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There have been extensive debates on the factors that influence local policy decisions. Although many researchers have contributed to uncovering various influences such as political, economic, institutional, and demographic factors on local policy decisions, however, the concept of QoL rarely has used in extant literature. Local government spending is likely to be affected by citizen demands for achieving community well-being. Additionally, given that different policy functions variably affect local circumstances, the impact of QoL on local policy decisions will depend on the policy area. Hence, this study examined the relationship between QoL and local budgetary decisions based on Peterson's (1981) policy scheme of, three distinct policy arenas (developmental, allocational, and redistributive policy). In examining the relationship of QoL and city spending across policy functions, I also considered economic, political, institutional, and demographic factors, derived from various theoretical perspectives on local policy decisions. The relative influences of community QoL as well as other factors on local policy decisions were estimated by two-stage least squares regression analysis (2SLS) for developmental spending and by ordinary least squares (OLS) for allocational and redistributive spending. To measure community QoL, this study used 89,066 completed surveys from 167 communities in the United States for 2002-2008 are used. QoL appeared as a critical factor influencing local government expenditures in the three policy areas. The impact of QoL on local spending in the three areas differed depending on city income levels; city income levels then moderated local policy decisions. These findings suggest that local policy priorities adjusted in accordance with economic growth. Allocational policy functions also should be thought to be functions of cities geared toward giving them a competitive edge over other cities by meeting evolved citizen preferences for city amenities. These findings also point to distinct patterns of political activities in each policy arena. Given that community QoL reflects adjusted citizens' demands, I contend that community QoL can contribute to performance management by providing additional public information and a complementary performance indicator. / Ph. D.

published_or_final_version / Public Administration / Master / Master of Public Administration

M.A. (Public Management and Governance) / This study sought to assess the main outcomes of the 2003 Maputo Declaration encapsulating the political decision of the Heads of State of the Organization of African Unity (OAU), within the framework of the Comprehensive Africa Agriculture Development Programme (CAADP), to allocate at least 10% of national public budgets to the agriculture sector. The scope of the assessment included the levels, composition, efficiency and effectiveness of public expenditures in the agriculture sector. For this reason, the study not only sought to find out the calibration of the levels and quantities of resources allocated to, or spent in the agriculture sector, but also undertook a diagnosis of the composition and patterns in resource allocations and expenditures in the agriculture sector. The study, designed in form of an exploratory and pilot research, was conducted in two African countries (Rwanda and Malawi) and adopted an orientation towards discovering ideas and insights – not for purposes of coming up with final answers or decisions, but rather for providing a better understanding of the situation to inform the construction of larger research efforts. Specifically, the study aimed to: i) determine the patterns in public agriculture allocations and expenditure after the Maputo Declaration; ii) to identify the factors that determine or influence the levels and composition of budgetary allocations and expenditure in the public agricultural sector. From the population frame comprising all 54 member states of the African Union, a purposive stratified sampling method was employed to select the two countries. A judicious blend of qualitative and quantitative methods and attendant techniques was employed in data collection and analysis. Qualitative information was collected largely using a literature review and participatory research methods, such as semi-structured interviews with key informants. On the other hand, quantitative information was collected using a suite of methods and tools, such as simple questionnaires administered among specific country respondents. Anecdotal evidence drawn from literature review showed that Malawi allocates well above the 10% CAADP target for its national resources to agriculture, while Rwanda, in spite of being the first country on the continent to sign the CAADP Compact, allocates less than 10% of its public resources to the sector. The research, undertaking a deeper analysis revealed that Malawi exhibited consistent increases in the percentages of agricultural expenditure as a share of the national expenditure for the entire period under study (2000 to 2013), except in 2002/03 and in 2008/09. In fact, there is evidence that Malawi spent over 30% of its national resources on agriculture, although this percentage declined to 24.7% in the subsequent year. Most of Malawi’s expenditure is explained by the thrust that the government had placed on farm-input subsidies. It is also noteworthy that a significant proportion of Malawi’s agriculture budget (about 80%) is funded by external donors. The research revealed that the expectations of agriculture’s contribution to the growth and development of the national economy forms part of the major explanations behind the gigantic proportions of the national budget allocated to the agricultural sector. This is consistent with findings of another study that showed that show that agricultural-led economic growth has a greater impact on poverty reduction than does the same level of growth driven by non-agricultural sectors. Rwanda exhibited clearly different trends in agriculture expenditure from those exhibited by Malawi; with the exception of a spike recorded in 2001-2002, the subsequent periods all the way to the year 2006 show a consistent decline in expenditure. This study revealed that the share of agriculture expenditure in the national total fell from 8.6% recorded in 2002 to 3.3% in 2006. The patterns in agriculture budget allocations and public expenditure in Rwanda continued to drop and, in the best case scenario, the allocation patterns stagnated. The reasons for the drop before 2007 are unclear. However, Rwanda registered a consistent rise in public expenditure in the agricultural sector after 2007, both in absolute and relative terms. It is recalled that Rwanda was the first country on the continent to sign the CAADP Compact in 2007.

