We quantify general equilibrium effects of place-based policies in a multi-region framework with mobility, trade and agglomeration economies. Using detailed data on EU transfers, we infer the local effects of different transfer types on productivity, income and transportation cost. Based on...

Economic activity tends to cluster. This results in productivity gains. For policy makers this offers an opportunity to formulate and promote policies that foster clustering of economic activity. Paradoxically, although agglomeration rents are often found in empirical research a rationale for...

Using a natural experiment from Germany, we show that temporary place-based subsidies generate persistent effects on economic density. We identify employment and capital formation as main channels for higher income per square kilometer. As the spatial regression discontinuity design allows us to...

Economic activity tends to cluster. This results in productivity gains. For policy makers this offers an opportunity to formulate and promote policies that foster clustering of economic activity. Paradoxically, although agglomeration rents are often found in empirical research a rationale for...

This paper empirically investigates the underlying determinants of expenditure decentralization, based on the predictions of a new political economy model of partial decentralization. The analysis is based on an agency model, in which two levels of government are involved in the provision of a...

Over the next four decades, increasing old-age dependency ratios exert an enormous upward pressure on welfare spending in most developed countries. As this is mainly due to existing unfunded public pension schemes, many countries have embarked on far-reaching reforms in this area, strengthening...

We address the problem of how to investigate whether economics, or politics, or both, matter in the explanation of public policy. The problem is first posed in a particular context by uncovering a political business cycle (using Canadian data for 130 years) and by taking up the challenge to make...

This paper attempts to identify the effect of fiscal decentralization on public sector efficiency (PSE). We employ data envelopment analysis on a panel of 21 OECD countries over the period 1970-2000 to construct two alternative PSE indicators that reflect the governmental goals of economic...

We estimate the fiscal multiplier associated with shocks to government spending. We consider increases in government spending in the U.S. states in the wake of natural disasters to capture spending shocks that are both unexpected and unrelated to the preceding state of the economy. We find that...

The literature on estimating macroeconomic effects of fiscal policy requires suitable instruments to identify exogenous and unanticipated spending shocks. So far, the instrument of choice has been military build-ups. This instrument, however, largely limits the analysis to the US as few other...