long live the doge death as a term limit on venetian chief executives can an electorate use the projected life expectancy of a lifetime appointed chief executive to enforce binding informal term limits informal term limits based on the life expectancy of a chief executive candidate at election would enable an electorate to exercise discretion in adjusting tenure lengths to minimize expected turnover and tenure length costs while also providing a strictly binding term limit death we provide a detailed historical case study of venice from 1172 to 1797 when the ruling patricians utilized informal term limits on their chief executive the doge relying on the projected life expectancy of ducal candidates

budget processes and commitment to fiscal discipline abstract we present a framework of investigation into the political economy of the budget process our model suggests that institutional rules governing the budget process can be found to limit the importance of fiscal illusion empirical evidence supports that proposition the choice of rules depends on the political environment as well as the dominant source of uncertainty in the budget process

term limits and pork barrel politics abstract we develop a dynamic model of democratic politics in which both potential office holders and the electorate have heterogeneous ideologies voters have incomplete information about candidate ideologies so they must use information from previous positions taken in office to make informed re election decisions we characterize the effects of term limits on the evolution over time of the ideological positions taken by office holders and derive the implications for voter choice and welfare contributions of our paper include we detail how pork provision by more senior incumbents interacts with term limits to affect electoral outcomes pork provision transfers of resources from districts with junior legislators to districts with more senior legislators induces voters to be more forgiving of extreme location by incumbents especially incumbents in small or poor districts pork provision can explain why re election probabilities in congress exceed those for governors term limits reduce voter welfare when all that matters are the ideological positions taken by the office holder term limits may be advantageous when senior incumbents can extract benefits for their constituencies at the expense of districts with more junior representatives large or rich districts especially value term limits when there is substantial pork provision we characterize the welfare of all voters not just the median voter

on the mis measurement of legislator ideology and shirking in this paper we show that current statistical measures of legislator s shirking are implicitly based on the electoral concept of a unique majority rule equilibrium point in the policy space where elections are contested we note that such equilibria do not exist generically and present statistical results showing that cross sectional regressions where legislators voting indices are predicted by district average demograhic and economic data are mis specified we also discuss a weaker equilibrium construct the uncovered set and present statistical evidence showing that differences in voting behavior between senators from the same state are positively related to the heterogeneity of the electorate we argue that current evidence alleged to show shirking by senators is equally consistent with senators who perfectly represent an idiosyncratic constituency that cannot be represented by district average data

term limits and electoral accountability abstract periodic elections are the main instrument through which voters can hold politicians accountable from this perspective term limits which restrict voters ability to reward politicians with re election appear counterproductive we show that despite the disciplining effect of elections term limits can be ex ante welfare improving from the perspective of voters by reducing the value of holding office term limits can induce politicians to implement policies that are closer to their private preferences such truthful behavior by incumbents in turn results in better screening of incumbents we characterize under which circumstances two term or even longer term limits are the optimal institution for voters

shirking and sorting in a political market with finite lived politicians this paper analyzes principal agent slack in the context of a political market composed of voters challengers and incumbents the introduction of a last period via finite livedness in combination with voters imperfect information about politicians preferences causes time varying shirking behavior on the part of politicians political markets eventually sort out those politicians with significantly deviant policy preferences potentially providing a solution to the last period problem and enabling politicians to make credible commitments in the extreme sorting can insure that it is not worthwhile for potential shirkers to run for office a systematic relationship between political shirking and number of terms in office may exist and depends on how quickly sorting takes place we show that evidence of little if any shirking is quite consistent with politicians having diverse and strongly held policy preferences in addition if sorting is a significant feature of political markets cross sectional studies will tend to oversample little and non shirking politicians compared to longitudinal studies reinterpretations of existing empirical work are also discussed

