Template-Type: ReDIF-Paper 1.0 Author-Name: Gerardo P. Sicat Author-Name-First: Gerardo Author-Name-Last: Sicat Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Next President Could Be an Economist: Or Gloria Macapagal as an Economist Abstract: Vice President Gloria will become President if Joseph Estrada is removed from office or he resigns as a result of his impeachment. This paper is about the background of Macapagal who graduated with a Ph.D. in Economics from the U.P. School of Economics. The paper is divided into four sections. The first section describes the Ph.D. program as a course of study and discusses the circumstances that made Macapagal take up the course. The second section discusses her Ph.D. thesis on the real effects of government expenditures and relates it to recent theoretical developments in macroeconomics and public finance. The third parts deals with the transitional problems of the post-Erap scenario, taking into account lessons from the past and the legacy of problems inherited from Estrada. The final section probes into how an economist who has the powers of the presidency would deal with economic issues of the country, based on the record of previous writings. The paper concludes on a more optimistic note about economic prospects of the country. But all would eventually depend on the still untested political skills of the successor president. Length: 16 pages Creation-Date: 2001-01 Publication-Status: Published as UPSE Discussion Paper No. DP 2001-01, January 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/81/73 File-Format: Application/pdf Number: 200101 Keywords: Political economy, macroeconomics, public expenditures, economic development Handle: RePEc:phs:dpaper:200101 Template-Type: ReDIF-Paper 1.0 Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Estimating the Income Elasticity of Local Government Revenues and Expenditures under Decentralization Abstract: A common feature of the different policy initiatives currently undertaken or considered to improve the decentralization program is a proposal to amend the current formula used in allocating the national government's internal revenues. This formula is known as the Internal Revenue Allotment (IRA) formula, which determines the principal revenue share of local governments in the country's total fiscal resources and as well as the allocation of the total share among the different levels and types of local governments. As an input to policy discussions, this paper seeks to measure the responsiveness of the revenues and expenditures of local government units to changes in the IRA. To measure local fiscal response to IRA changes, the income elasticity of the revenues from local sources and total expenditures of provinces and cities are econometrically estimated using local fiscal data covering the period 1990-96. The results show that revenues from local sources and total expenditures of either the provinces or cities are generally income elastic. That is, the increments in the IRA under decentralization do not seem to substitute for local revenues and have likewise stimulated greater local public spending. The results then suggest that local governments, despite initial apprehensions instigated by their seemingly increased dependence on central transfers, have nonetheless learned to adjust positively to their new roles and responsibilities under the program. However, the results also indicate that current policy reforms must also focus on improving fiscal imbalances, since local governments respond differently, albeit all positively, to the changes in their IRA shares under the decentralization program. Length: 36 pages Creation-Date: 2001-01 Publication-Status: Published as UPSE Discussion Paper No. 2001-02, January 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/41/35 File-Format: Application/pdf Number: 200102 Handle: RePEc:phs:dpaper:200102 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: The Legality of the Estrada Removal: The Condorcet Jury Perspective Abstract: We apply the Condorcet Jury Theorems and some extensions to the issue of the legality of the removal of Estrada from the Presidency and the accession of President Arroyo. Adopting as primal the legal principle "Salus populi, suprema lex," we argue that on the basis of (a) relevant subplots in the survey results, (b) the envelope vote and (c) the Davide court's unanimous decision on the Presidential vacancy, the proposition "Remove Erap" and its realization are legal and binding beyond reasonable doubt. Length: 9 pages Creation-Date: 2001-02 Publication-Status: Published as UPSE Discussion Paper No. 2001-03, February 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/42/36 File-Format: Application/pdf Number: 200103 Handle: RePEc:phs:dpaper:200103 Template-Type: ReDIF-Paper 1.0 Author-Name: Orville Jose C. Solon Author-Name-First: Orville Jose Author-Name-Last: Solon Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Joseph J. Capuno Author-Name-First: Joseph Author-Name-Last: Capuno Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Is Local Development Good Politics? Local Development Expenditures and the Re-election of Governors in the Philippines for 1992, 1995 and 1998 Abstract: Using a panel of incumbent provincial governors, this paper estimates the relative contributions of development spending and membership in local political clans to the likelihood of re-election of governors in the Philippines during the 