Funding Rules Research Articles

The European Fiscal Compact: A Counterfactual Assessment

Faced with the global financial crisis and an increasingly worrisome sovereign-debt crisis, the Eurozone countries are rethinking their fiscal governance. This paper discusses the different reforms and subsequent fiscal rules which have emerged since 2011. It assesses the impact of fiscal rules on the output gap and inflation rate of three representative countries of the Eurozone. By means of a counterfactual, the rules based upon their macroeconomic outcomes are ranked. The new debt reduction rule would certainly lead to lower debt levels, hence to larger fiscal margins for maneuver in the future but, in steep contrast with the golden rule of public finance, it would be very costly to implement as the requirement to enforce a substantial consolidation in the short run would be considerably higher than that of a golden rule and would worsen the output gap and inflation rate. The cap on the cyclically adjusted deficit also leads to unfavorable outcomes whereas the Maastricht status quo, limiting overall public deficit, would be a “second best” behind the golden rule of public finance.

Twenty-five years of science-industry collaboration: the emergence and evolution of policy-driven research networks across Europe

This paper aims at examining the collaborative networks established during the seven Framework Programmes on Research and Technological Development (1984–2009). These networks are the result of self-organized partnering by different participating entities (industry, universities, research centers and technology users) in subsidized research joint ventures selected on a competitive basis under the thematic priorities and funding rules imposed by the European Union. Social network analysis tools are employed in order to describe and assess the architecture, and the dynamics of the networks that were developed in the context of each Framework Programme. Analysis of organizations’ positioning in the network space will show whether there are some pivotal actors with significant policy implications for knowledge and technology transfer. Last but not least, understanding how these network are formed and how they have evolved over time may provide useful policy implications for the design and structure of the current and future EU Programmes aimed at shaping and creating a unified European Research Area.

Expecting the unexpected: applying the Develop-Distort Dilemma to maximize positive market impacts in health

Although health interventions start with good intentions to develop services for disadvantaged populations, they often distort the health market, making the delivery or financing of services difficult once the intervention is over: a condition called the 'Develop-Distort Dilemma' (DDD). In this paper, we describe how to examine whether a proposed intervention may develop or distort the health market. Our goal is to produce a tool that facilitates meaningful and systematic dialogue for practitioners and researchers to ensure that well-intentioned health interventions lead to productive health systems while reducing the undesirable distortions of such efforts. We apply the DDD tool to plan for development rather than distortions in health markets, using intervention research being conducted under the Future Health Systems consortium in Bangladesh, China and Uganda. Through a review of research proposals and interviews with principal investigators, we use the DDD tool to systematically understand how a project fits within the broader health market system, and to identify gaps in planning for sustainability. We found that while current stakeholders and funding sources for activities were easily identified, future ones were not. The implication is that the projects could raise community expectations that future services will be available and paid for, despite this actually being uncertain. Each project addressed the 'rules' of the health market system differently. The China research assesses changes in the formal financing rules, whereas Bangladesh and Uganda's projects involve influencing community level providers, where informal rules are more important. In each case, we recognize the importance of building trust between providers, communities and government officials. Each project could both develop and distort local health markets. Anyone intervening in the health market must recognize the main market perturbations, whether positive or negative, and manage them so as to maximize the benefits to the health system and population health.

Did the first Global Fund grant (2003–2006) contribute to malaria control and health system strengthening in Timor-Leste?