how efficient is the voting market it is by now well established that good macroeconomic conditions benefit the incumbent president and his congressional party confreres at the polls this result is not unanimous see for example stigler or arcelus and meltzer2 and may not be universal 3 however the basic results in kramer 4 the progenitor of the modern literature on the effect of economic conditions on elections seem to have stood the test of time the broad consensus of this literature is that voters in presidential and congressional elections 1 reward income growth and punish unemployment and inflation 2 probably give greater weight to income growth than to unemployment and inflation and 3 myopically ignore any information beyond the recent past say prior to the election year 5 so far however the data have outrun interpretation while economic conditions seem to matter we do not know why they matter or how plausibly to characterize the process by which voters translate information about economic conditions into voting decisions this article tries to fill that gap though it extends the empirical literature to gubernatorial elections its main con

brand names and barriers to entry in political markets the most obvious implication of this discussion is that barriers to entry in politics will raise the costs of governments transferring wealth more generally it will raise the cost of public provision of goods and services in the case of transfers the inefficiency created by barriers depends on whether one values government transfers the total transfer the transfer to the beneficiaries plus the politician s commission is maximized by the politician who can create support the most efficiently for other governmental services which are viewed as efficiency creating e g national defense these barriers reduce the amount of a valuable output we desire to purchase this result also supplies a possible efficiency explanation for the limitation on the number of terms imposed on the presidency and many governorships brand names are not really the barriers information costs are what cause brand name to be used and are the more fundamental barrier to entry what we are arguing is that private and not public organizations can in certain respects better overcome these information costs

leviathan at bay constitutional versus political controls on government a dependence on the people is no doubt the primary control on government but experience has taught mankind the necessity of auxiliary precautions james madison federalist no 51 i introduction citizens possess two main methods of controlling politicians elections and constitutional constraints the british system of parliamentary supremacy and america s written constitution with judicial review by the supreme court reflect the contrasting approaches political theorists continue to debate the relative effectiveness of constitutional and electoral controls on politicians these controls seemingly are substitutes if elections effectively control politicians constitutional constraints become redundant and can only lower the effectiveness of government public choice theory separately examines elections and constitutions an extensive literature beginning with barro 1973 analyzes electoral controls but has not considered constitutional controls constitutional political economy examines various constraints on politicians buchanan 1987 brennan and buchanan 1980 yet assumes elections insufficiently control politicians recent studies of term limits i e dick and lott 1993 represent one effort to analyze constitutional and electoral controls together i integrate constitutional limits on government into a model of electoral control of politicians my model features two types of politicians knaves who abuse discretionary powers at their disposal and angels who never misuse power citizens delegate a variable amount of discretionary power to government which provides benefits if properly employed but lowers welfare if abused the interaction between constitutional limits and elections is complicated constraints complement electoral controls based on politician payoffs selection and incentive effects while the screening and sorting effects substitute for constraints i proceed in this paper as follows section ii describes the citizen s constitutional delegation of authority to government and incorporates electoral screening of candidates optimal delegation of power increases with the effectiveness of screening but unless screening is perfect constitutional limits help keep leviathan at bay section iii endogenizes the candidate pool and examines the selection effect constitutional controls the composition of the candidate pool depends on delegation to government which has implications for the propensity of politicians to pursue their personal self interest while constitutional political economy relies heavily on the threat from knavish politicians many political observers contend that most politicians sincerely pursue the public interest as they perceive it i show that politicians observed honesty does not invalidate the argument for chains section iv considers the ability of repeated elections to sort knaves out of office the sorting effect increases optimal delegation of power to government but constraints can still play a useful role if knaves try for office and electoral review is not continuous section v allows knaves to act opportunistically and considers the incentive effect of retrospective voting and post political incentives constitutional constraints complement electoral incentives by limiting opportunistic knaves gain from shirking the final section concludes ii constitutional choice in a model of angels and knaves i adopt a principal agent view of government a representative citizen selects an agent to exercise the powers of government on her behalf the representative citizen framework abstracts from differences amongst the population about the actions the agent should undertake the control of politicians becomes difficult in the absence of a common interest both positively and normatively consequently models of electoral control typically employ this assumption 1 the agency model assumes a conflict of interest between the principal and agent

