Showing papers in "Kyklos in 2007"

The Impact of Democracy on Economic Growth: Some Evidence from Cross-National Analysis

Abstract: SUMMARY It has often been maintained that political democracy has a negative impact on economic growth, particularly in less developed countries. Here, cross-national regressions of two different growth variables on political democracy and on control variables, based on about 90 nations, are reported for the 1960 to 1979 period. Control variables include GNP per capita, gross domestic investment, school enrollment ratios, and sometimes the military participation ratio. While first results seem to support the notion of a negative growth effect of democracy, closer scrutiny reveals that this effect is no longer significant once the analysis is restricted to (more than 70) LDCs only. While a fairly strong and negative impact of democracy on growth can be demonstrated for nations where government revenue exceeds 20|X% of GDP, elsewhere there is no effect at all. It is not democracy itself that hurts the growth prospects of nations, but the combination of democracy and strong state interference with the economy.

Volunteering and Income – The Fallacy of the Good Samaritan?

Abstract: SUMMARY This paper explores individual motives for volunteering. The analysis is based on the interpretation of volunteering as a consumption good (consumption model) or as a mean to increase individual's own human capital (investment model). We present an econometric framework taking into account self selection into volunteering and simultaneity between the volunteering decision and the determination of income in order to test these two models and to identify the underlying motives. We find strong statistical evidence for the investment model with a highly robust and significant impact of volunteering on the wage rate. Within the framework of the investment model it turns out that the number of volunteering hours plays a major role in explaining this wage premium. This supports the significance of skill acquisition to accumulate human capital, the importance of deepening of social contacts and signalling willingness to perform. As far as the consumption model is concerned we find no clear statistical evidence for its validity.

An International Trade Flow Model with Substitution: An Extension of the Gravity Model

Abstract: SUMMARY The traditional gravity model has often been applied to international trade flows, especially to analyze trade creation and trade diversion. However, there are two fundamental objections to the model: it cannot describe substitutions between flows, and it lacks a cogent theoretical foundation. A newly developed model, the Extended Gravity Model (EGM), overcomes these objections. An empirical test strongly rejects the gravity model in favour of the EGM. The empirical analysis also proves that the gravity model widely overestimates the influence of the determinants of international trade. The EGM encompasses several models originating in regional economics, and can be applied usefully to a variety of subjects. ZUSAMMENFASSUNG Das traditionelle Gravitatsmodell ist oft zur Erklarung von internationalen Handelsstromen verwendet worden, obwohl es zwei fundamentale Einwande gegen dieses Modell gibt: Es kann Substitutionen zwischen Stromen nicht beschreiben, und es entbehrt einer uberzeugenden theoretischen Grundlage. Ein neulich entwickeltes Modell, das «Extended Gravity Model» (EGM), beseitigt diese Einwande. Ein empirischer Test verwirft uberzeugend das Gravitatsmodell zugunsten des EGM. Weiter zeigt die empirische Analyse, dass das Gravitatsmodell den Einfluss der Determinanten des internationalen Handels stark uberschatzt. Das EGM umfasst verschiedene Modelle, die aus der Theorie der Regionalokonomie hervorgehen, und kann mit Erfolg fur eine Vielfalt von Themen verwendet werden. RESUME Le modele de gravite traditionnel a ete applique souvent a des flux commerciaux internationaux, specialement pour analyser la creation et la diversion du commerce. Cependant, il y a deux objections fondamentales au modele: il ne peut pas decrire des substitutions entre des flux, et il lui manque une fondation theorique convaincante. Un modele developpt recemment, l'«Extended Gravity Model» (EGM) ecarte ces objections. Un test empirique repousse fortement le modele de gravitk en faveur de I'EGM. L'analyse empirique prouve aussi que le modele de gravite exagere largement I'influence des determinants du commerce international. L'EGM contient plusieurs modeles qui proviennent de l'economie regionale, et il peut etre applique avecsucces a une variete de sujets.

