Collective action problems:Disentangling possible feedback loops between government policies and the public’s value-change

Solving collective action problems, such as poverty reduction or climate change, depends on interactions between governments' and voters' preferences regarding pro-social actions. This paper examines whether the overall direction of change in pro-social public policy precedes public value-change, rather than the other way around. We examine change in the public’s pro-social values in six European countries, as measured by the European Social Survey (ESS) during 2002-2012. In these countries, we conducted an expert survey to rate governmental policy that expresses these values over the same period, thereby examining value-change in governmental policy. The chronological comparison of value-change of the public with that of respective governments suggests that changes in pro-social government policies may drive public value-change rather than vice versa. This complements previous studies focused on the opinion-policy connection. Possible political implications are discussed. The promising findings of this initial study point to the importance of conducting larger-scale future studies

Vertical externalities with lump-sum taxes: how much difference does unemployment make?

This paper analyses how the existence of unemployment affects the conventional approach to vertical externalities. We discuss the optimality rule for the provision of public inputs both in an unitary and a federal country. Our findings show that decentralizing the spending responsability on public inputs can bring its optimality rule closer to the production efficiency condition. Moreover, we describe the inability of the federal government, behaving as Stackelberg leader, to replicate the unitary outcome, unless to have new policy instruments at government’s disposal

Hidden costs of cuts: austerity, civil service management and the motivation of public officials in Central and Eastern Europe after the crisis

The implementation of austerity measures presents a dilemma for governments. While austerity measures such as cutbacks aim to reduce costs and enhance public sector efficiency, the same measures might undermine the motivation of employees and, consequently, the prospects of effectively implementing austerity programmes. Based on a survey of ministerial officials in Poland and Latvia, this article finds that the scale of cutbacks explains a larger decline of staff motivation in Latvia than in Poland. The article further shows that motivation was more likely to decrease after the crisis if austerity measures involved cutbacks such as staff reductions, recruitment freezes, and a reduction of training opportunities

Editorial statement: The first year of the European Journal of Government and Economics

<p>In this editorial statement we present a balance of the first year of life of the <em>European Journal of Government and Economics</em>. We discuss the main developments that concern the journal’s indexation by academic databases. We also comment on the approval of a code of publication ethics and malpractice. Finally, we emphasise the dangers of excessive technical sophistication and the need to keep an integrated approach between the fields of political science and economics, according to the spirit of the journal.</p

A Sharpe-ratio-based measure for currencies

The Sharpe Ratio offers an excellent summary of the excess return required per unit of risk invested. This work presents an adaptation of the ex-ante Sharpe Ratio for currencies where we consider a random walk approach for the currency behavior and implied volatility as a proxy for market expectations of future realized volatility. The outcome of the proposed measure seems to gauge some information on the expected required return attached to the “peso problemâ€

Corruption and Growth: Evidence from the Italian regions

This paper investigates the impact of corruption on economic growth in the Italian Regions. We estimate a dynamic growth model for the period 1980-2004 addressing both the potential bias of the measures of corruption and the endogeneity between corruption and economic development. We find strong evidence of a negative correlation between corruption and growth. Moreover, since government intervention has been traditionally used to reduce income differentials between the Northern and the Southern regions, we also analyze the interaction between corruption and government expenditure. Our results indicate that corruption undermines the positive impact that public expenditures have on economic growth

Multilevel governance and Smart Specialization in EU regions: an evidence-based critical review

This paper critically reviews the literature on multilevel governance issues in support of implementing Smart Specialization policies in EU regions. Using an evidence-based critical review approach, key literature that draws on three critical concepts is explored: multilevel governance, regional innovation policy, and Smart Specialization in various governance conditions and diverse regional resources. The evidence reviewed points to the critical role of multilevel governance in implementing Smart Specialization. Effective coordination mechanisms are essential building blocks to encounter the challenges of multilevel governance for Smart Specialization. More consequential, however, are substantial synergies that are solid, harmonious, and balanced among multi-stakeholders within institutions and across levels of government. This paper contributes to the limited literature on multilevel governance in support of the Smart Specialization policy. Further studies considering different types of regions are recommended to enrich future literature

FDI in Selected Developing Countries: Evidence from Bundling and Unbundling Governance

The objective of this study is to assess governance drivers of FDI in a panel of BRICS and MINT countries for the period 2001-2011.&nbsp; We bundle and unbundle governance determinants using a battery of contemporary and non-contemporary estimation techniques. Our findings reveal the following: Firstly, for both contemporary and non-contemporary specifications, while the majority of our governance determinants of Gross FDI are significant, they are overwhelmingly insignificant for Net FDI. Secondly, the significance of the governance dynamics in increasing order of magnitude are general governance, political governance, economic governance, political stability, regulation quality and government effectiveness. Thirdly, for non-contemporary specifications, the significance of governance variables is as follows in ascending order of magnitude: economic governance, institutional governance, general governance, corruption-control, political governance and political stability. The importance of combining governance indicators is captured by the effects of political governance, economic governance and institutional governance. The results indicate that the simultaneous implementation of the various components of governance clarifies a country’s attractiveness for FDI location. Policy implications are discussed with particular emphasis on the timing of FDI and its targeting

The Link between Quality of Governance and Stock Market Performance: International Level Evidence

The present study investigates the link between quality of governance and stock market performance within the context of international markets. The study employed the Fixed Effect model using 23 countries with complete relevant data for the period spanning from 1996 to 2014. The study reveals that, quality of governance as captured by Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption significantly affect stock market performance. Varying effects are produced when the countries are decomposed into income classifications. What is more, the findings and suggestions of this study suggest that quality of government significantly affect foreign direct investment and could have interesting policy implications. The main value of this paper is to examine the link between quality of governance and stock market performance within the context of international markets

A first formal approach to animal spirits beyond uncertainty

Standard Macroeconomics treats animal spirits as a source of uncertainty disturbing otherwise rational expectations. But, Keynesian animal spirits ensue from suboptimal emotional responses to socioeconomic status change beyond matters of uncertainty. This paper identifies such spirits with the disturbance from the optimal decision-making implied by an emotional well-being utility function. The introduction of a policy-maker, holding its own view of private welfare in a society of emotional individuals, generates by itself, i.e. in the absence of animal spirits, uniform business fluctuations. This is the result of the income redistribution needed to reconcile the policy-maker’s with the emotional individual’s view of private welfare. Consequently, if animal-spirits induced fluctuations are already present when a policy-maker is introduced in the economy, the aim of policy intervention should be the design of that income redistribution that would not aggravate the business cycle but that would end up in uniform only cycles, with the aid perhaps of discretionary interest rate policy. Nevertheless, if animal spirits do not exist when the policy-maker enters the system, the income-redistribution induced cycles may incite such spirits by themselves in which case the cycles will not be of the uniform type. All comes down to “income and emotionâ€, to an ageless and ecumenical fact of life, complicated purposefully or not by authority