The granting of discretionary budgeting powers to policymakers whose utility functions do not match those of the societies they govern, may lead to sub-optimal fiscal outcomes which require the creation of binding and credible commitments to rectify. Past research into the institutional constraints placed upon, and behaviour of, policymakers has shown that these do, in fact, generate real effects on macroeconomic performance. Optimal fiscal systems, in this sense, become reliant on having in place an institutional framework which structurally induces social welfare maximizing outcomes. This thesis provides both a historical overview of the birth of modern public finance as well as an in depth examination of both theoretical and empirical contributions to tax theory with a full statistical analysis of the multidimensional determinants of compositional systems of budget equations from the revenue side, observed across 90 states between 1990-2008. There is also the somewhat neglected area of finite planning horizons in public finance, where policymaker discount factors may lead to sub-optimal dynamic fiscal outcomes; mainly, the accumulation of public debt. Theoretical expectations have been difficult to statistically validate due to unobservable transition likelihoods and endogeneity problems which are overcome in this paper revealing significant discount effects on the accumulation of debt. Lastly, the recent popularity of budget rules in many of the world's economies has led to questions regarding their effectiveness where pro igate governments may be less likely to adopt budget rules that constrain their budgeting powers. Empirical findings suggest that rule adoption is partially determined within the equation of fiscal performance, making it difficult to identify the 'true' effects of budget rule adoption, as well as whether these are of first or second order.

Followed by the introduction, we begin the thesis by focusing on providing a quantitative indicator of the currency crisis contagion during the 1997-98 East Asian crisis. The severity of contagion is measured using a state-space model and a technical apparatus known as the Kalman filter. The results show that the contagion level is exceptionally high during the peak of the Asian crisis from June 1997 to January 1998. Further econometric tests were carried out to identify whether the crisis is transmitted to countries linked through trade or to countries characterized by macroeconomic similarities. The results indicate that the macroeconomic similarity dominates trade linkage as the major crisis transmission channel. Further, the high level of domestic claims which were financed by foreign capital inflows were shown to be the most significant factor in explaining crisis contagion in 1997-98. The next part of the thesis develops and implements a method for fore-casting capital flows to emerging markets. We provide capital flow forecasts to thirty-two developing countries using a vector autoregressive (VAR) framework based on the underlying fundamental factors driving capital flows. We also use our estimated models to carry out simulation exercises for the behaviour of capital flows under various economic scenarios. In the following part of thesis, using an unobserved components model and maximum likelihood Kalman filtering estimation, we separate out permanent and temporary components of capital flows. Based on these models, and using monthly data up to December 2000, forecasts of various capital flows are presented for the period January 2001 to December 2003. The results of the time series-based forecasts are then compared to those obtained using the fundamentals-based approach.

This thesis investigates redistributive impacts of fiscal policies at household level in a middle income developing country, Turkey, in 2003. It utilizes the benefit and tax incidence methodologies and applies the welfare dominance analysis and summary indices of progressivity to assess the distributional impacts of the fiscal policies. The 2003 Household Income and Consumption Expenditures Survey from the Turkish Statistical Institute is used for this purpose. Chapter 2 reviews the theoretical and empirical literature for measuring inequality and progressivity. The aim of the chapter is to review and discuss the measures used in the thesis. This is followed by the three empirical studies that form the core of the thesis. Chapter 3 and 4 examine redistributive impacts of publicly provided education, health, infrastructure services and social cash and in kind transfers. The key findings show that apart from primary education, none of the social services in question are well targeted to the poor, although the incidence of the services is progressive. In Chapter 5, attention is paid to direct and indirect tax policies in Turkey. Indirect taxes dominate tax revenues in Turkey. The results of the standard tax incidence analysis show that direct taxes are progressive thanks to personal income tax and property taxes. In the context of indirect taxes, redistributive power of indirect taxes is limited. The incidence of indirect taxes is sensitive to the welfare indicator chosen. While the indirect taxes reduce expenditure inequality, they increase income inequality. Effective indirect tax rates estimated by using input-output tables prove the importance of taxation on imported goods and intermediate goods, which are ignored by the standard tax incidence analysis. The incidence with effective indirect taxes is less progressive in the case of expenditure as the welfare indicator and more regressive in the case of income. The net fiscal incidence indicates that the fiscal policies have a positive redistributive impact on both expenditure and income inequality, and this positive impact is mainly driven by the public benefits.

