Evidence from the consumer behaviour literature show that people like private costs to either precede or occur at the same time as the benefits. No one wants to pay for a vacation after it has become a memory, or a dishwasher after it has gone to the tip. Likewise, no one wants to work for a salary that has already been spent. It is likely that similar preferences exist for communal expenditures. With this in mind, this thesis presents a series of studies into how ordinary citizens make (or want to make) communal financial decisions (i.e. cost-benefit trade-offs). The aim is to learn if people’s communal preferences are similar to their personal preferences; and if the prospective double-entry mental accounting model (Prelec & Loewenstein, 1998) – a well-supported theory of individual preferences – can explain these communal preferences. Eight studies (six communal and two personal) confirmed that people use similar mental rules to the ones prescribed by the double-entry model to make financial choices on a communal (and personal) level. That is, people prefer to have the communal costs to either precede or occur at the same time as the benefits; and when either is not possible, to minimise the temporal distance between the two. These preferences are observed for monetary gains and losses; for decisions that have a direct impact on the decision maker, or no impact at all; and for choices made between and within participants. These findings provide valuable insights for policy makers who are keen to design public finance policies that are efficient and have public support.

Higher education plays an important role in economic growth, job creation and export performance. It also has implications for research and knowledge creation. However, there is a notable lack of studies conducted in MENA, and other Arab countries. In particular, there is a dearth of research in the context of Libya, which has been witnessed the massive transformation that in terms of its political, economic, and institutional environment; and, there is a need to explore and understand the current applied system of higher education funding. Therefore, this study aims to investigate the Libyan government’s policies for the provision of funding to higher education. In addition, this study investigates and explores the obstacles and challenges experienced by the higher education sector in recent years. Furthermore, the study identifies the government policies, institutions and other factors influencing the decisions regarding the financial allocations to public universities. This study adopts a qualitative approach to collect data using semi-structured interviews and document analysis. The data was analysed using the thematic analysis technique following the length guidelines of Braun and Clarke (2006). The findings suggest that the operations of Libyan public universities are not only contingent upon government funding but also on the exploitation of universities’ resources. Besides, the findings reveal that there are certain factors behind the low levels of universities’ resources, such as legislation, government restrictions, lack of government encouragement and seriousness for universities to improve their income. The study also identifies various motivational factors behind government funding decisions. Furthermore, the findings confirm that, for universities and government agencies alike, economic (that is, resources available, government priorities, and instability of economic and political status in Libya), social (tribal as well as personal influence) and political factors (i.e., political clout, government and legislations restrictions) influence the distribution of resources.

This thesis examines the allocation of human capital in the public sector. I build a new global school-level database comprising 1.73 million public primary schools in 86 countries to study the allocation of teachers across schools across countries at different income levels. In line with common wisdom, I find a strong negative correlation between schoollevel pupil-teacher ratios (PTRs) and the level of income of a country. More strikingly, I document that the within-country variation in PTRs is also higher in lower income countries. This negative correlation between PTR variation and per capita income is also found within countries over time. Cross-country regressions and cross-district regressions within developing countries suggest that teachers may be misallocated across schools in developing countries: aggregate educational attainment and PTR variation are negatively correlated - even after controlling for differences in per capita income and aggregate PTR. I build a theoretical framework to characterize the notion of misallocation and calibrate the model to simulate counterfactual teacher allocations. I find that aggregate gains in grade promotion from teacher reallocation would be substantial in many developing countries. I finish by discussing the causes and implications of my findings. A case study from Zambia points to lack of managerial capacity and weak enforcement of teacher allocation policies as important underlying factors. A comparison of the distribution of health workers across public primary care facilities in Zambia and England suggests that misallocation of public human resources could also be an issue in other public sectors in developing countries.

The sovereign debt-­‐crises that recently unfolded in Europe highlight how incompletely we understand why prosperous developed countries persistently accumulate debt even in the face of risk of fiscal turmoil. Scholarly research explored why countries run deficits, but it remains unexplained why countries fail to put their fiscal houses in order once public debt reaches potentially dangerous proportions. This thesis argues that the key to the problem of excessive debt accumulation is the lack of compromise among powerful socio-­‐economic groups within the polity about the distribution of the necessary fiscal sacrifices. As long as each group finds it expedient to resist spending cuts and tax increases that place part of the burden of consolidation on its members, stabilization is delayed and debt is allowed to grow. The readiness of groups to reach a compromise and accept a share of the fiscal pain is a function of the economic harm each suffers from the side-­‐effects of fiscal imbalances, such as high inflation or declining international competitiveness. Therefore, the insulation of socio-­‐ economic actors from such side-­‐effects delays stabilization. This perspective sheds new light on unintended consequences of EMU-­‐membership. This explanation is couched in a society-­‐centred analysis of policy making. The thesis identifies coalitions of societal interest to explain policy choices, along the lines laid down in Gourevitch’s Politics in Hard Times (1986) and it uses Alesina and Drazen’s (1991) war of attrition model of delayed stabilization to analyse the costs and benefits for socio-­‐economic groups of resisting fiscal pain. Using this approach, it provides theoretically guided historical analyses of Belgium’s and Italy’s experiences with excessive debt accumulation in the 1980s, consolidation in the 1990s and mixed results in the 2000s, demonstrating how the interests of societal groups shaped the politics of fiscal policy-­‐making and investigating the effect of the EMU accession on fiscal outcomes.

