This dissertation comprises two essays that attempt to determine, empirically, the fiscal response of governments’ to international assistance. The first essay examines whether an increasingly popular recommendation in international aid policy to switch from tied foreign assistance to untied foreign assistance affects investment in critical development expenditure sectors by developing countries. In the past, most international aid has been in the form of tied assistance as donors believed that tying aid will improve its effectiveness. It has been argued, that if tied aid is well designed and effectively managed then its overall effectiveness can be improved. On the contrary, it is also believed that tied aid acts as an impediment to donor cooperation and the building of partnership with developing countries. In addition, it is also argued that it removes the ‘feeling’ of ownership and responsibility of projects from partner countries in aid supported development. Two other more popular arguments used to challenge the effectiveness of foreign aid is that it is compromised when tied to the goods and services of the donor countries because almost 30 percent of its value is eliminated and also because it does not allow recipient countries to act on their priorities for public spending. These problems bring into question whether tied aid is truly the most effective way to help poor countries. A recommendation by the international community is that a switch to untied aid would be necessary. With untied aid, the recipient country is not obligated to buy the goods of the donor country neither is it compelled to pursue the public expenditure priorities of donors. Instead with untied aid they will have greater flexibility over spending decisions and can more easily pursue the priorities of their countries as they see fit. Hence, one could expect that a one dollar increase in untied aid will increase spending in the critical priority sectors by more than a one dollar increase in tied assistance. The question therefore is whether national domestic priorities coincide or not with what the international community has traditionally deemed should be priority. Empirically, we test this prediction using country-by-country data for 57 countries for the period 1973 to 2006. The results suggest that on average untied aid has a greater impact on pro-poor spending than do tied aid. In addition, the results also suggest that fungibility is still an issue even after accounting for the effects of untied aid. However, one could argue that fungibility may not be as bad as it appears since the switch to untied aid improves spending in the sectors that are essential for growth and development. The second essay explores the hypothesis that the expectations of debt forgiveness can discourage developing countries from attaining fiscal independence through an improvement of their tax effort. On the one hand, the international financial community typically advises poor countries to improve revenue mobilization but, on the other hand, the same international community routinely continues to bail-out poor countries that fail to meet their loan repayment obligations. The act of bailing-out these countries creates an expectation on the part of developing country governments that they will receive debt forgiveness time and again in the future. Therefore, the expectation of future bail outs creates a moral hazard that leads to endemic lower tax efforts. The key prediction of our simple theoretical model is that in the presence of debt forgiveness, tax ratios will decline and this decline will be stronger the higher the frequency and intensity of the bailouts. Empirically, we test this prediction using country-level data for 66 countries for the period 1989 to 2006. The results strongly suggest that debt forgiveness plays a significant role in the low tax effort observed in developing countries. Our empirical model allows for the endogeneity of tax effort and debt forgiveness. Interestingly we find that more debt forgiveness is actually provided to countries with lower tax effort. The results are robust to various specifications.

