bonus culture competitive pay screening and multitasking to analyze the impact of labor market competition on the structure of compensation we embed multitasking and screening within a hotelling framework competition for talent leads to an escalation of performance pay shifting effort away from long term investments risk management and cooperation efficiency losses can exceed those from a single principal who dulls incentives to extract rents as competition intensifies monopsonistic underincentivization of low skill agents first decreases and then gives way to growing overincentivization of high skill ones aggregate welfare is thus hill shaped while inequality tends to rise monotonically bonus caps can help restore balance in incentives but may generate other distortions

political cycles in oecd economies this paper studies whether the dynamic behaviour of gnp growth unemployment and inflation is systematically affected by the timing of elections and of changes of governments the sample include the last three decades in 18 oecd economies we explicitly test the implication of several models of political cycles both of the opportunistic and of the partisan type also we confront the implication of recent rational models with more traditional approaches our results can be summarized as follows a the political business cycle hypothesis as formulated in nordhaus 1975 on output and unemployment is generally rejected by the data b inflation tends to increase immediately after elections perhaps as a result of pre electoral expansionary monetary and fiscal policies c we find evidence of temporary partisan differences in output and unemployment and of long run partisan differences in the inflation rate as implied by the rational partisan theory by alesina 1987 d we find virtually no evidence of permanent partisan differences in output growth and unemployment

women as policy makers evidence from a randomized policy experiment in india this paper uses political reservations for women in india to study the impact of women s leadership on policy decisions since the mid 1990 s one third of village council head positions in india have been randomly reserved for a woman in these councils only women could be elected to the position of head village councils are responsible for the provision of many local public goods in rural areas using a dataset we collected on 265 village councils in west bengal and rajasthan we compare the type of public goods provided in reserved and unreserved village councils we show that the reservation of a council seat affects the types of public goods provided specifically leaders invest more in infrastructure that is directly relevant to the needs of their own genders

entry barriers in politics and uncontested elections abstract lott 1986 1987a argues that brand names can be barriers to entry in political markets because political brand names cannot be sold our empirical model examines the effect of inalienability of political capital on entry into nineteenth century british political markets we test the hypothesis that since county races were more expensive than borough races owing to greater costs of information the level of non transferable investment produced by a given number of past campaigns was greater in the rural districts and produced more significant entry barriers

ethnic parties and public spending new theory and evidence from the indian states social scientists largely see ethnic politics as inhibiting public goods provisioning within developing democracies such parties are thought to uniformly rely on distributing excludable benefits t

do barriers to candidacy reduce political competition evidence from a bachelor s degree requirement for legislators in pakistan in the 2002 election candidates for pakistan s federal legislature had to possess at least a bachelor s degree this policy disqualified 60 out of the 207 incumbent legislators from running for election again using a difference in differences approach with panel data on all electoral constituencies in pakistan i find that this ballot access restriction does not affect political competition across all constituencies with disqualified incumbents equally stronger political competition is defined as a larger number of candidates contesting election a smaller vote share and vote margin for the winning candidate and a less concentrated candidate field as measured by a herfindahl hirschman index hhi of vote shares competition declined significantly in constituencies where the disqualified incumbent belonged to a small party and where literacy levels were lower signifying a smaller pool of substitute candidates however political competition increased in areas where the disqualified incumbent was stronger in terms of his winning vote margin

the impact of ballot access restrictions on electoral competition evidence from a natural experiment measuring the effect of ballot access restrictions on electoral competition is complicated because the stringency of ballot access regulations cannot be treated as being exogenous to candidates entry decisions this paper exploits the 1968 u s supreme court decision to strike down ohio s ballot access law as a natural experiment to overcome the endogeneity problem the evidence from difference in difference estimations suggests that the court s decision and the accompanying sharp decrease in ohio s petition requirements resulted in major parties facing a significant increase in competition from third party and independent candidates

incentives to cultivate favored minorities under alternative electoral systems a simple model is used to compare under different electoral systems the incentives for candidates to create inequalities among otherwise homogeneous voters by making campaign promises that favor small groups rather than appealing equally to all voters in this game model each candidate generates offers for voters independently out of a distribution that is chosen by the candidate subject only to the constraints that offers must be nonnegative and have mean 1 symmetric equilibria with sincere voting are analyzed for two candidate elections and for multicandidate elections under rank scoring rules approval voting and single transferable vote voting rules that can guarantee representation for minorities in multiseat elections generate in this model the most severely unequal campaign promises

political influence on the central bank international evidence political influence on the central bank is measured bere by looking at the probability that a central bank governor will be replaced shortly after a political change of government the governor changes about half the time witbin six months of a nonconstitutional or other radical change of government a military coup or a restoration of democracy the governor is much less likely to change within six months following a routine change in the head of government about one fourth of the time in developing countries and one tenth in industrial countries these indicators vary across countries and correlate statistically with inflation and its variability and with real growth and real interest rates differences in the vulnerability of the central bank to political instability in political instability itself and in central bank turnover in nonpolitical periods seem to be a major part of the explanation for why developing countries have on average higher and more variable inflation than industrial countries do

