In the three decades leading up to the financial crisis of 2008/09, income inequality rose across much of the developed world. This has led to a vigorous debate as to whether widening inequality was somehow to blame for the crisis by driving private sector credit booms. Despite growing interest, empirical evidence on an inequalityfragility relationship is limited. Based on a panel analysis of 18 OECD (Organisation for Economic Co-operation and Development) countries for the years 1970-2007, this study provides evidence of a positive relationship between income concentration and private sector indebtedness, once other traditional drivers are controlled for. If confirmed, the implications of this result are as follows: (i) the view that the distribution of income is irrelevant to macroeconomic stability, as implicit in mainstream approaches, needs further investigation; and (ii) in order to make the financial system more robust, policy makers should cast the net wider than monetary policy and regulatory reforms and consider the effects of changes to distributive patterns.

This paper examines the relationship between the compositions of government expenditure and economic growth. It develops an endogenous growth framework drawing on variables from existing models, and separates government expenditure into productive and non-productive forms. Using panel data from 37 high-income and 22 lowto middle-income countries covering 1993-2012, our findings are based on OLS fixed effects and GMM techniques. We challenge much of the existing empirical literature in relation to developing economies by showing that a shift in government expenditure away from non-productive government expenditure and towards productive forms of expenditure are associated with higher levels of growth in both high-income and lowto middle-income economies. Moreover, we identify the differing components of government expenditure that are most associated with increased long-run output levels in both high-income and low-to middle-income economies. Keywords Economic growth • Government expenditure • High-income countries • Low-to middle-income countries JEL Classification E62 • H50 • O40

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With the Central and East European countries increasingly included into the international division of labour in the European Economic space, we are prompted to ask whether this integration operates on a level playing field with respect to competition policy. In fact, a comparison between the more advanced West European countries and countries in Central and East Europe reveals that effectiveness of implementation of competition law and policy and intensity of competition are lower in the East and in particular also in the new EU member countries of Central East Europe, where the institutional framework of the West had been largely adopted for some time now. The EU recently decided to reform competition policy by delegating some of its powers to national competition agencies. Notably, this coincided with the accession of the most advanced countries in Central East Europe to the EU. We discuss whether this reform is likely to spur competition or whether it may turn out to be rather ill-designed given the particularities in post-socialist economies.

This study reviews the progress made in EU accession candidates on competition policy. The analysis shows that institution-building and legislation are well under way and that anti-trust practice is not too lax. Due to the diversity among the accession countries under review, the study finds that the strictly rule-based frame work of the EU might not be the most favourable solution for some candidates: firstly, the small and open economies of most candidates make it particularly difficult to define the 'relevant market' in competition cases. Secondly, the traditionally intense vertical integration of production in accession states calls for a reassessment of 'vertical restraints'. The policy implications of this study suggest that the EU competition task force should take a proactive, case-by-case approach "vis-à-vis" its new members. Copyright Blackwell Publishing Ltd 2004.