In 1989 the federal government spent $1197 billion, a mind-boggling sum that is almost impossible to visualize. Since there were 248. 8 million people living in the United States in that year, the government spent an average of $4811 for every man, woman, and child in the nation. For a hypothetical family of four, federal spending in 1989 amounted to an average of$19,244. To put this sum in perspective, the money income of an American family averaged $35,270 in the same year. To finance spending $1197 billion, the government collected taxes from American citizens and residents in an amount of $1047 billion. Because of a shortfall between what it spent and what it took in taxes, the government had to borrow $150 billion, partly from individuals, but mostly from banks, insurance companies, and foreigners. How, where, and on whom did the federal government spend all this money? Since federal spending in 1989 totaled 23 cents in comparison to every dollar spent for the buying of goods and services, finding an answer to this question is not a trivial matter. Spending by Washington reaches into every nook and cranny of the economy, touching the lives and fortunes of almost everyone in the nation. Thus, answers to these questions are of more than academic interest.

Any normative theory of democracy involves notions of equity, which are supposed to guide collective decisions. On the other hand, a descriptive theory of any decision-making body must take into account the distribution of power in that body. The development of collective decision theory along two different paths reflects these two foci of interest in the theory of democracy. One direction can be subsumed under the theory of social choice, the other under the theory of games. In the theory of social choice, the participants are characterized only by their preferences among a set of alternatives (candidates, courses of action, etc. ). They do not choose among these alternatives. They only submit their preferences to some central authority ("the Society"), which then chooses among the alternatives in accordance with some fixed rule of aggregating the preferences. On the other hand, the point of departure in the theory of games is a set of actors, each of whom can choose between alternative courses of action (strategies). The totality of choices results in an outcome, which gener ally has different utilities for the different actors. In this book, both approaches are presented in selected papers, from which the reader can get an excellent overview of the state of the art. Both branches of formal decision theory, the theory of social choice and the theory of games, were developed in mathematical language, but very little technical mathematical knowledge is required to follow the arguments."

This comprehensive book describes and analyzes the substance and politics of public budgeting at the national, state, and local levels of government. In doing so, it takes a comparative approach, illustrating the distinctiveness of budgeting at each level, as well as highlighting the features common to all three. A unifying focus is the extent to which budgetary decision makers use the budget as a central vehicle to advance their policy preferences. This fully updated sixth edition provides an extensive and thorough analysis of the causes of the Great Recession, its economic consequences, and the policy responses which pushed the boundaries of conventional monetary and fiscal policy. Also new to this edition is a chapter on the intergovernmental dimensions of public budgeting, along with boxed features highlighting hands-on vignettes of contemporary practical challenges facing budget makers at the different levels of government.

There are a number of people I wish to acknowledge for helping me write this book. First, the idea of politics as a nonequilibrium process owes its origins largely to a series of ongoing conservations I have had with Father Richard Telnack, o. c. s. o. Our discussions of Augustine's city of God and Hegel's Phenomenology in the hours before the night office led me to think about the world more as an ongoing flux than as a static rational order. The use of structurally unstable dynamical systems to. model democratic politics was greatly enhanced by my interactions with Professor Alex Kleiner, department of mathematics, Drake University. Professor Manfred Holler of the University of Aarhus provided a detailed critique of an earlier version. His insights and remarks were invaluable in improving the work's content and structure. I also wish to thank Dr. Werner A. Muller, director of Physica Verlag for his confidence in my work and his efforts on my behalf. Miss Jane Blevins was a patient and thorough typist. I thank her for her attention to the production of the manuscript. Finally, writing a book is in one way a moral act. It requires committment to pursue a line of thought to its conclusion when the final results are not clear. without the encouragement and support of my wife over a long period of time, I would have certainly faltered. Whatever good emerges from the work is due largely to her example and patient endurance.

