In this work we discuss a number of issues in the theory of voluntary provision of public goods and income tax evasion under the assumption that individuals are ruled by a notion of Kantian morality. Our justification for imposing such an assumption is that models incorporating the traditional assumption of rational egoism are unable to explain the many real world examples of successful private provision of public goods, of which compliance to tax rules can be taken as an example. In the first part of this work, after having reviewed the literature on private provision of public goods and justified our alternative approach, we introduce and formalize the notion of Kantian behaviour. We investigate efficiency of private provision of public goods under Kantian behaviour and we also compare Kantian provision with alternative models of public goods supply. Precise conditions on the structure of individual preferences which would ensure efficiency of private provision of a public good under Kantian, behaviour are derived. It is also shown that while Kantian supply of a public good is in general, still characterized by, underprovision it tends to be more efficient than public good provision under a democratic system as represented by the Median voter. theorem. Finally, using the notion of Lindahl equilibrium, a different way of assessing under/over provision of a public good under Kantian behaviour is derived. In the second part of this work, building upon the analysis on Kantian behaviour developed in the previous sections, we address the phenomenon of income tax evasion as an example of voluntary (non) provision of a public good. We present a model where the amount of tax that a taxpayer wishes to evade is determined on the basis of his perception of the fairness of his fiscal treatment, with respect to both governmental supply of public goods and the perceived behaviour of the other taxpayers. The coercive powers of the state, as well as the taxpayer's attitude toward risk, determine only the extent, to which this desired level of tax evasion is reached in practice. It is shown that this approach is able to produce implications for the relationship between the characteristics of public expenditure, the tax rates and tax evasion which are more consistent with both intuition, and empirical evidence than the results of the conventional model of income tax evasion. Furthermore, it also allows one to address other important questions such as the effect of government X-inefficiency on tax evasion.

The thesis focuses on the interaction between default and inflation risk on public debt bonds. We lighten the trade-off between flexibility to adverse shocks and credibility, in the debt management field, and identify the conditions under which the credibility effect can be dominant. EMU is now fully operating, including most of the European candidates that have been let in under a more relaxed interpretation of the Maasticht Treaty criteria. In particular, the debt criterion originally set at 60% of the GDP, was reinterpreted to require a debtlGDP ratio declining towards the target. As some of the countries have levels of debt above 100% of GDP (Belgium and Italy) and as European Central Bank is committed to price stability, what does giving up inflation imply for post-EMU debt management?

This dissertation is set in the North East (NE) of England and demonstrates how an experimental form of elite governance, characterised by multi-level, intra and inter-agency negotiation and co-ordination developed within complex and ambiguous socio-political structures and traditional hierarchies to deal with unmet social and economic needs. This emergent form of entrepreneurial governance has resulted from a poorly institutionalised field of regeneration, and allowed elites to seek autonomy by adapting national policies to specifically regional projects. A top-down, managerialist form of governance, it is not entirely democratic or open to public participation, but strategically contingent on global and other constraints. Central to an understanding of regeneration is the way strategies are formulated and implemented. This regime, with a broader mix of enterprising public servants and politically minded business and other interests, has coalesced over a long period to respond entrepreneurially to the consequences of globalisation and uneven development, and the failure of national and regional policies. A legacy of decline has created a strategic, cohesive and identifiably exclusive regime of actors, who act in the region’s interests. This regime is unlike the static or re-constructive regimes prevalent in other regions, rather it blends the positive aspects of traditional regional decision making with a more innovative approach. Democratic forms of managing regional space have gradually been replaced by a more adaptable and flexible form more suited to modern day and future needs. Power and influence shift dynamically over time, space and initiative, activities are legitimised by absorbing state officials into activities, and being in close proximity to civic society. As part of the history of change, and embedded in the social system, elites interact formally and informally.

