Fiscal Prudence Research Articles

The rock of stability? The political economy of the Brown government

This article seeks to demonstrate how each of the three core components of the British model of political economy developed during Gordon Brown's tenure as Chancellor of the Exchequer, and the assumptions underlying them, have been undermined during Brown's first 16 months as prime minister. Each of the trends that have contributed towards the UK's economic transition from growth to recession is shown to have begun during Brown's tenure as chancellor. First, the British model of monetary policy, and Brown's claim to have replaced ‘stop-go’ short-termism with macro-economic stability, is shown to have been undermined by a year of financial market volatility, rising inflation and broader deteriorating economic performance. The second, the British model of fiscal policy, and Brown's claim to have locked in fiscal prudence, is shown to have dissipated further since June 2007. In particular, the twin fiscal benchmarks of Brown's model, the Golden Rule and the Sustainable Investment Rule, are respectively shown to face imminent transgression. Third, the British model of competitiveness policy is shown to have failed to redress any of the long-term supply-side weaknesses that have contributed to the UK's relative economic decline during the twentieth century. Above all else, the Brown government's faith in a risk-based approach to financial regulation is shown to have been punctured by the domestic financial instability arising from the collapse of Northern Rock and Bradford and Bingley, and the need to recapitalise the major UK-based banks.

The Main Street Economic Recovery Proposal: Will it Bring Us out of Recession?

This is a policy paper on the stimulus plan as of December 2008. Fear of a deep recession has led policy makers to propose an unprecedented stimulus package to save the economy, a sort of Main Street economic recovery package that would rely heavily on government-sponsored infrastructure projects to create jobs and stimulate economic activity. The problem is real. The unemployment rate is 6.7 percent and rising: 10.3 million American workers are unemployed, and 2.7 million jobs were lost in the last year alone. If history is any guide, however, the bailout the government proposes won't work. Instead, policy makers should focus on the fundamentals of economic behavior and the incentives faced by individuals, governments, and entrepreneurs. Reducing taxes, insisting on fiscal prudence on the federal level, and encouraging it on the state and local level by cutting, rather than increasing, public spending would do far more to help the economy than any of the proposals currently being discussed in Washington.

Do Assets Affect Well-Being? Perceptions of Youth in a Matched Savings Program

ABSTRACTThis article presents data from a qualitative study of a youth savings account program. In-depth interviews were conducted with 30 youth ages 14–19 between November 2004 and February 2005 who were participants in the Saving for Education, Entrepreneurship, and Downpayment (SEED) national demonstration project. Our findings focus on youths' perceptions of the psychological, behavioral, and social impacts of savings-program participation. Five of our hypothesized effects were found including: (1) fiscal prudence, (2) view of self, (3) future orientation, (4) sense of security, and (5) financial knowledge. Youth did not generally perceive that savings participation had impacts on: (1) family interactions, or (2) community involvement. Following the presentation of findings, our discussion centers on implications for theory building, research, and policy and program design.

The Political Economy of Fiscal Prudence in Historical Perspective

This paper uses a new panel data set to perform a statistical analysis of political regimes and financial rectitude over the long run. Old Regime polities in Europe typically suffered from fiscal fragmentation and absolutist rule. By the start of World War I, however, many such countries had centralized institutions and limited government. Panel regressions indicate that political transformations towards centralized and limited regimes led to significant improvements in fiscal prudence. Dynamic estimations and structural breaks tests reinforce these findings. The results suggest that good financial housekeeping is one mechanism through which political reforms reduce sovereign credit risk.

Financial Liberalization, Fiscal Prudence and Growth: Panel Evidence from 1980–2003

The main objective of this study is to investigate empirical links between financial liberalization, fiscal prudence and growth. More specifically, the hypothesis of whether financial liberalization coupled with fiscal prudence fosters or hinders growth is examined. We use an unbalanced panel dataset of 75 countries and quinquennial averages from 1980 to 2003. Through fixed effects estimations, we uncover that even though financial liberalization does not affect growth significantly, higher degree of financial liberalization in the presence of higher level of fiscal prudence leads to faster growth.

Singapore's recurrent budget surplus: The role of conservative growth forecasts

Aided by strong economic growth the Singapore government has been able to keep both the tax rate and the government expenditure rate low and yet generate healthy budget surpluses year after year. Although the gap between the tax rate and the government expenditure rate is the obvious source of the surplus, this paper shows the presence of another subtle source, a surplus generated by conservative growth forecasts that lay the base for revenue projections. An omitted variable bias in a model based on the tax smoothing hypothesis led us to consider the role played by the growth forecast error in predicting the budget surplus. Our computations show that on average the under-prediction of the tax base (GDP) must have contributed about S$ 376 million (or about 13%) per year to the realized budget surplus over the period 1990–2005. This appears to be simply a by-product of the Government's philosophy of “fiscal prudence”.

