the African cocoa farm and the chocolate manufacturer, emphasizing institutional arrangements, is used to assess the likely success of these initiatives in achieving their social goals.Institutional and Behavioral Economics, International Relations/Trade,

'Leaning against an open door' : ideology and the cyclicality of public expenditure

When is government expenditure likely to be procyclical? While economists tend to anticipate counter-cyclical expenditure, recent studies report procyclical expenditure. This paper explores the impact of political ideology on the cyclicality of government expenditure. Predictions are tested with reference to government expenditure in the USA between 1950 and 2008. The likelihood of procyclical expenditure increases if groups that press for increased public expenditure are ‘... leaning against an open door’

CAN U.S. AGRICULTURE PRODUCE THE BASIC FOODSTUFFS CONSISTENT WITH THE DIETARY GUIDELINES?

Food Consumption/Nutrition/Food Safety,

Globalization Crises, Trade,and Development in Vietnam

Vietnam has been among the most successful East Asian economies, especially in weathering the external shocks of recent globalization crises—the 1997-98 Asian financial crisis and the 2008-09 great recession, financial crisis and collapse of global trade. Its success contradicts its characterization as an example of export-led growth and highlights the role of the state, particularly in maintaining and influencing investment. Examination of economic performance and policy responses shows rising dependence on foreign finance around each crisis, and actions by the government to counteract that dependence and bolster the domestic economy while continuing to restructure the economy toward greater emphasis on the private sector. Growth, employment and poverty alleviation have been maintained at the expense of renewed inflation, larger budget deficits, and currency depreciation. The ‘stop-go’ nature of present …trade and development, trade liberalization, foreign direct investment, globalization, WTO accession, asian financial crisis, great recession, Vietnam

PREFERENTIAL TRADE ARRANGEMENTS IN APPAREL EXPORTS FROM THE CARIBBEAN TO THE U.S.: A DYNAMIC INVESTMENT APPROACH

A dynamic profit maximization model with adjustment costs of capital is implemented to study US outward processing trade in apparel and to examine the effects of preferential trade policies in the long and short runs. The model is used to determine the role of foreign investment and to simulate outcomes due to the introduction of the Trade and Development Act of 2000 and the elimination of Multi-Fiber Agreement quotas in selected Caribbean countries. The transitional dynamics as well as long-run costs and benefits of these trade policy changes are evaluated. While outward processing trade expands with preferences under the Caribbean Basin Initiative, policies typically require five years to be fully effective, and competition in freer markets could reverse the benefits realized under preferential trade.International Relations/Trade,

Price Elasticities of Key Agricultural Commodities in China

We estimate a simultaneous equations model of Chinese markets for wheat, rice, corn, pork, and poultry. Elasticities for consumption, feed demand, production, stocks demand, and foreign trade fall within the range of results from previous studies, and are reasonable magnitudes. China has market power in the trade for all commodities.Marketing,

WHEAT-IMPORTING STATE TRADING ENTERPRISES: IMPACTS ON THE WORLD WHEAT MARKET

The U.S. is seeking further disciplines on STEs in upcoming WTO negotiations on agriculture. The prevalence and reform of state trading among wheat importers is examined. Behavior investigated across countries and over time includes domestic price stabilization, world price transmission, import levels and sources, and grain quality.International Relations/Trade,

Vietnam’s Accession to the WTO: Lessons from Past Trade Agreements

This paper examines Vietnam’s experience with bilateral trade agreements and compares subsequent outcomes with predictions from existing computable general equilibrium (CGE) models. Those model based assessments have greatly underestimated the impact of past agreements. Tariff reform is not the main factor driving economic adjustments, and market imperfections mean there is potential for greater output and trade expansion. The key questions to ask in future research are what critical new institutional reforms WTO accession will bring, and what incentives will be put in place to determine the evolution of investment by sector.trade liberalization; bilateral trade agreements; WTO accession; Vietnam