Jan-Egbert Sturm

On the relationship between economic freedom and economic growth

Often it is maintained that economic freedom may further high levels of economic growth. This paper compares various indicators for economic freedom. It is concluded that although these measures differ somewhat in their coverage, they show similar rankings for the countries covered. Some elements in these measures are, however, questionable. The robustness of the relationship between freedom and growth is also examined. Our main conclusion is that more economic freedom fosters economic growth.

Political and institutional determinants of fiscal policy in the European Community

In recent theoretical and empirical research the variation in political and institutional arrangements which may affect the process of national policy formation is examined, in order to explain cross-country differences with respect to fiscal policies pursued. In this paper we build upon this literature and examine whether and how cross-country differences in debt accumulation and public sector size of Member Countries of the European Community during the 1980s can be explained. We conclude that the growth of government debt is positively related to the frequency of government changes and negatively to sound budgetary procedures. In countries with left-wing governments the growth of the share of government spending in total output generally tends to be higher.

Political and economic determinants of OECD budget deficits and government expenditures: A reinvestigation

Abstract Recent theoretical and empirical research has examined the variation in political and institutional arrangements which may affect national policy formation, in order to explain cross-country differences in fiscal policies. In this note we investigate cross-country differences in debt accumulation and the level of government spending in the OECD countries over the period 1982–1992. Our findings are negative and suggest a reappraisal of previous research. In particular, neither the growth of government debt nor the level of government spending is related to the corrected Roubini–Sachs power dispersion index.

IS PUBLIC-EXPENDITURE REALLY PRODUCTIVE - NEW EVIDENCE FOR THE USA AND THE NETHERLANDS

This paper reviews empirical evidence for the United States on the impact of the public capital stock on productivity. On econometric grounds it is argued that most previous research is flawed. If the well-known model of Aschauer is estimated in first differences - which is necessary as the variables used are neither stationary nor cointegrated - the model breaks down entirely. Similar results are found for the Netherlands.

The Weak Government Thesis: Some New Evidence

This paper presents new evidence on the hypothesis that coalition governments will find it more difficult to keep their budgets in line after an adverse economic shock than do one-party, majoritarian governments. The estimates are based on a broad sample of OECD countries, for the period 1979–1995. Using various specifications as suggested in the literature, we do not find evidence that the type of government affects cross country variation in fiscal policy. However, the number of political parties in government affects central government debt growth.

Output effects of infrastructure investment in the Netherlands, 1853-1913

Using a new data set that allows for a distinction between transport and other categories of infrastructure investment, this paper finds strong evidence of a positive impact of transport infrastructure investment on Dutch GDP in the second half of the nineteenth century. However, as the time-series characteristics do not allow us to find permanent effects, these are short- and medium-run effects. We employ Granger-causality tests in a Vector AutoRegression (VAR) framework. Furthermore, the VAR models are analyzed using innovation accounting.

Political Pressure on the Bundesbank: An Empirical Investigation Using the Havrilesky Approach

This paper applies the method as developed by Havrilesky to examine whether a central bank responds to political pressure to the Bundesbank, which is widely believed to be one of the most independent central banks in the world. We construct an index for political pressure by counting the number of articles in three newspapers in which politicians or pressure groups argue in favor of a more or less restrictive monetary policy. We conclude that the Bundesbank did not respond to political pressure. However, its policies were in line with the wishes of the banking sector.

Public capital spending in The Netherlands: developments and explanations

As in many other OECD countries, government investment expressed as share of GDP has decreased in The Netherlands. Using the concept of Granger causality, we test in a bivariate vector autoregression framework various hypothesis that have been put forward to explain this decline. It is concluded that private investment and output are related to public investment. Demographic variables also influence public investment. The number of future civil servants affects investment in buildings. Our results do not support the view that higher interest burdens crowded out public investment. Finally, no confirmation is found for the idea that additional infrastructure triggers growth of the number of vehicles.

Infrastructure and economic development in the Netherlands, 1853–1913

Economic historians have always assigned a large role to infrastructure in the process of economic growth. For instance, it is commonly agreed that infrastructure endowments made the Netherlands the economic superpower in the pre-industrial era, but depressed economic growth in the first half of the nineteenth century, and then again enabled modern economic growth in the second half of the nineteenth century. However, this hypothesis has never been tested quantitatively, mainly because of the lack of reliable data. A new database on infrastructural investments allows us to confirm the hypothesis for the second half of the nineteenth century. Our main conclusion is that the investments in new infrastructure (mainly railways and waterways), clearly paid off. However, these positive effects lasted only temporarily; the Dutch economy did not switch to a permanently higher growth path. Also, it was some time before entrepreneurs fully reaped the potential benefits of a better infrastructure.

Output effects of transport infrastructure: The Netherlands, 1853-1913

In this paper we put to trial the alleged role of investment in transport and communications infrastructure in economic growth in the Netherlands in the second half of the nineteenth century. To do so, we combine a new data set with data‐oriented econometric techniques. Testing of the main hypothesis by applying Grangers concept of causation in a vector auto‐regression model reveals that the development of infrastructure ‘caused’ Dutch economic growth. In order to investigate the underlying mechanisms, we enhance the basic model with impulse‐response analysis. This leads to a clear response pattern of GDP to a change in transport infrastructure investment. The response of GDP is explained as being induced by three underlying mechanisms: 1. Positive forward linkage effects (mainly through reductions in the costs of transport and communications). 2. Positive backward linkage effects (mainly through expenditure and income effects). 3. Negative transitional dynamics (mainly through changes in the spatial setting of the economy).