Jay E. Ryu

Ohio University
Political Science

Bentley Annex 237
Athens, Ohio
United States

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I have applied the main mechanism of bounded rationality to the behaviors of budget actors under political and institutional settings, especially at the federal and state levels. More recently, I have been focusing on the dynamic choice model of public policy. I have also employed public economics theories to identify key factors of local fiscal choice. More specifically, I am currently analyzing how local tax burden based on property tax is affected by intergovernmental grants-in-aid. This study also involves developing new theories on the interactions among lump-sum aid, matching aid, and local tax price, which I hypothesize to be affected by consumer-voter's fiscal illusion. I have also investigated how the U. S. monetary policy has been politicized and has lost stimulative traction lately. These studies are further incorporated into a bigger research theme of how to reconcile equity and efficiency from public policy interventions.

Ryu, J. E. 2014. The Public Budgeting and Finance Primer: Key Concepts in Fiscal Choice. Armonk, NY: M. E. Sharpe. Routledge/Taylor & Francis Group after October 2014
Abstract: This primer succinctly summarizes key theoretical concepts in fiscal choice for both practitioners and scholars. The author contends that fiscal choice is ultimately a choice of both politics and economics. The book first introduces budget institutions and processes at various levels of government, which restrict budget decision makers' discretion. It also explains budget decision makers' efforts to make rational resource allocations. It then shows how and why such efforts are stymied by the decision makers' capacity and institutional settings. The book's unique benefit is its emphasis on all the essential topics, with short, module-type chapters that can be read in any order.
URL: https://www.routledge.com/The-Public-Budgeting-and-Finance-Primer-Key-Concepts-in-Fiscal-Choice/Ryu/p/book/9780765637970
Jung, Chulho, and J. E. Ryu. Why Did the U. S. Monetary Policy Lose Stimulative Traction After the 1999 Repeal of Glass-Steagall Act? Working Paper (Under Review)
Abstract: Compared to earlier decades, the federal monetary policy has lost its stimulative traction, especially since the early 1980s. Some studies indicate that the Fed’s forward guidance has enabled economic agents to anticipate the changes in interest rates more accurately. As a result, it is harder to find truly exogenous monetary policy shocks. However, these studies are focused so much on measurement issues of the shocks that they lose sight of a huge shift in the macroeconomic paradigm. In this paper, we find that anomalous economic behaviors of financial institutions might be the true culprit for the less effective monetary policy. We formulate a dynamic macroeconomic model based on structural vector autoregressive (SVAR) model to test the impacts of the economic behaviors of U.S. financial institutions. Our SVAR model uses five macroeconomic variables; GDP, Inflation rates, Federal funds rate, Investment, and Borrowing. By imposing some long-run and short-run restrictions, we show that increases in federal spending in the U.S. mostly flowed into the financial sector to increase the profits of the U.S. financial sector instead of stimulating the real sector of the economy through business investment.
Ryu, J. E. (Forthcoming) Measuring the Flypaper Effect: The Interaction Between Lump-sum Aid and the Substitution Effect of Macthing Aid. Public Finance and Management
Abstract: According to one theory, consumer-voters mistake lump-sum aid for matching aid such that lump-sum aid reduces their tax price of the aided service. Consumer-voters misunderstand that the substitution effect of matching aid comes from lump-sum aid, resulting in higher expenditures for the aided service. This flypaper effect is more likely when both lump-sum aid and matching aid (or equivalent tax-price reducing mechanisms) coexist and there is a high likelihood of interaction between the lump-sum aid and the substitution effect. However, surprisingly few studies have developed a clear formula to evaluate the flypaper effect while the literature generally assumes the interaction as one of potential causes for the flypaper effect. This paper fills in the huge gap in the literature by providing a formula to show whether and how lump-sum aid causes the flypaper effect.
Ryu, J. E. 2016. Outcome-based Grants-in-aid to Local School Districts: How to Apply Them and Analyze Their Impacts on Fiscal and Outcome Equity. Journal of Public Budgeting, Accounting, and Financial Management 28(3): 299-336.
Abstract: This paper investigates whether an outcome-based school aid formula could improve fiscal and outcome equity significantly more than a typical aid formula would. When outcome-based formula is applied to foundation aid, fiscal and outcome equity deteriorates compared to Ohio’s recent aid formula. However, when it is applied to power-equalizing aid, the latter improves fiscal and outcome equity more significantly than both foundation aid and Ohio’s recent aid formula do. This paper further shows how to apply them to real-world cases. The lessons from this paper can be easily applied to similar grant systems with standardized test scores.
Ryu, J. E. 2011. Bounded Bureaucracy and the Budgetary Process in the United States. New Brunswick, NJ: Transaction Publishers.
Abstract: Bureaucracies have been criticized from various perspectives and blamed for a variety of failings. Critics have claimed that bureaucracies are too focused on conforming to rules rather than achieving an organization’s core mission. Bureaucracies are said to oppress human freedom because of their orientation toward hierarchical control. Bureaucratic organizations are also said to be unable to deal effectively with public problems that span multiple administrative jurisdictions; they do not reach beyond their own organizational boundaries. This book provides solid data on how bureaucracies can expedite information processing and reduce organizational conflicts. Jay Eungha Ryu finds that the functions of bureaucracies are highly dependent upon external political conditions. Whether the executive and legislative branches are dominated by the same party significantly influences the ability of bureaucracies to function effectively. Ryu notes that the merits of bureaucratic centralization are worth close attention. Numerous attempts, including performance budgeting systems, have been made to improve bureaucratic malfunctions. However, such reform initiatives are doomed to failure, he argues, unless they employ a core feature of bureaucracy itself, centralization. Ryu defines bureaucratic centralization at its best as bounded bureaucracy. If well managed, bounded bureaucracy can substantially improve the rational behavior of organizations and reduce institutional frictions.
URL: http://www.transactionpub.com/title/Bounded-Bureaucracy-and-the-Budgetary-Process-in-the-United-States-978-1-4128-4289-1.html

Substantive Focus:
Economic Policy PRIMARY

Theoretical Focus:
Policy Process Theory PRIMARY
Policy Analysis and Evaluation SECONDARY