Who has the capacity to regulate production in transnational supply chains and whose interests does this serve? This focus of this thesis is on transnational regulation, specifically the identification of the actors who participate in setting and implementing regulatory agendas, their interests, capacity and interactions between them. Transnational regulation is the regulation of activities which take place across national jurisdictions. State and non-state actors are direct participants in transnational regulatory regimes and non-state actors may play leading roles in their development and implementation. While work has been done which examines the roles that non-state actors play in transnational regulatory processes, there has been limited investigation into the relationships between state and non-state actors on transnational standard setting and implementation. The Governance Triangle, developed by Abbott and Snidal (2009) is a framework that positions the relationships between states, businesses and NGOs as central to transnational regulation. They argue that cooperation is necessary between these groups for there to be sufficient capacity to regulate a transnational problem. However, due to the divergent interests of these actors and the distribution of bargaining powers between them, they posit transnational regulatory standards are likely to be dominated by business interests and will be sub-optimal. This thesis explores the question of whether transnational regulatory programmes dominated by business organizations are necessarily lacking regulatory capacity and whether they remain that way over time by studying the emergence and evolution of two cases of industry selfregulation designed to improve labour standards in the production of toys and chocolate. Building upon the Governance Triangle, this thesis makes three key findings: 1) Bargaining in transnational regulation is not always distributional and that it is possible for actors to cooperate to identify and develop frameworks for transnational regulatory problems. 2) Interactions within one actor type and interactions involving all three actor groups can shape power dynamics in the bargaining process and 3) Regulation that is dominated by business actors does begin as sub-optimal. However, over time new bargaining processes can be initiated which lead to incremental developments in the capacity of a system to regulate. This thesis also contributes to the literature on non-state actors in regulation by identifying the actors which participate in transnational regulatory processes and their motivation and capacity to do so. It identifies two new sources of regulatory capacity: individual policy entrepreneurs and the media.

Chapter 1: Under the average common value function, we select almost uniquely the mechanism that gives the seller the largest portion of the true value in the worst situation among all the direct mechanisms that are feasible, ex-post implementable and individually rational. Chapter 2: Strategy-proof, budget balanced, anonymous, envy-free linear mechanisms assign p identical objects to n agents. The efficiency loss is the largest ratio of surplus loss to efficient surplus, over all profiles of non-negative valuations. The smallest efficiency loss is uniquely achieved by the following simple allocation rule: assigns one object to each of the p−1 agents with the highest valuation, a large probability to the agent with the pth highest valuation, and the remaining probability to the agent with the (p+1)th highest valuation. When “envy freeness” is replaced by the weaker condition “voluntary participation”, the optimal mechanism differs only when p is much less than n. Chapter 3: One group is to be selected among a set of agents. Agents have preferences over the size of the group if they are selected; and preferences over size as well as the “stand-outside” option are single-peaked. We take a mechanism design approach and search for group selection mechanisms that are efficient, strategy-proof and individually rational. Two classes of such mechanisms are presented. The proposing mechanism allows agents to either maintain or shrink the group size following a fixed priority, and is characterized by group strategy-proofness. The voting mechanism enlarges the group size in each voting round, and achieves at least half of the maximum group size compatible with individual rationality.

