This thesis investigates the trade and revenue impact of trade liberalization. The purpose is to address the following issues: to examine the effect of trade liberalization on the volume of imports and exports, taxation, and its association with the enhancement of the performance of overall tax system. An empirical analysis is conducted by, first, adding liberalization factors to the import and export demand functions to assess their impact on imports and exports. The results indicate that, for Thailand, trade liberalization does not lead to the deterioration in the trade balance. Instead, it helps improve export performance. However, trade deficit may still occur due to a high income elasticity of demand for imports, rooted from its import structure. Although trade liberalization is not found to be associated with the problem of trade imbalance, the fiscal imbalance may still persist due to the mechanism of tariff reduction. In order to deal with the fiscal problem, the government needs to implement domestic tax reform. The consequence of reform may vary since liberalization impacts on taxation differ greatly depending on various factors. The study examines its effect on taxation, by applying a tax effort model and employing a two-way fixed effect approach. The results suggest that tax reform in less developed and developing countries, by moving away from trade tax to domestic taxes, may be inapplicable since domestic taxes may also severely suffer from liberalization. However, tax reform is still necessary and thus the study applies the concept of tax buoyancy and elasticity to evaluate the ability of Thailand’s tax system to mobilize its revenue after the reform. The results reveal that the tax system as a whole is buoyant and elastic due to the high tax-to-base buoyancy of corporate income tax, especially in the post-AFTA period. The main findings from empirical studies have important policy implications for tax strategies of Thailand and other developing countries.

Reforming the UK’s corporation tax code is becoming more of a widespread political concern than the preoccupation of specialists. This functionalist study offers an interpretation, and assesses the arguments. It views the corporation tax code as public law, energised by political values whose meaning and prioritisation are shaped by the prudential logic of effectiveness. The institutions that generate the code, and the challenges of globalisation to the nation state, have highlighted historic tensions between Crown and Parliament, and the latter’s scrutiny of the managerialist governance style that the code’s reform involves. This style is apparent in the ideology of the public interest that reform is designed to promote, a process that involves the skilful balancing of efficiency and fairness. Surprisingly, perhaps, there is little in the conduct of reform that violates the traditions of the UK’s representative democracy. The result is a code that, given its public law status, is a pre-eminent example of political jurisprudence. Its values, their prioritisation, and their change and complexity, are inevitably contentious, because they are the products of representative institutions. Criticism of the code generally understates these points. What are presented as impartial legal arguments are often simply rival views of the public interest.

This thesis draws on the analysis of data from interviews, observations, documents and archival records to examine the conditions of possibility for PFI procurements by three English National Health Service (NHS) Trusts and the extent to which these projects are affordable and delivering Value for Money (VfM). Drawing from Bourdieu’s Theory of Practice and his social praxeology, the thesis problematizes the critical explanations for the adoption of PFI by NHS Trusts and the VfM evaluations in operational projects. It contributes to the literature by theorising and empirically examining the operational conditions that have made NHS PFI a viable possibility, and the affordability and VfM issues arising from choosing and implementing PFI. On the conditions of possibility, the thesis finds that the state, through a statecraft of modernisation, structured local dispositions for PFI programmes using multi-layered and multi-directed reforms. Reforms restructuring the bureaucracy and financing of healthcare delivery, together with state-wide neoliberal practices, made Trusts more receptive to the use of the PFI. In addition, the increasingly evolving demands from national healthcare delivery frameworks in their applications to insufficiently resourced Trusts, defined the spatio-temporal adoption of the PFI. The thesis also finds that the projects are relatively unaffordable, but the reasons for their unaffordability are complex and multi-layered. In addition, VfM in operational projects is polysemous; has largely become symbolic and inconsequential, with its pursuit and constitution taken for granted. Ex-post evaluation programmes are not executed as procurers hold the costs of such exercises to outweigh the benefits. Furthermore, HM Treasury’s regime for VfM determination, in application, constructs a VfM reality removed from the ‘lived’ experiences of the procurers; and accounts for the apathetic inertia in PFI procurements. However, this same regime works to the benefit of stakeholders vested with financial and ideological interests in the functioning of the PFI.