The Post-Uruguay Round era has seen a proliferation of regional preferential trade agreements (PTAs) as well as progressive multilateral trade liberalization initiatives. This has stimulated theoretical discussion on whether the policy of pursuing PTAs will have a malign or a benign impact on multilateralism. In the former case, proliferation of PT As may increase protection in global trade due to trade diversion effects, thereby creating impediments to multilateral freeing of global trade. In the latter case, the expansion of PTA membership could ultimately lead to non-discriminatory global free trade. At the core of this discussion is the question of how to explain the preference for PTA membership. While some economists view the expansion of PTA membership as exogenously determined, participants of the Fourth Annual Workshop of the Network EU-LDC Trade and Capital Relations also considered endogenous factors explaining increased PTA membership. This book offers a closer look at the motives of policy makers in both developed and developing countries to still adhere to PTAs, notwithstanding the theoretical superiority of multilateralism, and addresses the question of how to bring order into the world trading system. These issues are dealt with in 9 chapters by scholars from both the EU and LDCs. Each paper is discussed in terms of its policy relevance by a policy maker as well as by an academic specialized in the field.

This volume contains the papers, along with the discussant's re marks, presented at a conference on 'Federal Fiscal Responsibility', held at The Homestead, Hot Springs, Virginia, on 26-27 March 1976. Additionally, we, the editors, have included an introductory essay which sets forth some of our background thoughts that in formed our organization of the conference and which also de scribes some of our reactions to the conference. This conference was sponsored by the Liberty Fund, Inc. of Indianapolis, Indiana, which incorporated this conference into its overall program directed toward the study of the ideals of a free society of responsible individuals. Related to this effort, the Liberty Fund also assisted in supporting research on Democracy in Deficit: The Political Legacy of Lord Keynes, by James M. Buchanan and Richard E. Wagner (New York: Academic Press, 1977). Both Democracy in Deficit and the conference were de signed to examine one important aspect of the Liberty Fund's general set of concerns, namely the' way in which political con siderations influence the macroeconomic aspects of budgetary policy, thereby, in turn, influencing the future of American liberty and prosperity. We are most grateful to the Liberty Fund for their efforts, and we are pleased that Enid Goodrich, William Fletcher, Neil McLeod, and Helen Schultz of the Liberty Fund were able to attend the conference."

Health care arguably is the single most regulated industry in industrial countries, and possibly in newly industrialized and developing countries as well. But what exactly is being regulated, what are the instruments used, and what are the effects and side-effects of such regulation? Regulation of Health: Case Studies of Sweden and Switzerland seeks to resolve problems in answering these key questions regarding the health care sector in two countries - Sweden and Switzerland. The volume contains a series of studies that compare the regulation of health and health care in these two apparently very similar countries, in considerable detail. The contributing teams acquired a great deal of knowledge about health regulation in both countries; they also derived comparative predictions when regulation differs, using actual observations to check whether these predictions are borne out. These comparisons are based on the conditions prevailing in the mid-nineties.

by Peter Coffey This is indeed a most opportune time for the publication of a serious, critical and independent study about the "Main Economic Policy Areas of the EEC." The European Economic Community is the world's most import ant commercial and trading bloc and its economic policies consequently have the most far-reaching implications for all countries in the world. The rest of the world is acutely conscious of the Community's trading policies. In turn, these policies (apart from those based on historical links - ante cedent to the EEC's formation) are strongly influenced by the internal economic policies of the Common Market - especially by the Common Agricultural Policy (CAP). At the present time, the Community finds itself, both in ternally and externally, at a crossroads. This crossroads takes the form of a choice between 'protectionism' or 'open ness'. Unfortunately, present evidence suggests that currently and in the immediately foreseeable future the former option has been chosen by the EEC."

This book examines the role of uncertainty on financial decisions - and, consequently, on financial markets - in the buildup to and aftermath of the Great Recession. It tracks the significant growth and important structural changes in the financial sector during the past few decades, both of which made the economy more vulnerable to perceptions of risk in the markets. Halperin argues that conventional economic models have lost relevance by failing to take these developments into account appropriately, and also explains that because of financial globalization we can no longer understand what happens in the economies of major countries by relying on "closed-economy" thinking. The book concludes with a list of policy recommendations designed to increase the resilience of the financial markets to negative economic developments and to reduce incentives for risk taking, including a proposal to eliminate the double taxation of dividends.

