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Nicht zuletzt durch den fortschreitenden Prozeß der europäischen Integration hat das wissenschaftliche Interesse an der Zuordnung finanzpolitischer Kompetenzen auf gebietskörperschaftliche Entscheidungsträger zugenommen. Während die traditionelle Theorie des Fiskalföderalismus auf die kostenminimale Bereitstellung von Kollektivgütern mittels föderativer Strukturen abstellt, sieht die politische Ökonomik die Hauptfunktion eines föderativen Systems in der Begrenzung staatlicher Macht durch vertikale Gewaltenteilung. In dieser Arbeit werden die Argumentationslinien beider Ansätze ausführlich dargestellt und im Rahmen eines konstitutionell-ökonomischen Denkansatzes integriert.

Nicht zuletzt durch den fortschreitenden Prozeß der europäischen Integration hat das wissenschaftliche Interesse an der Zuordnung finanzpolitischer Kompetenzen auf gebietskörperschaftliche Entscheidungsträger zugenommen. Während die traditionelle Theorie des Fiskalföderalismus auf die kostenminimale Bereitstellung von Kollektivgütern mittels föderativer Strukturen abstellt, sieht die politische Ökonomik die Hauptfunktion eines föderativen Systems in der Begrenzung staatlicher Macht durch vertikale Gewaltenteilung. In dieser Arbeit werden die Argumentationslinien beider Ansätze ausführlich dargestellt und im Rahmen eines konstitutionell-ökonomischen Denkansatzes integriert.

Stringent fiscal rules and budgetary procedures might generate incentives for political decision-makers to cut predominantly productive public investment during periods of fiscal consolidation. While the influence of the European Stability and Growth Pact on public investment received a lot of attention in the empirical literature, only a few studies consider the impact of different budgetary decision-making rules and procedures at the national level on government investment spending. We test empirically for the effect of political factors and the institutional framework of budgeting on public investment in EU 15 over the period 1990-2005. Our results show that stringent quantitative constraints limit government investment, but a centralisation of budgeting procedures by providing more agenda setting powers to the finance minister (delegation approach) or by the use of medium-term fiscal contracts are not related to public investment spending cuts.

In 2013, the European Union and United States initiated a new political dialogue regarding a further deepening of bilateral trade and investment relations, the TTIP (Transatlantic Trade and Investment Partnership). In some member states, anti-TTIP street protests and political activists received substantial support. The paper is concerned with the drivers of public support or disapproval of TTIP. In particular, we focus on the role of (dis-) trust in companies and in political institutions for attitude formation concerning economic regulation. We use data from a Eurobarometer Survey conducted in November 2014 to assess the determinants of individual approval or disapproval of TTIP by European citizens. By means of a mixed-level logit regression it can be shown that disapproval is highly correlated with a lack of trust in European institutions and in large companies. Our results moreover indicate that anti-TTIP political activism has a strong impact on TTIP-related preferences.

SUMMARYWhile economic policy liberalization is a key to higher overall growth, reforms are often not implemented due to a fierce opposition from politically powerful prospective losers from reforms. In this respect, it is frequently claimed that economic crises can help overcome resistance to policy liberalization. Furthermore, political authorities not constrained by democratic checks and balances are supposed to be more decisive and are thus expected to carry out market‐friendly policy change in times of crises more easily. Rules of democratic participation and checks and balances may however also be good for policy reform, as they can serve as an institutional mechanism for peaceful conflict resolution.The paper investigates empirically the interaction between economic growth performance and political institutions in producing free‐market reform. We explore whether political regime types shape systematically government policy responses to good or bad growth performance, employing panel econometric techniques and using recently updated data for economic reform and political institutions. Contrary to conventional wisdom we find that a bad growth performance is conducive to reforms in democracies, but not in autocracies. Democracies not only carry out more liberal economic policies in general, but they are also more responsive to economic growth crises. Democratic rule seems to be favorable for policy liberalization, but a very good growth performance weakens liberalization incentives considerably.

The paper investigates empirically the interaction between economic growth performance and political institutions in producing free-market reform. In particular, we explore whether political regime types systematically shape government policy responses to good or bad growth performance, employing panel econometric techniques and using recently updated data for economic reform and political institutions. Contrary to conventional wisdom we find that a bad growth performance is conducive to reforms only in democracies, but not in autocracies. Democratic rule seems to be favourable for policy liberalisation in general, but a very good growth performance weakens liberalisation incentives considerably.

This report collects and draws conclusions from research papers of Area 1. It summarises the results against the background of the existing literature, focusing in particular on the challenges arising on welfare states from globalisation, post-industrialisation, and demographic changes. The report also discusses problems of the political economy of policy reform and large-scale economic and social transitions.

AbstractA popular explanation for economic development is that 'individualistic values' provide a mind-set that is favorable to the creation of growth-promoting institutions. The present paper investigates the relationship between individualistic values and personal attitudes toward government intervention. We consider two key components of an individualistic culture to be particularly relevant for attitude formation: self-direction ('social' individualism) and self-determination ('economic' individualism). Results indicate that both are negatively associated with interventionist attitudes. Effects of self-direction are much weaker though, than self-determination. Moreover, the effects of self-direction are mitigated through higher trust in the state and lower confidence in companies, while that is not the case for self-determination values. We conclude that especially economic individualism supports attitudes conducive to the formation of formal market-friendly institutions.

Ever since Max Weber (1930) uncovered the cultural origins of capitalism, a common denominator for explanations of economic development is that "individualistic values" provide a more favourable background for promoting the wealth of nations. This paper investigates the impact of individualist values on personal attitudes towards government intervention, as a potential link of culture and formal institutions. We consider two key components of an "individualistic culture" to be particularly relevant for attitude formation, namely values related to self-direction and self-determination. Results indicate that both elements of individualistic values are associated negatively with interventionist preferences. Interestingly, effects of self-direction values on intervention attitudes are much weaker though, than the effects of a strong belief in self-determination. Moreover, the effects of self-direction on intervention preferences are mitigated through higher trust in state actors and lower confidence in major companies, while that does not appear to be the case for self-determination values.

Which impact does government size have on life satisfaction, and how do effects of bigger government differ between income groups in society? Previous studies typically employed country averages and thus neglect possibly heterogeneous happiness effects between income groups. The paper addresses empirically the effects of government spending on subjective well-being of individuals belonging to different income groups. Our analysis is based on individual data from 25 European countries participating in the European Social Survey. In contrast to most previous studies we take account of the endogeneity between relative income position and reported life satisfaction by an instrumental variable approach. Our results suggest, first, that most government spending categories, including social protection, are on average negatively related to individual well-being. Secondly, estimated marginal effects of health, education and social protection spending at different income levels show that spending increases always have a stronger negative effect on high income groups' well-being than on low income groups' life satisfaction. For all government spending categories, marginal happiness effects of higher public spending are clearly negative for income groups at the top.