The purpose of this dissertation is to analyze the effects of public policies on rural-urban migration and human capital expansion, and to examine the role of human capital (among other domestic and external factors) in the long-term economic growth of developing countries. Human capital expansion and labor migration from villages to cities are two aspects of the structure of labor markets in poor countries that are continuously influenced by public policies— policies that are often either ineffective or have unintended adverse consequences. For example, while much of human resource policy in developing countries is directed toward increasing the supply of educated labor, inter sectoral in-country migration and unemployment have become more pronounced, requiring new thinking on policy responses. This dissertation analyzes the outcomes of such policies and offers insights into how they might be improved. Chapter 2 extends a two-sector, general-equilibrium model of rural-urban migration to include government spending. Provision of public goods acts as a productivity-enhancing input in private production that results in external economies of scale. This approach is generalized by introducing an unbalanced allocation of public expenditure in rural and urban sectors due to political economy considerations, differential sector output elasticities with respect to government input, and distortionary taxation. The chapter studies the effects of an increase in public spending and taxation on sectoral outputs, factor prices, urban unemployment, and welfare. Of particular concern here is to study the effect of an unbalanced allocation of government spending between rural and urban areas. Chapter 3 studies the effects of selected education policies on the size of the educated labor pool and on economic welfare using the “job ladder” model of education, which is relevant to liberal arts education in developing countries. The policies considered are (1) increasing the teacher student ratio, (2) raising the relative wage of teachers, and (3) increasing the direct subsidy per student. In addition, the chapter analyzes the impact of wage rigidities in the skilled or modern sector on the size of the educated labor force. The analysis consists of five major sections. First, it reformulates the Bhagwati-Srinivasan job ladder model to make it amenable to analyzing the comparative static results of the effects of selected policies. Second, since higher education is mostly publicly financed, the analysis extends the job ladder model to incorporate public financing of the education sector. It then examines that model along with the effects of changes in policy parameters. Third, the analysis develops another extension of the job ladder model to include private tuition practices by teachers that are prevalent in many developing countries. Fourth, to analyze the impact of wage rigidities in a less restrictive framework where individuals can choose education based on ability and cost, the chapter develops an overlapping generations model of education with job ladder assumptions of wage rigidities in the skilled or modern sector. The chapter examines the flexible market and fixed market (with wage rigidities) equilibrium scenarios, and compares the impact on the threshold level of abilities and the size of the educated labor force. Finally, using specific functional forms of human capital production, cost, and ability density functions, the chapter analyzes the equilibrium outcomes. The analysis shows that in an economy with wage rigidities in the skilled sectors (modern and education sectors), the result of quality-enhancing policies under the simple job ladder model is an increase in the total size of the educated labor force. However, under an extended version of the job ladder model, the result depends on the relative size of the effects of an increase in the cost of education and the effects of an increase in the expected wage. The overlapping generations/job ladder model formulation used in the chapter finds that an increase in the present value of the expected wage and/or an increase in the marginal product of education will increase the demand for education. The minimum threshold level of ability falls, and more people are encouraged to acquire educational skills. Chapter 4 estimates the effects of openness, trade orientation, human capital, and other factors on total factor productivity (TFP) and output for a pooled cross section, time-series sample of countries from Africa and Asia, as well as for the two regions separately. The models are estimated for the level and growth of both TFP and output by using panel fixed effects. The generalized method of moments is also applied to address endogeneity issues. Several variables related to political, financial, and economic risks are used as instruments, together with the lagged values of the dependent and endogenous explanatory variables. The data for this study span 40 years (1972–2011) and are grouped into five-year averages. Several sources were used to obtain the most updated data, including the newly released Penn World Table (Version 8.0). The chapter finds that inducing a greater outward orientation generally boosts TFP, per capita output, and growth. Greater accumulation of human capital has a consistently positive effect on output and TFP growth in both Africa and Asia. Its positive influence comes rather independently of trade variables than interactive terms with openness. Furthermore, inflation does not negatively affect growth, although inflation variability is found to adversely affect TFP and output in Africa. Chapter 5 concludes the dissertation by providing conclusions, a summary of major results, and possible directions for future research.