The concept of shared services has been heavily promoted by UK central government, reportedly offering a mechanism to reduce costs and improve service performance. This advocacy of shared services has advanced ahead of academic research and evidence. This thesis aims to assess whether using this model results in reduced costs and improved performance in local government. A theory-driven research framework is used to assess the impact of using this form of partnership. The dominant theoretical rationale underpinning shared services is the intention to create a partnership to generate economies of scale, achieving reduced costs and improved performance. The model is thought to benefit from effective relationships which reduce supervision costs, and is dependent on effective implementation processes. The research project also incorporates counter-perspectives, which suggest there are limits to economies of scale, and potential challenges to the partnership relationship. The findings of the study indicate that, firstly, in comparison with other models of service delivery, clients of shared services report a more negative perception of performance. Secondly, it seems respondents in those authorities using shared services extensively are more likely to perceive that performance has declined. Thirdly, qualitative data indicate that shared corporate services have been implemented in a limited form, most often constituting a shared management arrangement, perceived to deliver cost reduction but with little evidence of performance improvement. Finally, the findings offer limited evidence of economies of scale, although the data provides some support for the notion that high-trust partnership relationships can reduce supervision costs, and conversely, finding that partnership working can also result in disruption or dysfunction which may bring the partnership to an end. The thesis offers recommendations for theory, research and policy. Overall, it would seem that the effectiveness of shared service partnerships is highly contingent upon the form they take, the effectiveness of the implementation process and a clear understanding of the associated benefits and risks

This thesis investigates the legal conditions, the methodological framework and the sufficient conditions for the application and implementation of the standard cost model (SCM) in German municipalities. Based on the background of the severe financial crisis of German municipalities this thesis examines the potential of using the SCM to assist in requesting the necessary financial funding for transferred public obligations by the federal legislation in Germany. The first step of the research methodology was based on a number of expert interviews conducted with stakeholders of German institutions. Those that are relevant for the SCM implementation into German legislation. Additionally, this thesis analyzes existing projects that utilize the SCM application in public administration, particularly municipalities. Together with a reflective presentation of the author in front of an audience of experts about bureaucracy decrease, the author developed a hermeneutic prejudice as starting point for a hermeneutic text analysis. First, the thesis analyzes the relevant constitutional jurisdiction and literature about the municipal finance equalization and the principle of connectivity in the federal states and proposes the transfer of essential parameters to the level of federal legislation. Concerning the methodological framework as the second issue, the thesis examines existing methods to measure municipal efforts and proposes a coherent system of public finance equalization within the constitutional conditions. The third issue is a proposal for the possible integration of the municipal cost estimation into the federal legislation regarding existing rules of legislative procedures. The thesis reveals a lack of municipal cost estimation that is necessary for the impact assessment of federal legislation in Germany. Regarding the constitutional jurisdiction in particular, the text analysis shows that such a municipal cost estimation is not only legally permissible, but is necessary for federal legislation. The analysis of the dualistic system of municipal finances requires an appropriate financial equalization for transferred administrative obligations including administrative and purposes costs. This estimation is based on a representative investigation in “average economic municipalities.” The consideration of such financial municipal demands must be implemented by the responsible federal ministry as early as possible within the legislative procedures, ideally during the investigation of municipal interests (§ 41 GGO). This thesis describes legal, methodological, and organizational proposals for a SCM application in municipalities; however, additional research is needed about the concrete process of information exchange between the different administrative levels in Germany and the resultant political consequences on federal legislative discussions.

The European Sovereign Debt crisis in 2010 not only brings the sustainability of public finance to the forefront, but also the sustainability of external balances. Chapter 2 of this thesis proposes an approach to measuring fiscal sustainability of a country; Chapter 3 investigates the divergent external imbalances in Europe, and Chapter 4 proposes the measures of external sustainability for a country. Chapter 2 proposes a measure of public sector debt sustainability based on probabilistic statements of various future events relating to debt sustainability. It illustrates the approach using data for 10 developed countries over the period 1958-2010. The approach accommodates various alternative definitions of sustainability, which is new in the literature. The approach employs a Global cointegrated Vector Auto Regression model, modelling both long-run relations and cross-country interactions. Applying our approach on an empirical sample including eight EU countries, shows that our measures offer a multi-dimensional description of fiscal sustainability. Chapter 3 characterises the long-run time series properties of net foreign assets in twelve EU countries over the period 1970-2011. Using a multi-country restricted VAR model, we establish that shocks to net foreign asset persist over time. We then measure the size and the source of the permanent effects of the shocks. We find, the current account drives the net foreign assets in the long-run. Unanticipated changes in cross-border finance flows have a significant permanent effect on net foreign assets across the EU economies, more than output shocks and dollar exchange rate shocks. Chapter 4 measures the likelihood of sustainability of the net foreign assets and the current accounts. In response to the sovereign debt crisis, the European Commission includes both the stock and flow external balances under its surveillance. We illustrate our measure by implementing the introduced policy. Our sustainability likelihoods are based on a formal model incorporating behavioural feedbacks and cross-country movements. Illustrating on the EU empirical sample adopted in Chapter 3, our measures not only describe countries' sustainability of external balances but also serve as early warning indicators.