Forecasting is central to economic and financial decision-making. Government institutions and agents in the private sector often base their decisions on forecasts of financial and economic variables. Forecasting has therefore been a primary concern for practitioners and financial econometricians alike, and the relevant literature has witnessed a renaissance in recent years. This thesis contributes to this literature by investigating three topical issues related to financial and economic forecasting. The first chapter finds its rationale in the large literature suggesting that standard exchange rate models cannot outperform a random walk forecast and that the forward rate is not an optimal predictor of the spot rate. However, there is some evidence that the term structure of forward premia contains valuable information for forecasting future spot exchange rates and that exchange rate dynamics display nonlinearities. This chapter proposes a term-structure forecasting model of exchange rates based on a regime-switching vector equilibrium correction model which is novel in this context. Our model significantly outperforms both a random walk and, to a lesser extent, a linear term-structure vector equilibrium correction model for four major dollar exchange rates across a range of horizons. The second chapter proposes a vector equilibrium correction model of stock returns that exploits the information in the futures market, while also allowing for regime-switching behavior and international spillovers across stock market indices. Using data for three major stock market indices since 1989, we find that: (i) in sample, the model outperforms several alternative models on the basis of standard statistical criteria; (ii) in out-of-sample forecasting, the model does not produce significant gains in terms of point forecasts relative to more parsimonious alternative specifications, but it does so both in terms of market timing ability and in density forecasting performance. The importance of these gains is illustrated with a simple application to a risk management problem. The third chapter re-examines a major puzzle in international finance that is the inability of exchange rate models based on monetary fundamentals to produce better out-of-sample forecasts of the nominal exchange rate than a naive random walk. While prior research has generally evaluated exchange rate forecasts using conventional statistical measures of forecast accuracy, this chapter investigates whether there is any economic value to the predictive power of monetary fundamentals for the exchange rate. We estimate, using a framework that allows for parameter uncertainty, the economic and utility gains to an investor who manages her portfolio based on exchange rate forecasts from a monetary fundamentals model. In contrast to much previous research, we find that the economic value of the exchange rate forecasts implied by monetary fundamentals can be substantially greater than the economic value of forecasts obtained using a random walk across a range of horizons. In sum this thesis adds to the relevant literature on forecasting financial variables by providing insights and evidence to researchers and indicating potential avenues for futures research.

The articles in this thesis reflect my work at the Centre for Study of Globalisation and Regionalisation in Warwick, centred around two EU-funded projects: one relating globalisation to social exclusion, and the second looking at the re-integration of the Central and Eastern European transition economies into the main European economy. The papers in this thesis are seen as new contributions. Chapter 1 is introductory, consisting of a brief literature survey outlining a number of important debates. This is followed by a summary of the contributions of the papers in subsequent chapters. Chapter 2, written with John Whalley, is a general equilibrium decomposition of the widening wage gap in the United Kingdom, utilising novel techniques of double calibration. The underlying question is the degree to which widening inequality reflects a change in world traded prices following liberalisation. Chapters 3 and 4 refer to regional integration. In Chapter 3 I look specifically at the likely effects of admitting several new Central and Eastern European countries to the European Single Market, using a general equilibrium model combining the new trade theory and the gravity model approach. Chapter 4 is more theoretical, examining the perceived misuse of regulatory protection in determining national product standards - in this case, in a cross-hauling duopoly. It is shown that several conclusions of the recent literature regarding the trade volume effects of regulation and the welfare effects of mutual recognition agreements, may be misleading. In Chapter 5 I delve into a new issue in trade theory: namely the implications of imperfect information, matching, search and networking. This chapter indicates a possible direction in which trade theory needs to move to better understand the growing outsourcing trade, and also draws important theoretical and policy implications. Chapter 6 draws brief conclusions.

This thesis attempts to focus on several 'unresolved' issues that exist in the field of open-economy macroeconomics. 41 Chapter 2 examines the implications of1currency substitution, (CS) for the behaviour of a small open economy, subsequent to an unanticipated contraction in the domestic money supply. Chapter 3 concentrates on the role of CS, capital mobility and price stickiness in the international transmission of disturbances. Chapter 4 explores how the degree of openness of national economies might influence the relationships among exchange rates, price levels, interest rates and international balances of payment. Chapter 5 examines the relative effectiveness of various simple policy rules for economic stabilization, under alternative assumptions about the degree of openness of individual economies. In Chapter 6 we study the behaviour of a semi-small open economy subsequent to (unanticipated) increases in foreign interest rates, using a model in which some of the key characteristics of the major debtor countries are incorporated. In Chapter 7 we analyse the effects of exogenous financial disturbances on the economy of a debtor country, under alternative assumptions about the nature of its external debt. Chapter 1 attempts to provide a "background' for the analysis in the remainder of the thesis, by discussing some of the developments in the theoretical literature and in the world economy that have motivated our study.