This dissertation comprises two essays that attempt to determine, empirically, the fiscal response of governments’ to international assistance. The first essay examines whether an increasingly popular recommendation in international aid policy to switch from tied foreign assistance to untied foreign assistance affects investment in critical development expenditure sectors by developing countries. In the past, most international aid has been in the form of tied assistance as donors believed that tying aid will improve its effectiveness. It has been argued, that if tied aid is well designed and effectively managed then its overall effectiveness can be improved. On the contrary, it is also believed that tied aid acts as an impediment to donor cooperation and the building of partnership with developing countries. In addition, it is also argued that it removes the ‘feeling’ of ownership and responsibility of projects from partner countries in aid supported development. Two other more popular arguments used to challenge the effectiveness of foreign aid is that it is compromised when tied to the goods and services of the donor countries because almost 30 percent of its value is eliminated and also because it does not allow recipient countries to act on their priorities for public spending. These problems bring into question whether tied aid is truly the most effective way to help poor countries. A recommendation by the international community is that a switch to untied aid would be necessary. With untied aid, the recipient country is not obligated to buy the goods of the donor country neither is it compelled to pursue the public expenditure priorities of donors. Instead with untied aid they will have greater flexibility over spending decisions and can more easily pursue the priorities of their countries as they see fit. Hence, one could expect that a one dollar increase in untied aid will increase spending in the critical priority sectors by more than a one dollar increase in tied assistance. The question therefore is whether national domestic priorities coincide or not with what the international community has traditionally deemed should be priority. Empirically, we test this prediction using country-by-country data for 57 countries for the period 1973 to 2006. The results suggest that on average untied aid has a greater impact on pro-poor spending than do tied aid. In addition, the results also suggest that fungibility is still an issue even after accounting for the effects of untied aid. However, one could argue that fungibility may not be as bad as it appears since the switch to untied aid improves spending in the sectors that are essential for growth and development. The second essay explores the hypothesis that the expectations of debt forgiveness can discourage developing countries from attaining fiscal independence through an improvement of their tax effort. On the one hand, the international financial community typically advises poor countries to improve revenue mobilization but, on the other hand, the same international community routinely continues to bail-out poor countries that fail to meet their loan repayment obligations. The act of bailing-out these countries creates an expectation on the part of developing country governments that they will receive debt forgiveness time and again in the future. Therefore, the expectation of future bail outs creates a moral hazard that leads to endemic lower tax efforts. The key prediction of our simple theoretical model is that in the presence of debt forgiveness, tax ratios will decline and this decline will be stronger the higher the frequency and intensity of the bailouts. Empirically, we test this prediction using country-level data for 66 countries for the period 1989 to 2006. The results strongly suggest that debt forgiveness plays a significant role in the low tax effort observed in developing countries. Our empirical model allows for the endogeneity of tax effort and debt forgiveness. Interestingly we find that more debt forgiveness is actually provided to countries with lower tax effort. The results are robust to various specifications.

Background: Green consumerism is on the rise. However, the individuals with budget constraints are unable to afford sustainable products due to their budget as well as the premium pricing of the products. This in turn impedes them from expanding their sustainability options. In addition, the sustainability motivated individuals seek other means to meet their sustainable consumption practices. Thus, this thesis explores how the individuals innovate in their sustainable consumption practices while facing budget constraints. Purpose: The purpose of this research is to explore in what ways budget constrained sustainability motivated consumers innovate in their sustainable consumption practices. Method: The method used to investigate this topic is a mixed method of focus groups and interviews. The reason why this method was chosen was because it allows us to obtain an in depth discussion and rich data. Conclusion: The findings of our research has demonstrated that there are many ways that the budget constrained, sustainability motivated students innovate. Nevertheless, premium pricing as well as budget constraints play a significant role in limiting the extent to which they can innovate in their sustainable consumption practices.

Background: Since the late 1990s the economy has become an important part of the football club activities. With increased revenues, a financial framework was needed and in 2002 the "Elitlicens" introduced for this purpose. Elitlicensen is divided into different criteria, the study dealt only with the economic criteria, the requirement that clubs in Allsvenskan should maintain a positive shareholders' equity. Aim: The study aims to study items and key figures in the annual financial reports of the clubs that participated in Allsvenskan every year during the period 2010-2014 to examine whether and how the clubs reached Elitlicensens criterion for positive shareholders´ equity. Furthermore, the aim is to explain the club's actions based on Elitlicensens criterion of positive shareholders´ equity. Method: A case study of the AIK, BK Häcken, Djurgårdens IF's, Helsingborgs IF's, IF Elfsborg, IFK Gothenburg, Kalmar FF and Malmö FF's annual financial reports during the period 2010-2014 where selected items and key figures audited. Through the theoretical framework with Soft budget constraint and the Fund theory the clubs actions tries to explain. Result: All clubs have reported positive shareholders´ equity 2010-2014. This has been maintained through player sales, money from the UEFA Europa Cups and capital contributions from stakeholders. There have been clear hints of soft budget constraint through both soft credit and soft subsidy AIK, Djurgårdens IF, Helsingborgs IF and IFK Gothenburg. A tendency to use of the Fund theory could be seen some years in BK Hacken, IF Elfsborg, IFK Gothenburg and Kalmar FF. Conclusion: The study shows that all audited clubs reached Elitlicensens requirements in positive shareholders´ equity 2010-2014. Selected theories provide no coherent picture of the clubs' actions regarding shareholders´ equity. Further research is needed in this area, which also take into sporting success and club financial strategies.

