為解決經濟發展過程伴隨的污染問題，常可見到政府和私部門一同投入防治工作，Pearce and Palmer (2001) 發現OECD國家隨著經濟成長，政府逐步提高公共防治支出，而且各個國家私部門的防治投入仍然佔有相當比重。Seldon and Song (1994)、Antle and Heidebrink (1995) 和Komen et al. (1997) 等實證文獻曾提出「倒U字型」EKC成立的原因可能來自環境財為奢侈財，使得經濟成長過程中公共防治投入快速增加，污染才會逐步減少。雖然Pearce and Palmer (2001) 實證OECD國家公共防治投入的所得彈性確實大於1，可是Kriström and Riera (1996) 發現許多國家對環境品質改善之願付價值的所得需求彈性值介於0到1之間，環境品質實為正常財而非奢侈財。鑒於相關實證資料的矛盾，本文從政府公共防治決策過程，了解環境品質所得需求彈性與公共防治投入所得彈性大於1的關聯，以連結環境品質所得需求彈性與EKC成立的關聯。本文證明無需奢侈財的偏好條件，而僅需環境品質偏好為正常財，以及防治技術滿足規模報酬遞增或固定，平均所得提高，消費者對環境品質的主觀願付價格高於客觀代價，模型預期政府將不斷提高防治費率，平均所得水準和防治費率同步增加，公共防治投入的所得彈性必定大於1，污染量終會減少並趨向於零。 實證研究指出並非所有種類污染物的污染水準與平均所得關係，一定呈現「倒U字型」關係，而過去理論模型單從消費者對於環境品質偏好條件，或是單從污染物防治技術是否具備規模報酬遞增，仍不能完全解釋不同污染物與所得關係的差異性。本文強調必須將經濟成長帶動所得分配變化對污染的間接效果納入，有助於釐清不同種類污染物與所得關係的差異性。首先，所得分配固定不變而平均所得提高，只要滿足環境品質偏好為正常財，以及防治技術滿足規模報酬遞增或固定，平均所得對污染的直接效果為「倒U字型」。再則平均所得固定不變時，只要消費者對環境品質的偏好為正常財(而非奢侈財)，所得分配改善，經由多數決投票決定均衡費率反而調降，污染隨之增加。考量高所得國家經濟成長帶動所得分配改善 (即顧志耐曲線存在) 的間接效果，不同污染物面對相同的所得分配變化，唯一的差異僅是防治技術的不同。防治技術之規模報酬遞增並不保證平均所得對污染的淨效果為「倒U字型」，而必須該污染物防治技術之規模報酬指數很高，直接效果大到足以抵銷間接效果，淨效果才可能為「倒U字型」。 另外，本文探討為何世界各國普遍有公私部門同時投入防治的現象，以及研究公共防治支出對私人防治投入產生排擠或排入效果的機制。模型發現無論政府和私部門的防治要素是否為互補要素 (complementary inputs) ，政府和私部門的最適防治投資都不為零。假若私部門增加設備無關乎提升公共防治設備之效能，公共防治增加，將對私人投資產生排擠效果。假若私部門增加設備可以提升公共防治設備之效能，公共防治對私部門防治投資可能產生排擠效果或排入效果，端看該國對於環境品質的重視程度。 政府環境政策制定與私部門防治投資決策的互動息息相關，環境政策的成效實有賴私部門是否願意配合投入防治設備。一旦公共支出對私人投資具排入效果，政府傾向事前宣布較高費率，期望刺激私人投入防治，待事後私人已經投入防治設備，政府則有誘因調降費率。反之，假若公共支出對私人投資具排擠效果，則政府傾向事後再調高費率。只要政府落實事前宣布政策，在符合實證支持的技術條件，污染與平均所得的關係為「倒U字型」的環境顧志耐曲線 (Environmental Kuznets Curve, 以下簡稱EKC) ，若缺乏機制督促政府落實事前宣布政策，且消費者理性預期政府背離意向，當動態一致性 (dynamically consistent) 費率低於事前宣布政策的費率，則執行動態一致性費率所對應的EKC將高於政府確實執行事前政策之EKC；若動態一致性費率高於事前宣布的費率，環境政策的動態不一致反而使得EKC降低。

