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21. Alaska: Arctic Groundhog Day

Author:
Glenn Wright and Tasha Elizarde
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
Since the early 1980s, Alaska has relied on oil taxes for almost all of its state government revenue. Like many resource-based economies, including many of the Western states, the result is a boom and bust economy. With production declining and the price of Alaska’s North Slope crude around $75 per barrel, the state is in a bust cycle, with a large state government deficit. Although Alaska is experiencing a somewhat improved revenue outlook compared to 2017, the state’s executive and legislative branches continue to wrestle with unpopular political choices; do we implement a state income tax, tap the state’s Permanent Fund sovereign wealth fund (and thereby reduce or eliminate Alaska’s annual Permanent Fund Dividend payment to Alaskan residents), or some combination of those two approaches? In Spring 2018, the Alaska State Legislature—supported by Independent Governor Bill Walker—chose the first of these options, tapping Alaska’s Permanent Fund to fund state government operations for the first time. The result is a dramatically improved fiscal position for 2019, and although the state remains in deficit, chances of a balanced budget are much improved. Use of the Permanent Fund has not been popular, however; a number of incumbents who supported the use Permanent Fund earnings were defeated in November 2018 by opponents who campaigned on the issue. At the moment, Alaska’s fiscal future remains in doubt.
Topic:
Governance, Budget, Economic Policy, and Fiscal Policy
Political Geography:
United States and Alaska

22. Arizona: #RedforEd -- Governor Ducey Forced to Invest in Education

Author:
David Wells
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
The FY2019 budget saw the country’s largest movement of teachers descend on the state capital and force Governor Doug Ducey to scramble to save his re-election prospects. Gradually growing through social media, the #RedforEd movement culminated with 50,000 teachers and supporters walking out of classrooms and descending onto the Capitol grounds. Gov. Ducey deftly rose to the occasion from his initial one percent raise to a 20 percent raise by FY2021 before the walkout commenced, moving the pressure to legislators to seal the deal, which they did on May 3, 2018. Stronger revenue growth than prior years enabled the governor and Legislature to find the necessary funds.
Topic:
Education, Fiscal Policy, and State Funding
Political Geography:
United States and Arizona

23. New Mexico: The Lost Decade

Author:
Kim Seckler
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
In January 2018, the New Mexico State Legislature convened for its regular session, a thirty day budget session, per its constitutional mandate. Thirty days later the legislative session ended quietly and the state of New Mexico closed the book on the great recession and a decade of financial and political strife. The 2018 legislature passed a $6.38 billion dollar budget, re-supplied dangerously low general fund reserves, and provided small raises to teachers and state employees. Oil and gas revenues are up, unemployment is slowly coming down and legislative-executive political battles have muted. The balanced budget, signed by the governor in early March, brings the state back to where it began almost 10 years before, leading one observer to refer to the time as the “lost decade in New Mexico” (Cole 2018).
Topic:
Governance, Budget, and Fiscal Policy
Political Geography:
United States and New Mexico

24. Oregon: Progressive Agenda, Yet Facing Great Fiscal Risks

Author:
Mark Henkels and Brent S. Steel
Publication Date:
01-2019
Content Type:
Journal Article
Journal:
California Journal of Politics and Policy
Institution:
Institute of Governmental Studies, UC Berkeley
Abstract:
The 2018 midterm elections strengthened the Democrats’ control of Oregon’s state government. Governor Kate Brown won re-election with 50percent of the vote defeating moderate Republican Knute Buehler with 46.6percent of the vote. Democrats also increased their seats in both the House and Senate, leading to super majorities in both houses. Governor Brown and the Democrats in Salem have taken fairly strong progressive policy stances in 2017 and 2018, particularly opposing President Trump’s immigration and marijuana policies, reinforcing the West Coast carbon-reduction pattern, and strongly supporting health care coverage expansion. With a booming economy and unemployment at record lows, the state seems to be able to deliver on its progressive agenda for the 2017-19 biennium, but funding progressive policies in the future will be a challenge for the governor for a variety of reasons. The fate of this progressive vision depends on five elements: (1) the continuation of the favorable economy and the corresponding revenue growth in the approaching budget cycle; (2) the ability to manage the ongoing taxing and spending structures that include major obligations for the Public Employees Retirement System (PERS); (3) the constraints of ongoing dependency on income taxes; (4) the vicissitudes of Trump era politics and policy with declining federal funds; and (5) continued public support for expansive public policies.
Topic:
Governance, Domestic politics, and Fiscal Policy
Political Geography:
United States and Oregon

25. Structural Transformation and Fiscal Policy in Botswana

Author:
Kelesego Mmolainyane
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Botswana Institute for Development Policy Analysis
Abstract:
This paper analyses impacts of fiscal policy on structural transformation in Botswana using structural vector autoregression (SVAR) model over the period of 1990 to 2015. The study uses an inclusive sustainable transformation (IST) index and government expenditure as proxies for structural transformation and fiscal policy respectively. Results show that prudent fiscal policy can be used as a major strategic tool for structural transformation in Botswana. Most evidently, IST index responds positively to government expenditure shocks over time. In addition, fiscal policy innovations dominantly account for movements in structural transformation in Botswana. Notwithstanding, Botswana has a lot of potential and opportunity to use its fiscal policy more effectively and efficiently to promote an inclusive structural transformation that leads to sustainable economic growth.
Topic:
Economics, Economic structure, Macroeconomics, and Fiscal Policy
Political Geography:
Africa and Botswana