From 1997 to 1999 and 2003 to the present, Major League Baseball has had a luxury tax on high payroll teams. This paper analyzes the impact of the tax as a budget constraint on teams’ ability to reward and retain high performing players. In contrast to other papers, we use wins above replacement (WAR), a popular sabermetrics statistic, to measure performance. Using this metric, we quantify the number of top performers, how this performance is rewarded with salary, and how salary impacts players’ mobility decisions. We conclude that when using WAR, the distribution of performance is not heavy tailed and rather follows an exponential distribution. Our results suggest that there are fewer top performers in periods with a luxury tax/budget constraint. We use efficiency wage theory to understand this decrease in top performers as the result of a decrease in motivators. We understand two different mechanisms of motivating performance: (1) under a stochastic budget constraint, managers did not choose to extend the contracts of top players; and (2) under a fixed budget constraint, managers decreased the monetary reward for an increase in performance. Both these mechanisms decrease the motivation for top talent to perform highly.

Thesis advisor: Hideo Konishi / My doctoral dissertation contains three essays on menu auction and its related applications. The first chapter is a theoretical generalization of classical menu auction model, and the second and the third chapters are applications to a resource allocation problem and an industrial organization problem. Menu auction (Bernheim and Whinston, 1986) is a first-price package auction with complete information. They show that every Nash equilibrium under some refinements always leads to an efficient outcome. Therefore, this becomes a natural efficiency benchmark for package auction designs (e.g., Ausubel and Milgrom 2002). Menu auction can also be viewed as a model of economic influence where the auctioneer is going to choose an action which affects bidders' payoff so that each bidder tries to influence the outcome by monetary transfer to the auctioneer. This framework is widely adopted in political lobbying models where the special interest groups lobbying the government over trade policies (e.g., Grossman and Helpman 1994). However, the applicability is limited by quasi-linear preferences and the absence of budget constraints. In my first chapter, ``Menu Auctions with Non-Transferable Utilities and Budget Constraints'', I extends Bernheim and Whinston's (1986) menu auction model under transferable utilities to a framework with non-transferable utilities and budget constraints. Under appropriate definitions of equilibria consistent with subgame perfection, it is shown that every truthful Nash equilibrium (TNE) is a coalition-proof Nash equilibrium (CPNE) and that the set of TNE payoffs and the set of CPNE payoffs are equivalent, as in a transferable utility framework. The existence of a CPNE is assured in contrast with the possible non-existence of Nash equilibrium under the definition by Dixit, Grossman, and Helpman (1997). Moreover, the set of CPNE payoffs is equivalent to the bidder-optimal weak core. The second chapter relates menu auction to a resource allocation problem. Kelso and Crawford (1982) propose a wage-adjustment mechanism resulting in a stable matching between heterogeneous firms and workers. Instead of a benevolent social planner, in ``Profit-Maximizing Matchmaker'' (w. Hideo Konishi), we consider a profit-maximizing auctioneer to solve this many-to-one assignment problem. If firms can only use individualized price, then the auctioneer can only earn zero profit in every Nash equilibrium and the sets of stable assignments and strong Nash equilibria are equivalent. Otherwise, the auctioneer might earn positive profit even in a coalition-proof Nash equilibrium. This reinforces Milgrom's (2010) argument on the benefit of using simplified message spaces that it not only reduces information requirement but also improves resource allocation. The third chapter applies menu auction in an industrial organization problem. In ``Choosing a Licensee from Heterogeneous Rivals'' (w. Hideo Konishi and Anthony Creane), we consider a firm licensing its production technology to rivals when firms with heterogeneous in production costs competing in a Cournot market. While Katz and Shapiro (1986) show that a complete transfer in duopoly can be joint-profit reducing, we show that it is always joint-profit improving provided that at least three firms remain in the industry after transfer. While transfers between similarly efficient firms may reduce welfare, the social welfare must increase if the licensor is the most efficient in the industry, contrast with Katz and Shapiro (1985) in the duopoly environment. This has an important implication in competition regulation. Then we investigate relative efficiency of the licensee under different licensing auction mechanisms. With natural refinement of equilibria, we show that a menu auction licensee, a standard first-price auction licensee, and a joint-profit maximizing licensee are in (weakly) descending order of efficiency. / Thesis (PhD) — Boston College, 2012. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

