MARIO DEHESA, International Monetary Fund (IMF)
Email: mdehesa@imf.org
PABLO DRUCK, International Monetary Fund (IMF)
Email: pdruck@imf.org

The paper analyzes the challenges for the Eastern Caribbean Central Bank (ECCB) to be an effective lender of last resort (LOLR) as part of a modern banking crisis resolution framework. The main results from the theoretical model of the ECCB's institutional arrangement are that the majority of currency union members may veto emergency lending in the case of a member-specific shock, as such lending may endanger the stability of the currency board (by lowering the central bank's international reserves, thus raising devaluation risk). However, in the presence of contagion across countries, all currency union members have a vested interest in liquidity supply from the central bank. A key policy recommendation is that currency union members need a stronger fiscal position to continue to access international financial markets and sustain the exchange rate peg.

DAVID HAUNER, International Monetary Fund (IMF) - African Department
Email: dhauner@imf.org
ANNETTE J. KYOBE, International Monetary Fund (IMF)
Email: akyobe@imf.org

We compile the first large cross-country panel dataset of public sector performance and efficiency, encompassing 114 countries on all income levels from 1980 to 2006, with about 1,800 country-year observations for the education sector and about 900 observations for health. We regress these indicators on potential economic, institutional, demographic, and geographic determinants. Our most resounding conclusion is that higher government expenditure relative to GDP tends to be associated with lower efficiency in the respective sector. Moreover, we find that richer countries exhibit better public sector performance and efficiency, and that institutional and demographic factors also play a significant role.

STIJN CLAESSENS, International Monetary Fund (IMF), University of Amsterdam - Finance Group, Centre for Economic Policy Research (CEPR)
Email: SClaessens@IMF.org
KENICHI UEDA, International Monetary Fund (IMF)
Email: kueda@imf.org

Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet, theory clearly indicates that the combination of relative powers of different stakeholders affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization positively impact overall state growth but greater workers' rights affects it ambiguously. At the industry level, however, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization does not differ across industries that vary in external financing dependency. The results hold controlling for changes in shareholders' rights, which itself is not significant. The findings suggest that financial liberalization operates mostly through an efficiency channel, better reallocating resources across sectors, while employment protection creates higher incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders' protection affects performance through efficiency channels and provide support for a stakeholders' view of corporate governance.

MICHAELA HAASE, Freie Universitaet Berlin
Email: Michaela.Haase@fu-berlin.de
STEFAN CHATRATH, Freie Universitaet Berlin
Email: Stefan.Chatrath@fu-berlin.de
SAMY SAAB, Freie Universitaet Berlin
Email: Samy.Saab@fu-berlin.de

The paper discusses what has been achieved by one German and two Anglo-Saxon approaches to services with reference to the concept of service, the analysis of service economies, and the tasks which evolve from that for the further development of marketing theory. It addresses three approaches to marketing theory: a German theory of the firm having roots in transaction cost economics and property rights theory, which has particularly gained influence in Germany's business-to-business marketing, a service-centered approach called 'service-dominant logic,' and the rental-access approach by Lovelock and Gummesson.

The paper does not only compare recognitions and shortcomings of the above mentioned approaches; it also deals with the identification of criteria which will contribute to the advancement of this field of study.

KISHORE GAWANDE, Texas A&M University - George Bush School of Government and Public Service
Email: kgawande@bushschool.tamu.edu

Policy making power enables governments to redistribute income to powerful interests in society. However, some governments exhibit greater concern for aggregate welfare than others. This government behavior may itself be endogenously determined by a number of economic, political and institutional factors. Trade policy, being fundamentally redistributive, provides a valuable context in which the welfare mindedness of governments may be empirically evaluated. This paper investigates quantitatively the welfare mindedness of governments and attempts to understand these political and institutional determinants of the differences in government behavior across countries.

HANS VEDDER, University of Groningen
Email: h.h.b.vedder@rug.nl

The EC and it's Member States struggle to draw the line between markets and public interests. Traditionally, these two are contrasted, most prominently by the continental Member States and followed by a conclusion that public interests require public governance. Some of this public governance takes the form of a public law framework within which self-regulation by the members of a profession occurs. We also see a more subtle version of self-regulation, whereby regulators are so dependent on specific information from the professions concerned, that they effectively become captive regulators. In those circumstances, the degree to which the public interest, rather than the interest of the professions concerned, is actually served may be doubted.

This holds true even more where legislators, both at the EC and the Member State level, are moving the line between markets and public interests towards the market side. It is uniformly recognised that public governance is not the blanket solution for market failures and the introduction of market mechanisms may actually increase consumer welfare. The contrast between public interests and markets may therefore also be rephrased into a citizens versus consumers antithesis. EC (competition) law plays a prominent role in this debate in that it requires member state regulators to rethink how and to what extent their actions serve the public interest. This role of EC (competition) law requires a fundamental rethinking of the market (consumer) and public interest (citizen) antithesis. The hypothesis central to this paper is that EC (competition) law can serve as a democratic instrument to increase legitimacy whilst refining the line between markets and public interests.