<p>This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures.</p><p>Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods.</p><p>Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation.</p><p>Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base.</p><p>In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.</p>

This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures. Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods. Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation. Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base. In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.

This study examines the impact of exchange rate on inflation in Nigeria economy between 1970 and 2007. We analyzed the trend of inflation and exchange rate in the last 38 years by evaluating the relationship between government expenditure, money supply, Oil revenue, exchange rate and inflation as the dependent variables. We adopted the Augmented Dickey- Fuller to carry out the unit root test and co integration with Johansen test. Our result shows that the individual variables are integrated order one, that is a unit root exist. This means that each variable tends to follow a random walk. On the other hand, inflation rate, exchange rate, oil revenue, government spending and money supply are co integrated. This revealed a strong relationship among the variables though inflation rate and exchange rate show no long term relationship, but short term relationship seems to exist between them.

ABSTRACT In this thesis, I evaluate how fiscal and monetary stimulus policies contribute to the economic recovery process of recessions in the United States. Using a case study approach, I will study ten major recessions over the 20th century and early 21st century to answer this question. I will study the different fiscal and monetary policies implemented during the following recessions: the Great Depression; the Recession of 1937, the Recession of 1945, the Recession of 1953, the 1973-75 Recession, the 1980 Recession, the Early 1980s Recession, the Early 1990s Recession, the Early 2000s Recession, and the Late-2000s Recession. The literature suggests a wide range of conflicting viewpoints as to the most effective stimulus policies for economic recovery. I conclude that while both monetary and fiscal stimulus policies have been effective in contributing to GDP growth and reductions in unemployment, it is evident that each recession requires a unique policy response. In many cases, I find value in implementing both monetary and fiscal policy, jointly, as they complement one another. I also find that, generally, monetary policy is most effective in contributing to the economic recovery process of recessions through open market operations that reduce the interest rate and that fiscal policy is most effective in contributing to the economic recovery process of recessions through government spending. My systematic exploration of these policies and the recession case studies, provide valuable information of the effects of these policies and provide insight into the appropriate use of stimulus policies in the current economy and for future recessions and recoveries.

The dissertation aims at broadening our understanding of tax evasion and government spending in developing countries. It comprises three essays. The first essay deals with estimation of tax evasion in a cross-section of developing countries by estimating their underground economies using the currency demand method. By including enforcement parameters of the tax authorities as another factor of tax evasion in the currency demand equation, it presents theory-consistent tax evasion measurement. Our estimation strategy includes the use of the Arellano-Bond dynamic panel data method that is suitable for correcting the endogeneity problem in the currency demand estimation. The study finds substantial underground economy in developing countries, ranging from 2-67 percent of GDP. The second essay is concerned with time series measurement of the underground economy in South Africa using the currency demand method. Unlike other similar studies on South Africa, it gives sufficient attention to the unit root problem that is common in time series analysis of the currency demand method. Using the Error Correction Method (ECM), it investigates the relationship between the tax rate and the currency demand, and presents yearly estimates of the underground economy for the period 1965-2002. The third essay deals with the behavior of government spending in South Africa for the period 1960-2002. Since South Africa went through various political and macroeconomic shocks during this period, we augment measures of these shocks to the standard median voter model to assess the determinants of government spending in South Africa. Using the Error Correction Method (ECM), we investigate the long-run and short-run behavior of government spending. We find that, in addition to the tax share and the income of the median voter, macroeconomic and political shocks were also significant factors in determining government spending in South Africa. This study broadens our understanding of the behavior of government spending in the presence of political and macroeconomic shocks that are common in small open developing economies.