voter turnout and fiscal policy abstract in this paper we examine whether shocks in voting costs can impact elected representatives quality defined as the capacity to fund projects at the lowest cost using data on french municipalities and local variations in seasonal infections incidence as a shock on voting cost we estimate that higher incidence lowers voter turnout increases subsidies obtained by a municipality decreases harmful financial decisions and increases the municipality s investment in infrastructure we present a model where these predictions would hold in particular for municipalities with a high base level of turnout

activity choice labor allocation and forest use in malawi this article examines the determinants of activity choice affecting forest use among low income households in malawi data from three villages are used to estimate a system of household labor share equations for maize production forest employment and non forest employment a system estimation approach is used to identify factors influencing the competing and synergistic livelihood strategies which households undertake at the forest margin results from constrained maximum likelihood estimation indicate heightened incentives to degrade forests when returns to forest use are high factors reducing forest pressure include favorable returns to non forest employment secondary education of the household head and wealth

compulsory voting turnout and government spending evidence from austria abstract we study a unique quasi experiment in austria where compulsory voting laws are changed across austria s nine states at different times analyzing state and national elections from 1949 to 2010 we show that compulsory voting laws with weakly enforced fines increase turnout by roughly 10 percentage points however we find no evidence that this change in turnout affected government spending patterns in levels or composition or electoral outcomes individual level data on turnout and political preferences suggest that these results occur because the impacts of compulsory voting on turnout are larger among those who are non partisan who have low interest in politics and who are uninformed

pro poor targeting and accountability of local governments in west bengal a commonly alleged pitfall of decentralization is that poverty socio economic inequality and lack of political competition allow local elites to capture local governments this hypothesis is empirically examined using a longitudinal sample of 89 west bengal villages concerning targeting of credit agricultural input kits employment programs and fiscal grants spanning the period 1978 98 higher poverty land inequality and low caste composition of the poor was associated with negligible adverse effects on targeting of private goods to the poor within villages but with lower employment generation out of allotted funds and significantly lower allocation of resources to the village as a whole political competition or literacy levels among the poor were not systematically related to targeting

a re examination of the relationship between industry structure and economic performance the objective of this study is to develop a simultaneous equations model of profitability concentration advertising expenditures and research and development outlays the data used in the estimation are subjected to regression diagnostics in an effort to determine the importance to the estimation results of a subset of the data that can have a disproportionate influence the estimation results especially for the advertising expenditures relationship and the research and development outlays equation do change when a truncated data sample based on the omission of the outliers is used this serves partly to explain why there is some disagreement in the literature on market structure and economic performance with regard to the impact of several economic factors

imports and the supply of winter tomatoes an application of rational expectations a model of the florida tomato industry is formulated under the hypothesis that growers make production decisions as rational economic agents this assumption implies that anticipated mexican tomato imports as well as other economic variables are taken into account when the planting decision is made maximum likelihood estimation methods are used to solve the simultaneous equations model and the implications of the model s reduced form are analyzed the empirical findings are consistent with the rational expectations hypothesis that producers respond to market information in its entirety when making acreage decisions key vwords expectations imports mexico rational expectations supply response tomatoes florida produces about 90 of u s tomatoes harvested for fresh use during the november to mid june season since the cuban trade embargo of february 1962 mexico has become the major foreign supplier of fresh winter tomatoes the total fresh winter tomato market in the united states has been almost equally shared by florida and mexico in recent years the rivalry for this market reached the point in 1978 that florida growers charged that mexican producers were dumping their product on the u s market schmitz firch hillman many florida growers suggest that unless mexican tomato imports are limited the florida tomato industry will effectively disappear primary attention in this paper is focused on domestic tomato acreage allocations in light of the mexican influence on the winter tomato market the paper does not attempt to evaluate the welfare effects of mexican imports on the florida tomato industry in addition to the emphasis on acreage response the domestic quantity and price effects are also considered most efforts to explain acreage devoted to agricultural crops have utilized some variant of a cobweb model because the ultimate price of the crop cannot be ascertained until the completion of the production cycle nevertheless if the supply and demand framework is truly representative of the way the market works an alternative to lagged price for representing the anticipated price for the crop is the price prediction of the supply and demand model itself thus acreage would be dependent on the expected price of the crop and expected price would result from the solution of the supply and demand model for price on the basis of information available at planting time the underlying hypothesis is that producers are acting in accordance with the information available to them at planting time and in a way represented by the interaction in the supply and demand model viewed in this way planted acreage decisions would be based on such factors as anticipated mexican imports and their attendant effect on the price of tomatoes one distinction between this and the traditional cobweb framework is that in the latter case lagged imports may influence planted acreage via their effect on lagged prices but any impact expected imports might have on current price is ignored in the acreage