The fast-evolving relationship between the promotion of welfare-enhancing competition and the balanced protection of intellectual property (IP) rights has attracted the attention of policymakers, analysts and scholars. This interest is inevitable in an environment that lays ever greater emphasis on the management of knowledge and innovation and on mechanisms to ensure that the public derives the expected social and economic benefits from this innovation and the spread of knowledge. This book looks at the positive linkage between IP and competition in jurisdictions around the world, surveying developments and policy issues from an international and comparative perspective. It includes analysis of key doctrinal and policy issues by leading academics and practitioners from around the globe and a cutting-edge survey of related developments across both developed and developing economies. It also situates current policy developments at the national level in the context of multilateral developments, at WIPO, WTO and elsewhere.

This collection of thirteen essays on social ethics and normative economics honouring Serge-Christophe Kolm's seminal contributions to this field addresses the following questions: How should the public sector price its production and services? What are the normative foundations of criteria for comparing distributions of riches and advantages? How should intergenerational social immobility and inequality in circumstances be measured? What is a fair way to form partnerships? How vulnerable to manipulation is the Lindahl rule for allocating public goods? What are the properties of Kolm's ELIE tax proposal? Would the addition of EU-level income taxes enhance equity? How should we compare different scenarios for future societies with different population sizes? How can domain conditions in social choice theory be justified using Kolm's epistemic counterfactuals? How can Kolm's distributive liberal contract be implemented? What are the implications of norms of reciprocity for the organization of society? The answers to these questions give major insight into the state-of-the-art of social ethics and normative economics and are thus an indispensable source for researchers in both of these fields.

The Telecommunications Act of 1996 envisioned a competitive free-for-all in the U.S. telecommunications industry with removal of barriers to entry in local telecommunications markets and the lifting of the artificial restrictions that kept the Regional Bell Operating Companies (RBOCs) out of the interLATA long-distance market. After close to 5 years, only one RBOC has been granted permission (controversially) to enter the interLATA market, and local competition has yet to provide most consumers with meaningful choices. In addition, the wave of mergers across the industry has raised the specter of putting the former Bell System back together again. Policymakers now openly question whether the Act can deliver what it promised. Three principal themes are developed in this book. First, there has been a coordination failure between Congress and the FCC in translating the principles embodied in the Act into practice. The authors provide evidence for this by analyzing stock market reactions to legislative and regulatory actions. This coordination failure was largely predictable, given the ambiguity in the Act, as well as conflicting jurisdictions between the FCC and the states. Second, the Act calls for wholesale prices to be `based on cost.' Regulators adopted a costing standard (TELRIC) that provides a means to subsidize competitive entry in local telephone service markets. The ready adoption of the TELRIC standard by regulators is shown to be tied to the third theme: price cap regulation provides regulators with `insurance' against the adverse effects of competition in local telephone markets. Statistical analysis reveals that regulators in price cap states set uniformly lower unbundled network element prices (lower barriers to entry) in comparison with regulators in rate-of-return and earnings sharing states. The result is a triumph of regulatory processes over market processes - the antithesis of the purpose of the Act.

The main objective of this book is to restate the important theories and evidence from economic analysis concerning intergovernmental fiscal issues. More importantly, the second objective of the book is to identify gaps in knowledge, empirical uncertainties, and missing theoretical structures and then to establish a preliminary agenda for new research on this topic. The book is organized in two sections. The first covers the core body of intergovernmental fiscal relations, including optimal size for jurisdictions and assignment of public sector functions, the formulation and execution of tax policy in an intergovernmental setting, and the appropriate structure and use of intergovernmental transfers. In the second section, the core knowledge is applied to four major policy areas: education, welfare, fiscal interaction in urban areas, and economic development. In thinking about a new research agenda, the authors call for more current and authoritative estimates of fiscal incidence, including interjurisdictional spillovers, for more fundamental research about the federation process and effects of consolidation, for new evidence about the long run, general equilibrium effects of interjurisdictional competition, and for basic research about the choice process and establishment of intergovernmental fiscal institutions and policies by federal and subnational governments.