Time Use of the Self‐Employed

Abstract: SUMMARY It is a well-documented empirical regularity that it is more satisfying to be self-employed than to work as an employee for an organization. A large part of this difference in job satisfaction is attributed in the literature to the strong perception of independence by the self-employed. In this paper we study people's time use as a source of entrepreneurial independence. By making use of disaggregated sequential microdata on people's time use, we are able to document that the self-employed work longer effective hours, as well as more in the evenings and weekends, than those employed by an organization. Even though being able to decide when to do one's work may be a sign of flexibility in time use, the self-employed have less pure leisure and are less frequently absent from work in general and when sick on weekdays in particular. Moreover, we document that the self-employed who have small children are more likely to work after 5 p.m., when the com-munal day-care centres close. Based on these findings it is not surprising that the self-employed perceive that they are more often under time pressure and in a hurry than those employed by an organization.

Finance and Firm Export in China

Abstract: Using a rich panel data set, we provide a rigorous analysis of the relationship between access to external finance, foreign direct investment and the exports of private enterprises in China. We conclude that, in order to foster the exports of indigenous enterprises, the elimination of financial discrimination against private firms is likely to be a more effective policy tool than the reliance on spillovers from multinational firms. © 2007 Blackwell Publishing Ltd.

Cycles and Substitutions in Terrorist Activities: A Spectral Approach

Abstract: SUMMARY We use spectral analysis to provide evidence that cycles have characterized the following time series: all terrorist events, skyjackings, kidnappings, barricade and hostage-taking, and all events not involving hostages. The series for all events had a periodicity of 28 months, while skyjackings had two significant periodicities - 4.1 months and 28 months. Only a single significant periodicity was associated with barricade and hostage events and kidnappings -72 months and 48 months, respectively. We also found that nonlinear trends best represented four of the five series. Cross-spectral analysis was then applied to the six possible pairs of series; each pair displays from three to nine statistically significant coherencies. Moreover, we discovered evidence of orthogonality for five of the six pairs studied. This evidence suggests that terrorists substitute between related events; this substitution primarily showed up in the short run. ZUSAMMENFASSUNG Mit Spektralanalysen wird Evidenz festgestellt, dass nachfolgende Zeitreihen durch Zyklen charakterisiert sind: terroristische Aktivitaten insgesamt, Flugzeugentfuhrungen, Entfuhrungen, Besetzungen und Geiselnahmen sowie alle Aktivitaten ohne Geiselnahmen. Fur die terroristischen Aktivitaten insgesamt resultiert eine Periodizitat von 28 Monaten, fur die Flugzeugentfuhrungen resultieren die zwei signifikanten Periodizitaten 4,1 Monate und 28 Monate, fur Besetzungen und Geiselnahmen 72 Monate sowie fur Entfuhrungen 48 Monate. Weiter wird festgestellt, dass nichtlineare Trends vier der funf Serien am besten wiedergeben. Kreuz-Spektralanalysen fur die sechs moglichen Paare von Zeitreihen zeigen drei bis funf statistisch signifikante Koherenzen. Weiter wird fur funf der sechs untersuchten Paare Evidenz fur Orthogonalitat festgestellt. Diese Evidenz deutet an, dass Terroristen zwischen miteinander in Beziehung stehenden Aktivitaten substituieren, wobei sich diese Substitution in erster Linie fur die sehr kurze Frist zeigt. RESUME Nous utilisons l'analyse spectrale pour prouver que les series chronologiques suivantes ont ete caracterisees par des cycles: tous les evenements terroristes, les detournements d'avions, les entevements, les prises d'otages et meme les evenements n'impliquant pas des otages. Les statistiques de tous ces evenements font ressortir une periodicite de 28 mois, avec deux cycles particuliers de 4,l mois et de 28 mois pour les detoumements d'avion. Les prises d'otages et les enlevements ont une seule longueur de cycle de 72 et 48 mois respectivement. Nous avons aussi trouve que des trends non lineaires representent le mieux quatre des cinq series setudiees. Nous avons ensuite applique une analyse spectrale croisee aux six paires de series possibles; chaque paire presente de trois a neuf coherences statistiquement significatives. Nous avons, de plus, decouvert une preuve d'orthogonalite pour cinq des six paires etudiees. Cette preuve laisse a penser que les terroristes substituent volontiers un type d'evenement a un autre; cette substitution est particulierement marquee dans le court terme.