price prediction errors and real activity a reassessment price prediction errors and real activity a reassessment i introduction macro models employing rational expectations and natural rate assumptions have proven to be powerful and tractable analytical tools in these models output and employment fluctuations are typically demand driven with aggregate demand disturbances transmitted to the real sector through price prediction errors the waning popularity of natural rate models is due in part to the widely held belief that although theoretically appealing the models are of questionable empirical relevance this view appears to be based on a small number of studies which fail to find evidence of a robust empirical relationship between price level surprises and aggregate real activity indeed the available evidence has led some influential macroeconomists to conclude that the channels through which aggregate demand influences the economy have yet to be identified 1 this has had the two fold effect of i stimulating research on channels other than price through which aggregate demand may affect the economy and ii discouraging research on channels that do act through the price level while the first of these effects may be desirable the second is of concern this paper is motivated by our conviction that potentially valuable research has been discouraged on the basis of thin and seriously suspect evidence the sections that follow reassess the role of price prediction errors in determining aggregate real activity we provide evidence that the inability of other researchers to verify a positive correlation between demand driven price prediction errors and real activity is due to misspecified models and in some cases inappropriate estimation procedures we demonstrate that in a more correctly specified and estimated model the relationship between price surprises and real activity is positive and strongly significant thus we conclude that previous researchers were incorrect in discarding the major natural rate paradigms as empirically irrelevant these models do appear to identify an important channel namely price surprises through which aggregate demand influences the real sector ii issues and early evidence price prediction errors play a central role in the most prominent natural rate macro models these models typically fall into one of two general classes equilibrium models and contracting models in both classes of models unanticipated movements in the price level are the channel through which aggregate demand disturbances influence the real sector the exact nature of transmission process however differs across the two sets of theories equilibrium models of the sort pioneered by lucas 1973 depend on the assumption of incomplete information to produce non neutrality of aggregate demand disturbances in the best known examples of this kind of model confusion between relative and aggregate price movements causes firms to react to unanticipated price level movements as though they were at least in part relative price movements thus positive price level shocks cause all firms to increase output and generate positive deviations of aggregate output from its natural rate contracting models as developed in the work of fischer 1977 and gray 1976 depend on contractually set wages to produce non neutrality in these models nominal wages are incompletely responsive to unexpected changes in the price level during the term of the contract under which they are set consequently an unanticipated rise in the price level causes a fall in the real wage of all workers whose contracts are not in the process of renegotiation at that moment with employment determined by the firm during the contract interval the result is a rise in aggregate employment and output our present concern is with testing the common implications of equilibrium and contracting models possibilities for distinguishing between the two classes of models are explored in separate work

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

is environmental policy a secondary trade barrier an empirical analysis should international trade agreements be extended to include negotiations over environmental policy the answer depends on whether countries distort levels of environmental regulations as a secondary means of providing protection to domestic industries our results suggest that they do previous studies of this relationship have treated the level of environmental regulation as exogenous and found a negligible correlation between environmental regulation and trade flows in contrast we find that when the level of environmental regulation is modelled as an endogenous variable its estimated effect on trade flows is significantly higher than previously reported jel classification fl f14 f18 est ce que la politique environnementale est une barriere commerciale secondaire une analyse empirique est ce que les accords commerciaux internationaux doivent etre etendus pour couvrir la politique environnementale la reponse depend du degre de distorsion que les pays introduisent dans leur politique environnementale pour proteger leurs industries nationales nos resultats suggerent que cet impact est important des etudes anterieures de cette relation ont traite la politique environnementale comme exogene et ont montre qu il existe une co relation negligeable entre politique envir onnementale et flux commerciaux au contraire nous revelons que quand la politique environnementale est consideree comme variable endoge ne son effet sur les flux com merciaux est plus eleve de maniere significative que ce qu on a note anterieurement

