Deterrence, expected cost, uncertainty and voting: Experimental evidence

We conduct laboratory experiments to investigate the effects of deterrence mechanisms under controlled conditions. The effect of the expected cost of punishment of an individual’s decision to engage in a proscribed activity and the effect of uncertainty on an individual’s decision to commit a violation are very difficult to isolate in field data. We use a roadway speeding framing and find that (a) individuals respond considerably to increases in the expected cost of speeding, (b) uncertainty about the enforcement regime yields a significant reduction in violations committed, and (c) people are much more likely to speed when the punishment regime for which they voted is implemented. Our results have important implications for a behavioral theory of deterrence under uncertainty.     

A comparative analysis of public sector restructuring in the U.S., Canada, Mexico, and the Caribbean

We examine public sector restructuring in North America and selected Commonwealth Caribbean nations. Although all the countries studied experienced significant restruc-turing in response to public debt pressures, there were major differences across coun-tries in the magnitude, pace, form, and the manner in which restructuring decisions were made. These differences reflect the state of economic development and institu-tional characteristics, e.g., the role of the state and the industrial relations system. In developing countries, international lending institutions played a major role in trans-forming the role of the state. In developed countries, the inherent stability of the eco-nomic systems and institutional pressures led to a gradualist approach to restructuring.     

A New Model of Trend Inflation

This article introduces a new model of trend inflation. In contrast to many earlier approaches, which allow for trend inflation to evolve according to a random walk, ours is a bounded model which ensures that trend inflation is constrained to lie in an interval. The bounds of this interval can either be fixed or estimated from the data. Our model also allows for a time-varying degree of persistence in the transitory component of inflation. In an empirical exercise with CPI inflation, we find the model to work well, yielding more sensible measures of trend inflation and forecasting better than popular alternatives such as the unobserved components stochastic volatility model. This article has supplementary materials online.