Wage flexibility and labour market institutions: a meta-analysis

Abstract: Questions: How did an initial tree harvest in 1894 infl uence the spatial and temporal patterns of Pinus ponderosa recruitment? How do these patterns compare to our understanding of P. ponderosa stand dynamics prior to Euro-American settlement? How might spatial pattern information, particularly with respect to patch characteristics, inform current restoration and management practices? Location: A 2.59-ha permanent sample plot in the Fort Valley Experimental Forest, Flagstaff, Arizona. The plot was selectively harvested in 1894 and measured in 1909 and 2002. Methods: We used historical stem-map and ledger data, contemporary data, and dendrochronological techniques to reconstruct stand structure (tree size, age, location) in three scenarios: (1) unharvested (1909), (2) harvested (1909), and (3) contemporary (2002). We used Clark and Evans’ R, Ripley’s K(t) univariate analysis, and correlogram analysis to assess the spatial pattern in each scenario. We also used Ripley’s K12(t) bivariate analysis and tree age data to examine spatial and temporal recruitment patterns as observed in the contemporary scenario. Results and Conclusions: The unharvested stand was aggregated at scales up to 28 m. The selective harvest accentuated the spatial patchiness of the stand in 1909 and changed spatial patterns by homogenizing tree size within patches. By 2002, the stand was a single patch dominated by small trees. Postharvest recruitment patterns were not spatially random; Pinus seedlings initially established in natural grass openings and then proceeded to fi ll-in stump patches created by harvesting. Knowledge of spatial pattern should be explicitly incorporated into restoration activities in these forests.

Intra‐firm Wage Dispersion and Firm Performance – Is There a Uniform Relationship?

Abstract: SUMMARY Empirical studies examining the impact of intra-firm wage dispersion on firm performance report extremely mixed results. Yet, almost all of the studies implicitly assume that there is a uniform relationship between wage dispersion and firm performance across all types of firms. In contrast, we argue that the effects of wage dispersion depend on the industrial relations regime and the type of incentive scheme employed. Using data on a sample of manufacturing establishments in Germany, our findings confirm that wage dispersion interacts with internal promotions, individual and group piece rates, works council presence and collective bargaining coverage. This strongly supports the notion that moderating factors play an important role in the relationship between intra-firm wage dispersion and productivity.

Is God Good for Trade

Abstract: SUMMARY As the world economy is integrating, trade between countries is growing rapidly. The exchange of goods not only has an economic, but also a cultural dimension. In the gravity equation literature common religion is often used as a control variable, without distinguishing between religious groups. This paper investigates the possible ways in which religion influences international trade patterns. Analyzing empirically trade flows between 151 countries, the paper finds that the five world religions, namely Hinduism, Judaism, Buddhism, Christianity, and Islam, have different impacts on trade. For inter-religious trade the study indicates that several religions have clear preferences with whom to trade or not. Furthermore, the results indicate that religious openness boosts trade performance of countries.

Aid and Growth Accelerations: An Alternative Approach to Assessing the Effectiveness of Aid

Abstract: It continues to be heavily disputed whether foreign aid promotes economic growth in developing countries. In most cross-country regressions, aid is considered effective only if it shifts recipient countries to a significantly higher and sustainable growth path. We apply an alternative approach which is less demanding, based on the concept of temporary growth accelerations suggested by Hausmann, Pritchett and Rodrik. In assessing what can reasonably be expected from the donors' modest aid efforts, we do not only employ aggregate aid data but we also differentiate between major aid categories, including grants, loans and so-called short-impact aid. It turns out that aid flows have a small but significantly positive effect on the conditional probability of growth accelerations. This result holds across different estimation methods. Short-impact aid is found to be more effective in this respect, while we reject the view that grants are superior to loans. To the contrary, we find a stronger effect of loans. Furthermore, aid has become more effective during the second half of our sample. Typically, however, the significance of results crucially depends on the criteria applied to identify growth accelerations.

Has Globalisation Really had no Effect on Unions

Abstract: SUMMARY For a number of OECD countries, the deterioration of labour market outcomes for less-skilled workers since the early 1980s has coincided with a steady decline in union membership. Globalisation is commonly believed to have contributed to both developments. However, recent studies fail to find support for the presumption that globalisation adversely affects unions. Revisiting this issue by using a novel globalisation index we find that globalisation has indeed contributed to deunionisation. In delving further into the issue, we find that it is social integration, rather than economic or political integration, that has been the main contributor to the decline in union membership.

