We show how to transform any interactive proof system which is statistical zero-knowledge with respect to the honest-verifier, into a proof systemwhich is statistical zero-knowledgewith respect to any verifier. This is done by limiting the behavior of potentially cheating verifiers, without using computational assumptions or even referring to the complexity of such verifier strategies. (Previous transformations have either relied on computational assumptions or were applicable only to constant-round public-coin proof systems.) Our transformation also applies to public-coin (aka Arthur-Merlin) computational zero-knowledge proofs: We transform any ArthurMerlin proof system which is computational zero-knowledge with respect to the honest-verifier, into an Arthur-Merlin proof system which is computational zero-knowledge with respect to any probabilistic polynomial-time verifier. A crucial ingredient in our analysis is a new lemma regarding 2-universal hashing functions. 1 Introduction Zer...
This article explains (1) the origins of central banking and (2) variations in the spread and durability of central banks across nations. Early central banks helped bind governments to honor their debts and thereby furthered governments' capacities to efficiently finance military expenditures. The origins of central banking are problematic because government credit-worthiness and efficient wartime fiscal policy are public goods, subject to the free-rider problem. Applying a variant of the joint-products model, I argue that governments offered private benefits (monopoly privileges) to select creditors to induce participation in central banks. To explain cross-national differences, I argue that the level of domestic political decentralization negatively affected the incidence and durability of central banking. Countries with decentralized political systems faced regulatory competition from strong local authorities as licensers of banking monopolies, making it difficult to adopt or sustain central banking. Qualitative and statistical evidence from Europe and the United States to about 1850 support the arguments.
Concurrent executions of a zero-knowledge protocol by a single prover (with one or more verifiers) may leak information and may not be zero-knowledge in toto . In this article, we study the problem of maintaining zero-knowledge.We introduce the notion of an (α, β) timing constraint : for any two processors P 1 and P 2 , if P 1 measures α elapsed time on its local clock and P 2 measures β elapsed time on its local clock, and P 2 starts after P 1 does, then P 2 will finish after P 1 does. We show that if the adversary is constrained by an (α, β) assumption then there exist four-round almost concurrent zero-knowledge interactive proofs and perfect concurrent zero-knowledge arguments for every language in NP . We also address the more specific problem of Deniable Authentication , for which we propose several particularly efficient solutions. Deniable Authentication is of independent interest, even in the sequential case; our concurrent solutions yield sequential solutions without recourse to timing , that is, in the standard model.
This two-part paper provides a theoretical framework for appraising trade-offs between alternative methods of delegating authority over the delivery of public services, on the targeting and cost-effectiveness of public spending programs in developing countries. Authority over these programs has to be delegated owing to absence of information at the central level concerning local needs and costs of specific communities. In a top-down centralized system, this authority is delegated to bureaucrats by a central government that has limited ability to monitor their performance with respect to either service delivery or cost control. In a decentralized system, it is allocated instead to elected local governments or client groups, which may be subject to capture by local elites. Both systems are thus prone to local corruption and lack of accountability. Part 1 of the paper studies the relevant tradeoffs in the context of a poverty alleviation program, whose aim is to deliver a private merit good available on competitive markets to the poor. Decentralization generally dominates with respect to inter-community targeting as well as cost-effectiveness. However, the ranking of intracommunity targeting under the two systems is ambiguous, and depends on the relative degree of capture that local and national governments are prone to, besides the nature of uncertainty and preferences of the good by the nonpoor. Part 2 of the paper considers an infrastructure service provided by a public enterprise which has a natural monopoly. In this context it is shown that decentralization dominates if the following four conditions are satisfied: (i) local governments are not vulnerable to capture; (ii) local governments have access to adequate local financing sources; (iii) there are no interjurisdictional externalities in service provision; and (iv) local governments have all the bargaining power and access to relevant cost information vis-a-vis public enterprise managers. Absent any one of these institutional conditions, however, decentralization may perform worse than centralization. The Appendix develops a model of electoral competition (adapted from Grossman-Helpman (1996)) where parties are prone to capture by special interest groups, which helps identify some of the institutional determinants of the degree of capture of local and central governments.
