Browsing by Subject "Fiscal policy."

Now showing 1 - 4 of 4

Open Access
Agency costs, fiscal policy, and business cycle fluctuations
(2009) Kısacıkoğlu, Burçin
This paper studies the relationship between scal policy, nancial market frictions and business cycle uctuations. It is shown that in an economy where balance sheets play a role in the propagation of shocks, using countercyclical scal policy net worth and output uctuations can be reduced. This countercyclical scal policy requires to distribute resources to the entrepreneurs when a negative technology shock is realized and levy taxes on entrepreneurs after the technology shock is back to zero. It is shown that after the realization of a negative shock, countercyclical scal policy reduces agency costs which would make entrepreneurs increase investment and dampen the business cycle uctuations via decreasing uctuations in net worth. By this increase in investment, nancial fragility decreases, which reduces the slowdown of economic activity.
Open Access
The effects of aid on foreign direct investment : the roles of governance and financial market development
(2005) Karakaplan, Mustafa Uğur
This thesis investigates the effects of aid on foreign direct investment. The study takes into account the conditions such as sound governance within countries or well-developed financial markets, which are expected to effect this relationship. The hypothesis is that aid encourages foreign direct investment only where governance is of quality or financial markets are developed or both. The dynamic relationship is examined using an unbalanced panel data set, including 97 countries over the period of 1960-2004, where available. The results of the empirical analysis confirm the hypothesis with strong evidence.
Open Access
Fiscal decentralization : a political economy approach
(2013) Aslım, Erkmen Giray
This study presents a theoretical approach to analyze income and welfare implications of fiscal decentralization in a static closed economy model where political factors are taken into account. We provide two alternative Scenarios: in one scenario government acts like a social planner and solves optimally for the level of fiscal decentralization; in the other scenario government is politically oriented and solves for the optimal tax rate. Under both scenarios we obtain non-cooperative solutions resulting from the interactions of the central government with local governments. Comparative statics of the model provide explicit solutions which enable us to derive policy implications. In order to get a better and deeper insight on the model, we also perform calibration and simulation analyses. We observe that benevolent government enhances social welfare whereas Leviathan CG enhances efficiency, measured by effective tax collection.
Open Access
The vulnerability of public expenditures: a cross-sectional analysis
(1997) Özgür, Seçil
This thesis investigates the relation between the vulnerability of various expenditure categories and political environment of a country during a fiscal adjustment program. In this study, OLS is used at analyzing cross country data. Dependent variables are the vulnerabilities of 14 different expenditure categories. In order to explain the dependent variables, 22 independent variables are used, which capture political, social and economic indicators of countries. Six of them are common to all sectors and they allow us to test the hypotheses related to vulnerability of public expenditures and political conditions of a country. These variables are indicator of political liberty, index of political stability, economic ideology of the ruling elite, the relative size of central government, military relations with neighbors and percentage decline in total budget. As a result, all these six variables are statistically important factors at determining the vulnerability of expenditure sectors.