Behavioral Economics and Perverse Effects of the Welfare State

Abstract: SUMMARY Critics often argue that government poverty programs perversely make the poor worse off by encouraging unemployment, out-of-wedlock births, and other ‘social pathologies.’ However, basic microeconomic theory tells us that you cannot make an agent worse off by expanding his choice set. The current paper argues that familiar findings in behavioral economics can be used to resolve this paradox. Insofar as the standard rational actor model is wrong, additional choices can make agents worse off. More importantly, existing empirical evidence suggests that the poor deviate from the rational actor model to an unusually large degree. The paper then considers the policy implications of our alternative perspective.

The Economic Effects of Human Rights

Abstract: SUMMARY There are three positions concerning the economic effects of human rights discussed among economists. Some economists argue that only property rights matter for economic growth and basic human rights can even make the legal system less efficient. Others argue that negative rights are generally welfare increasing while positive rights tend to reduce income and growth over time. Yet a third group of economists argues that elements of all groups of human rights are a precondition for making productive use of one's resources and are thus efficiency-enhancing. Based on a cross-country analysis, the effects of different groups of human rights on economic growth are estimated in this paper. The transmission channels through which the different rights affect growth are identified by estimating their effects on investment and overall productivity. Basic human rights have indeed a positive effect on investment, but do not seem to contribute to productivity. Social rights, in turn, are not conducive to investment in physical capital but do contribute to productivity improvements. None of the four groups of rights covered in this analysis ever has a significant negative effect on any of the economic variables included.

Stagflation and Shortageflation: A Comparative Approach

Abstract: SUMMARY This paper compares inflation and unemployment in western market economies with the repressed inflation and persistent shortages common in centrally planned economies. Stagflation and shortageflation, the latter defined as inflation accompanied by shortages, have much in common, and a similar, albeit inverse, theoretical structure is offered. Measures of stagflation for the western economies and development of a conceptual framework for measuring shortageflation for the eastern European socialist countries leads to a new ‘misery index' facilitating comparisons that are not as misleading as comparison only of inflation rates. They suggest that Italy and Poland have the most severe unhappiness index, and West Germany and East Germany have the lowest unhappiness index. Furthermore, where relative prices fail to reflect relative scarcities, then the failure of production to fully respond, and the time and other resources wasted through queuing, gluts, and other allocative inefficiencies can slow growth. ZUSAMMENFASSUNG In diesem Aufsatz werden Inflation und Arbeitslosigkeit in westlichen Marktwirtschaften mit der zuruckgestauten Inflation und anhaltenden Mangelerscheinungen in sozialistischen Planwirtschaften verglichen. Die Stagflation und die Mangelflation (das heisst Inflation von Mangelerscheinungen begleitet) haben viele gemeinsame Eigenschaften. Die Bestimmung von Stagflationsraten in westlichen Marktwirtschaften und die Entwicklung eines theoretischen Konzepts fur die Messung von Mangelflation in sozialistischen Planwirtschaften fuhrt zu einem «Armutsindex». Dieser «Armutsindex» erleichtert internationale Vergleiche und bringt bessere Ergebnisse als die Analyse der Inflationsraten. Die statistische Untersuchung zeigt, dass Italien und Polen die hochsten, die BRD und die DDR die niedrigsten Unzufriedenheitsindices haben. Es wird auch gezeigt, dass wenn die relativen Preise den relativen Knappheiten nicht entsprechen, die beschrankte Reaktion der Produktion auf Nachfragesteigerungen, die Zeitverluste durch Schlangestehen und sonstige Ineffizienzen das Wirtschaftswachstum senken konnen. RESUME Cet article compare d'une part I'inflation et le chomage des economies occidentales, et d'autre part I'inflation contenue et les penuries persistantes communes aux economies planifites. La stagflation et la penurieflation (deefinie comme I'inflation accompagnee de penuries) ont beaucoup en commun, et I'auteur en propose une analyse theorique similaire, mais inverse. I1 mesure la stagflation des economies occidentales et la penurieflation des economies socialistes de I'Est. Ceci I'arnene aelaborer un «indice des detresses» facilitant les cornparaisons de faqon moins erronee que les comparaisons basees sur le seul taux d'inflation. Ces calculs amenent a penser que I'Italie et la Pologne ont I'indice de tristesse le plus fort et que les deux Allemagnes ont I'indice de tristesse le plus faible. De plus, quand les prix relatifs ne peuvent plus refleter les penuries relatives, la croissance se ralentit, du fait de I'absence de reponse de la production aux besoins, et des pertes de temps ou d'autres ressources dans les files d'attente et autres allocations inefficaces.