This thesis aims to extend our understanding of the contemporary stage of monopoly capitalism by considering the issue of profits, income distribution and trade unionism. By focusing on the effect of trade unions on key economic indicators we hope to demonstrate the key importance of both trade unions and market structure in shaping the industrial economic landscape. Using national accounts and census of production data we find that there is a secular tendency for the degree of monopoly to rise although we find little evidence to suggests a similar decline in the profit rate. It also emerges that unions cannot easily influence factor shares. We go on to make the case for a fundamental reappraisal of the role of labour within the firm. We then provide an assessment of the effect of unions within oligopoly. Using firm level data we illustrate that there is a significant degree of apparent collusion within oligopoly and that this is influenced by product market structure and trade unionism. We consider the effects of both structure and unionism in shaping industry profits. We find that for the mid-1980's unions depress mark-ups whilst increasing concentration impacts positively on the margin. We further show that the effect of concentration in successively related industry adds to the seller margin and does not reflect countervailing power. We also find evidence that union coverage in downstream industries adversely affects the seller margin in 1984-85. Finally, we consider the role of trade union power in shaping factor distribution in the manufacturing sector. We find that unions cannot easily influence the distribution of income but that seller concentration significantly depresses wage share. These results are of considerable interest and attest to the importance of considering both product and labour market interaction in shaping key economic variables.

This thesis builds on the research tradition of Cultural Economics, particularly of its empirical strand. The thesis includes four articles that each analyse empirically a different facet of production of cultural services. Together they contribute to the two main themes of the thesis: features of production technology and applicability of different empirical methods in analysing production of cultural services. The four articles proceed in "chronological" order. The first article deals with problems shared by the subsequent studies - measurement of inputs, output(s) and quality of production - and employs neo-classical single-output cost functions and Structural Equation Modeling approach together with a cross-sectional data set of museums. The second article follows the earliest strand of cultural economics and examines, in a context of Baumol's cost disease, the assumption of stagnant productivity growth. The analysis utilises two index number approaches, Törngvist Approximated and Generalised Divisia Indices, and a panel data set of orchestras. The third article looks at the scale properties of production as well as tests the assumption of allocative efficiency by using non-linear single-output cost functions with a panel data set of theatres. The fourth article focuses on cost-efficiency of museums and utilises non-parametric Free Disposal Hull method and a cross-sectional data set of museums. The main findings of the thesis indicate, first, that production technologies of museums, orchestras and theatres vary substantially. The production technology of museums is shown, in a single-output setting, to exhibit homotheticity and homogeneity with respect to output as well as substantial increasing/decreasing scale economies, depending on the output measure. Analysis in a multiple output context reveals that on average a quarter of museums are cost-inefficient and private museums are more likely to be inefficient than the publicly owned ones. The production technologies of orchestras and theatres are alike with respect to single-output production as well as non-homotheticity and nonhomogeneity of production technology. They differ as to the scale properties - orchestras exhibit diseconomies while theatres are characterised by scale economies - as well as relative usage of labour input. Production in orchestras is characterised by stagnant productivity that is a result of scale effect cancelling out technical change. Theatres are shown to be moderately allocatively inefficient. As to the methodology, the thesis suggests that particularities of cultural institutions have to be taken into account. These particularities involve problems related to measurement of inputs, output(s) and quality of production, definition of production technology as well as problems arising form data. Methods employed in price-quantity space, allowing in-efficiencies of production and not imposing a priori assumptions on production technology are argued to be most applicable ones.