1990s. The results suggest that governors, whether members of political clans or not, respond to local development needs to get re-elected. Further, it is not the presence of political clans per se, but rather the absence of effective electoral competition among clans, that seems inimical to development. Thus to ensure that local development becomes good politics, electoral reforms should be adopted to prevent capture of local governments under a fiscal decentralization program. Length: 36 pages Creation-Date: 2001-02 Publication-Status: Published as UPSE Discussion Paper No. 2001-04, February 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/82/74 File-Format: Application/pdf Number: 200104 Handle: RePEc:phs:dpaper:200104 Template-Type: ReDIF-Paper 1.0 Author-Name: Maria Socorro Gochoco-Bautista Author-Name-First: Maria Socorro Author-Name-Last: Gochoco-Bautista Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: What Drives Monetary Policy? Abstract: Under its charter, the mandated duty of the BSP is to maintain price stability, yet there are many ways of translating this objective into a workable framework for monetary policy. Under the monetarist framework that forms the basis of the IMF's financial programming approach, including its program with the Philippine Government, this means that controlling the growth of the money supply is key to controlling inflation. This is the basic approach that has been in use in the Philippines since the mid-1980s. This study is an attempt to understand how monetary policy is conducted today, if and how it differs from the manner it was conducted in the past, whether monetary authorities are faithful to the tenets of the theories they say underlie their framework, and whether any lessons have been learned at least since the onset of the Asian financial crisis in July 1997. The basic finding is that the framework being used by the monetary authorities currently cannot be described as monetarist in the tradition of QTM. The results of the Granger tests performed, albeit a crude form of empirical testing, tend to support the hypothesis that what drives monetary policy in this country is basically concerns over the exchange rate. It appears that the authorities use monetary growth reactively, to set a floor on the rate of peso depreciation directly, as a way of ultimately control the rate of inflation. Length: 20 pages Creation-Date: 2001-03 Publication-Status: Published as UPSE Discussion Paper No. 2001-05, March 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/43/37 File-Format: Application/pdf Number: 200105 Handle: RePEc:phs:dpaper:200105 Template-Type: ReDIF-Paper 1.0 Author-Name: Casimiro V. Miranda, Jr. Author-Name-First: Casimiro Author-Name-Last: Miranda, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Consumption or Income Taxation for the Philippines? Abstract: Apropos the Philippines' perennial tax problems, the pros and cons of consumption and income taxation are weighed in terms of their respective effects on revenue generation by drastically reducing the negative effects of non-preference revelation and its closely related free rider problem and, on efficiency and equity concerns. The study concludes that consumption taxation is more appropriate for the Philippines than income taxation. Length: 23 pages Creation-Date: 2001-03 Publication-Status: Published as UPSE Discussion Paper No. 2001-06, March 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/44/38 File-Format: Application/pdf Number: 200106 Handle: RePEc:phs:dpaper:200106 Template-Type: ReDIF-Paper 1.0 Author-Name: Raul V. Fabella Author-Name-First: Raul Author-Name-Last: Fabella Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Multiple Juries and Two-Party Representative Democracy in the Condorcet Jury Framework Abstract: We consider decision regimes where two independent juries choose opposite majority rule winners in the same dichotomous choice problem. We highlight the role of the extent of victory on top of the numbers competence effects in evaluating the outcomes. We also analyze the judgmental competence of representative democracy in a two-party system when voter judgmental competence erodes with the size of constituency. We show when constituency division enhances the polity's judgmental competence. Length: 17 pages Creation-Date: 2001-03 Publication-Status: Published as UPSE Discussion Paper No. 2001-07, March 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/45/39 File-Format: Application/pdf Number: 200107 Handle: RePEc:phs:dpaper:200107 Template-Type: ReDIF-Paper 1.0 Author-Name: Renato E. Reside, Jr. Author-Name-First: Renato Author-Name-Last: Reside, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Two Decades of Vector Autoregression (VAR) Modeling: A Survey Abstract: A vector autogregression (VAR) is defined as a vector of endogenous variables regressed against its own lags. VARs therefore are considered part of a general class of simultaneous equations models. By construction, VAR analysis allows us to examine over time the dynamic impacts of innovations to variables on others. The following is a survey of the literature of vector autoregressions (VARs) in the last twenty years since it was first used for policy analysis for Christopher Sims (1980). Identification of a VAR model initially involved the imposition of a recursive structure on models. Since authors using VAR models provided insufficient justification for using a recursive