Estimating the Institutional and Network Effects of Religious Cultures on International Trade

Abstract: Economists have increasingly emphasized the role of institutions in shaping economic activity. Among the many studies on institutions, however, there has been relatively little research on the economic role of religion in modern societies or in recent episodes of economic growth and change. This lack of research is surprising because religious practices, traditions, and philosophies are important components of national cultures that shape institutions. Religious cultures are clearly legitimate subjects for scientific study. This is not to imply that all economists have been reluctant to deal with religion. Adam Smith (1776) discussed religion from an economic perspective, arguing in his Wealth of Nations that religious participation was a rational device by which people enhanced their reputations. Smith also provided economic explanations of the behavior of clergy and religious organizations. Recent studies on the economic impact of religion include Freeman (1986), Cochran and Akers (1989), and Lehrer and Chiswick (1993), Levin (1994), and Evans et al. (1995), who examined the relationship between religion and crime, drug use, divorce, suicide, and health, respectively. Barro and McCleary (2002, 2003), Grier (1997), and Noland (2003) examined how religious cultures influenced economic growth. Ensminger (1997), Kuran (1995, 1997), and Ragab (1980) specifically examined the influence of Islamic culture on economic growth, and Uppal (1986) focused on the growth effects of Hinduism. Allen (2004), Anderson and Tollison (1992), Delacroix (1995), Kaufmann (1997), and Samuelsson (1993) recently disputed Weber’s (1905) well-known ‘Protestant ethic’ thesis. However, Iannaccone (1998) argues that the continued widespread acceptance of Weber’s 100-year old hypothesis by economists

Alternative institutional frameworks for price incentive mechanisms

Abstract: SUMMARY The paper contains incentive mechanisms for the control of natural monopoly. They are based on the observation that government lacks information on industry costs and market demands which the managers of natural monopoly firms hold. Thus, all mechanisms only make use of publicly accessable information. They are all adjustment processes derived from the common principle to share the benefits of quantity weighted price reductions between the firm and the public. Differences between the mechanisms relate to their welfare objective and the institutional environment. Our findings show that the institutional environment does matter both as regards distributional consequences and the possibilities to reach efficient solutions.

A Social Proximity Explanation of the Reluctance to Assimilate

Abstract: Quite often, migrants appear to exert little effort to absorb the mainstream culture and to learn the language of their host society, even though the economic returns (increased productivity and enhanced earnings) to assimilation are high. We show that when interpersonal comparisons affect individuals’ wellbeing and when a more intensive assimilation results in migrants’ comparing themselves more with the richer natives and less with fellow migrants, then the effort extended to assimilate will be muted.

PUBLIC UTILITIES IN EGALITARIAN LDC's: THE ROLE OF BRIBERY IN ACHIEVING PARETO EFFICIENCY

Abstract: SUMMARY This article points out that the egalitarian ideals adopted by many Less Developed Countries (LDC's) often lead to an inefficient allocation of resources because productive and unproductive agents are given equal access to public facilities. Productive agents then find it worthwhile to bribe their way into obtaining differential access to such public facilities —e.g., the telephone system. As long as bureaucrats look upon such bribes as windfall gains, the efficiency of the economic system can be improved. In practice, however, LDC bureaucracies often come to look upon such incomes as a systematic part of their remuneration and this leads them to pursue bribes rather than carry out their appointed duties; as a result, the system as a whole becomes increasingly inefficient.

Avoiding 'Star Wars' - Celebrity Creation as Media Strategy

Abstract: Media companies generally enjoy increasing profits if more customers watch a program. The viewer drawing capability of stars serves as a prominent instrument to increase the audience. The literature distinguishes between two different types of stars: highly talented and therefore ‘self-made’ superstars, and famous but ‘manufactured’ and thus rather trivial celebrities. Whereas ‘self-made’ superstars attract viewers by providing services of superior quality, ‘manufactured’ celebrities draw attention by fabricated fame. Illustrating the Pop Idol series and comparing the abilities of superstars and celebrities to generate and to capture value, we show why ‘manufacturing’ celebrities is a lucrative business for the media.

