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This paper looks at the role Sovereign Wealth Funds have played in the Pacific Island Countries in achieving key macro-fiscal policy objectives, namely, protecting the budget from high revenue volatility and strengthening fiscal prospects. Evidence shows that the funds' effectiveness has been hampered by lack of integration with the budget, institutional weaknesses, and inadequate controls. These factors, together with weak asset management, have sometimes led to substantial financial losses and undermined fiscal policy. Funds, if well designed, could be used as a tool to support a sound fisca

This paper studies a principal-agent model of the relationship between office-holder & an electorate, where everyone is initially uninformed about the office-holder's ability. If office-holder effort & ability interact in the determination of performance in office, then an office-holder has an incentive to learn, i.e., raise effort so that performance becomes a more accurate signal of her ability. Elections reduce the learning effect, & the reduction in this effect may more than offset the positive 're-election concerns' effect of elections on effort, implying higher effort with appointment. When this occurs, appointment of officials may welfare-dominate elections. Tables, Figures, Appendixes, References. Adapted from the source document.

Lebanon's political development since independence has been influenced primarily by its evolving confessional system. However, this system, originally established to balance the competing interests of local religious communities, is increasingly seen as an impediment to more effective governance as it has resulted in a paralysis in decision-making and a general hollowing out of the state. Lebanon's confessional system has also proven extremely vulnerable to external influence, which has bred and exacerbated local conflict and violence. Subject to the design of reforms that are incentive compatible with the twin overarching constraints the following opportunities could materially improve Lebanon's development prospects: a) reduce macro-fiscal vulnerabilities; (b) improve governance and effectiveness of public institutions; c) address energy gaps to increase productivity of the private sector and reduce the macro-fiscal burden; d) strengthen ICT so Lebanon is fully connected to the global economy and can develop jobs needed in the 21st century; e) modernize the education sector to ensure youth have skills relevant to employers; f) improve the business climate to ease the burden on firm creation and operation; g) increase investments in transportation so people and products can move efficiently; and h) address environmental issues to protect Lebanon's natural resources, including water. Reforms in these areas must be tackled with a sense of urgency if Lebanon is to generate the number and quality of jobs it needs for its citizens and achieve progress towards the twin goals, to avoid further deterioration in the well-being of citizens and, importantly, to manage the added pressures stemming from regional conflicts.

We propose a theory to explain why, and under what circumstances, a politician endogenously gives up rent and delegates policy tasks to an independent agency. Applied to monetary policy, this theory (i) formalizes the rationale for delegation highlighted by Alexander Hamilton, the first Secretary of the Treasury of the United States, and by Alan S. Blinder, former Vice Chairman of the Board of Governors of the Federal Reserve System; and (ii) does not rely on the inflation bias that underlies most existing theories of central bank independence. Delegation trades off the cost of having a possibly incompetent technocrat with a long-term job contract against the benefit of having a technocrat who (i) invests more effort into the specialized policy task and (ii) has less incentive to pander to public opinion than a politician. Our key theoretical predictions are broadly consistent with the data

Tax administration reforms can play an important role in fiscal adjustment. This role is examined by reviewing Indonesia's tax reform cum fiscal adjustment experience since 2001. The paper describes Indonesia's fiscal adjustment strategy, its tax administration reforms, and assesses the impact of these reforms on fiscal adjustment. Evidence suggests tax administration improvements had a strong positive impact on the tax yield and a positive effect on the investment climate. Lessons are presented for designing tax administration reforms within the context of a fiscal adjustment program and refo