The present doctoral thesis studies the association between pre-colonial institutions and long-run development in Latin America. The thesis is organised as follows: Chapter 1 places the motivation of the thesis by underlying relevant contributions in the literature on long-run development. I then set out the main objective of the thesis, followed by a brief outline of it. In Chapter 2, I study the effects of pre-colonial institutions on present-day socioeconomic outcomes for Latin America. The main thesis of this chapter is that more advanced pre-colonial institutions relate to better socioeconomic outcomes today - principally, but not only, through their effects on the Amerindian population. I test such hypothesis with a dataset of 324 sub-national administrative units covering all mainland Latin American countries. The extensive range of controls covers factors such as climate, location, natural resources, colonial activities and pre-colonial characteristics - plus country fixed effects. Results strongly support the main thesis. In Chapter 3, I further analyse the association between pre-colonial institutions and present-day economic development in Latin America by using the historical ethnic homelands as my main unit of analysis. The main hypothesis is that ethnic homelands inhabited by more advanced ethnic groups -as measured by their levels of institutional complexity- relate to better economic development today. To track these long-run effects, I construct a new dataset by digitising historiographical maps allowing me to pinpoint the geospatial location of ethnic homelands as of the XVI century. As a result, 375 ethnic homelands are created. I then capture the levels of economic development at the ethnic homeland level by making use of alternative economic measures --satellite light density data. After controlling for country-specific characteristics and applying a large battery of geographical, locational, and historical factors, I found that the effects of pre-colonial institutions relate to a higher light density --as a proxy for economic activity- in ethnic homelands where more advanced ethnic groups lived. In Chapter 4, I explore a mechanism linking the persistence of pre-colonial institutions in Latin America over the long-run: Colonial and post-colonial strategies along with the ethnic political capacity worked in tandem allowing larger Amerindian groups to "support" the new political systems in ways that would benefit their respective ethnic groups as well as the population at large. This mechanism may have allowed the effects of pre-colonial institutions to influence socioeconomic development outcomes up to today. To shed lights on this mechanism, I combine the index of pre-colonial institutions prepared for the second chapter of the present thesis with individual-level survey data on people's attitudes. By controlling for key observable and unobservable country-specific characteristics, the main empirical results show that areas with a history of more advanced pre-colonial institutions increase the probability of individuals supporting present-day political institutions. Finally, in Chapter 5, I summarise the main findings of the thesis, and emphasise the key weaknesses of the study as well as potential avenues for future research.

High levels of either public debt or wealth inequality are detrimental to social and economic stability. At a time when reducing public debt and decreasing wealth inequality have become important policy priorities, the question arises about whether these two goals stand in con ict. With this in mind, Chapter 1 assesses the effects of public debt on wealth inequality based on an analytically tractable model of heterogeneous agents. Its scope, in particular, is to investigate whether a reduction of public debt or of budget deficits in general might amplify or not the levels of wealth inequality. In answering this question, we explore a novel channel where, for example, a reduction in budget deficits amplifies wealth inequality due to the change in factor prices, and in particular that of interest rates. Therefore, and besides that our research is the first to explore this type of question, our main contribution is that we show how a change in public debt can affect wealth inequality in an implicit way through the change in factor incomes - that is, the general equilibrium effects. In Chapter 2, on the other hand, we study the design of policies within an endogenous growth model of incomplete markets and partial commitment. Markets are incomplete in two dimensions, the government cannot insure itself from the presence of aggregate risk, and the accumulation of human capital is subject to idiosyncratic risk. Our primary contribution highlights the importance of human capital to effectively manage the economy along the cycle. More specifically, we make a novel argument: taking short run risks are effective responses to a shock that might depress the economy. An investment in human capital which is subject to idiosyncratic risk, serves that purpose. Its returns however, must be protected over-time through an effective provision of liquidity and manipulation of taxes. In our case this policy requires to subsidise physical capital and tax human capital, while the government must own assets. Finally, In Chapter 3 we estimate the fiscal multipliers for Greece. In particular, using the SVAR approach of Blanchard and Perotti we estimate the dynamic effects of government spending and tax revenues on output. The results over the available sample indicate some strong Keynesian effects. That is government spending multipliers are large while the tax multipliers are relatively small. However the conclusions are confined to the peculiarities of the available sample and are not easily exportable to alternative periods or allow any generalizations.

