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Globalization and political structure

The first wave of globalization (1830-1914) witnessed a decline in the number of countries from 125 to 54. Political consolidation was often achieved through war and conquest. The second wave of globalization (1950-present) has led instead to an increase in the number of countries to a record high of more than 190. Political fragmentation has been accompanied by the creation of peaceful structures of supranational governance. This paper develops a theoretical model of the interaction between globalization and political structure that accounts for these trends and their reversal. We show that political structure adapts to steadily expanding trade opportunities in a non-monotonic way. Borders hamper trade. In its early stages, the political response to globalization consists of removing borders by increasing country size. War is then an appealing way of conquering markets. In its later stages, however, the political response to globalization is to remove the cost of borders by creating international economic unions. As a result, country size declines and negotiation replaces war as a tool to ensure market access.
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Vertical income tax externalities and fiscal interdependence: Evidence from the US

Concurrent taxation is a feature of many federal systems. As a result, the tax policy of one level of government affects the tax base of the other. A way to check the empirical relevance of this hypothesis is to test for the existence of interdependencies in the tax setting behaviour of various layers of government. Following this approach, this paper estimates the reaction of U.S. state personal income and general sales taxes to federal tax rates, taking into account the special features of the U.S. tax system. We find that when the federal government increases taxes, there is a significant positive response of state taxes.
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The role of intergovernmental finance in achieving diversity and cohesion: The case of Spain

The democratic Constitution of 1978 set up a decentralised state in Spain. Since then, the Autonomous Communities (intermediate level of government) have strongly increased their role and currently represent around 25-30% of total public expenditure. Thus, financing autonomous government has become a crucial issue with important financial and political consequences. The present system is mostly based on grants coming from central government, while tax revenue are weak and so it is fiscal responsibility. The financing system can play an important, albeit complementary, role in ensuring cohesion within a decentralised state. On the one hand, achieving a certain level of equalisation in providing public services all over the territory. On the other, permitting that all regions can obtain an appropriate level of self-government. However, it is important to stress that territorial cohesion requires, as previous conditions, a political consensus and the acceptation of a common project among the different regions. Financial problems can become political problems, but rarely political problems can exclusively be solved through financial measures. Hence, we should not demand to the intergovernmental finances what they cannot do.
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Pautas de localización de las nuevas empresas y flexibilidad territorial

¿Por qué la localización de las nuevas empresas difiere según las características de las industrias? ¿Qué relación existe entre la intensidad tecnológica de las empresas y el entorno urbano donde nacen? ¿La autonomía de las nuevas empresas a la hora de decidir su emplazamiento difiere según las características del sector industrial y el tamaño del establecimiento? El presente trabajo aborda estas cuestiones para las manufacturas españolas entre 1980 y 1994. Partimos del supuesto de que los nuevos establecimientos industriales deciden localizarse en un determinado municipio descartando el resto de emplazamientos alternativos. Los resultados obtenidos indican que las decisiones de localización difieren según la intensidad tecnológica de las industrias y de su ciclo de vida.
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Determinantes de la innovación y efectos sobre la competitividad: el caso de las empresas textiles

El concepto de innovación ha sido un tema de interés permanente en los sectores industriales más preocupados por la madurez de su tecnología y por la pérdida de competitividad asociadas a ella. El objetivo de este documento es contrastar la incidencia de la innovación sobre la posición competitiva de la industria textil y de confección española. El tratamiento econométrico de la información permite confirmar que el dinamismo exportador está estrechamente relacionado con la innovación de producto, con la localización geográfica en distritos industriales, con la dimensión empresarial y con el tipo de actividad.
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Determinantes del gasto público local: ¿necesidades de gasto o capacidad fiscal?

En este trabajo se cuantifica la importancia relativa de las necesidades de gasto y de la capacidad fiscal como factores explicativos de la desigualdad observada en los niveles de gasto público local por habitante con datos de los municipios de la provincia de Barcelona con más de 5.000 habitantes para 1996. La metodología utilizada consiste en la estimación de ecuaciones de demanda para siete categorías de gasto. Las necesidades de gasto son introducidas en el modelo a partir de una especificación detallada de la relación entre actividad y resultados de los servicios, en la que se incluyen distintos grupos de usuarios y variables de coste. Además de los determinantes clásicos del gasto –precio, renta y subvenciones–, se introducen también como variables de control un índice de capacidad fiscal, factores políticos e institucionales, y los efectos de la actividad realizada por gobiernos cercanos. Los resultados indican que las necesidades de gasto explican un porcentaje sustancial de la variación en el gasto por habitante (44%), superior al porcentaje explicado por la capacidad fiscal (38%), por factores políticos e institucionales (9%), o por las interdependencias existentes entre gobiernos cercanos (9%). Los resultados obtenidos ponen en relieve también la importancia de diversas variables de necesidades, además de la población, como por ejemplo: dispersión de la población, niveles de pobreza, visitantes diarios, población estacional, ocupación comercial, etc.
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The Redistributive Power of the Central Government Budget

We analyse the redistributive power of the Spanish central government budget to diminish regional disparities in per capita income in the 1991-1996 period. It firstly makes a brief overview of the most relevant empirical studies carried out on this subject, analysing their methodologies and results. Secondly, it estimates the redistributive power of the budgetary policies of the Spanish central government. Its principal interest lies in the fact that the data base used allows the redistributive effect of the main items of revenue and expenditure to be analysed, whereas the majority of studies carried out limit the categories of expenditure to the case of transfers. The results obtained are in line with those from other studies. The redistributive power of the central budget is around 40%, expenditure being much more redistributive than revenue, with the exception of individual income tax.
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All roads lead to Rome ... and to sprawl? Evidence from European cities

I investigate the effect of highways on residential sprawl in European cities between 1990 and 2012. I find that a 10% increase in the stock of highways (km) causes a 0.4% growth in the residential land area, a 1.7% growth in the number of residential lots, and a 0.7% growth in the percentage of undeveloped land surrounding residential land over 20 years. At the regional level, only the effect on residential area is smaller in Northwestern cities than in Mediterranean and Eastern LUZs. I also explore the impact on population growth a la Duranton and Turner (2012) and find significant positive effects. Jointly, land and population results show a negative effect of highways on the intensity of use of land. As a whole, these results confirm that highways expand cities with more fragmented residential developments surrounded by undeveloped land and reducing the overall city density.
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Abandon ship? Party brands and politicians’ responses to a political scandal

How do politicians react to a political earthquake? In this article, we study politicians’ – rather than voters’ – responses to the main political scandal in Italian recent history (Tangentopoli), and overcome endogeneity concerns by analysing the local implications of this national corruption scandal. We find that local politicians withdraw support for incumbents in parties hit by Tangentopoli – inducing early government terminations in such municipalities. Moreover, politicians in parties hit by the scandal exhibit higher rates of party switching and lower re-running rates. By decreasing the value of the party “brand”, scandals thus become transmitted across politicians and levels of government via partisan cues.
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Popularity shocks and political selection

We observe that popularity shocks are crucial for electoral accountability beyond their effects on voters’ behaviors. By focusing on Brazilian politics, we show that the disclosure of audit reports on the (mis)use of federal funds by local administrators affects the type of candidates who stand for election. When the audit finds low levels of corruption, the parties supporting the incumbent select less-educated candidates. On the contrary, parties pick more-educated candidates when the audit reveals a high level of corruption. These effects are stronger in municipalities that have easier access to local media.
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