Owner managers of small companies (OMSCs) present an important group for tax research, as they constitute a majority of taxpayers, although little is known about their tax compliance behaviour. Hence, the key purpose of this study is to understand how OMSCs’ tax compliance and tax morale, intrinsic motivation to pay taxes, are shaped through their social roles: as an individual and as a manager. Moreover, the study explores the influential factors on OMSCs’ tax morale such as religiosity. This study is particularly important for providing a detailed picture of the factors that are key to successful tax compliance, which might help OMSCs and policy design. Additionally, it is one of the first studies to understand OMSCs’ tax morale, particularly the first one in the context of Turkey, with a predominant by Muslim population. This study is based on three phases. First, the OMSCs’ tax morale model is developed building on the Theory of Planned Behaviour. In this phase, the factors that are grouped under Personal Norms, Corporate Norms and Perceived Behavioural Control are identified with the critical review of literature and their influences on OMSCs’ tax morale and tax compliance are discussed. Next, in the qualitative exploratory phase of the research, the model’s relevance to the research context is confirmed and necessary modifications to the model are made according to the results of the thematic analysis of 20 face to face interviews with OMSCs. The third phase comprised the confirmatory phase of the research. Based on 447 responses from an on-line survey, the model was tested using Structural Equation Modelling via Partial Least Squares. The results of this study show a strong positive relationship between tax morale and tax compliance of OMSCs. Interestingly, the most influential factor in predicting and explaining tax morale are Personal Norms, which refer to OMSCs’ personal beliefs and values, including religiosity. In contrast, Corporate Norms, which refer to normative beliefs of an OMSC about his/her company, were found to be affecting negatively on tax morale but in terms of magnitude are far less influential than Personal Norms. Perceived Behavioural Control positively influences tax morale but again to a smaller extent compared to Personal Norms. These findings suggest that OMSCs’ personal beliefs and values are the main determinant of their tax compliance behaviour rather than their corporate concerns. Overall, the current study illustrates how tax morale and tax compliance of OMSCs are shaped by using the model that utilises the factors that are discussed in the literature alongside additional factors that have emerged from the qualitative phase of this study. The model benefits policy makers by portraying OMSCs’ tax morale that might help policymakers to identify problems and aid them in devising policies to improve tax compliance of OMSC.

The thesis is about household income taxation and consists of three essays. Chapter 1 investigates the implications of the design of income tax schedules for the distribution of household income and work incentives from the cross-national perspective. Using microsimulation techniques, we evaluate the distributional effects of replacing existing graduated rate schedules in Western European countries with flat tax schemes. Our simulations show that in specific circumstances a revenue neutral flat tax reform can increase income equality and improve work incentives; in most cases, however, there is an equity-efficiency trade-off. We show that the specific flat tax design and the welfare state regime play a key role. Chapter 2 estimates the determinants and extent of income tax compliance in a novel way, using income survey data linked with tax records at the individual level for Estonia. I model jointly two processes contributing to discrepancies in employment income between these data sources - tax evasion and (survey) measurement error. The results indicate a number of socio-demographic and labour market characteristics which are associated with non-compliance. Overall, about 12% of wages and salaries are underreported, which is very substantial for a major income source subject to third party reporting and tax withholding. Chapter 3 follows on Chapter 2, extending the scope of analysis from employees to the self-employed. It uses the same data source but an alternative method by Pissarides and Weber (1989), where the scale of income underreporting is inferred from the comparison of income and expenditure patterns across different population groups. Results confirm substantial underreporting of earnings by private employees and indicate large underreporting by the self-employed on the basis of register income, while a much smaller scale of non-compliance is detected for the self-employed and no underreporting for private employees using survey incomes.