does direct democracy reduce the size of government new evidence from historical data 1890 2000 using historical data for all swiss cantons from 1890 to 2000 we estimate the causal effect of direct democracy on government spending the main innovation in this paper is that we use fixed effects to control for unobserved heterogeneity and instrumental variables to address the potential endogeneity of institutions we find that the budget referendum and lower costs to launch a voter initiative are effective tools in reducing canton level spending however we find no evidence that the budget referendum results in more decentralized government or a larger local government our instrumental variable estimates suggest that a mandatory budget referendum reduces the size of canton spending between 13 and 19 percent a 1 percent lower signature requirement for the initiative reduces canton spending by up to 2 percent

strategic public policy around population thresholds abstract political economists have long maintained that politicians respond to both re election and financial incentives this article contributes to the latter literature by analysing whether when and how local office holders respond to the economic incentives embedded in exogenously imposed population thresholds leading to an increased number and remuneration of local politicians building on insights from the urban economics and public finance literatures we argue that local politicians may strategically adjust fiscal and housing policies to stimulate in migration when approaching a population threshold where their remuneration increases using data from all 589 belgian municipalities over the period 1977 2016 our results confirm that approaching important population thresholds causes lower local tax rates and the granting of additional building permits particularly for apartments these policy changes occur early in the election cycle and at least for housing policy are restricted to incumbent mayors themselves expecting to benefit from crossing the population threshold

applying the economic model of crime to child support enforcement a theoretical and empirical analysis child support noncompliance affects both the family and the taxpayer this papers models the decision to pay based on expected utility maximization the amount unpaid is determined jointly with the expected enforcement probability a two stage estimation technique requiring ordinary least squares and probit is used the author improves upon previous problems with measurement error and sex restricted data in deterrence and child support studies the treatment of endogenous deterrence variables as exogenous and the use of aggregate data he finds a joint relationship between the amount unpaid and the enforcement probability policies are suggested for increasing compliance and payments to the family copyright 1988 by mit press

regional transfer multipliers a series of discontinuities in the allocation mechanism of federal transfers to municipal governments in brazil allow us to identify the causal effect of public spending on local labour markets using a fuzzy regression discontinuity design rdd our estimates imply a cost per job of about 8 000 us dollars per year and a local income multiplier around two the effect comes mostly from employment in services and is more pronounced among less financially developed municipalities

cumulant instrument estimators for hedge fund return models with errors in variables we revisit the factors incorporated in asset pricing models following the recent developments in financial markets i e the rise of shadow banking and the change in the transmission channel of monetary policy we propose two versions of the fung and hsieh 2004 hedge fund return model especially an augmented market model which accounts for the new dynamics of financial markets and the procyclicality of hedge fund returns we run these models with an innovative hausman procedure tackling the measurement errors embedded in the models factor loadings our empirical method also allows for confronting the drawbacks of the instruments used to estimate hedge fund asset pricing models

structural adjustment and the japanese textile industry a production theory approach the production theory approach for modelling trade in intermediate goods is applied to dervie export supply and import demand functions for the japanese textile industry the estimated elasticities provide insight into the process of internal adjustment and structural change reflected in the declining international competitiveness of the japanese textile sector estimation issues related to endogeneity tests and the concavity restictions implied by economic theory are highlighted in the econometric results estimated trade balance adjustments are derived from the parameter estimates of the export supply and import demand functionf for the japanese textile sector

do political parties matter evidence from u s cities are cities as politically polarized as states and countries no is the answer from our regression discontinuity design analysis which shows that whether the mayor is a democrat or a republican does not affect the size of city government the allocation of local public spending or crime rates however there is a substantial incumbent effect for mayors we investigate three mechanisms that could account for the striking lack of partisan impact at the local level and find the most support for tiebout competition among localities within metropolitan areas

the two waves of voucher privatization in the czech republic a model of learning in sequential bidding this study develops a dynamic model of bidding behaviour to investigate the czech voucher privatization process which took place in two waves of bidding rounds the first in 1992 and the second in 1994 it examines the voucher mechanism from the standpoint of investors and the pricing and allocation of shares investors could participate as independent individuals or by assigning some of all of their voucher points to investment privatization funds principal findings are that individual participants behaved differently from funds and benefited by learning from one round to the next and from observing the behaviour of the funds an important collateral finding is that the market though crude behaved efficiently in the adjustment of share prices over the bidding rounds