Barbados: 2008 Article IV Consultation: Staff Report; Staff Statement; and Public Information Notice on the Executive Board Discussion

Barbados’s 2008 Article IV Consultation is focused on policies to balance the conflicting risks to inflation, growth, and medium-term sustainability. Although the government has maintained some policy space by postponing the liberalization of the capital account, its options are constrained by high public debt and the peg to the U.S. dollar. Downward-trending annual inflation rates masked pent-up price pressures that have been unleashed. The government stressed its commitment to fiscal prudence, with a view to balancing the central government accounts over the medium term.

Statistical Significance of Less Common Load Combinations

The purpose of this work is to provide a simple, rational basis for combining bridge loads in the extreme event limit state. Classic methods are used to evaluate the probabilities of traffic, seismic, and storm-related bridge loads occurring simultaneously and in various intensities. The loads are modeled using a Poisson distribution, which circumvents problems encountered when using normal- or log-normal distributions. The hazard level is evaluated directly using a negative exponential function in the time domain. An acceptable hazard level for combined events is subjectively based on that deemed acceptable for the strength limit state and extreme events occurring individually, as well as fiscal prudence. It is shown that (1) application of seismic loads to a structure already subjected to the combined effects of degradation, local pier scour, and contraction of the waterway is not justifiable; (2) live loads reduced from the anticipated 75-year maximum to a 2-week maximum are appropriate when designing a bridge in its 100-year “scoured-out” storm configuration; and (3) vehicular live loads are likely to be on a bridge during a seismic event, but other issues need to be considered.

Democratic Republic of S�o Tom� and Pr�ncipe: Debt Relief at the Completion Point Under the Heavily Indebted Poor Countries Initiative and Under the Multilateral Debt Relief Initiative

This paper examines the consideration of the Democratic Republic of São Tomé and Príncipe’s debt relief at the completion point under the enhanced Initiative for Heavily Indebted Poor Countries and Debt Relief under the Multilateral Debt Relief Initiative. Lower-than-projected export receipts largely owing to drought conditions and lower-than-expected tourism receipts, changes in cross-currency exchange rates, and variations in discount rates have been all unambiguously exogenous and outside the control of the authorities. There is need for continued fiscal prudence, policies to support broad-based growth and export diversification, continued donor support, and prudent debt management.

Costing and Budgeting for Preservation and Conservation in the East And Southern Africa Regional Branch of the International Council on Archives (ESARBICA) Region

Within the Eastern and Southern Africa Regional Branch of the International Council on Archives (ESARBICA) region, little or no information is available on budgeting systems for archival institutions in the region to enhance preservation and conservation programs. Preservation and conservation requires both economic time management and fiscal prudence. With limited budgets throughout the region, there is an acute need for proper budgeting and costing in an effort to maximize the limited resources. This paper attempts to highlight the importance of budgeting and costing in conservation and preservation practices by archival institutions in the ESARBICA region. The paper concludes by proposing the need for preservation and conservation managers to formulate a deliberate and conscious strategy aimed at promoting best and sound accounting practices to ensure maximization of resources. This would convince the skeptics of the necessity of channeling more funding to promote preservation and conservation activities. ESARBICA Journal Vol.23 2004: 68-74

Fiscal policy and public debt sustainability in the EMU

Monetary Union (EMU) over the last few years. Several EU members, including the three largest Euro Area countries, have repeatedly failed to fulfill the public deficit criterion of a general government (Maastricht) deficit of less than 3 percent of GDP. Moreover, although politically less spectacular, the central government debt of several countries remains not only considerably higher than the 60 percent of GDP mark prescribed by the Maastricht criteria but has also been rising during the last few years. Although generally the transition to the new common EMU currency was remarkably smooth and the euro is now generally accepted within its area of circulation, failure to meet the self-imposed fiscal policy restrictions may undermine the credibility of macroeconomic policies in Europe. In principle, there are two possible reactions to the gap between targeted and actual government deficits and debt. Either policy makers may intensify their efforts to reach the original goals in spite of increasing difficulties, like low growth and high unemployment, or the targets have to be revised downwards. In the EMU, the latter course of action was pursued in 2005 by (moderately) weakening the Stability and Growth Pact. It is clear that in no way can this amendment alleviate the problems resulting from the discrepancy between the need for fiscal prudence and the day-today pressures of partisan and interest-led politics. In particular, the long-run detrimental effects of high and increasing public debt threaten the stability of the fiscal and monetary policy arrangements in the EMU. To deal with these problems, the Ludwig Boltzmann Institute for Economic Analyses (now succeeded by the Robert Holzmann Institute for Economic

