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Public spending often increases at the end of fiscal years. This is undesirable because late spending tends to be inefficient. The causes for these spending spikes are however poorly understood. This paper offers a novel identification strategy that relies on the historic variation in countries' fiscal years to analyze their effect on government disbursements. We show that the end of fiscal years rather than alternative explanations cause spending spikes at the end of fiscal years. Our accounting data includes discretionary contributions of 27 OECD countries to the World Bank from 2002 to 2013 at the daily level. As suggested by the principal-agent theory, we find that the end of year effect is smaller in countries with high administrative quality. We analyze the pertinent budget institutions as possible mechanism. For the first time, we can show that unexpected positive demand shocks decrease year-end spending, a common assumption in the literature. Finally, we revisit the complementary explanations for year-end effects in public spending.

Public spending often increases at the end of fiscal years. This is undesirable because late spending tends to be inefficient. The causes for these spending spikes are however poorly understood. This paper offers a novel identification strategy that relies on the historic variation in countries' fiscal years to analyze their effect on government disbursements. We show that the end of fiscal years rather than alternative explanations cause spending spikes at the end of fiscal years. Our accounting data includes discretionary contributions of 27 OECD countries to the World Bank from 2002 to 2013 at the daily level. As suggested by the principal-agent theory, we find that the end of year effect is smaller in countries with high administrative quality. We analyze the pertinent budget institutions as possible mechanism. For the first time, we can show that unexpected positive demand shocks decrease year-end spending, a common assumption in the literature. Finally, we revisit the complementary explanations for year-end effects in public spending.

This thesis consists of four essays on the political economy of foreign aid. These essays cover issues related to the allocation, the timing, and the economic consequences of foreign aid for recipient countries. Chapters 1 and 3 consider the allocation of official development assistance across different aid channels (bilateral, multi-bi/trust funds, or multilateral). Chapter 2 studies the sub-annual timing of aid contributions to World Bank funds. Chapter 4 examines the growth consequences of short-term politically motivated foreign aid.

We investigate the consequences of a peaceful shift of power from one social group to another. Theoretically, we show that an individual's decision to stay put or migrate depends on the difference between the political preferences of groups and the change in tax. Empirically, we use the case of the unexpected creation of the Canton of Jura in Switzerland, which witnessed a power shift from German to French speakers in the 1970s. We find robust evidence supporting the model's predictions using data at the municipal and individual levels. Our research sheds light on population sorting in the shadow of power transitions.

We investigate the consequences of a peaceful shift of power from one social group to another. Theoretically, we show that an individual's decision to stay put or migrate depends on the difference between the political preferences of groups and the change in tax. Empirically, we use the case of the unexpected creation of the Canton of Jura in Switzerland, which witnessed a power shift from German to French speakers in the 1970s. We find robust evidence supporting the model's predictions using data at the municipal and individual levels. Our research sheds light on population sorting in the shadow of power transitions.

This thesis consists of four essays on the political economy of foreign aid. These essays cover issues related to the allocation, the timing, and the economic consequences of foreign aid for recipient countries. Chapters 1 and 3 consider the allocation of official development assistance across different aid channels (bilateral, multi-bi/trust funds, or multilateral). Chapter 2 studies the sub-annual timing of aid contributions to World Bank funds. Chapter 4 examines the growth consequences of short-term politically motivated foreign aid.

Over the past decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. This earmarking of contributions to donors' preferred recipient countries and issues has raised concerns about the alignment of trust funds with the performance-based allocations of aid by the International Development Association, the World Bank's concessional lending arm, and raises the question of the role of this new "multi-bi" aid channel. This study finds that the cross-country allocations of aggregate trust fund aid are poverty- and policy-selective. In this respect, they are much more similar to allocations from the International Development Association than from bilateral donors. The allocations of trust fund types that are more closely controlled by donor countries—recipient-executed and single-donor trust funds—are more strongly related to the strategic interests of donor countries than trust fund aid in general. Trust funds for health and education aid are poverty selective and positively correlated with the World Bank's assessment of the quality of countries' sector policies, while environmental trust funds are neither poverty selective nor correlated with the assessed quality of countries' environmental policies. Overall, the evidence indicates that multi-bi funds administered by the World Bank do not undermine the International Development Association's allocation criteria.