a structural model of the demand for owner occupied housing abstract the goal of the analysis in this paper is to estimate a structural model of the demand for owner occupied housing in our framework the buyer selects the value of the house the size of the mortgage and the length of stay in the house we estimate a housing demand equation which includes both the length of stay and the loan to value ratio as endogenous variables one empirical result of interest is that the income elasticity of demand for housing found in the structural housing demand equation is much larger than the value estimated in the reduced form we also point out some occasions when it is important to distinguish between a reduced form and a structural model of housing choices

a theory of participatory democracy based on the real case of porto alegre participatory democracy is a process of collective decision making that combines elements from both direct and representative democracy citizens have the power to decide on policy proposals and politicians assume the role of policy implementation the aim of this paper is to understand how participatory democracy operates and to study its implications over the behavior of citizens and politicians and over the final policy outcomes to this end we explore a formal model inspired by the experience of participatory budgeting implemented in the brazilian city of porto alegre that builds on the model of meetings with costly participation by osborne et al 2000 meetings with costly participation american economic review 90 927 943

decentralization of governance and development all around the world in matters of governance decentralization is the rage even apart from the widely debated issues of subsidiarity and devolution in the european union and states rights in the united states decentralization has been at the center stage of policy experiments in the last two decades in a large number of developing and transition economies in latin america africa and asia the world bank for example has embraced it as one of the major governance reforms on its agenda for example world bank 2000 burki perry and dillinger 1999 take also the examples of the two largest countries of the world china and india decentralization has been regarded as the major institutional framework for the phenomenal industrial growth in the last two decades in china taking place largely in the nonstate nonprivate sector india ushered in a landmark constitutional reform in favor of decentralization around the same time it launched a major program of economic reform in the early 1990s on account of its many failures the centralized state everywhere has lost a great deal of legitimacy and decentralization is widely believed to promise a range of benee ts it is often suggested as a way of reducing the role of the state in general by fragmenting central authority and introducing more intergovernmental competition and checks and balances it is viewed as a way to make government more responsive and efe cient technological changes have also made it somewhat easier than before to provide public services like electricity and water supply relatively efe ciently in smaller market areas and the lower levels of government have now a greater ability to handle certain tasks in a world of rampant ethnic cone icts and separatist movements decentralization is also regarded as a way of diffusing social and political tensions and ensuring local cultural and political autonomy these potential benee ts of decentralization have attracted a very diverse range

manufacturer retailer channel interactions and implications for channel power an empirical investigation of pricing in a local market the issue of power in the marketing channels for consumer products has received considerable attention in both academic and practitioner journals as well as in the popular press our objective in this paper is to provide an empirical method to measure the power of channel members and to understand the reasons demand factors cost factors nature of channel interactions for this power we confine our analysis to pricing power in channels we use methods from the game theory literature in marketing on channel interactions to obtain the theoretical framework for our empirical model this literature provides us a definition of power one that is based on the proportion or percentage of channel profits that accrue to each of the channel members there can be a variety of possible channel interactions between manufacturers and retailers in channels the theoretical literature has examined some of these games for example choi 1991 examines how channel profits for manufacturers and retailer vary if channel interactions are either vertical nash or if they are stackelberg leaderfollower with either the manufacturer or the retailer being the price leader each of these three channel interaction games has different implications for profits made by manufacturers and retailers and consequently for the relative power of the channel members in contrast to the previous literature that has focused largely on the above three channel interaction games our model extends the game theoretic literature by allowing for a continuum of possible channel interactions between manufacturers and a retailer furthermore for a given product market we empirically estimate from the data where the channel interactions lie in this continuum more critically we obtain measures of how channel profits are divided between manufacturers and the retailer in the product market where a higher share of channel profit is associated with higher channel power we then examine how channel power is related to demand conditions facing various brands and cost parameters of various manufacturers in going from game theory based theoretical models of channel interactions to empirical estimation we use the new empirical industrial organization framework bresnahan 1988 as part of this structural modeling framework we build retail level demand functions for the various brands manufacturer and private label in a given product category given these demand functions we obtain optimal pricing rules for manufacturers and the retailer in determining their optimal prices manufacturers and the retailer account for how all the players in the channel choose their optimal prices that is we account for dependencies in decision making across channel members these dependencies are characterized by a set of conduct parameters which are estimated from market data the conduct parameters enable us to identify the nature of channel interactions between manufacturers and the retailer along the continuum mentioned previously in addition to the demand and conduct parameters manufacturers marginal costs are also estimated in the model these marginal cost estimates along with the manufacturer prices and retail prices available in our dataset enable us to compute the division of channel profits among the channel members hence we are able to obtain insights into who has pricing power in the channel in the empirical application of the model we analyze a local market for two product categories refrigerated juice and tuna in both categories there are three major brands the difference between them is that the private label has an insignificant market share in the tuna category our main empirical results show that the usual games examined in the marketing literature do not hold for the given data we also nd that the retailer s market power is very significant in both these product categories and that the estimated demand and cost parameters are consistent with the estimated pattern of conduct between the manufacturers and the retailer given the evidence from the trade press of intense manufacturer competition in these categories as well as the commodity nature of these products the result of retailer power appears intuitive