In the last decade the endogenous growth theory has been said to have found into the difference of endowment of knowledge that different regions possess both an explanation of semi permanent differences in prosperity levels and, consequently, a recipe for eliminating the gaps. The theory had significant policy consequences and the impact was particularly large on the European Commission when it was decided to drastically increase the share of structural funds – the money meant to produce economic convergence of regions – into R&D. However, statistical data show a weak correlation between R&D expenditure and economic growth acceleration, and more specifically, the correlation becomes even weaker if applied to EU poorer regions. More precisely, the evidence suggests that R&D programmes can display different returns. This work wants to be contribution to better understand the reasons that lie behind these differences. The research tests an hypothesis described through a framework that we called innovation value chain. The result is that better performing innovation strategies are associated to: a more concentrated allocation of available resources and a higher capability of the initial public investments to stimulate further private investments; a clearer distribution of responsibilities for decision making over structural funds programmes and independence from policy making of the implementation processes of the programmes; a presence of partnerships amongst business, universities, government and public opinions that pre exist the implementation of the programmes and are based on specific per projects objectives. The analysis is carried out through case studies that compare similar OB 1 programmes in regions that were similarly endowed as far as R&D assets at the beginning of the 2000 – 2006 programming period and that, yet, showed opposite results and patterns of economic growth.

The objective of this study is to examine the relationship between taxation and public spending in the UK, utilising public choice theories that the level of government spending should reflect voter-taxpayer's demand for public goods. Such theories argue that certain features of the tax structure affect voter's perceptions of their tax burden so that they underestimate how much they are paying for public goods. Fiscal illusion is investigated as a key issue in a time series analysis of general government expenditures, and a cross-section analysis of local government spending. Also survey data from British Social Attitudes is employed to analyse the relationship between tax perceptions and preferences for public spending. The time-series results show quite consistent evidence that low visibility of taxed and deficit financing are associated with increased levels of spending, but for various reasons measures of tax elasticity and complexity performed less well. Closer examination suggests that deficit financing is less an illusory plan to hide expenditure increases from voters and more a short-term necessity when shock cause (trends in) spending and revenue to diverge. The cross-section results suggest fairly strong support for the "flypaper effect" that central government grants increase spending by more than would an equivalent increase in local income. Measures of local accountability appeared to have similar effects, while evidence on renter illusion suggests different outcomes in the two alternative tax regimes (community charge and council tax). Evidence from the micro-data analysis suggests some forms of fiscal illusion, though the influence of tax misperceptions on the demand for public spending is ambiguous. Overall, the evidence is consistent with the tendency to use invisible taxes to support increased spending, however, the use of this evidence, per se, may be misleading in drawing future prospects for tax and expenditure policies. Micro data analysis of fiscal perceptions offers a potentially important means of determining policy instruments. Moreover, if governments aim at increasing local accountability, inter-governmental fiscal relations should be reconsidered.

The objective of this thesis is to examine the implications of different government financial policies on the real sector of the economy. For this purpose we develop two overlapping-generations models. The first one allows us to evaluate the performance of the economy when debt is managed with different types of financial assets. A general result of the analysis is shown to be that an increase in the burden of debt leads to crowding out of the capital stock. A criterion for deriving endogenously the maximum sustainable level of debt within the model is also identified. The model turns out to be useful to provide an explanation of the poverty trap which is a very common phenomenon in some developing countries. The second model is developed to discuss the effects on the real economic variables of two different government deficit financing policies. The framework is an overlapping-generations monetary economy with population growth. Firstly, we analyse the effects of public deficit financing policy by injection of money into the economy at an exogenous constant rate and we emphasise the Mundell-Tobin (or non-superneutrality of money). Secondly, we extend the previous financing policy to include an endogenised money growth rate and we succeed in providing a powerful framework to explain the conditions under which dynamics of hyperinflation may arise. The novelty and importance of the findings are highlighted throughout the thesis.