26. Inflated Beyond Fiscal Capacity: The Need to Reform the Public Sector Wage Bill

Publication Date:
09-2019
Content Type:
Policy Brief
Institution:
Sana'a Center For Strategic Studies
Abstract:
This policy brief addresses the issue of Yemen’s bloated public sector. Due to decades of corruption and patronage appointments, among other factors, public sector salaries were already a source of fiscal stress prior to the ongoing war. Previous efforts to downsize the public sector, notably those supported by the World Bank, produced few tangible results, as this brief outlines. During the conflict, the internationally recognized Yemeni government and the armed Houthi movement have added to the public sector payroll — particularly in the military and security apparatus — as the economy has contracted. Amid consistently large budget deficits, the inflated public sector wage bill is fiscally unsustainable and threatens to undermine economic recovery and future stability in Yemen.
Topic:
Economics, World Bank, Budget, Inflation, Public Sector, Fiscal Policy, and Economic Development
Political Geography:
Asia, Yemen, and West Asia

27. Expansionary Austerity and Reverse Causality: A Critique of the Conventional Approach

Author:
Christian Breuer
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper we methodologically review and criticize a broad literature of empirical work on the effects of fiscal policy (the ‘conventional approach’). Beyond previous critiques of this approach, we show that the cyclical adjustment strategy as used in this literature entails erroneous assumptions that necessarily produce flawed results in support of expansionary austerity. Specifically, the cyclically-adjusted primary balance (CAPB) strategy this literature employs fails to correct for cyclical effects in the expenditure- GDP-ratio, so that the estimates of the results of expansionary fiscal consolidation are affected by reverse causality, i.e. increasing GDP causally decreases expenditure-GDP- ratios, rather than vice versa. We provide suggestions on how to fix this incomplete cyclical adjustment problem with a new approach. After replicating two famous articles of the conventional literature and controlling for this bias, the expansionary effects of fiscal adjustments disappear or turn into their opposite
Topic:
Economics, Macroeconomics, and Fiscal Policy
Political Geography:
United States

28. China’s economy seeks bottom amid downward pressure in 2019

Author:
Qiyuan Xu
Publication Date:
02-2019
Content Type:
Policy Brief
Abstract:
Proactive fiscal policy will be employed this year to meet the challenge of downward pressure In 2019, the Chinese economy is expected to seek a bottom as a slowdown is inevitable. It is anticipated that it will stabilize at the end of the year or early next year at a growth rate of around 6.3 percent. With China's economy entering a new era, policymakers should focus more on the quality of growth in addition to maintaining a moderately high growth rate. ...... At the same time, China's economy is facing a lot of downward pressuredomestically. First, confidence in the financial market needs to be restored. In2018, China's financial market was hit many times; its stocks, bonds, fundsand internet finance, for example, were all affected. In addition, at present, thewidening credit spreads and the high degree of liquidity between bankscannot be converted into loans to enterprises and other market entities. Facedwith rising market risks and faltering consumer confidence, investors preferlow-risk or risk-free asset allocations.
Topic:
Markets, Financial Markets, Economy, and Fiscal Policy
Political Geography:
China and Asia

29. Assessing Tunisia’s Upstream Petroleum Fiscal Regime

Author:
Thomas Lassourd and Carole Nakhle
Publication Date:
09-2019
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
The authors of this paper examine Tunisia’s upstream petroleum fiscal regime, in consideration of the government’s stated policy priority of reversing a decade-long decline in reserves and production. Although the country’s “Jasmine Revolution” led to improved civic rights and the country is a strong regional performer on the Natural Resource Governance Institute’s (NRGI) Resource Governance Index, foreign investment has dropped since 2011, in part because of regulatory ambiguity and political instability. Tunisia’s proven oil and gas reserves are very small, especially by regional standards. With limited geological prospects, the existing context is not conducive to oil and gas investment, especially for exploration. Tunisia offers different contractual arrangements and fiscal regimes: a concession-based system, which often involves joint ventures between the state-owned company, ETAP, and international oil companies and production sharing contracts. This paper analyses the various arrangements and fiscal instruments, focusing primarily on production sharing contracts, which have become the dominant contractual forms for foreign investors and do not require any public (ETAP) capital investment. The government of Tunisia publicly discloses all contracts and concessions.
Topic:
Oil, Natural Resources, Gas, and Fiscal Policy
Political Geography:
North Africa and Tunisia

30. EuroPACE Market Analysis

Author:
Grzegorz Poniatowski, Izabela Styczynska, Karolina Beaumont, and Karolina Zubel
Publication Date:
10-2019
Content Type:
Special Report
Institution:
Center for Social and Economic Research - CASE
Abstract:
EuroPACE is an innovative tool designed to make home renovation simple, affordable and reliable for all Europeans by combining affordable financing with people-centric technical assistance. EuroPACE offers 100% up-front financing that can be repaid over a long term of up to 25 years. The innovation lies in the collection and repayment mechanism – financing is attached to the property and is repaid regularly with charges linked to a property. Homeowners are offered logistical and technical support throughout the process and access to trained and qualified con-tractors. Thus, EuroPACE overcomes the main barriers to home renovation – lack of financing, technical knowledge and complexity of the works. The concept of EuroPACE is inspired by the success of a financing model called Property Assessed Clean Energy (PACE), launched in California in 2008. In the United States (US), the PACE market reached over USD 6 billion in funded projects, including the retrofit of over 220,000 homes, which resulted in more than 50,000 new local jobs and the creation of hundreds new companies.
Topic:
Energy Policy, Markets, Climate Finance, Fiscal Policy, and Innovation
Political Geography:
Europe