who determines mexican trade policy using a political economy approach the authors analyze the pattern of protection in mexico s manufacturing sector during the period of trade policy reforms 1985 89 when mexico experienced significant trade liberalization and an important inflow of foreign direct investment they take into account the potential effect of foreign direct investment on endogenous tariff formation it turns out that the data support this analytic approach in which the formulation of trade policy reflects political support and in which the presence of foreign direct investment in the sector strongly affects the pattern of tariff protection before and after reform in mexican manufacturing especially sectors with heavy foreign direct investment received greater protection in import competing sectors although the move toward greater openness was associated with a reduction in the influence of industrial and foreign investor lobbying

estimating marginal returns to medical care evidence from at risk newborns a key policy question is whether the benefits of additional medical expenditures exceed their costs we propose a new approach for estimating marginal returns to medical spending based on variation in medical inputs generated by diagnostic thresholds specifically we combine regression discontinuity estimates that compare health outcomes and medical treatment provision for newborns on either side of the very low birth weight threshold at 1500 grams first using data on the census of us births in available years from 1983 2002 we find that newborns with birth weights just below 1500 grams have lower one year mortality rates than do newborns with birth weights just above this cutoff even though mortality risk tends to decrease with birth weight one year mortality falls by approximately one percentage point as birth weight crosses 1500 grams from above which is large relative to mean infant mortality of 5 5 just above 1500 grams second using hospital discharge records for births in five states in available years from 1991 2006 we find that newborns with birth weights just below 1500 grams have discontinuously higher charges and frequencies of specific medical inputs hospital costs increase by approximately 4 000 as birth weight crosses 1500 grams from above relative to mean hospital costs of 40 000 just above 1500 grams under an assumption that observed medical spending fully captures the impact of the very low birth weight designation on mortality our estimates suggest that the cost of saving a statistical life of a newborn with birth weight near 1500 grams is on the order of 550 000 in 2006 dollars

land and power theory and evidence from chile many employment relationships concede rents to workers depending on the political institutions the presence of such rents allows employers to use the threat of withdrawing them to control their workers political behavior such as their votes in the absence of secret ballot we examine the effects of the introduction of the secret ballot in chile in 1958 on voting behavior before the reforms localities with more pervasive patron client relationships tended to exhibit a much stronger support for the right wing parties traditionally associ ated with the landed oligarchy after the reform however this difference across localities completely disappeared jel d72 n46 o13 o15 o17

single equation multiple regression methodology is it an appropriate methodology for the estimation of the structure performance relationship in banking abstract tests of the structure performance paradigm of the industrial organization literature have been carried out almost exclusively using a single equation multiple regression methodology the purpose of this paper is to suggest that where the firms being considered are multiple product in nature and may pursue objectives in addition to maximizing the value of the firm such a methodology may be inappropriate the results presented in this paper suggest that the absence of a consistently strong positive and statistically significant relationship between market concentration and bank profitability may be traced in part to such an inappropriate methodology

children and female labour supply behaviour using the generalized residual method this paper investigates the assumption that children are exogenous in the labour supply equations of married women via alternative regression specifications for the children variables the empirical results of this paper suggest that children are endogenous to the participation decision and likely to be exogenous to the hours of work decision for married women children under age six have a dramatic negative impact on the labour force participation of married women these findings support the implication of the literature relating fixed costs of employment including child care costs to female labour supply