In a world of asymmetric information, firms can use accounting policy as a means to signal information to outsiders and thereby, attempt to reduce the level of asymmetric information that outsiders face. I examine ‘commitment’ mechanisms that can be used by firms to signal information to outsiders. In particular, I examine the use of International Financial Reporting Standards (IFRS) and the use of Fair Value Accounting (FVA). The first paper examine the influence of Uncertainty Avoidance (UAI) as introduced by Hofstede (1980), on the cost of equity for IFRS adopters in the EU. The results suggest that though UAI has a detrimental impact on the cost of equity, UAI interacts with IFRS adoption, leading to a reduction in the cost of equity for firms based in higher UAI countries that use IFRS. The results are being driven by the mandatory adopters group, who were found to benefit from IFRS adoption and a higher UAI, while voluntary and Voluntary/Mandatory adopters appear to suffer from an increase in their cost of equity. The paper therefore suggests that differences in cultural norms towards uncertainty may be able to explain part of the heterogeneity in the cost of equity exhibited by firms that have adopted IFRS. The second paper examines the influence of FVA on the design and renegotiation of debt contracts. The paper is an extension of the Garleanu and Zwiebel (2009) model and incorporates the use of FVA as a disclosure mechanism and compares it to a setting where the firm uses Historical Cost Accounting (HCA). The model suggests that FVA firms would benefit from fewer covenants and a lower cost of debt. In subsequent extensions to the model, I incorporate the different FVA classifications and the model suggests that the Level 1 classification is expected to be more information relevant to lenders compared to the Level 3 classification. The third paper uses the predictions from the second paper and examines the influence of FVA on a sample of US private loans obtained from LPC/Dealscan. The results of the paper suggest that the Level 1 FVA classification results in a lower number of Balance sheet covenants, and a lower cost of debt. However, we do not find positive evidence to suggest that the Level 1 classification leads to a reduction in the Covenant intensity index or an increase in the number of loan amendments. The Level 2 and 3 classifications appear to exhibit results that suggest that they are considered less informationally relevant compared to the Level 1 classification.

Predicting small business growth is at the heart of entrepreneurship scholars, practitioners and policy makers because small businesses contribute to employment, innovation and economic growth. Given these and other benefits that small businesses offer to the economies of many countries, researchers have devoted much efforts in predicting what drives small business growth. Scholarly work suggests that business success is dependent on the firm, strategy, the entrepreneur and the environment. Regarding the entrepreneur, passion for starting and growing a business has received much attention by scholars recently. Yet we do not know enough about the relationship between entrepreneurial passion and business growth. This study investigates the relationship between entrepreneurial passion (and its domains) and business growth from the perspective of a less developed country setting. A major insight is to argue that despite being receiving much scholarly attention recently, research regarding the role of passion in venture success in economies of developing countries remains under-researched. A theoretical model comprising the relationship between entrepreneurial passion (and its domains) and business growth is, thus, developed and empirically tested using survey data from 346 small manufacturing businesses operating in Ghana. The study’s empirical findings revealed that entrepreneurs’ overall level of passion weakly drives business success. The study further revealed that high levels of political network ties and environmental dynamism can help small businesses to achieve higher growth outcome. The disaggregate model of entrepreneurial passion established that two of the domains of passion (passion for founding and passion for developing) can aid entrepreneurs to report success. However, passion for inventing works against business growth. Nevertheless, further analysis revealed that political network ties and environmental dynamism positively moderate the association between entrepreneurial passion domains and business growth. The findings of the study extend research on how passion interacts with network ties and environmental variables to improve business growth.

This thesis explores the determinants of tax evasion and their implications for tax policy, with a special focus on taxation in developing countries. Chapter 1 studies how the transition from self-employment to employee-jobs over the long run of development explains the rise of the modern tax system. I construct a new microdataset, covering 90 countries at all levels of development today and 140 years within the US between 1870 and 2010. Using these data, I provide new stylized facts: within country, the share of employees increases over the income distribution, and increases at all levels of income as a country develops; 2) the income tax exemption threshold moves down the income distribution as a country develops tracking employee growth. I provide a causal estimate of the impact of employee-share on the exemption threshold and on tax revenue, by studying a state-led development program which was implemented across US states in the 1950s-60s. I find that the exogenous increase in employee share is associated with a lower state income tax threshold and higher revenue. Chapter 2 studies individual and social motives in tax evasion. We build a dynamic model that incorporates these motives, their interactions, and where social motives underpin the role of norms. Our empirical analysis exploits the adoption in 1990 of a poll tax to fund local government in the UK, which led to widespread evasion, and a series of natural experiments due to narrow election outcomes, which induce shifts into single-majority local governments and lead to more vigorous enforcement of local taxes. The econometric results are consistent with the model’s main predictions on the dynamics of evasion. Chapter 3 studies the impact of access to formal finance and firm size on tax inspection and tax compliance. We use firm-level data on 108,000 firms across 79 countries in the World Bank Enterprise Surveys. We instrument for finance and firm size at the industry-level using an out of sample extrapolation strategy related. We find a large and positive effect of firm size on both tax inspection and sales tax compliance, but no overall significant impact of reliance on external finance.