THE JANUS-FACE OF RACE: REFLEC- TIONS ON ECONOMIC THEORY Patrick L. Mason and Rhonda Williams Many economists are willing to accept that race is a significant factor in US eco nomic and social affairs. Yet the professional literature displays a peculiar schizo phrenia when faced with the task of actually formulating what race means and how race works in our political economy. On the one hand, race matters when the dis cussion is focused on anti-social behavior, social choices, and undesired market outcomes. Inexplicably, African Americans are more likely to prefer welfare, lower labor force participation, and unemployment. On the other hand, race does not matter when the subject of discussion is economically productive or socially accept able activities and legal market choices (for example, wages and employment). This Janus-faced construction of race is maintained by economists' stubborn ad herence to the market power hypothesis. The market power hypothesis asserts that racial discrimination and market competition are inversely correlated. Discrimina tory behavior will persist only in those sectors of society where the competitive forces of the market are least operative. When applied to the labor market, the mar ket power hypothesis suggests that pre- and post-labor market decisions represent disjoint sets. On average, members of a disadvantaged social group may accumulate a lower amount of or a lower quality of productive attributes because of discrimina tion in marital, residential, or school choice, or because of substantial animosity in day-to-day interpersonal relations with members of a privileged group.

As the public in the U.S. has grown increasingly concerned over the gaps in the health care system's attention to quality, and as the health care industry itself struggles for stability in a volatile environment, a historic opportunity presents itself. This book reviews a variety of quality monitoring approaches, identifies critical issues pertaining to assessment, measurement, implementation, and evaluation of quality initiatives, and suggests scientific approaches to put in place a core set of performance measures that reliably identify the value-added clinical and managerial behaviors in health care - for both quality and cost efficiency. The key to quality improvement has to focus on physicians and other health professionals. This book is designed to identify issues pertaining to health care quality and to formulate appropriate approaches for improving quality. It can be used by risk managers and hospital executives to guide their development, implementation, and evaluation of quality improvement programs.

Policy Uncertainty and Risk presents a contribution to risk analysis and risk management in public policy and management at large. Special emphasis is put on the utilization of scientific knowledge by decision-makers in instances where knowledge in both spheres of science and administration is highly uncertain and contested. The book therefore contributes a model of science-practitioner interaction in a policy area of strong current relevance. The perspective is a realist constructivist one, which means that risk and policy are taken to be socially predicated insofar as we can choose and change the way we define and interact with its practices. It is realist insofar as we continually use such constructions to re-define and re-structure the world we live in. Although essentially theory-driven and conceptually oriented, the authors develop their argument for a new interpretation of policy-relevant science through a number of pressing case studies. These studies include the recent BSE/CJD crises in the UK, the introduction of Marine Protected Areas in Sweden, and the current practices surrounding risk management in corporate bodies. Drawing on empirical cases and theoretical explication, the book provides a number of suggestions as to how risk analysis and risk management may be more properly conceived of both from a practitioner as well as from an academic point of view.

The issue of asymmetric information and public decision-making has been widely explored by economists. Most of the traditional analysis of public sector activities has been reviewed to take account of the different incentive problems arising from an asymmetric distribution of relevant information among the actors of the public decision-making process. A normative approach has been developed, mainly employing the principal agent paradigm to design incentive schemes which tackle adverse selection and moral hazard problems within public organizations. Still, this analysis is under way in many fields of public economics. However, a debate is ongoing on the theoretical limitations of this approach and on its relevance for the actual public sector activities. Public Decision-Making Processes and Asymmetry of Information encompasses different contributions to these issues, on both theoretical and practical areas.The innermost problem in the current discussion arises from the fact that this normative analysis is firmly rooted in the complete contracting framework, with the consequence that, despite the analytical complexities of most models, their results rely on very simplified assumptions. Most complexities of the organization of public sector, and more generally, of writing contracts, are therefore swept away. Once the need for an incomplete contracting approach is recognized, the question becomes how to relax some of the assumptions characterizing the complete contracting framework, without getting ad hoc results. The Introduction to this book, written by Jean Jacques Laffont, sets the general grid to interpret the position of its papers in this debate. The four papers in Part 1 of the book are devoted to developing the analysis of some of the theoretical issues mentioned in the Introduction. Part 2 is devoted to discussing the applications of the theory to different public sector activities.