This thesis is composed of four essays that make empirical contributions to impact evaluations of health sector interventions in low- and middle-income countries, in light of the interventions introduced under Egypt's Health Sector Reform Program (HSRP) between 2000 and 2014. We are mainly interested in the effects on family planning and maternal and child health. Different methods are used in this context: difference-in-differences (DD), DD propensity score matching (PSM), fixed effects (FE), random effects (RE) and pooled ordinary least-squares (POLS). In chapter 3, we estimate the effect of improving the quality of health care through facility accreditation on the family planning, maternal health and child health outcomes that we expect to reflect the effect of compliance with quality standards, policies and procedures. We found that accreditation had multiple positive effects, especially on delivery care and child morbidity prevalence. No significant effects were observed, however, with respect to most antenatal care (ANC) outcomes. In chapter 4, we estimate the medium-term effect of introducing user fees on the utilization of family planning, ANC and delivery care services, women's access to health care, and child health status. With respect to ANC, we found that the positive effect of increased willingness to pay for an improved quality of service outweighed the negative effect of the price elasticity of demand. Introducing user fees was associated with a higher likelihood of receiving ANC by skilled health personnel, a higher likelihood of receiving at least four ANC visits and a higher likelihood of receiving iron supplements during pregnancy. However, the two effects offset each other with respect to the outcomes that reflect the utilization of family planning and delivery care services, women's access to health care, and child health status. No net effect at all was observed on these outcomes. Chapter 5 complements the analysis of chapter 4 by allowing us to estimate the net effect of combining user fees and two quality improvement interventions: facility accreditation and performance-based financing (PBF). Again, we observe positive effects on both the utilization and the quality of ANC services. More notably, a positive effect on access to care was observed during our first study period that is more likely to reflect the effect of quality improvements. These effects, however, were reversed during the second study period that is more likely to reflect the effect of user fee introduction. The positive effects reported in chapters 4 and 5 were mainly with respect to ANC. No effects were reported on the outcomes that reflect the utilization of family planning and delivery care services, and child health status. In chapter 6, we estimate the effect of discontinuing provider incentives on health outcomes that reflect the health services targeted by the PBF scheme as well as the quality of these services. We found that discontinuing the incentives had a negative effect on four out of seven health outcomes: knowledge of contraceptive methods, receiving ANC by skilled health personnel, receiving iron supplements during pregnancy, and more importantly, under-five child mortality. Our findings, first, suggest that improving the quality of care through facility accreditation could be particularly effective in improving delivery care and child health. However, a high level of commitment from the central government is indispensable to sustain the positive effects of quality improvement interventions. Second, introducing user fees will not necessarily have negative effects on access and utilization of family planning, maternal health and child health services. However, user fees are ineffective, in general, as a stand-alone policy. Third, negative effects of introducing user fees in low- and middle-income settings on the utilization of healthcare services can be mitigated by officially exempting the poor from any fees at the point of service. More importantly, this exemption should be known to the population. Fourth, combining quality improvement interventions with user fees will not necessarily add to the few positive effects obtained when user fees are introduced as a stand-alone policy. Finally, provider incentives should be introduced carefully in low- and middle-income countries as negative effects are observed when these incentives are discontinued.

Motivated by unresolved debates on the appropriateness of accrual accounting in the public sector context and limited empirical support justifying its suitability within developing countries, this research seeks to fill such important knowledge gap. It expands the ongoing interest in the development of public sector accounting by focusing on an in-depth exploration of contextual interactions between institutions and processes of accounting change in one of the developing countries, Malaysia. As Malaysia is currently undertaking a radical accounting reform at the federal level, the research explored how it becomes institutionally embedded within political and administrative structures. By applying Critical Realism and Institutional Theory as theoretical lenses, this research employed qualitative strategies for primary and secondary data collected at lead agencies and three selected ministries. These include a thorough review of government documents, interviews with key actors and observations of their responses towards reform activities. The analyses revealed how the ultimate institutionalisation of accrual accounting approach, was constrained by the key actors’ limited capacity for action along with unaccommodating power dependencies. Moreover, the tension that arose between multiple expectations and the inherent attributes and culture of the public organisations that were strongly embedded in social welfare logics heavily influenced their interests and commitments in applying the efficiency logics prescription which underpin accrual accounting. The data also revealed the difficulties in complying with the International Public Sector Accounting Standards requirements, especially by organisations with distinctive assets where the relevant government policies still appear ambiguous. Consequently, there is heterogeneity in organisational responses and the quality of accounting information produced proved to be below expectations. The new financial information indicating the government’s financial position has imposed some political risks that have caused political support for the project to fluctuate. Therefore, rather than functioning as a management tool, accrual accounting has become a political tool. If these issues remain unresolved, the research implies that the Malaysian government will not be able to realise the value promised by accrual accounting, of which, may result in significant consequences in its effort to become a developed nation.