This study has attempted to explain the portfolio behavior of the Pakistani Schedule banks and to provide the Pakistan monetary authorities with the best possible model through which they can influence the economy. First of all, we have investigated the links between monetary policy, the Banking Sector and the (aggregate) real economy in Pakistan over a forty year period, which commences in 1964. We have focused here to study how banks play a vital role in the monetary transmission mechanism through the banking credit channel. This study in chapter three provides the background for the two portfolio chapters where particular emphasis has given to the mean-variance form of expected utility and safety first Principle. Both static and dynamic versions of these models are examined. It is observed that these types of models, generally, perform well in terms of the traditional “goodness of fit” measures. Theoretical restriction on the properties of the demand/supply equations such as symmetry, homogeneity and joint homogeneity and symmetry were tested within each and every alternative model specification. For the estimation of the models, we used semi-annual balance sheet data of the State Bank of Pakistan for the period 1964:2-2005:1. Our main finding is that dynamic model performs better than static model in both expected utility model and safety first model and safety first dynamic model marginally perform better than expected utility dynamic model in terms of coefficients’ significance of interest rates and general stock adjustments.

This thesis studies multi-sector macroeconomic models suitable for policy analysis. The first and second chapters use a variety of empirical and theoretical macroeconomic models allowing for the consumption of goods with different durability, and analyze which modeling assumptions and features of the economy are crucial for the conduct of monetary policy. The third chapter focuses on the role of fiscal and monetary policies in the Euro Area, thus providing insights about the joint policy stance that have the potential to inform future policy choices. In the fi rst chapter, we challenge a crucial assumption made in the literature of Dynamic Stochastic General Equilibrium (DSGE) models with durable and nondurable goods about their relative price stickiness. We start with a thorough empirical analysis by estimating a Structural Vector Autoregressive model of the US economy, in which we find that the response of the relative price of durables to a monetary policy contraction is either flat or mildly positive. It signi cantly falls only if narrowly de ned as the ratio between new-house and nondurables prices. These findings are then rationalized via the estimation of two-sector New-Keynesian (NK) models. Durables prices are estimated to be as sticky as those of nondurables, leading to a flat relative price response to a monetary policy shock. Conversely, house prices are estimated to be almost flexible. Such results survive several robustness checks and a three-sector extension of the NK model. These findings have implications for building NK models with durable and nondurable goods, and for the conduct of monetary policy. This chapter is based on an article co-authored with Dr. Giovanni Melina (International Monetary Fund) and published in the Journal of Economic Dynamics and Control. The second chapter adds imperfect labor mobility to a two-sector New- Keynesian model with durable and nondurable goods and estimates it with Bayesian methods. We use the model to design optimal monetary policy and find that an inverse relationship between sectoral labor mobility and the optimal weight the central bank should attach to durables inflation arises. Moreover, we show that the combination of nominal wage stickiness and limited labor mobility leads to a nonzero optimal weight for durables inflation even if durables prices were fully flexible. These results survive alternative calibrations and interest-rate rules and point toward a non-negligible role of sectoral labor mobility for the conduct of monetary policy. This chapter is co-authored with Dr. Giovanni Melina (International Monetary Fund). The third chapter of the thesis focuses on the role of shocks and policies in the Euro Area business cycle. We consider the long-term structure of government debt and introduce a financial sector. These features allow the model to account for both the recent nancial and sovereign debt crises, and the effects of the unconventional monetary policy implemented by the European Central Bank. We then determine the joint fi scal and monetary policy stance in the Euro Area and find that it has been expansionary in the aftermath of the financial crisis but has turned to be contractionary after the sovereign debt crisis. The joint effect of the austerity measures taken by governments of European countries and the zero-lower-bound constraint on the monetary policy rate caused the reversion of the policy stance, which was prevented to be even more contractionary only by the quantitative easing implemented by the European Central Bank. This chapter is based on a paper co-authored with Dr. Nicoletta Batini (International Monetary Fund), Dr. Giovanni Melina (International Monetary Fund) and Dr. Stefania Villa (Bank of Italy).

