Fiscal policy, public debt stabilisation and politics: theory and UK evidence

Article Abstract:

A two-party dynamic game model was developed to explain how the objectives of a government affect fiscal and monetary policy. These objectives were described as partisan, defined as the desire to remain in power indefinitely and electoral, the tendency to curry favor with the electorate by cutting taxes and interest rates. UK economic data was incorporated and tested in the model. It was concluded that the results of the model support research data on the relationship between partisan and electoral motives on the amounts of government expenditure, tax revenues and public debt.

Economic policy, Political aspects, Government spending policy, Fiscal policy

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Determinants of price quote revisions on the London Stock Exchange

Article Abstract:

Two approaches have been proposed to the question of how market makers set their price quotes. The first approach is the inventory control framework which accounts for price quote changes as a result of inventory level movements. The other approach is adverse selection theory, which view price quote movements as market makers' responses to information revealed in trade volumes. A model that combines both approaches and that uses data from the London Stock Exchange is proposed and tested. The results indicate support for the inventory control hypothesis only.

Securities & Commodities Exchanges, Securities and Commodity Exchanges, Security and commodity exchanges, Prices and rates, Stock-exchange, Stock exchanges, London Stock Exchange PLC

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Wage inflation, electoral uncertainty and the exchange rate regime: theory and UK evidence

Article Abstract:

Wage inflation in the post-war period of the United Kingdom is examined using the partisan and fixed-exchange-rate-regime models. Socialists are determined to cause higher inflation during their administration of government than that of conservatives. Close preferences of political parties for inflation and unemployment also result in higher inflation for any parties after an election period. Results prove the importance of the exchange rate regime for expected price inflation and the nominal growth.

Analysis, Economic aspects, Economics, Inflation (Finance), Inflation (Economics)

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