elected or appointed how the nomination scheme of the city manager influences the effects of government fragmentation abstract empirical research on the causal effect of government fragmentation derives diverse results one reason for this diversity might be that studies are typically settled in a variety of institutional environments to assess the extent to which the local political system might shape the effects of fragmentation this study measures the causal effect of a change in the nomination scheme of the city manager on the council size effect i combine a regression discontinuity design with a difference in differences approach in a large panel dataset of german municipalities the study finds that when the manager is appointed by council there is no significant council size effect but that there is a negative effect when the manager is elected by voters for those expenditure categories over which the manager has the most discretion these findings suggest that the nature of the political system does indeed matter

the causal effect of coalition governments on fiscal policies evidence from a regression kink design proportional election systems are widespread across countries and often lead to coalition governments this creates interest in how the form of government single party or coalition governments causally influences fiscal policies it is difficult to estimate this causal effect empirically because the form of government is not randomly assigned to political units i overcome this problem by using a regression kink design which exploits that there is a slope change in the treatment probability at the 50 vote share of the strongest party this method is applied to a large panel data set of german local governments i find that contrary to the theoretical prediction coalition governments significantly decrease expenditures

interactions between hospital admissions cost per day and average length of stay hospital cost per day cost annual admissions per capita admit and average length of stay alos are important health policy variables because each variable provides important information about hospital industry performance this study uses country level data to explore the empirical relationships between cost admit and alosin three steps ols estimation application of the wu hausman endogeneity test and re estimation with two stage least squares the major results are i admitand alosexert exogenous influences on costand ii admitand alosare endogenously related with possible one way casuality from admitto alos

productivity growth and some of its determinants in the deregulated u s railroad industry this study analyzes the effects of an important postderegulation innovation on rail freight productivity the elimination of cabooses and related crew members it also analyzes the overall growth of productivity in rail freight between 1983 and 1997 using a translog rail cost function estimated over a sample of class i railroads between 1983 and 1997 the results indicate that elimination of cabooses and associated crew members from freight trains reduced costs by 5 8 on the typical class i railroad in 1997 equivalent to an annual cost saving of 2 billion to 3 3 billion for all class i railroads moreover if class i railroads had no other technological advances since 1983 their 1997 costs with 1997 factor prices would have been 36 43 higher than they in fact were finally the results show that overall productivity growth in rail freight did not decelerate between 1983 and 1997 if anything it accelerated slightly

does the size of the legislature affect the size of government evidence from two natural experiments this paper makes use of regression discontinuity designs to estimate the effect of the number of legislators on the size of government the results indicate a negative effect i e the larger the size of the legislature the smaller is the size of government this runs counter to conventional wisdom one potential explanation is that more legislators can better control a budget maximizing bureaucracy i present evidence that is consistent with the proposed mechanism

donor preferences and recipient fiscal behavior a simultaneous analysis of foreign aid we theoretically develop and empirically estimate a preference model determining foreign aid donor behavior aid access and levels are separately determined by endogenous budgetary allocations the international economic environment the distribution of income between countries basic human needs the small country effect and regional bias we find fungibility of aid in recipient budgets is due to donor and recipient preferences despite the importance of other economic influences we find a significant pro poor country bias in aid allocations although little aggregate influence of basic human needs or regional bias the small country effect is significant for two of six donors jel f35 o19 h 77

international capital mobility evidence from panel data abstract to test whether capital is internationally mobile some researchers have examined the relationship between saving and investment using time averaged data they find saving and investment to be related and conclude that capital is relatively immobile in this paper i argue that a country s intertemporal budget constraint biases results using time averaged data against finding capital mobility using annual data pooled for 21 oecd countries over the 1962 1990 period i find the estimated impact of saving on investment to be considerably smaller than previous estimates

electoral reform and trade offs in representation we examine the effect of electoral institutions on two important features of representation that are often studied separately policy responsiveness and the quality of legislators theoretically we show that while a proportional electoral system is better than a majoritarian one at representing popular preferences in some contexts this advantage can come at the price of undermining the selection of good politicians to empirically assess the relevance of this trade off we analyze an unusually controlled electoral reform in switzerland early in the twentieth century to account for endogeneity we exploit variation in the intensive margin of the reform which introduced proportional representation based on administrative constraints and data on voter preferences a difference in difference analysis finds that higher reform intensity increases the policy congruence between legislators and the electorate and reduces legislative effort contemporary evidence from the european parliament supports this conclusion