Smart contracts combine protocols with user interfaces to formalize and secure relationships over computer networks. Objectives and principles for the design of these systems are derived from legal principles, economic theory, and theories of reliable and secure protocols. Similarities and differences between smart contracts and traditional business procedures based on written contracts, controls, and static forms are discussed. By using cryptographic and other security mechanisms, we can secure many algorithmically specifiable relationships from breach by principals, and from eavesdropping or malicious interference by third parties, up to considerations of time, user interface, and completeness of the algorithmic specification. This article discusses protocols with application in important contracting areas, including credit, content rights management, payment systems, and contracts with bearer.
Various types of sysfems o/ proai/istc proa/s have played a decisive role in the development of Computer Science Theory in the last decade. This can be verified through the great number of studies about interactive proofs, zero-knowledge proofs, and transparent (or holographic) proofs. These topics are guided by the robustness of the codifications and by the computational capacity of checking them. In this text, we aim at presenting a ecncal ntroduc on reZaiue fo the proabilstcaZZy checkaZe robust proa/s. Within this approach. the new characterization of the non-deterministic polynomial-time class through the Probabilistically Checkable Proofs class formulated by Arara, Lund, Motwani. Sudan e Szegedy in IALM+92], ./V'P = PCP(logo, 1), is of central importance. We intend to prove this characterization, because it encompasses the principal points of the subject and. furthermore, covers subjacently a wide set of computational, algebraic. and probabilistic tools. which are fundamental in this topic.
<p>We study the behavior of interactive arguments under sequential iteration, in particular how this affects the error probability. This problem turns out to be more complex than one might expect from the fact that for interactive proofs, the error trivially decreases exponentially in the number of iterations.<br />In particular, we study the typical efficient case where the iterated protocol is based on a single instance of a computational problem. This is not a special case of independent<br />iterations of an entire protocol, and real exponential decrease of the error cannot be expected, but nevertheless, for practical applications, one needs concrete relations<br />between the complexity and error probability of the underlying problem and that of the iterated protocol. We show how this problem can be formalized and solved using the<br />theory of proofs of knowledge.<br /> We also prove that in the non-uniform model of complexity the error probability<br />of independent iterations of an argument does indeed decrease exponentially - to our knowledge this is the first result about a strictly exponentially small error probability in a computational cryptographic security property. <br />As an illustration of our first result, we present a very efficient zero-knowledge argument<br />for circuit satisfiability, and thus for any NP problem, based on any collision-intractable hash function. Our theory applies to show the soundness of this protocol. Using an efficient hash function such as SHA-1, the protocol can handle about 20000 binary gates per second at an error level of 2^−50.</p><p>Keywords -- Interactive proofs, arguments, proofs of knowledge, computational security,<br />efficient general primitives, multi-bit commitment, statistical zero-knowledge.</p>
The Family Division of the High Court exercises jurisdiction in family proceedings in England and Wales. A broadly similar jurisdiction is exercised under the Children Act in care proceedings and in private law disputes between parents by county courts and family proceedings courts. It should be emphasised that this article is about civil, not criminal, proceedings in which the burden of proof is diVerent and the practice which I describe does not apply. 2 The most recent example is the acknowledgment by the Court of Appeal that paediatricians and child psychiatrists are entitled in family proceedings to express opinions on child abuse which are based on or take into account the expert's assessment of the child's truthfulness: see Re M and R (Child Abuse: Evidence) [1996] 2 FLR 195, CA. Equally, I do not have space to address the duties of experts generally, as to which there is agreement across all the divisions of the High Court that expert evidence presented to the court should be and should be seen to be the independent product of the expert uninfluenced as to form or content by the exigencies of litigation. In Re J [1991] FCR 191 at 226/7, Cazalet J said that in children's cases the duty to be objective and not to mislead is as vital as in any case, because the child's welfare is at stake, and his/her interests are paramount. He added that an absence of objectivity may result in a child being wrongly placed and thereby unnecessarily at risk. It must also be borne in mind that a misleading opinion from an expert may well inhibit a proper assessment of a particular case by the non-medical professional advisers and may also lead parties, and in particular parents, to false views and hopes. 3 By section 12 of the Administration of Justice Act 1960, as amended by Schedule 13, para 14 of the Children Act 1989, it is a contempt of court to publish information relating to proceedings brought (inter alia) under the Children Act. 4 Oxfordshire County Council v M [1994] Fam 151, CA: Re L (A Minor) (Police Investigation) [1996] 2 WLR 395, HL. 5 By section 1(2) the court is required to have regard to the general principle that any delay in determining questions relating to the upbringing of children is likely to prejudice their welfare. 6
We present a protocol for controlling a shared ATM multicast tree supporting many-to-many communication. The protocol supports one or several ATM virtual channel connections (VCCs) of the many-to-many type. The number of VCCs is independent of the number of endpoints. The protocol guarantees that there is no interleaving on any VCC of the tree. The protocol also guarantees that the traffic contract associated with the VCCs is respected, thus making it possible to use ordinary VCCs of the constant bit rate (CBR), variable bit rate (VBR), or unspecified bit rate (UBR) class. No resequencing server or cell buffering inside the network is required, and all cell forwarding is performed at the ATM layer. We describe the protocol both informally and formally.