policymakers horizon and the sustainability of international cooperation abstract this paper examines the impact of policymakers horizon on the sustainability of international cooperation we describe a prisoners dilemma game between two infinitely lived countries run by policymakers we show that re election incentives can act as a discipline device making it easier to sustain cooperation between policymakers with finite but potentially renewable mandates than between infinitely lived policymakers we also show that when voting suffers from a recency bias policymakers may have incentives to collude to get re elected and term limits may help international cooperation

the incumbency effects of signalling much literature on political behaviour treats politicians as motivated by re election choosing actions to signal their types to voters we identify a novel implication of incumbent signalling because incumbents only care about clearing a re election hurdle signals will tend to cluster just above the threshold needed for re election this generates a skew distribution of signals leading to an incumbency advantage in the probability of election we also solve for the optimal threshold when voters have the ability to commit

campaign finance reform and electoral competition using state senate data from 1984 through the beginning of 2002 this paper finds that campaign donation regulations clearly reduce the competitiveness in political races this is reflected in several dimensions conservative estimates indicate that different donation limits are associated with anywhere from a 4 to over a 23 percentage point increase in win margins the regulations increase the probability that only one candidate will run for office and they increase the probability that incumbents win re election campaign finance regulations also tend to reduce the number of candidates who run for office by an average of about 20 percent

final voting in legislatures in representative democracies such as the united states legislatures provide the transmission mechanism through which pressure from private interests becomes public policy considerable attention has been given in the literature to explanations of the relevant forces that appear to be driving the legislative process for example much research has focused on the relative impact of economic vs ideological influences on congressional voting behavior in this approach the way that legislators vote on proposed legislation is modeled as a function of the preferences of various economic and ideological interests groups including the legislator s own preferences for wealth and ideology james kau and paul rubin 1979 joseph kalt and mark zupan 1984 sam peltzman 1985 missing from this approach is the idea that when legislatures are the transmission mechanism they are costly and imperfect organizations for generating political influence gary becker 1983 as such rules and institutions will emerge that are related to problems of internal control within the organization of a legislature in this paper we focus on the role of floor voting from the standpoint of legislator organization and control we seek to expand the interpretation of the meaning of floor voting activity by examining the timing sequence and outcomes of such votes specifically we look at final floor voting in the u s congress the patterns described in the analysis below suggest that a broader analytical perspective on the economic function of floor voting is required the findings also suggest that to identify more precisely the forces that are driving legislator voting behavior it is important to recognize the role of legislative transactional costs and institutional constraints in section i the conceptual framework for the empirical results is discussed in more detail the purpose is not to develop a fullblown theory of legislative organization rather it is to focus the reader s attention on several hypotheses about the function of final floor voting as a device for controlling legislator behavior within the legislature empirical results including an explanation of the timing and sequence of final votes on bills are reported in section ii the data for these tests are drawn from legislative activities in the u s house of representatives during the 96th and 98th congresses some concluding remarks are offered in section iii

on the policy ineffectiveness proposition and a keynesian alternative a rejoinder i the basis of rush and waldo s rw results is the introduction of a war dummy variable in the dg equation this is however difficult to justify in the context of a rational expectations model under incomplete learning wars by their very nature are unique events and it is not clear how the public are supposed to learn the quantitative effects that the ending of three totally different wars may have had upon the growth of real government expenditure the fact that in i946 the public knew that world war ii was over does not mean that they could also estimate its precise quantitative effect on government expenditure rw estimate their dg equation using data for the whole of the period i943 73 and i943 85 thus implicitly assuming that all these data were available to the public in i946 for the computation of the coefficient of the war dummy in the dg equation but in i946 the public could not possibly have known about the timing and the intensities of the korean or the vietnam wars the assumption of complete learning that underlies the rational expectations hypothesis in general and rw s version of the nc model in particular is especially troublesome when the model contains dummy variables that correspond to unique events