In the first chapter, first we review the famous Taylor (1979, 1980a) model of staggered wage setting and then we present original work in describing the structure of a dynamic general equilibrium model with staggered wage setting a la Taylor. This model is central to the thesis since the results presented in chapters 2, 3 and 4 are based on it. Moreover, also the models in chapters 5 and 6, while somewhat different, originate from it. Chapter 2 addresses the issue of superneutrality of money using the model presented in the previous chapter. It demonstrates that, once staggered wages are introduced in an optimising framework, a mild permanent change in the rate of growth of money could have substantial effects on the steady state aggregate level of output and welfare. Previous studies fail to reproduce these results because they consider restrictively simple utility and production functions. The model exhibits high costs of inflation and provides a rationale for the pursuit of price stability observed in western countries. Chapter 3 studies analytically the output costs of a reduction in monetary growth in the dynamic general equilibrium model with staggered wages of the previous chapters. We show that the introduction of microfoundations helps to resolve the puzzle recently raised by Laurence Ball (1994), namely that disinflation in staggered pricing models causes a boom. In our model disinflation, whether unanticipated or anticipated, unambiguously causes a slump. The analytical results are restricted to the tractable case (log-linearisation of the model around a zero steady state inflation), but a long appendix checks the robustness of these results through non-linear simulations. Chapter 4 investigates whether staggered wages could induce a high degree of persistence in the real effects of money shocks. We show how the parameters of Taylor's model depend upon the microeconomic fundamentals and the conduct of monetary policy. We conclude that high persistence is an unlikely outcome. Either sensible values of the microeconomic parameters or a moderate rate of underlying inflation imply a low degree of persistence. This is the persistence puzzle we referred to above. Furthermore, we show that: (i) the model is highly non-linear; (ii) the conduct of monetary policy affects the structural parameters of Taylor's wage setting equation, providing a clear example of the Lucas critique; (iii) the inertia of the system is inversely related to the level of average inflation. In Chapter 5 we incorporate explicit relative wage concern on the part of wage-setters into the dynamic general equilibrium model with staggered wages developed in the previous chapters. We then investigate the effects of money shocks on both inflation and output. In contrast to previous models of staggered wages/prices, output and inflation persistence are a robust finding of the model. Moreover, they hold for all the sensible parametrisations. Given the empirical evidence on relative wage concern, we conclude that this may be the missing piece in the money shocks persistence puzzle. Chapter 6 presents a unifying framework to analyse the ability of price versus wage staggering to generate persistence. The results are fairly general in that they derive from a stylised log-linear model which encompasses most of the microfounded models of price/wage staggering, found recently in the literature. The results highlight the importance of the underlying economic structure for the ability of staggered price/wage models to generate persistence of the real effects of money shocks.

Most reputation-based models of sovereign debt assume that a default on a loan obligation leads to the imposition of an immediate and permanent credit embargo. The first part of this thesis examines the case in which the length of exclusion is endogenously determined and may consequently be finite or infinite. In this way, lulls in activity followed by enthusiastic lending in the international credit market can be modelled. Additionally, examining the optimal exclusion strategy of the creditor allows investigation of the consequences of `excusing' default. By not punishing a defaulter immediately, it is more likely that a complete loan embargo will be imposed in the future. The effect of excusing default on the expected value of the credit relationship to the country is also examined. A negative externality can arise in the relationship between a sovereign borrower and a creditor due to the existence of countries which repeatedly default on their debt: a default by one country may make the creditor more cautious in lending to others. The effects of this externality are examined in a dynamic model in which the bank does not know the type of customer it faces, but can learn its identity over time. The equilibrium actions of the players then depend crucially on the borrower's reputation for creditworthiness. Even a country which is not an inherent defaulter may be tempted to repudiate its debt obligations with this type of incomplete information structure. Each successive default causes reputation to fall until a critical level is surpassed, at which point a permanent lending embargo is imposed. In this dynamic model of debtor reputation, borrowers face an additional problem as they do not always possess the funds needed to make a repayment and thus reveal their type. In recognizing that borrowing countries can be different by nature, the final part of this thesis examines an economy which is driven to borrow externally as an endogenous outcome of a political system in which interest groups lobby political parties. The amount of borrowing is shown to depend upon the number of redistributive policies the parties can use and the attitude of the voters to external borrowing. A proposal is put forward for linking debt forgiveness in this type of lobbying economy to the level of rent-seeking carried out by the interest groups. lt is demonstrated that this proposal is capable of improving the well being of the ordinary citizens of the economy who share the repayment cost but may not enjoy the benefits of external borrowing.