structure, VAR modeling was criticized as atheoretical. In the last decade, however, a number of authors have attempted to remedy the problem by introducing new structural identification techniques. This has enhanced the ability of VARs to model the economy. VAR studies have been used primarily to identify the impacts of aggregate demand and supply shocks on aggregate output, as well as to identify the channels and impacts of monetary policy. The frontiers of current VAR research focuses on open economy extensions, as well as on improving lag selection and estimation. Length: 43 pages Creation-Date: 2001-04 Publication-Status: Published as UPSE Discussion Paper No. 2001-08, April 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/46/40 File-Format: Application/pdf Number: 200108 Keywords: Electricity industry, utilities regulation, competition in regulated industries, privatization, Philippine economy Handle: RePEc:phs:dpaper:200108 Template-Type: ReDIF-Paper 1.0 Author-Name: Arsenio M. Balisacan Author-Name-First: Arsenio Author-Name-Last: Balisacan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Nobuhiko Fuwa Author-Name-First: Nobuhiko Author-Name-Last: Fuwa Author-Workplace-Name: Department of Economics, Chiba University Title: Growth, Inequality, Politics, and Poverty Reduction in the Philippines Abstract: This paper examines the interaction among economic growth, inequality in land distribution, and poverty reduction. Following the familiar neoclassical growth model approach, it attempts to explain the variations in mean income growth rates, as well as in rates of poverty reduction, accross provinces in the 1980s and 1990s. Regression results show that lower initial income, higher initial human capital, higher initial land inequality, and greater implementation of CARP tend to result in higher rates of both mean income growth and poverty reduction. In addition, terms of trade more favorable to agriculture tend to facilitate poverty reduction. The dominance of oligarchic political regime inhibits growth and, through lower growth, hurts poverty reduction. Quite disturbing from a policy perspective is an implication of the evidence that there may be some trade-off between growth and equity. Length: 21 pages Creation-Date: 2001-09 Publication-Status: Published as UPSE Discussion Paper No. 2001-09, September 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/49/41 File-Format: Application/pdf Number: 200109 Handle: RePEc:phs:dpaper:200109 Template-Type: ReDIF-Paper 1.0 Author-Name: Cayetano W. Paderanga, Jr. Author-Name-First: Cayetano Author-Name-Last: Paderanga, Jr. Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Recent Fiscal Development in the Philippines Abstract: The Philippine fiscal picture shows an economy that has not yet achieved sustainable long-term fiscal balance. It had taken major steps in this direction from 1990 to 1996. However, since the Asian Crisis, the picture has deteriorated. The tax ratio has declined, the fiscal balance has turned to negative and has widened, and the public debt reached a level that is not sustainable given reasonable forecasts of inflation, interest rates and the real economic growth rate. To return to a sustainable fiscal situation, the government may have to implement some difficult policies and programs. Length: 50 pages Creation-Date: 2001-10 Publication-Status: Published as UPSE Discussion Paper No. 2001-10, October 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/84/75 File-Format: Application/pdf Number: 200110 Keywords: fiscal balance, Philippine economy Handle: RePEc:phs:dpaper:200110 Template-Type: ReDIF-Paper 1.0 Author-Name: Arsenio M. Balisacan Author-Name-First: Arsenio Author-Name-Last: Balisacan Author-Workplace-Name: School of Economics, University of the Philippines Diliman Author-Name: Ernesto M. Pernia Author-Name-First: Ernesto Author-Name-Last: Pernia Author-Workplace-Name: School of Economics, University of the Philippines Diliman Title: Probing Beneath Cross-National Averages: Poverty, Inequality, and Growth in the Philippines Abstract: Recent research papers employing cross-national regressions report that the incomes of the poor move one-for-one with overall average incomes, suggesting that poverty reduction requires nothing much more than promoting rapid economic growth. This paper attempts to probe beneath cross-country averages by analyzing provincial data on the poverty-growth nexus in the Philippines. The results show that economic growth explains a lot but not all about poverty. The balance which seems fairly large can be accounted for by other factors (e.g. infrastructure, human capital, and location-specific characteristics) and institutions (e.g., political economy and agrarian reform). Thus, while growth is indeed good for the poor, it is not good enough. How much is not good enough is illustrated by this paper and will become clearer still as subnational analysis is etended to more countries. For policy purposes, an intra-country examination of the determinants of poverty reduction seems clearly superior to cross-country analysis. Length: 30 pages Creation-Date: 2001-12 Publication-Status: Published as UPSE Discussion Paper No. 2001-08, December 2001 File-URL: http://www.econ.upd.edu.ph/dp/index.php/dp/article/view/50/42 File-Format: Application/pdf Number: 200111 Classification-JEL: I32, O15, R11 Keywords: Welfare, poverty, inequality, economic growth, Philippines Handle: RePEc:phs:dpaper:200111