In 1984, slightly more than a decade ago, neo-liberal economic theory under the guise of 'free market' reform was ushered into New Zealand for the first time in the country's history by the ruling Labor Government. The initiation of monetary reform policies sent shock waves throughout the nation. The ensuing fiscal reforms changed the operating patterns of both public and private organizations as well as the lives of individual citizens. This paper examines the political and economic environment which preceded the enactment of the broad sweeping educational reforms. The purpose of this paper is to review policy papers and government documents that affected educational reform and restructuring of the tertiary educational system. Although primarily focusing on tertiary educational change, this thesis will also summarize educational policy changes that premeated compulsory education. As a primary service organization of the state, education was caught up in the tide of market reforms ushered in by the Treasury Department. The initiation of monetary policy changes sent shock waves throughout the nation as it drastically altered the 'cradle to grave' welfare philosophy. Restructuring the educational bureaucracy and establishing greater accountability were the general aim of the decentralization process. The 1989 Education Act stream-lined the educational bureaucracy by dismantling the Department of Education and its ten regional offices. In its place, the Ministry of Education was established with the main function as a policy advisor to the government. This structural change coincided with the tertiary education functions being transferred to four new agencies: 1). The Ministry of Education, 2). The New Zealand Qualifications Authority, 3). The Educational and Training Support Agency, 4). The Careers Service. Tertiary Education in New Zealand was modified in greater detail following the passage of the Education Act of 1990. This act extended the changes initiated with the Education Act of 1989. It essentially established tertiary educational institutions as autonomous bodies and placed polytechnics on the same bureaucratic structure as universities. More importantly, this new educational law of 1990 transferred the technical and skilled training standards to the Ministry of Education. The free market economic reforms initiated in the mid-80's have influenced educational restructuring by expecting more accountability on the part of the educational institution and greater choice on the part of the student consumer. Recent tertiary education reforms highlight the delicate balance between professional and technical education and the needs of the state as well as the rights of the students.
The World Economic Outlook (WEO) exercise at the IMF evolved during the 1980s, partly in response to demands by policymakers in national finance ministries for objective and internationally comparable projections and policy scenarios. The exercise had begun as a staff initiative, encouraged by the Managing Director (Johannes Witteveen). Gradually, the Executive Board, the Interim Committee, the Group of Seven, and others came to view the discussion of the WEO documents as an important element in their efforts to keep abreast of world economic developments and prospects. Direct and indirect feedback from those discussions informed the staff as to how the exercise should be improved. Driven by this policy relevance, the WEO evolved from a decentralized project that was only haphazardly model-based into a more rigorous and coordinated exercise.
Financing Decentralized Expenditures presents new original research papers on the structure of intergovernmental fiscal relations in virtually all types of countries and the design and implementation of transfer mechanisms between different levels of government.