BackgroundIn 2003, Timor-Leste successfully obtained its first Global Fund grant for a three-year programme for malaria control. The grant aimed to reduce malaria-related morbidity and mortality by 30 % by the end of the implementation.MethodsA mixed-methods approach was used to assess the impact of the grant implementation. Fifty-eight in-depth interviews, eight group interviews, 16 focus group discussions, and on-site observations were used. Morbidity data reported to the Ministry of Health were also examined to assess trends.ResultsThe National Malaria Programme with funding support from the Global Fund grant and other development partners contributed considerably to strengthening malaria control and the general health system. It also brought direct and indirect benefits to pregnant women and to the community at large. However, it failed to achieve the stated objective of reducing malaria morbidity and mortality by 30 %. The implementation was hampered by inadequate human resources, the rigidity of Global Fund rules, weak project management and coordination, and inadequate support from external stakeholders.ConclusionDespite limitations, the grant was implemented until the agreed closing date. Considerable contributions to malaria control, health system, and the community have been made and the malaria programme was sustained.

Priority-setting, rationing and cost-effectiveness in the German health care system

Germany has just started a public debate on priority-setting, rationing and cost-effectiveness due to the cost explosion within the German health care system. To date, the costs for German health care run at 11,6% of its Gross Domestic Product (GDP, 278,3 billion €) that represents a significant increase from the 5,9 % levels present in 1970. In response, the German Parliament has enacted several major and minor legal reforms over the last three decades for the sake of cost containment and maintaining stability of the health care system. The Statutory Health Insurance--SHI (Gesetzliche Krankenversicherung--GKV) is based on the fundamental principle of solidarity and provides an ethical and legal framework for implementing equity, comprehensiveness and setting the principles and rules for financing and providing health care services and benefits. Within the SHI system, several major actors can be identified: the Federal Ministry of Health, the 16 state ministries of health, the Federal Joint Committee (G-BA), the physicians (with their associations) and the hospitals (with their organizations) on the provider side, and the sickness funds with their associations on the purchasers' side. This article reviews the structure and complexities of the German health care system with its major players and participants. The focus will be put on relevant ethical, legal and economic aspects for prioritization, rationalization, rationing and cost-effectiveness of medical benefits and services. In conclusion, this article pleads for open discussion on the challenging subject of priority-setting instead of accepting the implicit and non-transparent rationing of medical services that currently occurs at many different levels within the health care system, as it stands today.

How Student Disability Classifications and Learning Outcomes Respond to Special Education Funding Rules: Evidence from British Columbia

In 2002, British Columbia eliminated supplemental grants to school districts for some students with special needs. This study provides estimates of the response of special needs designations and academic performance to this funding change. Using student-level panel data, we find that students were less likely to receive a gifted, moderate behavioural disorder, or mild mental illness designation under the new funding rules. We study standardized test scores in Grade 7, finding that the reading scores of gifted students declined substantially among those exposed to the new funding rules for the longest duration.

Sleeping with the enemy? On Hayek, constructivist thought, and the current economic crisis

AbstractThe current economic crisis challenges the constitutive rules of global finance. Despite its various roots, dynamics, and consequences, the current reform debate is surprisingly limited in scope: it focuses on possible changes of Basle II and thus banking regulation only. This article suggests that the reason for this ‘gap’ can be found in the idea of asymmetric information. The idea that the asymmetric dispersion of information is the ‘real’ cause of the crisis is reiterated constantly in public documents. However, the argument rests upon two assumptions: that crises are exogenous to otherwise efficient and stable markets, and that finance is an autonomous field where the primary focus of the current reform can then concentrate on its laws. It is thought that it is enough to reform financial markets to stabilise the global economy. This article suggests that this belief is utterly misguided and argues that a more comprehensive picture of the current turmoil needs to abandon exactly these two assumptions. To pursue such an avenue, this article provids an interpretation of Hayek's social theory.

A Better Mouse Trap: IRS Finalizes Regulations Treating Disregarded Entities as Persons for Purposes of Conduit Financing Regulations

To avoid potential structuring to circumvent the US conduit financing rules, on 9 December 2011, the US Internal Revenue Service finalized regulations that treat disregarded entities as persons for purposes of the US conduit financing regulations. This means that all business entities within a financing structure will need to be tested under the conduit financing regulations if a portion of the financing structure relies upon the US treaty network or US domestic exceptions to obtain a reduction of withholding on payments of interest.

