3. Electronic Theses and Dissertations (ETDs) - All submissions

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    The nexus between infrastructure quantity, quality and economic growth in Sub Saharan Africa
    (2017) Chakamera, Chengete
    Public infrastructure is believed to be important to economic growth through its role as a complementary production factor or an additional input of production. Investigation of the growth effects of infrastructure has been one of the favourable areas in academic and policy circles. Despite increased attention received in the literature on the infrastructure-growth relationship, there still exist important research gaps in the areas such as aggregate infrastructure-growth nexus, direction of infrastructure-growth causality, electricity growth effects in presence of energy-related CO2 emissions, and spatial spillovers of infrastructure investment. In these various areas, the most serious gap is failure to account for infrastructure quality. The knowledge of the quantitative and qualitative growth impacts at both aggregated and individual infrastructure sector levels, including the infrastructure spatial spillovers in Sub Saharan Africa (SSA) is extremely important in the design of optimal infrastructure investments and implementation of cost-sharing structures in the presence of vital spillovers. This thesis examines four critical themes in the infrastructure quantity and quality literature. The first essay examines the growth effects of aggregate infrastructure stock and quality, and the direction of infrastructure-growth causality. Exploiting advances in applied econometrics, the results reveal strong evidence of a positive effect of infrastructure on economic growth with most contribution coming from infrastructure quality. More so, the findings show evidence of a unidirectional causality from aggregate infrastructure to growth, which is based on hybrid indices that simultaneously capture the quantity and quality features. While SSA should continue solving the infrastructure shortage problem, the results in this essay also give much credence to infrastructure quality enhancement. This study argues that causality testing based on quantitative measures alone is not adequate as quality developments are omitted, thus the use of hybrid indices tend to be superior. The second essay presents new evidence on the economic growth effects of the stocks and qualities of electricity, telecommunication, transportation, water and sanitation infrastructures in both long-run and short-run using a five step panel analysis. The results reveal long-run positive growth effects from the stocks of electricity and telecommunication. While water stock shows no significant long-run impact, transport stock has a negative impact. Moreover, the qualities of telecommunication, transport and sanitation exhibit positive long-run growth effects. For short-term dynamics, the findings suggest positive growth effects from the stocks of electricity and telecommunication, whereas transport and water stocks suggest negative growth effects. While telecommunication and sanitation quality developments can raise short-run growth, transport and water qualities have no significant contribution. Electricity quality exerts a downward pressure on growth in SSA. Based on the hybrid indices, the long-run and short-run growth effects across the infrastructure sectors are basically positive except for electricity in the long-run. Moreover, the negative growth effects from transport stock may imply shifting of vital resources away from other investments during construction while their under (or unproductive) utilisation yields economic benefits below construction costs. The third essay critically analyses the extent of electricity shortage, efficiency, key sources and opportunities for SSA in comparison with other regions. The essay proceeds to address the issue of how electricity-related CO2 emissions may alter the growth contributions of both electricity stock and quality. First, as in essay two but here with a different approach and different proxy for electricity stock, the results suggest positive effects from electricity stock but the quality effects are negative. Second and most importantly, a high level of electricity-related CO2 emissions lower the growth contributions of electricity stock and exacerbate the negative growth impact of electricity quality. The key conclusion established is that electricity-related CO2 emissions adversely affect the economic contribution of electricity sector. This may give an insight on proper design of carbon taxes (where applicable) yet comparing the opportunity cost of carbon taxes versus investment in carbon capture technologies. Finally, the last essay analyses the spatial spillovers from aggregate infrastructure stock and quality among SSA countries. The results indicate evidence of positive and robust spillover effects from foreign aggregate infrastructure quality while the foreign aggregate stocks of infrastructure imply negative spillovers. Thus, whereas infrastructure quality enhancement invigorates the surrounding regions, infrastructure stock development may provide a competitive advantage that draws economic factors from the surrounding regions and hence exerting negative pressure on their respective economic activity. To buttress these findings, panel Granger causality tests show evidence of causality (mostly bi-directional) between the infrastructure (domestic and foreign) variables and economic growth. This essay is crucial for two key policy concerns, which are the implementation of optimal infrastructure investments and credibility of cost-sharing structures in the presence of spillovers.
