Hans Pitlik

Do crises promote the extent of economic liberalization?: an empirical test

Abstract The paper explores empirically the impact of preceding growth and inflation crises on the extent of economic liberalization as measured by the Fraser Institutes Economic Freedom of the World-index. We find that deep crises are conducive to market-oriented policy reforms. The paper also finds evidence for a positive impact of democratic regimes and checks and balances on the extent of economic reforms. The popular thesis that fractionalized governments have a lower propensity to reform is clearly rejected.

Legislative Malapportionment and the Politicization of Germany's Intergovernmental Transfer System

Legislative bargaining theory suggests that fiscal transfers among member states of a federation are determined to a substantial degree by political representation effects. Malapportionment of the statespopulation in the legislature is claimed to lead to disproportional benefits of overrepresented states. The article analyzes empirically the determinants of funds in Germanys intergovernmental transfer system. The authors expand previous investigations to include the effects of both the bicameral system in Germany and the postreunification period. Using data for the period from 1970 to 2002, the authors find that malapportionment in the upper house leads to disproportional state shares of per capita transfers. Estimates also indicate that the impact of overrepresentation has somewhat increased over time. Disproportional representation in the lower house does not seem to matter, as the institutional framework of decision making in the lower chamber is not too supportive to constitute a bias towards overrepresented states.

The Path of Liberalization and Economic Growth

Empirical research has shown that both more economic freedom and a higher stability of policy variables are supportive for economic growth. Thus, the path of policy liberalization may have a considerable influence on a nations growth performance. Using the Fraser-index of economic freedom, this article shows empirically that policy volatility proves to be growth depressing, even if the state liberalizes the economy in the long-run. Growth is significantly higher if liberalization occurs on a smoother path. Copyright 2002 by WWZ and Helbing & Lichtenhahn Verlag AG

Zur politischen Ökonomie der föderalen Finanzbeziehungen in Deutschland

Abstract Over the past 50 years revenue sharing and intergovernmental grants between the central government and the states have become increasingly important in the Federal Republic of Germany. Although this system is shown to be highly inefficient no serious attempts to reform can be observed yet. This paper examines the institutional mechanisms underlying the centralization process in Germany. It is argued that the erosion of competitive elements of Germany’s fiscal constitution can be explained by a common interest of federal and state politicians to establish a fiscal cartel. Furthermore, the system of intergovernmental grants softens the states’ budget constraints, and democratic control of governments at both levels is weakened by non-transparent rules of the Laenderfinanzausgleich. Despite a latent instability of the fiscal cartel, due to distributional struggles for tax revenues between the Laender and the federal government, we conclude that a far-reaching reform of intergovernmental fiscal relations in Germany cannot be expected.

Explaining economic performance during transition: What do we know?

While after the collapse of the communist bloc virtually all of its former member countries embarked on market-oriented reforms, the individual countries followed different routes and experienced different outcomes. In all cases, however, output declined steeply during the early years of transition. What were the main causes behind the severe contraction of output? Why have some countries managed to overcome the transformation crisis far better than others?