does delegation of fiscal policy to an independent agency make a difference evidence from intergovernmental transfers in india abstract one area of fiscal policy in which several countries have delegated responsibility to an independent agency is the distribution of national resource transfers across regional and local governments such delegation is expected to promote equity and efficiency and mitigate distortions created by political incentives this paper tests whether delegation to an independent agency indeed makes a difference by contrasting the impact of partisan politics on two types of fiscal transfers to states in the indian federation over a period of time 1972 1995 the pattern of evidence shows that while the transfers that are determined by the central political executive are indeed distributed to favor particular states that are politically important for the central ruling party the transfers that are delegated to an independent agency serve to constrain such partisan impact

the revolving door and worker flows in banking regulation abstract this paper traces career transitions of federal and state u s banking regulators from a large sample of publicly available curricula vitae and provides basic facts on worker flows between the regulatory and private sector resulting from the revolving door we find strong countercyclical net worker flows into regulatory jobs driven largely by higher gross outflows into the private sector during booms these worker flows are also driven by state specific banking conditions as measured by local banks profitability asset quality and failure rates the regulatory sector seems to experience a retention challenge over time with shorter regulatory spells for workers and especially those with higher education evidence from cross state enforcement actions of regulators shows gross inflows into regulation and gross outflows from regulation are both higher during periods of intense enforcement though gross outflows are significantly smaller in magnitude these results appear inconsistent with a quid pro quo explanation of the revolving door but consistent with a regulatory schooling hypothesis

the value of democracy evidence from road building in kenya ethnic favoritism is seen as antithetical to development this paper provides credible quantification of the extent of ethnic favoritism using data on road building in kenyan districts across the 1963 2011 period guided by a model it then examines whether the transition in and out of democracy under the same president constrains or exacerbates ethnic favoritism across the post independence period we find strong evidence of ethnic favoritism districts that share the ethnicity of the president receive twice as much expenditure on roads and have five times the length of paved roads built this favoritism disappears during periods of democracy jel d72 h54 j15 o15 o17 o22 r42

can mandated political representation increase policy influence for disadvantaged minorities theory and evidence from india accountable governments often fail to reflect the interests of disadvantaged minorities this paper exploits the institutional features of political reservation as practiced in indian states to examine the role of mandated political representation in providing disadvantaged groups influence over policy making ifind that political reservation has increased transfers to groups which benefit from the mandate this finding also suggests that complete policy commitment may be absent in democracies as is found in this case jel d72 d78 hl 1 h50

what role for the epas in the caribbean the aim of this paper is to consider the possible implications of an epa between the eu and the caribbean the focus is on the caribbean economies and on the question of what form of epa might be pro development and pro poor for the region the discussion outlines the specificities of the caribbean region and some of the economies therein as well as detailing the key analytical issues which need to be considered the empirical analysis focuses on examining patterns of trade by product and geographical source at a highly detailed level of disaggregation the analysis suggests that future epa arrangements are more likely to lead to significant trade diversion as opposed to trade creation or trade reorientation mfn liberalisation would serve to minimise trade diversion but in turn is likely to lead to greater adjustment costs if the epas are to be pro development and pro poor than maintaining increasing levels of market access to the eu and ensuring appropriate levels of assistance and aid will be critical

the educational and professional background of central bankers and its effect on inflation an empirical analysis we assume that central banks can control inflation so that inflation rates reflect the preferences of the central bank council the hypothesis to be tested is that these preferences depend on the central bankers educational and or professional background in a panel data analysis for the euro area and eleven countries since 1973 we explain inflation either by the weights with which the educational and professional characteristics of the 391 council members were represented in the various central bank councils or by the education or profession of the median council members control variables are added using professional background weights we find that former members of the central bank staff and in some specifications former insurance executives commercial bankers other businessmen and public servants prefer significantly lower inflation rates than former union leaders and politicians do in the median voter analysis former central bankers commercial bankers businessmen and public servants are also significantly more inflation averse than economic scholars as for the education of the council members our results are less robust however if the median member of the central bank council has studied business the inflation rate is significantly lower than if she has studied economics taking educational and professional background together central banks seem to attract or produce primarily economists who are monetary conservatives whereas keynesian economists are more prominent in academia jel classification e42 e58