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    The common problem in fiscal policy making: an exploratory experimental analysis
    (2017) Adeniran, Adedeji Peter
    This thesis explores implications of the common pool problem in fiscal policy making on fiscal performance. Three main research problems were investigated, using various laboratory experiments. First, we examine the effect of dynamic common pool problem on fiscal performance. Second, we test the delayed stabilization hypothesis as predicted in the dynamic common pool model. Third, we investigate the effect of multiyear budgeting on fiscal performance. Along the highlighted research problems, the thesis is structured into three core chapters that follow the much broader and general introductory chapter—chapter one. Chapter two examines the effect of the dynamic common pool within budget institution on fiscal performance. Dynamic common pool problem occurs when fragmentation within budgeting institution creates uncertainty in the future fiscal path, thereby increasing the proclivity for budget actors to strategically incur deficit and draw down on the public-sector wealth. Given the limitation of field data in exploring a dynamic and strategic setting, the experimental method is adopted. The experimental data generated are estimated using non-parametric techniques and system GMM technique. Overall, the findings indicate that dynamic common pool problem leads to poor fiscal performance, as measured by deficit level. In addition, we observe that budget actors react to the declining public-sector wealth with more aggressive appropriation behaviour, which further exacerbates the poor fiscal outcomes. Furthermore, the effect of dynamic common problem was found to be propagated through the strategic channel. In essence, despite the absence of the conventional fundamentals for incurring fiscal deficit—the divergence between discount rate and interest rate— poor fiscal performance persists due to the dynamic common pool problem. Chapter three empirically tests the delayed stabilization hypothesis, as predicted by the dynamic common pool model. The hypothesis suggests that there is stabilization threshold at which the presence of dynamic common pool problem no longer exerts a negative effect on fiscal outcome. In testing this hypothesis, we adopt an experimental design which builds on and extends the legislative bargaining game of “divide-the-dollar”. This is implemented by applying the random stopping rule after a pre-specified period. Also, tax is imposed on the groups that exhaust their initial public-sector wealth. However, to eliminate possible identification problem, the initial public-sector wealth is restored after some periods of paying tax, although participants are not V aware of this replacement ab initio. Thus, it becomes possible to evaluate if the appropriation behaviours follow the pattern predicted by delayed stabilization hypothesis. Furthermore, the experimental data generated are analysed using both fixed-effect panel threshold regression model and piecewise linear regression model. The results do not support the prediction of delayed stabilization. In fact, the deficit level is highest in the periods after which the group’s initial public-sector wealth is restored; a clear contradiction of the delayed stabilization hypothesis. However, we observe a temporary stabilization during the periods when resources pool is generated by taxing the players. This evidence in part supports the crisis hypothesis, which suggests that probability of successful stabilization is enhanced when it coincides with economic crisis. Thus, this suggests a possible role for resources composition (whether taxation or natural endowment) and economic crisis in stabilization policies and plan. In chapter four, we examine the implication of the voting equilibrium model for the relationship between multiyear budgeting and fiscal performance. Voting equilibrium model recognizes that budget actors are rational individual, who are also seeking to maximize their utility in relation to the budget proposal. Thus, voting equilibrium model predicts that voting preference of the budget actor will influence the eventual budget outcome, thereby influencing any possible effect of multiyear budgeting on fiscal performance. This prediction is tested in a laboratory setting for a five-member budgeting institution, under two different treatment conditions. In the baseline treatment, participants make their budgeting decision using multiyear budgeting procedure, while annual budgeting procedure is adopted in the secondary treamnent. The budget outcomes under two treatments are compared using various non-parametric techniques and Selten’s predictive success measure. We find no signifcant different in budget sizes under the multiyear and annual budgeting proceses. As predicted by voting equilibruim, the multiyear budgeting generates lower budget size than annual budgeting and vice versa, according to the configuration of the voters’ preference. It is also observed that the predictive success of the voting equilinruim model reduces as the dimension of the planning horizon increases. In essence, increasing the dimension of planning horizon has the tendency to increase the uncertainty in the budgeting outcomes. Chapter five concludes with a summary of the key findings and discusses the important policy implications of our findings. An important policy addition from this study points to the significant improvement in fiscal performance that could be gained by addressing the dynamic common problem within budget institution. Similarly, the study demonstrates the importance of adopting active stabilization policy such as fiscal rules or centralization of the budget institution, as against relying on budget actors to act endogenously to correct deficit bias. Finally, in designing the possible fiscal interventions, our findings suggest that the voting preference of budget actors will be crucial.
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    Essays in public choice : public sector organization and politics as exchange
    (2017) Sitoe, Aldo Alfredo
    The present thesis considers the state as a public organization, namely a complex structure that individuals use to accomplish collectively their individual interests mainly through exchange. By placing greater emphasis on exchange, the thesis is able to suggest novel insights about the organization of the public sector. [Abbreviated abstract. Open document to view full version]
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    Mobilizing local revenue capacities of African cities: Johannesburg and Nairobi
    (2016) Kithatu-Kiwekete, Angelita Kuasa
    Public finance literature has minimally engaged the fiscal autonomy of African local governments, and cities in particular. African cities should independently generate a significant portion of revenue locally in order to finance a varied range of municipal services to a diverse municipal population. This study aims to provide insight through the contextual analysis of the revenue assignment function of African cities. The study explores fiscal discretion and appropriation as a reflection of local fiscal autonomy and how these manifest in local revenue instruments. The study employs an illustrative case study methodology on Nairobi and Johannesburg by means of an examination of local revenue generation particularly water revenue and municipal borrowing to examine the contrasting experience of local fiscal autonomy of these two cities. The legal and institutional frameworks of these cities provide for an array of OSR. Previously, local revenue tools did not address the financing needs for municipal services of infrastructure required to cater for the growing and diverse municipal populations. A national process of local government restructuring compelled the cities to realign local structures to enhance revenue mobilization in order to address the challenge of municipal service delivery. The regulatory environment was also amended to effect intergovernmental transfer arrangements as well as particular local revenue instruments in each case. In Nairobi, the structural and legal changes have effectively entrenched the centralist nature of the Kenyan government, severely limiting the city’s autonomy with regard to water revenue. The city’s fiscal capacity for municipal borrowing has been left largely unchanged by Kenyan local government reform. In Johannesburg, the democratic dispensation has enforced local fiscal autonomy that was evident in the apartheid white local authorities. The mammoth task of centrally managing all the city revenues has brought to the fore administrative challenges particularly regarding water revenue; however, the city’s fiscal capacity has improved its state of municipal borrowing. These findings confirm the decentralization rationale. Fiscal decentralization is thus important for asserting the function of revenue assignment to enhance local fiscal autonomy. The two case cities show that local capacity and the historical role of central government are important in ascribing and manifesting this function.
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