Made available in DSpace on 2015-03-05T18:57:20Z (GMT). No. of bitstreams: 0 Previous issue date: 10 / Nenhuma / Um evento econômico que os formuladores de política têm enfrentado nas últimas décadas na América Latina é a questão do comportamento fiscal dos governos e a conseqüente (in)sustentabilidade da dívida pública e os seus efeitos sobre a economia. O fato é que a dívida dos governos aumentou exponencialmente em inúmeros países latino-americanos, tornando-se algumas vezes insustentável no curto prazo e conduzindo-os a uma série de defaults. Portanto, a política fiscal desempenha um papel relevante no processo de estabilização macroeconômica e nos ciclos econômicos. Dentro desse contexto, o presente estudo tem como objetivo geral avaliar a sustentabilidade da política fiscal para sete países latino-americanos utilizando um modelo de multicointegração, primeiramente apresentado por Granger e Lee (1989 e 1990) e, posteriormente, desenvolvido por Engsted, Gonzalo e Haldrup (1997), Haldrup (1998) e Leachman et al. (2005). O modelo apresenta uma série de critérios para verificar a existência de uma relação de multicoint / An economical event that the policymakers have been facing in the last decades, in Latin America, is the subject of the government's fiscal behavior and the consequent (un)sustainability of the public debt and your effects about the economy. The fact is that the government's debt increased exponentially at countless American Latin countries, becoming sometimes unsustainable in the short period, leading them to a defaults series. Therefore, the fiscal policy plays an important rule on the macroeconomic stabilization and on the economical cycles. Inside of this context, the present study has as general objective to evaluate the sustainability of fiscal policy of seven Latin America countries using the multicointegration methodology first apresented in Granger and Lee (1989, 1990) and, further, developed by Engsted, Gonzalo and Haldrup (1997) and Haldrup (1998) and Leachman et al (2005). The model presents a series of criterions to verify the existence of a multicointegration relationship among the receipts, sp

nÃo hà / Considerando o atendimento à restriÃÃo orÃamentÃria intertemporal do governo, analisa-se a solvÃncia das administraÃÃes pÃblicas municipais no Cearà a partir da proposta de Hamilton e Flavin (1986) e dos avanÃos de Levin et. al. (2002) e Im, Pesaran, and Shin (2003). Na impossibilidade de se praticar um jogo de Ponzi, uma administraÃÃo à considerada solvente se o dÃficit pÃblico segue uma trajetÃria estacionÃria. Para o exercÃcio empÃrico, dois testes de raiz unitÃria em painel sÃo utilizados e o perÃodo de anÃlise compreende os anos 2002 a 2008. Constata-se que as administraÃÃes pÃblicas municipais no Cearà sÃo solventes, muito embora uma anÃlise para oito macrorregiÃes tenha indicado que em duas delas a polÃtica fiscal seja insustentÃvel. Finalmente, a condiÃÃo de insolvÃncia nÃo parece ser determinada pelo tamanho econÃmico, jà a solvÃncia parece estar associada à afinidade polÃtica entre as prefeituras e as esferas maiores de governo. / Considering that the intertemporal budget constraint of the government is fulfilled, this work examines the long-run solvency of the public accounts of the municipalities of Ceara following Hamilton and Flavin (1986), Levin et al. (2002) and Im, Pesaran, and Shin (2003). If an administration does not use a Ponzi game it is considered solvent if the budget deficit has a stationary path. As an empirical exercise, two unit root tests in panel are used and the period of analysis covers the years 2002 to 2008. It appears that the municipalities governiments in Ceara are solvents, although an analysis for eight macro-regions has indicated that in two of them the fiscal policy is unsustainable. Finally, the condition of insolvency does not seem to be determined by economy size, since the solvency appears to be associated with political affinity between the municipalities and the larger spheres of government.