This thesis studies the promotion and financing of industrial diversification in natural resource-dependent countries. It tries to contribute to the existing literature by addressing three research questions in three main chapters. Chapter 2 attempts to answer the following question: Does financial development induce the diversification and complexity of exports in natural resource-dependent countries? Financial development and deregulation are standard recommendations in order to achieve greater industrial and economic development in these countries. However, using standard panel data econometrics, this chapter shows that financial development has no positive impact on export diversification or complexity. It argues that a general financial development policy recommendation is not expected to be a key for industrial and export diversification in these countries. This result provides an essential motivation for the following chapters. Chapter 3 looks at the financing of industrial diversification in two specific countries, namely Chile and Malaysia, which were both natural resource-dependent, but managed to successfully diversify their respective economies. The two countries have followed different strategies. In Chile, diversification has been towards niche natural resource-based industries, while in Malaysia the strategy has been to defy comparative advantages, resulting in specialization in sophisticated and high value added products. This chapter examines the role of the state and the financial system in financing the industrial diversification. The main finding is that in both countries the state has always played a key role in directing finance to strategic sectors and in contributing to the emergence of new industrial activities. Diversification in Chile and Malaysia has not occurred through free market operations and liberalized financial systems settings. Chapter 4 concentrates on promoting industrial diversification in oil dependent countries using Saudi Arabia as the case study. It starts by reviewing various strategies of economic diversification in the context of resource-dependent countries. In particular, it reviews the literature on resource-based industrialization (e.g. Perez, 2015), the literature on the Growth Identification and Facilitation Framework (i.e. Lin 2011) and the literature on the product space theory (i.e. Hidalgo and Hausmann 2009). This chapter, then, uses these frameworks to suggest possible diversification strategies in Saudi Arabia and to assess the government’s recently promoted diversification plan (Vision 2030). Furthermore, the potential role of the Saudi financial system is fully examined.

Local government accounting in Portugal has been through a radical transformation since 1999. As additions to the traditional cash-based budgetary accounting, the system now includes accrual-based financial accounting and reporting, as well as cost accounting. The keystone for the changes was the Chart of Accounts for Local Government, issued in 1999 as a consequence of a wider reform process (comprising administrative, financial management and accounting issues) started in 1990 for the whole Portuguese Public Administration. This thesis describes how the Portuguese local government accounting system currently works, specifically addressing budgetary, financial and cost accounting techniques. Using Lüder’s Financial Management Reform Process Model, it also explains the current innovations in the Portuguese governmental accounting, and presents the context within which the reforms have been taking place. The same framework is used to predict the conduciveness to future developments, providing some insights into the probability of further reforms. Finally, it offers an inductive theory of Portuguese local government accounting in comparative-international perspective, in comparison with the United Kingdom. In the process, this shows that, despite the similarities in the form and content of the reports produced, differences still remain as to their aims and purposes.

This thesis is composed of three core chapters on modern dynamic macroeconomics, which study different aspects of the public sector labor market in a large EU economy with significant public employment share and a non-trivial public sector wage premium over the private sector labor compensation. The study in this dissertation adds to earlier research by incorporating endogenous government hours and wages in the model framework and argues that the presence of a sizable public sector labor market in European economies generates significant interaction with the private sector labor and capital markets. In addition, the presence of interest groups (labor unions, government bureaucracy), as well as other labor market frictions in the public sector, is shown to be an important element of the analysis when discussing fiscal policy reforms. Motivated by the highly-unionized public sectors, the high public shares in total employment, and the public sector wage premia observed in most post-WWII European economies, Chapter 1 examines the role of public sector unions in a general equilibrium framework. A strong union presence in a large non-market sector is shown to be relevant for both business cycle fluctuations and for the welfare effect of fiscal regime changes. To this end, an otherwise standard real-business-cycle (RBC) model is augmented with a public sector union optimization problem. The resulting theoretical setup generates cyclical behavior in government hours and wages that is consistent with data behavior in an economy with a highly-unionized public sector, namely Germany during the period 1970-2007. The main findings of Chapter 1 are: (i) the model with a public sector union performs reasonably well vis-a-vis data; (ii) overall, the public sector union model is a significant improvement over a similar model with exogenous public sector employment; (iii) endogenously-determined public wage and hours add to the distortionary effect of contractionary tax reforms and produce significantly higher welfare losses. Additionally, the union model requires greater changes in tax rates to achieve a pre-specified increase in tax revenue compared to an equivalent model with exogenous public sector hours. Thus, endogenous public sector hours and wages in the setup are shown to be quantitatively important for public policy evaluation. Ignoring the positive co-movement between public and private hours and wages leads to a significant underestimation of the welfare effect of fiscal regime changes. Chapter 2 characterizes optimal fiscal policy and evaluates it relative to the exogenous (observed) one. Motivated by the high public employment, and the public wage premia observed in the major European economies, a Real-Business-Cycle model, calibrated to German data (1970-2007), is set up with a richer government spending side, and an endogenous private-public sector labor choice. To illustrate the effects of fiscal policy on sectoral allocation of hours, public wage rate determination and the provision of labor-intensive public services, two regimes are compared and contrasted to one another - exogenous vs. optimal (Ramsey) policy case. The main findings from the computational experiments performed in Chapter 2 are: (i) The optimal steady-state capital tax rate is zero, as it is the most distortionary tax to use; (ii) A higher labor tax rate is needed in the Ramsey case to compensate for the loss in capital tax revenue; (iii) Under the optimal policy regime, public sector employment is lower, but government employees receive higher wages; (iv) The benevolent Ramsey planner provides the optimal amount of the public good, and substitutes labor for capital in the input mix for public services and private output; (v) The government wage bill is smaller, while public investment is three times higher than in the exogenous policy case. Lastly, the thesis tries to delve into the hierarchical structure of public employment service and addresses the problem of rent-seeking in the public sector by government bureaucrats. Chapter 3 studies the wasteful effect of bureaucracy on the economy by addressing the link between rent-seeking behavior of government bureaucrats and the public sector wage bill, which is taken to represent the rent component. In particular, public officials are modeled as individuals competing for a larger share of those public funds. The theoretical model used is calibrated to German data for the period 1970-2007. The analysis then extends to the other major EU economies as well. To illustrate the effects of fiscal policy on rent-seeking, the exogenous and the optimal (Ramsey) policy cases are compared and contrasted to one another. The main findings of Chapter 3 are: (i) Due to the existence of a signicant public sector wage premium and the large public sector employment, a substantial amount of working time is spent rent-seeking, which in turn leads to significant losses measured in terms of aggregate output; (ii) The measures for the rent-seeking cost obtained from the model for the major EU countries are highly-correlated to indices of bureaucratic ineficiency; (iii) Under the optimal fiscal policy regime, steady-state rent-seeking is smaller relative to the exogenous policy case. The benevolent government invests more in public capital, sets a higher public wage premium, but chooses much lower public employment, thus achieving a decrease in rent-seeking.