Economic Restructuring and the Growing Uncertainty of the Middle Class focuses on a relatively new research area which is becoming increasingly more important: the growing uncertainty of the middle class. Until recently, members of the middle class were not only assured of a good social and economic position but also of the continuation of this position. Nowadays, economic and organisational changes are threatening this once secure position. The boundaries between the middle classes and the working class are becoming less and less visible. `Making a career', which was in the past central for middle class people, is becoming ever more difficult. Moreover, organisational restructuring is threatening their employment. It seems that insecurity is becoming a central element in the lives of members of the middle class. In this book experts from several European countries discuss the question of to what extent the position of the middle class is really changing. They also discuss the mechanisms that are propelling these changes, and the effects these changes have on the attitudes of middle-class people. As the experts are from several parts of Europe (Great Britain, Germany, The Netherlands, Greece, Spain and Russia), the reader can compare the situation of the middle classes in these various countries. This book contains valuable information for anyone interested in this important topic: not only for those involved in the studies of economic and organisational change and social stratification and those interested in the similarities and differences between European countries, but (amongst others) for policy-makers, managers, and trade union representatives who will be dealing with problems induced by the changes that are discussed in the book.

Rolf R. Strauch and Jiirgen von Hagen Center for European Integration Studies (ZEI), University of Bonn; ZEI, University of Bonn, Indiana University, and CEPR The large and persistent deficits, rising levels of debt and growing levels of public spending observed in many DECO economies during the past 25 years have stimulated much theoretical and empirical research on the political economy of public finance. Although a number of issues have been studied extensively, certain areas are still at an exploratory stage and need further theorizing and thorough empirical research. During the last two decades, the theoretical debate on budgeting has been dominated by the controversy between partisan and institutionalist approaches. Within the more political-science oriented, institutionalist literature, a controversy exists between the distributive and the informational perspectives, each setting forth a distinctive organizational rationale of parliaments with different fiscal implications. The papers in this volume cover these different perspectives, extend previous models, and test their empirical validity. The papers were originally written for a conference on "Institutions, Politics, and Fiscal Policy" organized by the Center for European Integration Studies at the University of Bonn, Germany, in July 1998. The book is organized in three parts each focusing on a distinctive aspect. The first part is dedicated to the partisan perspective. The second part focuses on budget institutions. The third part consists of three case studies of institutional reform of the budget process. This book is directed to academics and practitioners alike.

Economic Development is but one facet of Human Development. This forces us to ask - how do humans develop? Man is a social animal and the growth of our humanity requires various social institutions, such as bureaucracy. The paradox of capitalism is that it is a system ostensibly based on self-interest yet wholly dependent on non-market values for its success. These non-market values are shaped by two much-neglected factors, religion and ethnicity. Economic Development is an applied field; whatever it claims as a conclusion should be an applicable conclusion. This requires attention to all those non-economic factors which translate economic decisions into practice - such as the forces of nationalism versus the pressures of such global powers as US foreign policy and the advice of the IMF/IBRD. Since policy is our goal, theory whose intellectual basis is inaccessible to policy makers or which fails to have application should be minimized. Mathematical models are best avoided and, if they are to be used, the burden of proof must be placed upon their proponents. As insights about the market are limited neither by time nor space, poor countries can learn from rich ones, and vice versa. It is most fruitful to focus on examples of success, such as the East Asian economies. They are the clearest illustration of the fact that rapid economic development is possible even to those who have suffered through imperialism, and possess few natural resources, but have their work and their determination intact. `One good example is enough.'

The Papers collected in this volume are those presented at the tenth Collo- quium arranged by the Societe Universitaire Europeenne de Recherches Fi- nancieres (SUERF), which took place in Vienna in April 1982. The Society is supported by a large number of central banks, commercial banks, and other financial and business institutions, as well as by academics and others interested in monetary and financial problems. Since its estab- lishment in 1963 it has developed as a forum for the exchange of informa- tion, research results and ideas, valued by academics and practitioners in these fields, induding central bank officials and civil servants responsible for formulating and applying monetary and financial policies. A major activity of SUERF is to organise and conduct Colloquia on sub- jects of topical interest to members. The titles, places and dates of previous Colloquia for which volumes of the collected Papers were published are noted on page 421. Volumes were not issued for Colloquia held at Tar- ragona, Spain in October 1970 under the title "Monetary Policy and New Developments in Banking" and at Strasbourg, France in January 1972 un- der the title "Aspects of European Monetary Union".