Experiences of recently relocated residents of a long-term care facility in Ontario: Assessing quality qualitatively

Background Canadians overwhelmingly support universal coverage for health services and seniors’ entitlement to high standards of care in long-term care facilities (LTCFs). Government rhetoric reflects these values, but claims of fiscal prudence often means translation into policy and improved care is uneven. Ontario is moving towards standardized “quality of care” measures, but such measures often ignore residents’ views and socio-psychological issues. Objectives and setting Assessment of residents’ experiences in a new “state of the art” LTCF and their understanding of “quality of care” shortly after relocation from two older hospital style facilities. Design and methods Unobtrusive observations of activities of residents and staff in the LTCF by several researchers generated an analysis of field notes. In addition, one-on-one, in-depth, semi-structured interviews with residents generated qualitative interview data, analyzed utilizing a grounded theory approach. Participants All residents deemed either moderately cognitively impaired or not impaired were invited to participate. Of these two groups, 18 seniors (five male and 13 female) with a mean age of 84.35 yr agreed to be interviewed. Participants were all Caucasian and from a wide variety of social-economic levels. Results Two meta-themes “Relationships are the foundation of quality care” and “Waiting, activity & grieving loss of personhood” best explained residents’ experiences of the LTCF. The two meta-themes were inter-connected and reflected the centrality of socio-psychological “quality of life” issues, especially resident–staff relationships as prominent aspects of seniors’ understanding of quality of care. Improvements in facilities and programs were undermined by inattention to staff–patient ratios and continuity in staffing. Conclusions Seniors said little regarding the fabulous new facility, but discussed quality of care as a socio-psychological concept intimately connected to staff relations. Government and administrative inattention to issues of sufficient funding for staff, relationship needs and continuity of care for seniors threatened to undermine residents’ experiences of meaning, as well as any potential benefits from facilities and program improvements.

Making Fiscal Space Happen: Managing Fiscal Policy in a World of Scaled-Up Aid

Debt relief and the scaling up of aid to low-income countries should allow for greater fiscal space for expenditure programmes to create long-term growth and lower poverty rates. But designing a suitable medium-term fiscal framework that fosters a sustainable delivery of better public services and infrastructure while maintaining a credible commitment to fiscal prudence confronts many challenges. This paper discusses what low income countries can do to shape fiscal policy frameworks that are ambitious in trying to absorb additional aid while still ensuring longer-term sustainability for government expenditure programmes and finances. It suggests what approaches can be used to manage the greater fiscal policy risks associated with a scaled up aid environment, including coordination with monetary policy. The paper also discusses what institutional changes are needed if donors and countries are to facilitate the implementation of a higher level of aid-financed spending programmes.

Making Fiscal Space Happen: Managing Fiscal Policy in a World of Scaled-Up Aid

Debt relief and the scaling up of aid to low-income countries should allow for greater fiscal space for expenditure programs to create long-term growth and lower poverty rates. But designing a suitable medium-term fiscal framework that fosters a sustainable delivery of better public services and infrastructure while maintaining a credible commitment to fiscal prudence confronts many challenges. This paper discusses what low-income countries can do to shape fiscal policy frameworks that are ambitious in trying to absorb additional aid while still ensuring longer-term sustainability for government expenditure programs and finances. It suggests what approaches can be used to manage the greater fiscal policy risks associated with a scaled-up aid environment, including coordination with monetary policy. The paper also discusses what institutional changes are needed if donors and countries are to facilitate the implementation of a higher level of aid-financed spending programs.

The Turkish encounter with neo-liberalism: economics and politics in the 2000/2001 crises

Turkey initiated an extensive dis-inflation program in December 1999 backed and supervised by The International Monetary Fund (IMF). The program aimed at decreasing the inflation rate to a single digit by the end of 2002. It exclusively relied on a nominally pegged (anchored) exchange rate system for dis-inflation and on fiscal prudence. In February 2001, however, Turkey experienced a very severe financial crisis, which deepened and continued to-date. The official stance is that the crisis was the result of the failure of the public sector to maintain the austerity targets and the failure to implement fully the free market rationale of globalization. We argue in this article that, contrary to the official wisdom, the current economic and political crisis is not the result of a set of technical errors or administrative mismanagement unique to Turkey, but is the result of a series of pressures emanating from the process of integration with the global capital markets. We further provide a discussion on the fundamental parameters of the Turkish politics connected with the crisis.