do better paid politicians perform better disentangling incentives from selection the wage paid to politicians affects both the choice of citizens to run for office and the performance of those who are appointed first if skilled individuals shy away from politics because of higher opportunities in the private sector an increase in politicians pay may change their mind second if the re election prospects of incumbents depend on their in office deeds a higher wage may foster performance we use data on all italian municipal governments from 1993 to 2001 and test these hypotheses in a quasi experimental setup in italy the wage of mayors depends on population size and sharply rises at different thresholds we apply a regression discontinuity design to the only threshold that uniquely identifies a wage increase 5 000 inhabitants exploiting the existence of a two term limit we further disentangle the composition from the incentive component of the effect of the wage on performance our results show that a higher wage attracts more educated candidates and that better paid politicians size down the government machinery by improving efficiency importantly most of this effect is driven by the selection of competent politicians rather than by the incentive to be re elected

tax and expenditure limitations and the fiscal relationships between state and local governments this paper uses comprehensive data on state and local tax and spending limitations for forty nine states between 1976 and 1990 to estimate the effects of these limits on the fiscal relationships between state and local government results indicate that tax and spending limits on local governments are only partially effective in reducing revenues because political agents bypass limitations by transferring revenue reliance to unconstrained revenue sources or because unconstrained levels of government take on additional revenue responsibilities in particular the empirical analysis demonstrates that binding local government fiscal constraints are associated with reductions in local revenues and increases in state aid to local governments in contrast state government limitations are related to reductions in both state and local own source revenues

does head start improve children s life chances evidence from a regression discontinuity design this paper exploits a new source of variation in head start funding to identify the program s effects on health and schooling in 1965 the office of economic opportunity oeo provided technical assistance to the 300 poorest counties to develop head start proposals the result was a large and lasting discontinuity in head start funding rates at the oeo cutoff for grant writing assistance we find evidence of a large drop at the oeo cutoff in mortality rates for children from causes that could be affected by head start as well as suggestive evidence for a positive effect on educational attainment i introduction head start was established in 1965 as part of the war on poverty to provide preschool health and other social services to poor children age three to five and their families and currently serves over 900 000 children each year at a cost of around 7 billion hhs 2006 this paper provides new evidence on the effects of the head start program on schooling and health by drawing on a new source of variation in program funding spe

the political resource curse this paper studies the effect of additional government revenues on political corruption and on the quality of politicians both with theory and data the theory is based on a political agency model with career concerns and endogenous entry of candidates the data refer to brazil where federal transfers to municipal governments change exogenously at given population thresholds allowing us to implement a regression discontinuity design the empirical evidence shows that larger transfers increase observed corruption and reduce the average education of candidates for mayor these and other more specific empirical results are in line with the predictions of the theory jel d72 d73 h77 o17 o18

meetings with costly participation an empirical analysis we analyse a firm s decision to participate in public meetings which determine regulation using data from the mid atlantic surf clam and ocean quahog fishery we find that firms with a preference for extreme policies are much more likely to participate in public meetings than firms with a preference for moderate policies we also find that participation rates are higher for larger closer and more influential firms these results are of interest for several reasons voluntary meetings with costly participation are ubiquitous as an institution for resource allocation examples include faculty meetings parent teacher association meetings and condominium association meetings moreover the requirement that regulators allow and encourage public participation is an almost universal feature of the u s regulatory process 1 yet despite their importance meetings with costly participation are little studied and basic questions about them are unanswered who goes does participation vary with observable characteristics do meeting participants represent the interested population our analysis of the mid atlantic clam fishery answers these questions large nearby extremists participate in meetings with costly participation it is clear that these findings improve our understanding of voluntary participation in costly meetings and hence of most regulatory decisions taken in the u s however they also suggest 1 the administrative procedure act requires that all u s federal regulatory agencies shall give interested persons an opportunity to participate in the rule making through submission of written data views or arguments with or without the opportunity for oral presentation title 5 u s code section 553 c 1988 edition in corrosion proof fittings v environmental protection agency 1991 the supreme court showed its willingness to require that public opinion be adequately consulted in this case the court vacated proposed regulation because the environmental protection agency prematurely ended public hearings and deprived the public of sufficient opportunity to comment on analyse and influence the regulatory proceedings in this case public participation is mandated by the toxic substances control act rather than the administrative procedure act