a drawback of electoral competition in most major democracies there are very few parties compared to the number of possible policy positions held by voters we provide an efficiency rationale for why it might be appropriate to limit the proliferation of parties in our model the larger the number of parties the greater the inefficiency of the outcome of electoral competition the reason is that when the number of parties increases electoral incentives push each party to focus its electoral promises on a narrower constituency and then special interest policies replace more efficient policies that have diffuse benefits the analysis provides a possible explanation for the existence of institutional features that limit the extent of electoral competition thresholds of exclusion runoff electoral systems and majoritarian two party political systems jel d82 l15

independent candidates and political representation in india we estimate the causal effect of independent candidates on voter turnout and election outcomes in india to do this we exploit exogenous changes in the entry deposit candidates pay for their participation in the political process changes that disproportionately excluded candidates with no affiliation to established political parties a one standard deviation increase in the number of independent candidates increases voter turnout by more than 6 percentage points as some voters choose to vote rather than stay home the vote share of independent candidates increases by more than 10 percentage points as some existing voters switch who they vote for thus independents allow winning candidates to win with less vote share decrease the probability of electing a candidate from the governing coalition by about 31 percentage points and ultimately increase the probability of electing an ethnic party candidate altogether the results imply that the price of participation by independents is constituency representation in government

do markets care who chairs the central bank this paper assesses the effects of central bank governor appointments on financial market expectations of monetary policy to measure these effects we assemble a new dataset of appointment announcements from 15 countries and conduct an event study analysis on exchange rates bond yields and stock prices our main findings are threefold first exchange rates and bond yields display a statistically significant response to the announcement of a new governor especially when the appointee s identity was not anticipated in advance second the reactions are especially pronounced for central banks lacking either independence or a clear nominal anchor third new governors are not generally perceived to lack credibility there is no tendency for announcements to be associated with jumps in inflation expectations

television and voter turnout i use variation across markets in the timing of television s introduction to identify its impact on voter turnout the estimated effect is significantly negative accounting for between a quarter and a half of the total decline in turnout since the 1950s i argue that substitution away from other media with more political coverage provides a plausible mechanism linking television to voting as evidence for this i show that the entry of television in a market coincided with sharp drops in consumption of newspapers and radio and in political knowledge as measured by election surveys i also show that both the information and turnout effects were largest in off year congressional elections which receive extensive coverage in newspapers but little or no coverage on television

history regionalism and caricom trade a gravity model analysis abstract a gravity model is fitted to 17 annual cross sections 1980 1996 of bilateral trade data imports and exports between caricom member states and selected trading partners specifically the paper investigates the effects of regional integration colonial legacies and linguistic ties on caricom bilateral trade flows between member states and between member states and north american and european union countries the empirical results indicate that history and regionalism have had significant and strong effects on caricom trade additionally two traditional explanatory variables in gravity models income per capita and population have significant and positive effects on caricom trade while the distance between trading partners exerts the expected negative effect

do old habits die hard central banks and the bretton woods gold puzzle abstract we assess the importance of individual and institutional experience in shaping macroeconomic policy by studying the persistence of gold standard monetary practices in the bretton woods system using new data from the imf archives we show that although they were not required to countries continued to back currency in circulation with gold the longer an institution spent in the gold standard and the older the policymakers the tighter the link between gold and currency such old habits prevented dollars and gold from working as perfect substitutes and ultimately contributed to the demise of the bretton woods system our findings highlight the persistence of past practices even in the face of radical institutional change and its consequences on the international monetary system

economic adversity and voter turnout does economic adversity affect whether people vote data from the november 1974 current population survey are used to estimate the effect that unemployment poverty and a decline in financial well being have on voter turnout each economic problem suppresses participation these individual level findings are corroborated with aggregate time series data from presidential and midterm elections since 1896 when a person suffers economic adversity his scarce resources are spent holding body and soul together not on remote concerns like politics economic problems both increase the opportunity costs of political participation and reduce a person s capacity to attend to politics

choosing the federal reserve chair lessons from history stable noninflationary growth has been the goal of monetary policymakers since the inception of the modern federal reserve in the mid 1930s policymakers however have come closer to achieving this goal in some eras than in others under chairmen william mcchesney martin jr in the 1950s and early 1960s and alan greenspan in the late 1980s and beyond the federal reserve presided over decades of low inflation and mild real fluctuations under paul volcker in the 1980s the federal reserve oversaw a significant recession but one that returned the american economy to near price stability and steady growth in contrast under marriner eccles in the late 1930s the federal reserve triggered a recession that was second in severity only to the great depression and that resulted in severe deflation and under arthur burns and g william miller in the 1970s the u s economy experienced high and rising inflation and painfully variable real growth an obvious question is why monetary policy has been so much more successful under some federal reserve chairmen than others this question has taken on new urgency because current chairman alan greenspan will need to be replaced in the near future it is crucial to understand what has determined policy success in the past and to identify factors that help predict success only by learning the lessons of history will we be able to choose a new federal reserve chair who is likely to replicate our policy triumphs and avoid our policy failures this paper demonstrates that the key determinants of policy success have been policymakers views about how the economy works and what monetary policy can