The <u>first essay</u> [“Twin Deficits and Free Lunches: Macroeconomic Outcomes In Anticipation of Foreign Aid”] concerns itself with situations in which private agents anticipate a future windfall (free lunch) that will help service the debt resulting from a present fiscal expansion (implemented via a temporary tax cut). Such expectations of a windfall can arise in the context of natural resource discoveries or, more interestingly, due to perceptions by agents in “too important to fail” countries that will be bailed out through higher foreign aid or debt relief. We employ an overlapping generations model featuring credit constraints to study the real effects of such free lunch expectations in a small open economy, drawing contrasts with the standard tax and money finance closure rules. The model is solved analytically and shows that anticipated aid is equivalent to current aid when agents have perfect foresight, so that a temporary tax cut is seen as permanent. Accordingly, agents raise their consumption and indebtedness (at the expense of future generations) by an amount that is an increasing function of their “impatience” (subjective rates of time preference plus probability of death). A worsening of the current account obtains (twin deficits) across a range of plausible closure rules, including those featuring money finance. The introduction of credit constrained households (we study the variant where myopic agents spend their current disposable incomes) does not alter the basic result in the case of full aid finance, but does matter for mixed tax-aid regimes, in more complex settings where agent expectations and donor promises on aid diverge, and when governments face borrowing constraints so that the timing of aid delivery matters. The <u>second essay</u> [“The Role of Domestic Debt in Economic Growth: An Empirical Investigation For Developing Economies”] focuses on the remaining source of government financing, i.e. domestic debt, and the role it can play in mobilizing private savings, facilitating credit intermediation in higher risk settings (i.e. serving a “collateral” function on bank balance sheets), developing financial markets and supporting economic growth in general. To investigate this question empirically, we set up a new domestic debt database covering about 100 developing economies, going back three decades to 1975; explore Granger causality links between domestic debt and key macroeconomic and institutional variables; and estimate the growth impact of domestic debt using panel regressions, allowing for non-linear effects. Domestic debt, as a share of GDP is found to exert a significant positive impact on economic growth, with potential channels including domestic savings mobilization, provision of risk-insurance on banks’ balance sheets; and greater institutional accountability of the state to its citizens. Although this result countervails more established arguments against domestic debt (i.e. that it leads to crowding out and banks to become lazy), there is some evidence that above a ratio of 35 percent of bank deposits, domestic debt does begin to undermine economic growth. The growth payoff also depends on debt quality, with higher payoffs observed for positive interest-rate bearing marketable debt issued to nonbank sectors. The <u>third and final essay</u> [“Why Do Banks in Developing Economies Hold Domestic Government Securities?”] explores demand-side determinants of domestic debt, by focusing on commercial bank holdings of government paper, discriminating carefully between voluntary factors (such as mean-variance portfolio optimization) and statutory ones (cash reserve and capital adequacy requirements). The analysis is made possible by the construction of a dataset on government and private returns (real and nominal) for almost 600 banks from 70 emerging and low-income economies, spanning the (pre-Basel II) period 1995-2005. A battery of structural cross-section regressions indicates that banks’ portfolio decisions are at least as significantly influenced by mean-variance considerations as regulatory factors: the actual portfolio share of government securities (λ) responds intuitively, and sizably, to variations in the moments of the distributions for government and private returns as well as in the minimum-variance portfolio share (λ*). Higher cash reserve requirements tilt portfolios away from government securities toward riskier private lending, while higher capital adequacy requirements work the other way. The association between actual portfolios and the identified determinants is noticeably weaker at lower ends of the λ distribution, suggesting the domination of non-CAPM factors in those contexts.

The study has empirically examined the relative impact of public and private investment on economic growth and has also tested the crowding in or crowding out effect of public investment on private investment in four Southern African economies – Malawi, South Africa, Zambia and Zimbabwe. The analysis used annual time-series data covering the period from 1970 to 2014. The study provides new evidence to contribute firstly to the current debate regarding the relative importance of public and private investment in economic growth processes and secondly, on whether public investment crowds in or crowds out private investment in the selected countries. For this purpose, the study employed two empirical models using the recently developed Autoregressive Distributed Lag (ARDL)-bounds testing approach to cointegration. Model 1 examines the relative impact of public and private investment on economic growth while Model 2 investigates the crowding in or crowding out effect of gross public investment and its subcomponents (infrastructural and non-infrastructural) on private investment. The results of Model 1 largely supported the private investment-led economic growth strategy. In all the study countries, private investment had a positive impact on economic growth. Also, public investment positively contributed to economic growth in Zimbabwe, but in the remaining study countries, public investment had a negative relationship with economic growth. Results from Model 2 reveal that: (i) the crowding out effect of gross public investment on private investment predominates in the study countries; (ii) infrastructural public investment crowds in private investment in South Africa and Zimbabwe in the long run while it crowds out private investment in Malawi and Zambia in the short run; and (iii) non-infrastructural public investment crowds out private investment in South Africa and Zambia. On balance, the results from Model 2 show that public investment tends to crowd out private investment in the selected countries and this further underscore the importance of the private sector-led economic growth processes in the study countries. / Economics / D. Phil. (Economics)

Indiana University-Purdue University Indianapolis (IUPUI) / A sizeable body of research has attempted to examine the interaction between government spending and private giving known as the crowd-out effect. Most researchers reported that increases of government spending cause decreases of philanthropic giving to different types of nonprofits. However, few studies have attempted to indicate the interaction between government welfare expenditures and private giving to human service organizations even though human service organizations are the most sensitive to the changes of government spending. Additionally, the estimated crowd-out effects with a simple crowd-out model have been criticized for potential endogeneity bias. This paper investigates the total effect of federal government welfare spending on state government expenditures and philanthropic giving to human service organizations (known as joint crowd-out). I used the 2005 wave of the Center on Philanthropy Panel Study (COPPS) to estimate the effect of federal human service grants on state government spending on, and donations to human services. From these reduced-form estimates I infer the levels of simple and joint crowd-out. I found that indicate federal spending on public welfare crowds out private giving to human service organizations while holding control variables constant in the donations equation. However, federal government spending on public welfare crowds in state government spending on public welfare.