Az innovatív kis- és középvállalkozások finanszírozása kockázati tőkével

Closing the gap between the USA and EU venture capital market size is crutial for european innovative small and medium sized companies. As the financial crises started in 2008 weekend the possibilities for external capital, the role of venture capital financing is revaluated. The study analyses the similarities and differences in the legal rules of venture capital fund raising and financing revised by the USA's Dodd-Frank Act, and the European AIMF-directive. The study also suggest the changes in connection with the European Commission's prepared document on the European Venture Capital Fund, and it's effects on the innovative small-and medium sized companies. The conclusion is that the new rules of venture financing both in the USA and Europe sets up significantly more administrative difficulties for funds, but more stability and safe for entrepreneurs.

Issues in Mutual Fund Distribution

This paper provides in-depth discussion of important issues related to mutual fund distribution. The first two topics are fund distribution channel characteristics and Rule 12b-1 fees and distribution. Distribution channel characteristics discuss direct channel, advice channel, retirement channel, institutional channel, supermarket channel, and multiple-share classes. Rule 12b-1 fees and distribution discuss adoption of Rule 12b-1, Rule 12b-1 after adoption, current 12b-1 fees, issues with 12b-1 fees, and summary of 12b-1 fees attributes. The remaining topics include direct sold and broker-sold services, Rule 12b-1 fees and revenue sharing, revenue sharing issues, “soft-dollar” trading, distribution and flows, opacity and agency conflicts, expense shifting agency conflicts, and intermediated distribution and portfolio managers.

How Student Disability Classifications and Learning Outcomes Respond to Special Education Funding Rules: Evidence from British Columbia

How Student Disability Classifications and Learning Outcomes Respond to Special Education Funding Rules: Evidence from British Columbia

The golden rule of public finance and the composition of government expenditures: a growth and welfare analysis

This paper employs an endogenous growth model to study the growth and welfare effects of the golden rule of public finance. Two versions are compared, whereby government deficits are restricted for the use of public investments. It is shown that the growth effect of the golden rule depends on what kind of expenditure is adjusted to meet debt obligations. A transition from a balanced budget to a golden rule is performed to study welfare. The results indicate that a budget rule with detrimental growth effects can still have positive welfare implications, and vice versa, if the composition of government expenditures and transitional dynamics are taken into account.

ON COMMUNITY INVOLEVEMENT IN RURAL DEVELOPMENT – A CASE OF LEADER PROGRAMME IN POLAND

E-mail: chmielinski@ierigz.waw.pl ABSTRACT. Basic aim of Leader axis under the Polish Rural Development Programme (RDP) 2007-2013 is activation of rural communities and enhancing of social capital at the local level. Paper investigates the rural policy measure in terms of barriers of functioning of local action groups (LAGs). Outcomes of the research, based on survey of 72 LAGs, show that at the initial stage of their operation, LAGs struggled against the formal and legal problems regarding the financing rules and lack of power in implementation of local strategy measures. Received: July, 2011 1st Revision: September, 2011 Accepted: November, 2011

The strategic design of technology funds for climate cooperation: generating joint gains

Abstract Clean technology is central to climate cooperation. How can countries promote the development and adoption of new clean technologies? In this article, I examine the strategic benefits of establishing an international technology fund. A game-theoretic analysis shows that a technology fund with a dual mandate of rewarding technology development and subsidizing subsequent adoption can contribute to climate cooperation. Interestingly, a technology fund can also reduce North-South distributional conflict. My institutional analysis reveals two particularly important issues in the design of a technology fund: credible commitment to funding rules and the use of a balanced burden sharing rule. Based on these observations, I propose that a technology fund could be established within the institutional framework of the World Bank.