monetary policy by committee consensus chairman dominance or simple majority this paper studies the theoretical and empirical implications of monetary policy making by committee under four different voting protocols the protocols are a consensus model where a supermajority is required for a policy change an agenda setting model where the chairman controls the agenda a dictator model where the chairman has absolute power over the committee and a simple majority model where policy is determined by the median member these protocols give preeminence to different aspects of the actual decision making process and capture the observed heterogeneity in formal procedures across central banks the models are estimated by maximum likelihood using interest rate decisions by the committees of five central banks namely the bank of canada the bank of england the european central bank the swedish riksbank and the u s federal reserve for all central banks results indicate that the consensus model fits actual policy decisions better than the alternative models this suggests that despite institutional differences committees share unwritten rules and informal procedures that deliver observationally equivalent policy decisions

a sceptic s comment on the study of economics a survey was carried out among two groups of undergraduate economics students and four groups of students in mathematics law philosophy and business administration the main survey question involved a conflict between profit maximisation and the welfare of the workers who would be fired to achieve it significant differences were found between the choices of the groups the results were reinforced by a survey conducted among readers of an israeli business newspaper and phd students of harvard it is argued that the overly mathematical methods used to teach economics encourage students to lean towards profit maximisation

women in politics evidence from the indian states abstract this paper uses panel data from the 16 larger states in india during the period 1967 2000 to study the effects of female political representation in the state legislatures on public goods policy and expenditure it finds that politicians gender affects policy but that their social position i e their caste should be taken into account as well female legislators in seats reserved for lower castes and disadvantaged tribes invest more in health and early education and favor women friendly laws such as amendments to the hindu succession act which was designed to give women the same inheritance rights as men they also favor redistributive policies such as land reforms in contrast female legislators from higher castes do not have any impact on women friendly laws oppose land reforms invest in higher tiers of education and reduce social expenditure the causal effect of female legislators is estimated using close elections between women and men

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning

campaign war chests as a barrier to entry in congressional races i introduction issues surrounding the nature and degree of competition in political races have been examined extensively in both the economic and political science literature with most attention focused on the interplay between incumbent and challenger expenditures and electoral success this study extends our understanding of political competition by investigating the impact of an incumbent s war chest on a challenger s decision to mount a campaign 1 for this purpose a war chest is defined as a pool of unencumbered funds accumulated prior to the start of a campaign for elective office 2 sorauf 1988 182 has observed that early receipts even without early spending discourage competition in the primary and attractive challengers in the general election jacobson 1985 26 has argued the most effective strategy for keeping a seat in congress is to avoid serious opposition contemporary critics and reformers of campaign financing practices use such words as frighten intimidate and overpower to describe the role of an incumbent s war chest 3 despite this kind of attention little is actually known about the degree to which war chests diminish entry or reduce the quality of a challenge we present three alternative mechanisms to explain how an incumbent s war chest might deter entry each is based upon a war chest serving as a credible commitment to spend heavily if challenged specifically war chests may either represent excess capacity in financing a campaign or serve as a signal of non observable incumbent characteristics that define a formidable opponent aside from determining whether an incumbent is challenged a war chest might also affect the quality of the challenger for example potential candidates with prior political experience may be unwilling to risk their political capital on a long shot proposition to test for these effects on entry into house races a trichotomous logit model is estimated the choices are uncontested race contested by an ordinary challenger and contested by an experienced challenger although the empirical model is not sufficiently rich to fully distinguish among competing mechanisms the regression results are robust incumbent war chests negatively affect the likelihood of a contested race and the quality of the challenger ii war chests as a barrier to entry becker 1958 106 in comparing economic and political competition observed i n an ideal political democracy competition is free in the sense that no appreciable costs or artificial barriers prevent an individual from running for office in the theory of the firm entry occurs when the expected postentry stream of profits minus the cost of entry is positive analogously an individual will enter a political race when the expected gain from holding office is positive expected gain as defined by baron 1989 is a function of campaign costs the probability of winning and the personal valuation placed by the candidate on the office the first two determinants are partly endogenous depending upon the strategic interplay of the candidates the third aside from its direct effects indirectly affects the first two for example persons hungry for office may be committed to expending greater effort and funds on their campaigns thus increasing their probability of winning similarly as lott has emphasized nontransferable brand name capital would be another factor creating a commitment to aggressively pursue office thereby affecting campaign costs and the probability of winning 4 that some challengers are deterred however need not imply the existence of a political market failure in a contestability sense the lack of a viable challenger on the ballot does not imply a lack of competition good representation will discourage entry similarly the fact that some incumbents will aggressively seek re election frightening away potential challengers is not a sign that competition is lacking