Over the last decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. Concerns have been raised that trust fund aid may undermine the incentives associated with IDA s performance-oriented aid allocation. Moreover, the earmarking of contributions to donors preferred recipient countries might bilateralize multilateral aid, potentially to the detriment of aid effectiveness. Using new data on World Bank trust fund disbursements for the 2002-2012 period, we test whether trust fund aid substitutes for IDA inflows, and, as official narratives suggest, for other aid inflows. We also investigate the bilateralization hypothesis by comparing multilateral core aid to trust fund disbursements. Trust fund aid is generally not allocated according to World Bank s Country Policy and Institutional Assessment (CPIA) index, which could undermine the incentives generated of the IDA allocation mechanism. This result is confirmed when we consider the health, education, and environment sector separately using sector-specific CPIA scores and IDA aid. We do not find systematic evidence that trust funds are to a larger degree motivated by political and economic motives.

Die Schweizer Volkswirtschaft bewegte sich zu Beginn der Covid-19-Pandemie aus einem konjunkturellen Tief in eine sanfte Aufschwungsphase mit im internationalen Vergleich niedriger Arbeitslosigkeit und gesunden öffentlichen Finanzen. Aufgrund ihrer geographischen Lage waren insbesondere die italienisch- und französischsprachigen Regionen der Schweiz frühzeitig und stark von Ansteckungen mit SARS-CoV-2 betroffen. Während der Sperrperiode (sanfter Lockdown) hatte die Strukturerhaltung höchste Priorität. Arbeitsplätze wurden durch Kurzarbeit erhalten, die Liquidität der Unternehmen wurde durch den einfachen und raschen Zugang zu günstigen und staatlich garantierten Krediten gewährleistet. Im Hinblick auf die Prävention der Überschuldung der Wirtschaft und die für Innovations- und Investitionsentscheidungen relevante Erwartungsbildung wurde allerdings wenig unternommen. Unternehmen erhielten keine nennenswerte Unterstützung für ihre Kapitalkosten. In der Kommunikation der Regierung fehlte es zudem oft an vorwärtsorientierenden Aussagen. © 2020 De Gruyter. ; ISSN:1465-6493 ; ISSN:1468-2516

Over the last decades, bilateral donors of foreign aid have increased their use of special purpose trust funds to provide earmarked aid to multilateral organizations. This paper investigates the incentives and consequences underlying this recent shift toward country‐ or theme‐specific funding and away from bilateral and multilateral aid. We propose a game‐theoretic model with multiple principals and a multilateral agent to study how the interaction between donor preferences, voter concerns in the donor country, the voting rules at the multilateral organization, and the presence of special purpose trust funds influences aid allocation. We show that multilateral organizations with majority rules are more likely to receive discretion and thus voluntary core contributions than those with unanimity requirements and that the possibility of earmarking multilateral aid decreases donors' contributions to the multilateral's discretionary core budget and the amount of bilateral aid. In contrast to much of the literature dealing with issues of delegation and bi‐ and multilateral aid, our model suggests non‐monotonic effects of preference heterogeneity on the choice of aid channel for some parameter combinations when contributions to special purpose trust funds are an option.

AbstractOver the past decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. This earmarking of contributions to donors' preferred recipient countries and issues has raised concerns about the alignment of trust funds with the performance‐based aid allocations by the International Development Association, the World Bank's concessional lending arm. This study finds that the cross‐country allocations of aggregate trust fund aid are poverty‐selective and policy‐selective but reveals differences between types of trust funds. Overall, the evidence indicates that trust funds administered by the World Bank do not undermine the International Development Association's allocation criteria. Copyright © 2018 John Wiley & Sons, Ltd.

We investigate the effects of short-term political motivations on the effectiveness of foreign aid. Specifically, we test whether the effect of aid on economic growth is reduced by the share of years a country has served on the United Nations Security Council (UNSC) in the period the aid has been committed, which provides quasi-random variation in aid. Our results show that the relationship of aid with growth is significantly lower when aid has been committed during a country's tenure on the UNSC. We derive two conclusions from this. First, short-term political favoritism reduces growth. Second, political interest variables are inadequate as instruments for overall aid, raising doubts about a large number of results in the aid effectiveness literature.