the effect of direct democracy on income redistribution evidence for switzerland there is an intensive dispute in political economics about the impact of institutions on income redistribution while the main focus is on comparison between different forms of representative democracy the influence of direct democracy on redistribution has attracted much less attention according to theoretical arguments and previous empirical results government policies of income redistribution are expected to be more in line with median voter preferences in direct than in representative democracies in this paper we find that institutions of direct democracy are associated with lower public spending and revenue particularly lower welfare spending and broad based income and property wealth tax revenue moreover we estimate a model which explains the determinants of redistribution using panel data provided by the swiss federal tax office from 1981 to 1997 and a cross section of representative individual data from 1992 while our results indicate that less public funds are used to redistribute income and actual redistribution is lower inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution this finding might well indicate the presence of efficiency gains in redistribution policies

democracy redistribution and political participation evidence from sweden 1919 1938 in this paper we compare how two different types of political regimes direct versus representative democracy redistribute income toward the relatively poor segments of society after the introduction of universal and equal suffrage swedish local governments are used as a testing ground since this setting offers a number of attractive features for a credible impact evaluation most importantly we exploit the existence of a population threshold which partly determined a local government s choice of democracy to implement a regression discontinuity design the results indicate that direct democracies spend 40 60 percent less on public welfare our interpretation is that direct democracy may be more prone to elite capture than representative democracy since the elite s potential to exercise de facto power is likely to be greater in direct democracy after democratization

direct democracy and local public finances under cooperative federalism this paper exploits the introduction of the right of referenda at the local level in the german state of bavaria in 1995 to study the fiscal effects of direct democracy in the first part of the paper we establish the relationship between referenda activity and fiscal performance by using a new dataset containing information on all 2500 voter initiatives between 1995 to 2011 this selection on observables approach however suffers from obvious endogeneity problems in this application the main part of the paper exploits population dependent discontinuities in the signature and quorum requirements of referenda to implement a regression discontinuity design rdd to safeguard against co treatments that might affect fiscal outcomes simultaneously at the same thresholds we validate our results by extending the rdd approach to a difference in discontinuity did design by studying direct legislation in an archetypical cooperative federation as germany our paper extends the literature to a novel institutional setting the results indicate that in our setting and in contrast to most of the evidence from switzerland and the us direct democracy causes an expansion of local government budgets

estimations of the economic model of crime using aggregate and individual level data much has happened in the economics of crime since becker s 1 seminal paper of two decades ago the theory has been refined by among others ehrlich 10 11 12 block and lind 4 5 block and heinke 3 and schmidt and witte 30 attempts to test the model empirically began immediately the most cited including ehrlich 10 11 12 sjoquist 31 carr hill and stern 7 phillips and votey 26 witte 38 and myers 22 23 interest continues with recent work including layson 19 sandelin and skogh 29 ehrlich and brower 13 cover and thistle 9 viscusi 36 and tauchen witte and griesinger 33 there has been some controversy however concerning the type of data more suitable to the estimation of the economic model of crime most of the work has used aggregate data in which the unit of observation is a political jurisdiction but the use of aggregate data has been sharply criticized the alternative is individual data few attempts have been made to use individual data probably because an ideally constructed data set representative of a general population would be far too costly for most research budgets most of the studies that have been done have used data on releasees from prison or other criminal justice programs they are in effect recidivism studies based on the economic model of crime

trade foreign direct investment and industry performance abstract this paper investigates the us margins effect of imports and fdi using a panel of 448 manufacturing industries for 1982 1990 in the single equation two way fixed effects regressions greenfield fdi has no significant effect on margins while there is some indication that non greenfield fdi affect margins and the effect is found to depend on the level of industry concentration when potential endogeneity among variables are taken into account both types of fdi are found to increase margins however for non greenfield fdi the effect appears with a lag of two periods for the most part the results indicate that the positive effect on margins holds for industries with low levels of concentration beyond some critical level the competitive effect of fdi predominates