German guarantee banks provide guarantees for small and medium-sized enterprises (SMEs) that apply for bank loans but cannot provide their own valuable collateral; this lack of collateral would normally lead to credit restrictions. Consequently, the central aim of guarantee banks is to enable SMEs to be eligible for loans. In Germany, the state provides counter-guarantees in the range of 65-80 per cent of the guarantee bank's guarantee. To justify the governmental intervention and the risk-taking of the state, guarantee banks need to be evaluated regularly. The literature review has revealed that additional research about German guarantee banks is needed. Some interesting literature exists about the ability of guarantee schemes to alter the lending behaviour of banks and reduce information asymmetries between the lenders and the borrowers. However, the literature review has demonstrated that these mechanisms have not yet been tested empirically. The present research provided a unique research approach for bridging this gap. Following the conceptual literature, the research aim was to test the ability of German guarantee banks to compensate collateral shortfalls and make available loans to SMEs, reduce information asymmetries, create lending relationships and mitigate credit restrictions immediately as well as in a sustainable way. This was done by carrying out a web survey with firms that have received a guarantee from guarantee bank Hesse as well as conducting semi-structured research interviews with bank managers. The results have demonstrated that the provision of a guarantee from a guarantee bank provides the missing collateral to banks and makes available loans to otherwise credit restricted SMEs. Evidence has been found for a reduction of information asymmetries and a creation of lending relationships between the borrower and the lending bank. Moreover, connections between an application for a guarantee and the support of the region and cross-selling aspects of commercial banks have been revealed.

This doctoral thesis studies sovereign credit risk during periods of uncertainty about the state of a government's fiscal position. A new measure of fiscal uncertainty is introduced, based on the disagreement in official forecasts of the public budget deficit, and forecast revisions to approximate common uncertainty shocks. It is shown that in the aftermath of the global financial crisis, fiscal uncertainty increased substantially in advanced economies. The effects of fiscal uncertainty are largely unknown, in particular in the context of sovereign credit risk. To estimate the response of sovereign credit ratings to fiscal uncertainty, a new empirical framework is developed for the analysis of rating determinants. Rating transition is modelled as the joint outcome of two processes, which determine the frequency of rating changes, and their direction. This thesis finds that fiscal uncertainty is perceived a credit risk by rating agencies and increases the probability of a rating downgrade. Fiscal uncertainty also affects the attention paid to sovereign ratings. An event study analysis shows that the attention to rating announcements increases, the more noisy publicly available information about fiscal outcomes is.

The importance of focusing on performance measurement systems (PMSs) in the public sector has increased following the introduction of new public management (NPM) initiatives, which placed a greater emphasis on organisational accountability and performance measurement. PMSs have always been a key player in ensuring accountability and improvement in the practices of public sector (e.g. healthcare) organisations. Critical features of the health sector have particularly warranted the application of various internal or external PMSs in this area as well as the regular assessment of their own performance. This is crucial in terms of both maintaining their alignment with the initially determined objectives and improving their merits and capabilities to continuously detect the deficiencies and malpractices in healthcare organisations (HCOs). Iran’s national accreditation programme for healthcare organizations (NAPH) has served as the sole element of macro control and regulation in the country’s health sector at national level. It has been set up to reflect, operationalise and guarantee the intentions of the government for promoting quality and safety in the local HCOs, mainly hospitals, across the country. Despite the NAPH’s importance and vital position in the country’s health system and its long-time implementation, the contextual effects of this evaluator mechanism on the individual hospitals have not been empirically researched in current organizational context; i.e. there is a lack of empirical evidence in the literature on how this macro PMS impacts in practice on the hospitals at local level. Accordingly, this study aims to render a contextual evaluation of the performance of this evaluatory system. A middle-range thinking (MRT) research approach has informed the study. Drawing on this approach, Broadbent and Laughlin’s theoretical framework was adopted to both guide the empirical work and help with the analysis and interpretation of the empirical data. The findings of the study showed that it was mainly the financial benefits rather than the quality improvement merits of the current hospital accreditation and evaluation programme that were apparently the main rationale behind the conformity of the hospitals. Both dysfunctional and beneficial consequences were associated with the NAPH by the hospitals’ members. In addition, the hospitals showed different reactions including rejection and gaming as well as absorption to achieve the beneficial gains of the programme. However, they also adopted some requirements of the NAPH exclusively in view of its perceived merits and some other contextual factors. Changes in the hospitals as a result of the programme occurred mostly in the early years following its introduction or modification. This study further provides both theoretical and practical research implications for policy and practice for the improvement of this evaluation mechanism