On the Treatment of Income Tax Rates in Empirical Analysis of Tax Evasion

Abstract: SUMMARY In this paper, it is argued that average tax rates exert an influence on income tax evasion separate from, and opposite to that of marginal tax rates. Failure to account for this effect in empirical evasion models biases the parameter estimate of the marginal rate in a predictable manner. Evidence from an aggregate empirical model of evasion in the US indicates that the marginal tax rate is positively related to evasion, whereas the average tax rate is negatively related. Further, exclusion of the average rate from the model does in fact bias the parameter estimate of the marginal tax rate. ZUSAMMENFASSUNG Im Artikel wird gezeigt, dass durchschnittliche Steuersatze einen Einfluss auf die Umgehung von Einkommenssteuern haben und dass die Wirkung nicht in die gleiche Richtung verlauft wie jene von Grenzsteuersatzen. Wird dies in empirischen «Steuerumgehungsmodellen» nicht berucksichtigt, wird der Schatzwert fur den Grenzsteuersatz in vorhersehbarer Weise verzerrt. Die empirischen Ergebnisse eines «Steuerumgehungsmodells» fur die USA zeigen, dass der Grenzsteuersatz mit der Umgehung von Steuern positiv korreliert ist, der durchschnittliche Steuersatz hingegen negativ. Wenn der durchschnittliche Steuersatz im Modell nicht berucksichtigt wird, resultiert fur den Einfluss des Grenzsteuersatzes tatsachlich ein verzerrter Schatzwert. RESUME Dans ce memoire, l'on soutient que les taux moyens d'imposition exercent sur l'evasion fiscale dans l'impot sur le revenu, une influence distincte de, et opposee a celle des taux marginaux d'imposition. Ne pas tenir compte de cet effet dans les modeles empiriques d'evasion, biaise l'estimation des parametres du taux marginal d'une maniere previsible. L'evidence a partir d'un modele empirique global d'evasion, aux Etats-Unis indique que le taux marginal d'imposition est relie positivement, alors que le taux moyen d'imposition est relie negativement, a l'evasion fiscale. En outre, l'estimation des parametres du taux marginal est en effet biaisee si l'on exclut le taux moyen du modele.

Governance and growth revisited

Abstract: Recent studies yield diverging outcomes on the governance-growth relationship. In this paper we construct a new index of governance using a latent variable approach and test whether this index is related to growth with varying samples of countries and different conditioning variables. The results show that our index has a positive and significant impact on economic growth. This conclusion is fairly robust for various samples and conditioning variables.

Corruption and Related Socioeconomic Factors: A Time Series Study

Abstract: SUMMARY This study examines corruption in relation to political, legal, and economic factors to see how these factors impact corruption over time and to test the direction of causality between these variables. To assess causality, cointegration analysis using an error correction model on data from over 100 countries spanning over 20 years was performed. Three antecedent variables are analyzed in relation to corruption. Over the long-term, increases in these variables result in decreases in corruption. However, there is no evidence that changes in corruption impact any of these same variables. Interestingly, increases in GDP per capita are found to increase corruption over the short-term while leading to a long-term reduction in corruption.

Corruption and Investment Choices: A Panel Data Study

Abstract: SUMMARY There is evidence in the literature that corruption lowers the level of investment and the productivity of capital stock in an economy. This paper extends the literature by presenting evidence that investment allocation decisions are affected in a significant way by corruption. The most commonly used measure of the efficiency of overall investment in an economy is the incremental capital output ratio (ICOR), measured by the ratio of gross investment to the change in the gross domestic product. The inverse of the ICOR measures the productivity of investment in an economy. When the known explanatory factors for inter-country variation in the ICOR are taken into account, the incidence of corruption has a statistically significant negative effect on the efficiency of investment for a panel of 90–140 countries during 1995–2004. The strength of this effect increases with the incidence of corruption. The econometric model used is robust to unobserved and time-invariant country fixed effects, feedbacks from current stochastic shocks to subsequent values of the determinants of investment efficiency, and the persistence of efficiency.

The Great Divide Revisited: Ottoman and Habsburg Legacies on Transition

Abstract: SUMMARY The former socialist countries of South East and Central Europe exhibit great variation in institutional quality. Unlike the sparse existing literature, I claim that the variation can be explained by the legacies of the Ottoman and Habsburg Empires. I identify historical legacies of the Empires, which have affected the current institutional quality of the successor states. I show empirically that the Empires' legacies are key determinants of institutional quality, and that the Habsburg successors have institutions that are more efficient in a market economy than the Ottoman successors. In contrast, I find an insignificant effect of socialism on institutional quality.

