Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers’ intake decisions. We show that case workers enroll more clients...

Rapide decentralizatioon since 1992 has given substantial responsability for key government services not just to Russias' 88 regions (oblasts) but also to its 1800 local authorities (raisons). It seems likely that that this will have had consequences for the enquiry of provision of these...

This paper revisits the fiscal "decentralization theorem", by relaxing the role of the assumption that governments are benevolent, while retaining the assumption of policy uniformity. If instead, decisions are made by direct majority voting, (i) centralization can welfare-dominate...

An important lesson from the incentive literature is that explicit incentives may elicit dysfunctional and unintended responses, also known as gaming responses. The existence of these responses, however, is difficult to demonstrate in practice because this behavior is typically hidden from the...

We consider an economy where individuals face uninsurable risks to their human capital accumulation, and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that...

This paper investigates the relationship between fiscal consolidation, business plans and firm investment. Based on a detailed narrative of tax changes in Germany covering 40 years of fiscal adjustments, we define and exploit the exogenous variation of tax bills to quantify the effect of tax...

The global financial crisis of 2008–09 has sent public debt on sharply higher trajectories. With the economic recovery gradually taking hold, the focus is now shifting to fiscal “exit” strategies. Medium-term consolidation efforts are likely to include not only tax increases but also...

This paper analyses two features of concern to policy-makers in the countries of the prospective European Monetary Union: The solvency of their governments finances; and the accuracy of fiscal forecasts.

The present paper provides an assessment of the effect of the recent revision of the Stability and Growth Pact (SGP) on the European economies. A set of structural VARs, one for each eurozone country, is estimated. The estimated models are then used to assess the possible effect of alternative...

In this paper we formalize budgetary stabilizers as a set of simple policy rules, and assess their operation in an uncertain environment by performing stochastic simulations in a forward-looking multi-country macroeconomic model, NiGEM, comprising individual blocks for 10 Euroland economies.