Transgression as a Rule: German-Polish Cross-border Cooperation, Border Discourse and EU Enlargement by Ulrich Best

Transgression as a Rule: German-Polish Cross-border Cooperation, Border Discourse and EU Enlargement by Ulrich Best

New Tax Rules for Intra-Group Financing in Luxembourg

In this note, the authors discuss two administrative circulars on the tax treatment of intra-group financing transactions issued by the Luxembourg tax authorities in January and April 2011, which clarify the application of the OECD Transfer Pricing Guidelines to debt-funded intra-group financing activities, list conditions that need to be met in order for a taxpayer to obtain a binding advance pricing agreement and provide for a grandfathering period for existing structures.

Straight talk with... María Blasco

On 22 June, María Blasco, best known for her research on the enzymes that maintain telomeres, became the new director of the Spanish National Cancer Research Centre (CNIO). Elie Dolgin spoke with her about her plans for the 13-year-old agency. Life hasn't been easy at the Spanish National Cancer Research Centre (CNIO) since the founding director Mariano Barbacid announced his intention to step down in 2009. Two campaigns to find a successor had to be halted—the first for lack of international candidates, and the second because nominees' names were leaked to the press. The leaks occurred amidst a high-profile dispute over Barbacid's controversial plan to use private funds to develop cancer drugs—a move that the country's Ministry of Science and Innovation said contradicted state financing rules for a public foundation. But things seem to have settled down since CNIO insider María Blasco was unanimously chosen to lead the 13-year-old center. Blasco, best known for her research on the enzymes that maintain telomeres, had directed the center's molecular oncology program since 2003, and had been vice director for basic research at the center since 2005. She became the CNIO's new director on 22 June. Elie Dolgin spoke to the new cancer capitán about her plans for the agency.

(Un)desirable effects of output funding for Flemish universities

Abstract Governments introducing output parameters (e.g. graduation numbers) in the funding rule of universities believe that it will induce universities to raise their teaching efforts while educational standards will remain unaffected. In this article we first show on theoretical grounds that this desire can only be fulfilled if there exist positive interaction effects between student ability, student effort and teaching effort in the educational production function. Secondly, even if this is the case we argue that universities attracting more students with a vulnerable socioeconomic background will not be rewarded for raising their teaching effort in the same way as other universities. Empirical data on success rates of Flemish university students reveal indeed a strong correlation between students’ probabilities of success and socioeconomic background. Moreover, we find a strong social clustering within universities.

Understanding the Fed Model, Capital Structure, and Then Some

Twenty years after the papers by Modigliani and Miller, the introduction in 1982 of SEC rule 10b-18 fundamentally changed the rules of corporate finance, by allowing public companies open-market repurchases of their own stock and making it easier to manipulate capital structure. We present a new ‘capital structure substitution’ theory that is based on one simple hypothesis: company managements manipulate capital structure such that earnings-per-share are maximized. The substitution theory is used to reassess the ‘Fed model’, which describes the equilibrium observed between the average S&P 500 earnings yield (E/P) and the US government bond yield. We conclude that the Fed model is miss-specified: the S&P 500 earnings yield is not in equilibrium with the government bond yield but with the average after-tax interest rate on corporate bonds. The proposed theory also sheds new light on a variety of other phenomena observed in corporate finance. It is used to formulate a new theory on dividend policy, explaining why some companies prefer dividends over share repurchases and why dividend policy has changed in the early 1980s. It also provides a new explanation for the stock market’s reaction to monetary and fiscal policy. And it is used to explain why the positive relationship between leverage and beta, as predicted by Hamada, is not observed in market data.

Is the 60-40 Stock-Bond Pension Fund Rule Wise?

Pension funds typically suggest the 60-40 stock-bond rule to lower risk as during stock market declines bonds tend to rise. However, US investment returns have been presidential party dependent; and returns in the last two years of all administrations exceed those in the first two years. The strategies small cap stocks with Democrats and intermediate bonds or large cap stocks with Republicans yields final wealth about six times the large cap index, 50% more than small caps and more than twenty times the 60-40 mix since 1942.