My purpose is to build an explanation of production that takes time into account. Adam Smith and the English Classical economists approached the problem by studying the relation between profits and wages or wages and capital. they emphasise the time aspect of production by saying that capitalists "advance" wages to labour long before its final consumption product is ready. On the background of that conception they painted a rough picture of production through time. I follow the classical tradition both in the title of my work and in parts 2. and 3. of my work where I approached the problem of production by studying equilibrium between the rates of interest and wages. Some light is thrown on the nature of this equilibrium by the statistics of distribution of the national income. My main results are in part 4. which contains a fairly general theory of production that takes time into account, found the use of mathematics indispensable. The best known attempts to formulate such a theory are Bohm-Bawerk's, Professor Fisher's and J.B. Clarks's (which is exemplified by Dr. Hicks' Theory of Wages). As I show Bohm-Bawerk's famous doctrine of the "average period of production" is based on a mathematical mistake. Professor Fisher's analysis of the "output streams" while very instructive, contains a greater number of unknowns than equations to determine them. Dr Hicks assumes that capital is a homogeneous factor of production assisting the production of consumption goods which emerge wither instantaneously or after time lags. If there are time - lags, Dr. Hicks assumes it makes no difference what these lags are. This is an attempt to deal with the time aspect of production by means abstracting from it. In recent articles (Economica and the Economic Journal) a very distinguished economist, Professpr F. Knight, appears to think that the problem of capital is incomprehensible and that it is no use trying to understand it. All these difficulties of theory mean that the pronouncements of economists on every concrete question of production - such as wage policies - are necessarily surrounded by a penumbra of considerable doubt. And no substantial improvement can take place until matters of general principles are cleared up. I try to clear them up. The essence of my analysis in part 4 is this. Assuming for simplicity that each competing firm controls a vertically completely integrated process of production of a consumption good, and writing t=0 as "the present", and entrepreneur finds himself in possession of a set of goods c at t=0 and is aware of a large number of alternative production plans. Each plan provides for future investment at a rate f(t) in values terms and for output of the consumption good at a rate of u(t). For simplicity we can take the good as the "numeraire". As between all the alternatives plans the functions u(t), f(t) are different. I.e. they have certain fields of variation. the central idea of the analysis is this: for each particular input function f(t) the output function u(t) can be varied within a certain field by varying the methods of production. This is the "missing link" which the earlier theories failed to bring out. Given the interest rate p, the condition which determines which plan is chosen is that the present value of the collection of goods c is maximised. I.e. that the present value of future profits is maximised (and is zero under perfect competition). That means that for each possible input function f(t) such an output function u(t) has to be considered as maximises x. I.e. the first partial variation. As f(t) is varied, different output functions u(t) become possible, and for each f(t) an output function u(t) is segregated which maximises x i.e. satisfies (2). Thence, in (1) f(t) becomes the only independent variable, and the equilibrium condition is that x is maximised with respect to the input function f(t). This condition determines which plan is chosen i.e. determines the unknown functions f(t), u(t). From (1) (2) (3) i.e. the present value of the future marginal product equals the present value of the future marginal costs. In this way a marginal productivity theory is built up which takes time into account. Then the theory is extended: account is taken of uncertainty, of "vertical disintegration" etc., etc., until a fairly comprehensive picture is reach of the course of production through time.