Love thy neighbour: How much bigotry is there in western countries

Abstract: SUMMARY Borrowing from the well known measures of poverty, we propose analogous measures for the amount of prejudice in a country. Values of this index are derived from individual responses to the Human Beliefs and Values Survey's question: ‘Would you like to have persons from this group as your neighbours?’ We use data on the responses to (i) construct measures for the amount of bigotry in a country and rank Western countries on a bigotry scale; (ii) examine the social and economic factors which determine whether people are bigoted or bigotry-free; (iii) examine three specific phobias to see whether the strength of the ‘bigotry-determining factors’ varies according to the group being considered.

Cross Country Differences in Trust in Television and the Governance of Public Broadcasters

Abstract: This paper offers an explanation of European cross country differences in the trust enjoyed by television. Our argument turns on the way that, while there is significant public ownership of television in all countries (so that trust in broadcasting as a whole is bound to depend importantly on trust in public broadcasters), the extent of independence of these public broadcasters from government varies across countries and this affects their trustworthiness. Trust in television matters not only because of the special influence that television plays in the political system but also because there is evidence that trust in institutions directly contributes to individuals' subjective well-being.

The national debt controversy

Abstract: SUMMARY Some analysts have argued that the burden of public debt is passed on to the future because public debt competes for funds in private capital markets, which lowers capital accumulation. Others argue that using debt finance rather than taxation will have no real effects because an increase in debt will be offset by an equal increase in savings, in anticipation of the higher future taxes that will be needed to service the debt. An empirical test finds that savings changes are only about 20 percent of debt changes, ceteris paribus, implying that most of the burden of the debt is passed on to the future through reduced capital accumulation.

Rechte und verhältnisse in der modernen wirtschaftslehre

Abstract: SUMMARY The paper is the 1980 - Bohm-Bawerk - lecture given at the University of Innsbruck. Starting from Bohm-Bawerk's book Rights and Relations from the Point of View of the Economic Theory of Goods the paper tries to evaluate rights and phenomena like goodwill from the perspective of innovation. A framework of three levels of economic activity is developed. The three levels are consumption (the lowest level), production and innovation (the highest level). Rights are interpreted as instruments of protection of higher level activity from lower level activity. Focus of attention are industries with very high rates of technical progress and innovation. There the most important positive externality of innovation is the increased potential for even more innovations. It is argued that competition policy, as a rule of thumb, must foster competition by innovation and must discourage competition by imitation.

Economic Growth and Potential Punishment Under Dictatorship

Abstract: Under democracy, anti-corruption laws are commonly passed with the aim of controlling governments’ and bureaucracy’s misappropriation of public as well as private resources. As such sanctions may be applied if the level of rentextraction by the incumbent ruler exceeds the levels set by established legislation or regulation. In these cases, rulers are judicially responsible for transgressing rules that courts, oversight agencies or any other public agent are enabled to enforce. In Benhabib and Przeworski’s (2005, p. 7) words, ‘criminal accountability concerns actions and maps them on criminal sanctions’. Accordingly, judicial accountability may be distinguished from political accountability, which simply might take place ‘if citizens can discern representative from unrepresentative governments and can sanction them appropriately, retaining in office those incumbents who perform well and ousting from office those who do not’ (Manin, Przeworski and Stokes 1999, p. 10) 2 . Nonetheless, under dictatorship, the issue of holding dictators judicially accountable becomes more complicated. Even though anti-corruption legislation may have been passed in several authoritarian regimes and international treaties on human rights protection may have been signed, they are both scarcely applied by biased judicial institutions and are often ignored and modified at will. For instance, in Burkina Faso, under Compaore´ ’s rule, two new anti-corruption bodies were created: the National Ethics Committee and the High Authority for Coordinating the Fight against Corruption. The members of both institutions were named by the President, so anti-corruption laws remained largely ignored. On his anniversary as President of Togo,

Incentives and Bonuses – The Case of the 2006 World Cup

Abstract: SUMMARY This paper investigates the determinants and effects of bonus schemes used during the World Cup 2006.