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This paper assembles detailed information on the budget institutions of Latin American countries. These institutions are classified on a "hierarchical/collegial" scale, as a function of the existence of contraints on the deficit, and voting rules. This shows that "hierarchical" and transparent procedures have been associated with more fiscal discipline in Latin America in the 1980s and early 1990s. (DSE/DÜI)

In a recent article published in this journal Steven Sheffrin presented the results of two tests on the so called "Rational Partisan Theory". Sheffrin concluded that the evidence provides "little support for a strict interpretation of the theory". This note argues that, although interesting in itself, the tests performed by Sheffrin are not particularly informative about the empirical relevance of the Rational Partisan Theory. Also, this note reconciles Sheffrin's results on OECD economies with the literature, which, in general, has found rather supportive evidence for the Rational Partisan Theory.

The second part of the paper considers interconnections and interactions of culture and formal institutions and demonstrates the role of culture in economic development. In particular, it shows the importance of individualism, cooperation, trust, and various forms of regulation. It considers and compares different characteristics of the labor market and social policy. It also demonstrates the feedback effects between culture and institutions in various contexts.

A growing body of empirical work measuring different types of cultural traits has shown that culture matters for a variety of economic outcomes. This paper focuses on one specific aspect of the relevance of culture: its relationship to institutions. We review work with a theoretical, empirical, and historical bent to assess the presence of a two-way causal effect between culture and institutions. The first part of the paper provides the main definitions and discusses the difficulties associated with the quantitative analysis of this effect. It also features a map of cultural traits used in economics and of their correlations.

THE AUTHORS ADDRESS TWO QUESTIONS: (1) IS A TWELVE-COUNTRY EUROPEAN MONETARY UNION FEASIBLE? (2) CAN MONETARY UNION BE ACHIEVED AT MULTI-SPEED (WITH A SMALL GROUP OF COUNTRIES GOING FIRST AND ADMITTING THE OTHERS LATER)? AFTER EXAMINING SEVERAL POLITICO-ECONOMIC ARGUMENTS CONCERNING FEASIBILITY, THEY CONCLUDE WITH A FAIR AMOUNT OF SKEPTICISM CONCERNING THE MULTI-SPEED CONCEPT. THE FINAL RESULT OF THE PROCESS OF MONETARY INTEGRATION WILL BE DEPENDENT UPON THE NUMBER OF COUNTRIES THAT INITIATE IT. THE AUTHORS' DISCUSSION OF FEASIBILITY SHEDS SOME LIGHT ON THE POLITICAL ECONOMY OF THE RECENT TURMOIL IN THE EUROPEAN MONETARY SYSTEM.

The recent recession has brought fiscal policy back to the forefront, with economists and policy makers struggling to reach a consensus on highly political issues like tax rates and government spending. At the heart of the debate are fiscal multipliers, whose size and sensitivity determine the power of such policies to influence economic growth.Fiscal Policy after the Financial Crisis focuses on the effects of fiscal stimuli and increased government spending, with contributions that consider the measurement of the multiplier effect and its size. In the face of uncertainty o