由於中共國營企業對中共政權在政治象徵著立國的根本；在經濟上具有全民所有制的地位；在社會上則揭示階級剝削消失理想的到來，由此可知國營企業的重要性。中共對其改革的策略也一直在小心斟酌，避免引起政治上的不安，也不能導致人民的不滿。因此，國營企業的改革勢必對中國大陸各方面帶來巨大的影響。令人不解的是，當中國大陸經濟改革中已然包含了許多種類的所有制型態，那麼在城市經濟改革重要的一環—國營企業改革中，為什麼仍然必須維持公有制得所有制形態？而此又有何重要性？此外，由工業總產值來看，全民所有制工業所占的比例，由一九五五年開始，一直超過百分之五十，最高曾達百分之九十之多；但從中共改革之後，比例一路向下滑，直到一九九三年，已經降到約百分之四十三，在此背後，有可能隱藏了何種意義？本論文之目的便在於探討中共的國營企業改革的過程，也嘗試探討國營企業改革對中共政權有何影響。所採取的觀察方式則以產權形式的變革作為分析的判準，隨著國營企業的產權性質的逐步變化，是否會對中共政權造成影響。中共政權的基礎是否不必然與社會主義公有制的經濟形式相配套，並且真如鄧小平所言，中國大陸正走向中國特色的社會主義的過程中。

Abstract R&D investment differs from general investments due to more and greater uncertainties. Once the R&D technique is selected and the investment turns into sunk cost, a path dependence of the R&D investment will occur that locks in the involved parties in the R&D cooperation relationship and the determined cost path. Due to information asymmetry, whether the executer honestly provides information about the project type will be critical to the profit or loss of the R&D investment. If a high cost type project be confesses, the financier can immediately terminate the project to avoid more losses. On the contrary, if the cost type is concealed, the financier will sink more costs into it. Thus, soft budget constraint should be seriously considered in R&D investments. First, we capture the intrinsic uncertainty in R&D investment by introducing both cost and outcome uncertainties of R&D investment. Furthermore, we introduce the financier type and the executor¡¦s expectation of the probability that a high cost project would be refinanced ex post to establish a dynamic game of incomplete information. With this setup, we develop reputation effects from repeated R&D games. The incentive for the financier to avoid executor¡¦s opportunism by establishing reputation makes the commitment to hard budget constraint credible. Second, we attempt to develop a foundation for the concept of the SBC and to extend the analysis of SBCs to the contractual relationship of R&D investment. Information asymmetry is one important cause for contractual incompleteness, and the only one cause makes two legal contract theories unhelpful. Instead of relying on court enforcement, it is possible for the financier to leave contract terms unspecified and rely on a private self-enforcement mechanism. Writing down explicit contract terms can define the self-enforcing range by imposing a private sanction on the executer perceived to be violating the contract understanding. Such a self-enforcing relationship is a useful framework in which to analyze the SBC of R&D investment. In Chapter 5, we describe industrial R&D activities in China and uses statistics to calculate the softness of budget constraint. The main point of the R&D investment model is that the incentive for the financier to establish reputation increases as the probability of success decreases. With this point of view, given the probability of success for R&D projects in high-tech industries being lower than that in conventional industries, refinancing should be relatively more common in conventional industries than in high-tech industries. Statistics of R&D activities in China confirm the above proposition in that the computer-related industry has the hardest budget constraint compared to other industries within the state-controlled sector.