In this paper a competi tive general equilibrium model is used to investigate the welfare and long run allocation impacts of privatization. There are two types of capital in this model economy, one private and the other initially public ('infrastructure'), and a positive extemality due to the latter is assumed. A benevolent governrnent can improve upon decentralized allocation intemalizing the extemality, but it introduces distortions in the economy through the finance of its investments. It is shown that even making the best case for public action - maximization of individuais' welfare, no operation inefficiency and free supply to society of infrastructure services - privatization is welfare improving for a large set of economies. Hence, arguments against privatization based solely on under-investment are incorrect, as this maybe the optimal action when the financing of public investment are considered. When operation inefficiency is introduced in the public sector, gains from privatization are much higher and positive for most reasonable combinations of parameters.
While Washington has been unable to lead the way in significant health care reform, the health care system has begun to transform itself in terms of curbing skyrocketing health care costs, dealing with the more than forty million Americans who lack health care coverage, and the problems plaguing the Medicare and Medicaid systems. The search has begun for a health care model that ensures quality care to a wide population in a cost-efficient manner. This article explores how the U.S. Health care system currently functions, examines several innovative models, and suggests ways in which a decentralized, community-based approach to health care reform can address our nation’s health care crisis. Specifically, Part I examines the current system of health care financing. Part II discusses current efforts to provide community based care. Part III offers suggestions for a community-based approach to health care reform, including ways to stimulate provider volunteerism, financing mechanisms, and methods to overcome potential legal barriers to local reform efforts.
Open access
Health Systems, Economic Evaluations, Quality of Life
Lixin Colin Xu, Bob Cull, Joe Hotz, D. Gale Johnson · 5 authors
In moving toward a more market-oriented system, how did China's government and state enterprises partition control rights, incentives, and financial arrangements? In 1980, China's government owned and controlled its state enterprises, which were managed (inefficiently) by bureaucrats. During the 1980s, the government experimented with decentralizing state enterprises to boost productivity. By decade's end, China's state enterprises had become more market-oriented, and the structure of enterprise property rights had changed dramatically. One factor in the move toward a more market-oriented system was the use of performance contracts with incentive components to govern state enterprises. Xu examines how China's government and state enterprises partitioned property rights - how the government and enterprises decided about incentives, financial arrangements, and control rights. Xu assumes that the government is risk-neutral and the enterprise manager is risk-averse; that the government's goal is to increase revenue (or profitability), to retain maximum control of the firms, and to reduce the inequality of income across firms (by bailing out firms in financial trouble and collective heavier taxes on high-performing firms). The enterprise manager and employees, on the other hand, have an informational advantage over the government that allows them to earn a rent; that advantage leads to suboptimal efforts. Among Xu's findings: The government, in striving for equality, rewards inefficient firms while penalizing efficient ones (the so-called ratchet effect). Efficient firms are unwilling to reveal their true efficiency. They pretend to be inefficient by slacking, so they can get more transfers. There are inherent conflicts between two of the government's goals: Profitability and equality. And the government's desire to control state enterprises prevents many of them from becoming decentralized and improving their productivity. Capital-intensive firms depend more on bank loans and less on retained profits, probably reflecting both their greater need for capital and the banks' role in allocating investment funds. Larger firms rely more heavily on the government for investment, their managers have more autonomy, yet the firms are easier to control (it's easier to monitor 100 employees in one firm than to monitor one employee each in 100 firms). This paper - a product of the Finance and Private Sector Development Division, Policy Research Department - is part of a larger effort in the department to understand state-owned enterprise reforms and government behavior.
Government financing of schooling is necessitated by capital market imperfections. Governments are also res ponsible for maintaining a stock of public capital that enters private production function. In this paper the welfare implications and politics of these investments are examined in a version of Diamond (1965) growth model. It is argued that in decentralized environments where the working generation is decisive each period significant underinvestment in both schooling and in frastructure will be observed relative to the Ramsey equilibrium.
