We use discounted cash flow analysis to measure a country's fiscal capacity. Crucially, the discount rate applied to projected cash flows includes a GDP risk premium. We apply our valuation method to the CBO's projections for the U.S. federal government's deficit between 2022 and 2051 and debt...

The current paper presents a method of deciding the question of whether any given stage in the budget process is an example of the "political" or the "bureaucratic" model. We then use it to study local government spending on education. The basis for our method is the important difference between...

We study budget formation in a model featuring separation of powers. In our model, the legislature designs a budget bill that can include a cap on total spending and earmarked allocations to designated public projects. Each project provides random benefits to one of many interest groups. The...

Based on this framework, we find that a Future Fund portfolio that included (amongst other potential investments) domestic nominal securities and equities of selected countries would reduce overall balance sheet risk

In this paper we collect detailed information on the budget institutions of Latin American countries. We classify these institutions on a `hierarchical'/'collegial' scale, as a function of their transparency and the existence of legislative constraints on the deficit. We then show that...

This paper investigates budgetary rules for an economy characterized by inflation and volatile relative prices. We view the budgetary process as a limited contingencies contract between the treasury and the ministers. The budgetary process allows a minister, whose realized real budget falls...

We refer to the idea that government must 'tighten its belt' as a necessary policy response to higher indebtedness as the household fallacy. We provide a reason to be skeptical of this claim that holds even if the economy always operates at full employment and all markets clear. Our argument...

This paper accounts for the value of children and future generations in the evaluation of health policies. This is achieved through the incorporation of altruism and fertility in "value of life" type of framework. We are able to express adults' willingness to pay for changes in child mortality...

Many observers have blamed HMOs for increasing financial pressures on private hospitals and causing them to cut back on the provision of charity care. We examine this issue using data on all hospital discharges in California between 1988 and 1996. We find that public hospitals in counties with...

This paper explores the links between institutional arrangements and fiscal performance in" Latin America. We consider four measures of fiscal performance, namely expenditures, the size of fiscal deficits and debt, and the response of fiscal policy to business" fluctuations; and two...