The collapse of socialism across Eastern Europe - as manifested most dramatically by the events of the forever memorable November 9, 1989, when the Germans of East and West reunited, moved and overjoyed, on top of the Berlin Wall - has added more support and urgency to the central thesis of this volume than I had ever hoped for. Whether the following studies deal with economic topics, such as employment, interest, money, banking, business cycles, taxes, public goods, or growth; with philosophical problems as the foundations of know ledge, and of economics and ethics in particular; or the reconstruction and theoretical explanation of historical and sociological phenomena such as exploitation, the rise and fall of civilizations, international politics, war, imperialism, and the role of ideas and ideological movements in the course of social evolution - each ultimately contributes to but one conclusion: The right to private property is an indisputably valid, absolute principle of ethics and the basis for continuous 'optimal' economic progress. To rise from the ruins of socialism and overcome the stagnation of the Western welfare states, nothing will suffice but the uncompromizing privatization of all socialized, that is, government, property and the establishment of a contractual society based on the recognition of the absoluteness of private property rights. *** In writing the following studies I received help from many sides. Special thanks go to my wife Margaret, who again took on the task of de Germanizing my English; to Llewellyn H."

Environmental economics addresses the issues that arise on the boundaries between economic systems and natural systems, such as pollution and natural resource de pletion and degradation. Like any other branch of applied economics, it has drawn its tools and techniques from the wide range already available in economics gener ally, selecting, adapting and extending these to meet its own particular requirements in its own particular context. Here, as elsewhere in economics, public policy analy sis requires quantitative assessments of the economic impact of different policy choices. Perhaps the most distinctive contribution of environmental economics has been the development of techniques for the economic valuation of environmental goods and services in the absence of markets for such goods and services, or in the presence of markets that are at best imperfect or incomplete. Nevertheless policy analysis still relies on one or another of three broad groups of methods used in eco nomics generally. One is project appraisal, which at the micro level provides an evaluation ofthe costs and benefits ofinvestment options to inform the choice among them, while at the macro level policy analysis rests either on computable general equilibrium (CGE) models or on economy-wide macroeconometric models. All models are simplifications, designed to focus attention on the important fea tures ofthe problem at hand, and neglecting other features that might for a different problem assume greater importance.

C. B. TILANUS, EDITOR This book tries to strengthen the ties between, on the one hand, the business administration and accounting world and, on the other, the operational research and management science world. The readership for which it is intended consists ofthe following categories: managers and professionals in organizational departments of business administration, management science, automatic data processing, etc.; management and operational research consultants; and students in academic departments of business administration, business economics, operational research, information systems, industrial engineering, etc. The book deals with the quantitative approach. to budgeting problems. Budgeting in this text is defined as the making of a financial, short-term plan for an organization. The budget is financial. Although volumes and prices play their part, the budget is finally expressed in terms of amounts of money thus allowing of the well-known two-way counting and balancing of double bookkeeping. (Whether items appear twice on the assets and liabili ties sides of balances, or are counted twice in the rows and columns of a matrix is immaterial. ) The budget is short-term. It is a detailed, quantitative plan of action in the near future. In this sense, budgeting is opposed to strategic planning which considers the course of action to be taken in the medium and long term. Strategic planning is of a more aggregative, qualita tive nature than is budgeting. The budget is a plan for an organization, and as such it is complete."

Monetary Policy in a Converging Europe covers the most important monetary issues in the transition towards an Economic and Monetary Union in Europe, containing contributions from renowned experts in relevant research and policy areas. Among other things, the contributions discuss the scope for inflation targeting, monetary interdependencies within the core' ERM countries, money demand within the European Union, the difference between the monetary transmission mechanisms in the various European countries, and the preferred exchange rate policy in Stage Two of EMU. The book provides an excellent overview of current issues for anyone interested in monetary policy in a converging Europe.