Africa Research Bulletin, Economic, Financial and Technical Series, June 16th-July 15th 2005

Africa Research Bulletin: Economic, Financial and Technical SeriesVolume 42, Issue 6 p. 16571-16606 Africa Research Bulletin, Economic, Financial and Technical Series, June 16th–July 15th 2005 First published: 11 August 2005 https://doi.org/10.1111/j.1467-6346.2005.00230.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Abstract In This Issue G8 Gleneagles Summit 16576 Malawi Fiscal Prudence 16581 South Africa Jobs at Risk 16583 Gold Industry Declining? 16600 Zambia Turning the Corner 16584 Nigeria Debt Relief 16589 Stock Markets High Growth 16590 Contents Continental Developments 16575 Policy and Practice 16579 Communications and Transport 16592 Commodities 16596 Industries 16602 Economic Aid 16605 Rates 16605 Index 16606 Volume42, Issue6August 2005Pages 16571-16606 RelatedInformation

Regulación del capital: A favor y en contra

La liberalización del mercado de capitales de los últimos veinte años ha traído consigo turbulencias bursátiles y monetarias que han afectado tanto a los países industrializados como a los países en desarrollo. Hasta hace poco se pensaba que este aspecto de la globalización era un coste que merecía la pena pagar para lograr una eficiente asignación de los recursos mundiales. Este análisis sobre el tema es de asequible lectura al tiempo que riguroso sobre las cuestiones más importantes de la economía internacional actual. En él se exponen los recientes acontecimientos acontecidos en Asia e Iberoamérica. Desde la crisis de la deuda iberoamericana, la prudencia fiscal y monetaria se ha convertido en la nueva ortodoxia de aquellos gobiernos que quieren recoger los beneficios procedentes de su participación en el nuevo mercado global. Estos sueños se vieron interrumpidos por la reciente turbulencia asiática que comenzó con las devaluaciones obligadas del Baht tailandés en julio de 1997. Lo que inicialmente se percibía como un correctivo del tipo de cambio sobrevalorado de un país menor, se transformó rápidamente en un huracán financiero que amenazó con engullir a las economías industrializadas. Hoy, la globalización se ha convertido en el enemigo de gobiernos tan dispares como los de Rusia y Malasia. Las crisis financieras que golpearon a Asia hace dieciséis meses han suscitado una vez más la cuestión de si es posible una razonable estabilidad económica en un mundo con mercados de capitales integrados.

Good governance and the dilemma of development: what lies beneath?

Ideas unleash human imaginations, as well as hold these imaginations on a leash. However, they are scarcely disarticulated from material realities. Together with these realities, they take on the form of discourses - words, concepts and thoughts that characterize how we live. 'Good governance' has come to occupy such a space in the practical and theoretical discussions on development. This paper attempts to put current understanding into perspective, by locating specific trends in government reform and public expenditure. It realizes that the nature of the Indian state, international finance and fiscal prudence, rather than responsiveness to democratic demands of poor people, inform the discourse on 'good governance'. Such thinking among the key players poses a dilemma to the theory and practice of development, because it reflects the tendency of the state to shy away from responsibility to its citizens. The discourse on 'good governance' must articulate democratic aspirations.

Good governance and the dilemma of development: what lies beneath?

Ideas unleash human imaginations, as well as hold these imaginations on a leash. However, they are scarcely disarticulated from material realities. Together with these realities, they take on the form of discourses - words, concepts and thoughts that characterize how we live. 'Good governance' has come to occupy such a space in the practical and theoretical discussions on development. This paper attempts to put current understanding into perspective, by locating specific trends in government reform and public expenditure. It realizes that the nature of the Indian state, international finance and fiscal prudence, rather than responsiveness to democratic demands of poor people, inform the discourse on 'good governance'. Such thinking among the key players poses a dilemma to the theory and practice of development, because it reflects the tendency of the state to shy away from responsibility to its citizens. The discourse on 'good governance' must articulate democratic aspirations.

The Impact of Proportional Representation on Government Effectiveness: The New Zealand Experience

It is often claimed that proportional representation (PR) undermines government effectiveness, including decisional efficacy, fiscal prudence, electoral responsiveness and accountability. Drawing on New Zealand's experience since the introduction of a mixed‐member proportional (MMP) electoral system in 1996, this article examines the impact of the new voting system on government effectiveness. Although government durability has been substantially reduced and the policy‐making process has become more complex, governments under MMP appear to be no less able to address major policy problems or respond to changing economic circumstances. Moreover, New Zealand has maintained continuous fiscal surpluses under MMP — a radical departure from the protracted, and often large, deficits that characterised the previous two decades under a majoritarian electoral system.