The thesis contains three chapters. The first chapter studies optimal fiscal policy in a small open economy in the presence of sovereign default risk. In particular, it studies this topic in an environment characterized by asymmetric information where financial markets (lenders) do not have enough information about the creditworthiness of the government (borrower). The chapter investigates whether the asymmetric information environment justifies the implementation of fiscal austerity during a recession, as opposed to the standard countercyclical response. The main finding is that fiscal austerity is the optimal fiscal policy during a recession. Fiscal austerity, although detrimental to economic growth, benefits the economy providing a signal to financial markets about the creditworthiness of the government and reducing borrowing costs. When the inherited government debt-to-GDP ratio is high, this beneficial effect of fiscal austerity outweighs the costs of the policy even when fiscal austerity has a strong negative impact on economic activity, i.e. when the fiscal multiplier is larger than one. The findings of this chapter are useful to shed new light on the fiscal policy developments across Europe during the European debt crisis. The second chapter of the thesis, co-authored with Maria Grazia Attinasi (ECB), studies empirically the effect of fiscal consolidation on the debt-to-GDP ratio for the Euro area countries, using a quarterly panel fiscal VAR. The main finding of this chapter is that following a fiscal consolidation episode, the debt-to-GDP ratio increases initially, for a period up to four quarters, and then starts to decline. The size and length of the initial debt increase depend on the composition of consolidation. In the case of revenue-based consolidations the increase in the debt-to-GDP ratio tends to be larger and to last longer than in the case of spending-based consolidations. The composition also matters for the long term effects of fiscal consolidations. Spending-based consolidations tend to generate a durable reduction of the debt-to-GDP ratio compared to the pre-shock level, whereas revenue-based consolidations do not produce any lasting improvement in the sustainability prospects as the debt-to-GDP ratio tends to revert to the pre-shock level. The findings of this chapter are of particular policy relevance in the context of the ongoing debate about the merits of fiscal consolidation as the main tool to restore debt sustainability in the Euro area countries. They suggest that short term considerations related to the detrimental impact of consolidation on growth and on the debt-to-GDP ratio need to be weighed against the long term benefits of a rebound in output growth and a durable reduction in the debt-to-GDP ratio. The third chapter, co-authored with Daniela Bragoli (Catholic University) and Michele Modugno (Federal Reserve Board), compares the forecasting performance of GDP now-casting techniques through a dynamic factor model to the forecasts produced by the Central Bank of Brazil, which is the only central bank that collects predictions at a daily frequency. Results indicate that the Central Bank of Brazil forecasts perform as well as model based forecasts. The latter finding suggests that, on the one hand, judgemental forecasters do not have computational limitations and they are able to incorporate quickly new information in a way that is almost as efficient as a machine. On the other hand, it shows that a linear time invariant model does a slightly better job in now-casting Brazilian GDP and hence that eventual non linearities, time variations and soft information that could be incorporated by judgement, do not provide new important information.

This thesis evaluates different specifications of non-linear time series models applied to macroeconomic problems. The evaluations investigate whether linear models are a good representation of the data, and which non-linear specifications are comparatively better in three different applications. In addition, the implications of the evaluation to the understanding of macroeconomic problems and to economic predictions are analysed. The first evaluation concerns univariate non-linear time series models aimed at reproducing the asymmetries of the business cycles. Using business cycle stylised facts and conditional mean functions and surfaces, the results support the use of non-linear models that can generate a three-phase cycle as the specification that can reproduce all the business cycle features, including the asymmetries in the shape of the cycle. The second assessment is of models that characterise the non-linearities of the US term structure of interest rates. The forecast evaluation of different specifications of threshold vector equilibrium correction models, which are estimated for long- and short-term interest rates and their spread, shows that the inclusion of non-linearity improves short-horizon forecasts. However, when compared with AR models, the gains from nonlinearity only occur when the predictions for the spread are evaluated at long horizons. The third assessment concerns non-linear bivariate systems that account for the effect of non-linearities and/or structural breaks when the spread is employed as leading indicator. Different specifications are evaluated using their prediction of the probability of two definitions of recessions. Models with non-linearities and structural breaks perform better at predicting the probability of recession than linear models and models with only non-linearity or structural break. The results of the evaluation of univariate time series models improve the understanding of the connection between these models and business cycle asymmetries. The winner of the forecast competition of bivariate systems of interest rates and their spread indicates that the expectation theory of the term structure of interest only holds for the period in which the spread is negative, even though the spread can predict changes in the long-term rate in a specific state. In addition, the result that structural breaks and non-linearities are important to predict US recessions when the spread is the leading indicator changes the timing of a predicted recession for 2001.