by Maria D. C. Garcia Alonso (University of Kent), Quentin Michel (Université de Liège) and Ron Smith (Birkbeck College).
The decision by the UK to leave the EU will have implications in a very large number of areas, given the extent of European coordination. An important area is the control of arms exports. Exports of weapons and dual-use equipment, which can have both military and civilian applications, raise major security concerns: you do not want to arm your enemies and you do not want your allies to arm your enemies either. Most states have arms export control regulations and supplies are also restricted, to some extent, by international regimes like the Wassenaar Arrangement on export controls for conventional arms, by UN embargoes, and by the Arms Trade Treaty that entered into force in December 2014.
“Studies have highlighted the role of electoral competition in directing the flow of public funds. Analysing data from India, this column finds lower income inequality and polarisation in tightly contested constituencies, implying that the poor gain more from electoral competition relative to the rich.
Accountability is central to the concept of democracy. Elected politicians are answerable to their constituencies. Moreover, they have the authority and wherewithal to affect the economic conditions of the citizens in the constituencies. This is because political power necessarily comes with some control of the purse strings: targeting of government schemes (be it welfare or employment generation or poverty alleviation), and provision of local public goods and services (health facilities, schools, road construction, public lighting, etc.). While the former can directly influence the economic prosperity of citizens, the latter does so in more indirect and subtle ways…”
A new discussion paper by Miguel León-Ledesma and Jaime Orrillo, KDPE 1610, October 2016
The cyclical behaviour of firm bankruptcy displays a clear counter-cyclical pattern: firms tend to go bankrupt in recessions. This leads to an amplification of business cycles and has important consequences to understand asset prices and the evolution of other macro variables like employment. However, macroeconomic models in which firms are allowed to go out of business are scarce. In this paper, we take a step in the direction of understanding the general equilibrium effects of default and bankruptcy.
A new discussion paper by Jean-Pascal Nganou, Juste Somé and Guy Tchuente, KDPE 1609, September 2016
This paper estimates government spending multiplier for natural resource-rich lowincome countries (LICs). The government spending multiplier is the ratio of a change in national income to any autonomous change in government spending.