This thesis discusses the choice of an exchange rate regime for a small commodity-exporting economy which experiences both monetary shocks and commodity price shocks. To investigate these matters, stochastic calculus is used in a continuous-time setting. The Franc Zone serves as an illustration: it is a currency union between a small country and a large country, and was subject to enormous strains in the last decade. The model developed in chapters 3 and 4 stresses the role of expectations in affecting domestic price variability, when the commodity price is described as a Poisson process. It also points to an exchange rate policy of "leaning with the wind" on the basis of the price stability criterion. Chapter 4 further investigates how the degree of openness of the small economy can influence the choice of the optimal exchange rate. Finally the analysis explains why the recent devaluation in the Franc Zone was a necessity in contrast to other studies which failed to notice the need for a devaluation. In this respect, it suggests a way to measure the degree of overvaluation.

Improving public sector managers' accountability with performance measurement is one of the dominant themes of the New Public Management (NPM) literature. With a case study of HM Customs & Excise (HMCE), this PhD research analyses NPM-inspired accounting changes using evidence from interviews with HMCE personnel, official publications and parliamentary reports. There are four important research findings. First, unlike other service delivery organisations, two sets of competing accountability relationships exist in a tax administration, which are operationalised by two performance measurement regimes. This necessitates adaptation of leading private sector performance measurement models to accommodate the duality. Second, HMCE used accounting as a change vehicle in an attempt to shift emphasis from a traditional, compliance-driven accountability relationship to a customer-focus driven one. Third, the compliance-driven relationship remained the dominant relationship in practice despite implementation of the first round of customer-focused accounting changes. Fourth, a second round of accounting changes, i.e. a tax gap reduction approach, attempts to harmonise the two competing performance measurements. This arguably represents a notion of shared accountability of taxpayers and tax administration for 'tax gap' reduction. From an institutional theory perspective, however, adoption of the tax gap approach represents an exercise to (re)gain legitimacy in the eyes of Government. The PhD evidence, therefore, suggests that success of accounting changes is context specific. Moreover, based on a notion of reciprocity of accountabilities in the public sector, the PhD research also develops a theoretical framework. This is a significant contribution as existence of multiple accountabilities is recognised in the literature but using accounting changes to shift emphasis from one accountability form to another is not well addressed. In addition to these theoretical contributions, this PhD research is a first field study of PMS of a tax administration, and therefore, also improves our understanding of managerial issues of a neglected, but important, research site.