Estonian authorities have made remarkable progress in a relatively short period of time by putting into place the elements of a modern budget process and fiscal management system. This progress is especially notable given the difficult circumstances the country has gone through in the transition period of the last five years. The most significant changes in budgetary policy took place with the adoption of the Law on State Budget in June 1993. Several other pieces of legislation have come to complement the Budget Law including laws on local budgets, state external audit and the department of treasury. Other reforms have helped establish the basis of a modern fiscal management system. These include a monetary board assuring the independence of monetary policy from fiscal management and eliminating all possibilities of inflationary deficit financing, a well designed and impressively simple tax code, an overall well designed system of decentralized government, and the privatization of many state enterprises.However, there are still significant steps that need to be taken for making the government budget and the budget process itself effective instruments of fiscal management in Estonia. In some cases, the new budget institutions are at the early stages of development and appear fragile because of lack of resources or trained personnel and lack of tradition. In other cases, the proper institutions for fiscal management have not been developed or are lacking. Addressing these reform issues should significantly enhance the ability of the Government of Estonia to accomplish its objectives of macroeconomic stability, a more efficient allocation of public funds, and growth of the economy’s private sector.This report takes stock and evaluates the reforms in fiscal management already introduced, those scheduled for introduction, and those that the Government still should consider putting in place to accomplish an effective fiscal management system. Because they have been reviewed recently, this report does not discuss in depth existing budget institutions but instead puts emphasis on recent reform and highlights those problem areas where additional reforms will be necessary. The first section of the report provides a brief overview of the main accomplishments and failings of Estonia’s budget process and fiscal management system. The next three sections of the report review in more depth the three stages of the budget process: policy formulation, forecasting and budget preparation; budget execution and the ongoing effort to introduce a modern treasury function in the Ministry of Finance; and the institutions for budget compliance, namely internal and external ex-post audits and budget evaluation.
About the Internet, there have been a number of indications recently, that the use of electronic methods not only for expanding business or creating new business, but also for making payments, may introduce a new " industrial and monetary " order. This idea, (millenarianism ?) implies a large adoption of new technologies, of e-business opportunities and usages and finally, the resolution of e-payment problems, especially taking into account the Internet's characteristics (decentralization and aperture). These problems do not depend only on implementation of information's technologies, cryptography or network management. Because payments concern the core of the market's economy, the e-payment systems involve i) the monetary regime - i.e. forms and nature of money creation - and ii) agents qualified to create money. On these points, the emergence of e-payment systems is not anodyne, because it participates in the evolution of the actual monetary regime in the direction of a weakening between money supply, quantity of money and economy financing by bank's credit. It participates also in the evolution of the " banking industry " in the direction of a real disintermediation.
The paper reviews the theoretical basis for the application of user fees in the public health sector in low-income countries with particular reference to the special characteristics of medical care as a commodity. The general equilibrium efficiency result of the market mechanism is shown to be the theoretical justification for the financing of health services via a system of user charges. If markets for all goods and services exist, and are perfect in a very strict sense, the welfare outcome of the price mechanism cannot be improved upon by any other resource allocation device. Furthermore, the decentralized and impersonal nature of this mechanism renders it more convenient to use in the allocation of commodities, health care included, than its alternatives such as a system of centrally administered prices or a system of administrative controls and directives. However, since many of the assumptions of the price system are rarely met in actual situations, especially in the health sector, it should be applied with caution. In particular, problems of information asymmetry and consumption externalities in health care markets necessitate a simultaneous use of fees with government interventions in order for fees to achieve their often intended aim of efficiency and equity improvement in health care provision. The most important intervention of the government here is the enactment and enforcement of institutions that reduce costs of transacting in health care markets and that in addition facilitate the emergence of new markets such as the markets for medical insurance. A striking finding of the paper is that health services in low-income countries are best financed primarily by revenue from general taxation, supplemented by a system of moderate user fees. Since medical insurance markets are generally non-existent in low-income areas, it is argued that financing health services primarily through user fees in such areas would be inefficient and inequitable. However, to mitigate the moral hazard problem as well as the problem of the commons, both of which characterize publicly financed health care, imposition of modest user fees is required. The importance of fees in this proposal increases with economic growth and with evolution of institutions that facilitate market transactions. Strategic interaction among economic agents is shown to affect the structure and implementation of user fees. A game-theoretic analysis of the general problem of health care financing shows that this problem is best tackled by harnessing the efforts of households, private health care providers, the government and civil society. These entities form what might be called a winning coalition in health care financing game of society. It is argued that the government is better placed to provide an institutional framework for coordinating the efforts of the various players to the desired end.