an analysis of welfare effects of legislative term limits this paper analyzes the welfare effects of term limits forstate legislators legislators tend to pursue their ownobjectives and deviate from the interests of voters as theystay longer in office however such long term incumbentsbecome more productive in transferring wealth to theirconstituents due to seniority they gain and voters re electthe incumbent term limits reduce the maximum seniority of adistrict s legislator and of other districts legislators aswell affecting the relative seniority of the legislator thus the legislator gains relative seniority sometimes andloses other times under term limits as a consequence votersof a district may or may not benefit from term limits thewelfare effects of term limits depend crucially on the shapeof the voters utility function

government spending and budget deficits in the industrial economies fiscal policy nouriel roubini and jeffrey sachs this paper examines the evolution of the size of government and of budget deficits in oecd economies we highlight the rapid increase in government spending in the 1970s the sharp rise in budget deficits and public debt after 1973 and the reversal in these trends in the 1980s the increase in the size of government was associated in part with the slowdown in growth after 1973 but also reflected gradual adjustment of the ratio of spending to output towards a long run target which depends on political and institutional characteristics of the economy the political orientation of the government the degree of wage indexation and the degree of stability of the political system such factors also explain the size of budget deficits when faced with an adverse shock subsequent deficit reduction requires a measure of political consensus we note that such consensus is hard to achieve in multi party coalitions in consequence countries with such a political structure tended in consequence countries with such a political structure tended toin consequence countries with such a political structure tended to experience much more rapid increases in their debt gnp ratios

an analysis of the impact of congressional term limits we examine the impact of a six term tenure limit on members of the u s house of representatives the first part of this study develops a methodological framework for simulating the quantitative impact of term limits the second part of this study uses this framework to estimate the effects of term limits on i the value of holding office ii turnover and iii the size of the democratic majority in the house both steady state and transition period effects are explored i introduction the widespread support for term limitations seems to have caught both popular commentators and academic researchers by surprise 1 why do voters want them and what is the likely impact of such legislation a small but growing literature concentrates on the first of these two questions adams and kenny 1986 dick and loft 1993 in contrast this paper addresses the second in particular it investigates the empirical consequences of imposing a twelve year six term tenure limit on the members of the u s house of representatives both the degree and timing of the impact of the alternative regimes are investigated here the issue of timing arises because term limits can have very different effects depending upon how they treat currently serving congressmen we focus our investigation on the two legislative regimes that we believe have the greatest chance of being implemented limited grandfathering and complete grandfathering 2 assuming term limit legislation is passed in 1992 we trace out the time paths of the effects associated with each of these regimes as we shall see there are important transitional differences between the two the paper proceeds as follows section ii addresses the methodology used in this analysis section iii considers the impact of term limits on i the value of holding office ii turnover and iii the democratic majority in the house section iv concludes ii methodology the first concern of this paper is to model the seniority structure of the house in the absence of congressional term limits let n t identify the number of congressmen in their nth term at time t let r define the proportion of congressmen that successfully move from term n to term n l note that there are a number of reasons for not continuing to an additional term besides electoral defeats there are voluntary departures to seek other elective office or private sector employment retirements and deaths given any set of continuation rates r sub 1 r sub 2 and an initial distribution of representatives across terms n sub 1 t n sub 2 t one can construct what the seniority structure of congress will look like any number of periods into the future for instance the number of congressmen in their jth term at time t m is given by mathematical expression omitted where n sub 1 t 1 m j identifies the number of representatives who enter congress in time period t 1 m j t 1 and j and m o ifj m 1 one simply takes the number of congressmen currently serving their j m th term and multiplies this by the appropriate product of continuation rates if j m 1 one needs to identify the number of congressmen who will enter congress in time period t l m since congress always has 435 members the number of arrivals must always equal the number of departures the number of first term congressmen who leave office at the end of time period t is given by 1 r sub 1 n sub 1 t similarly the number of second term congressmen who leave office at the end of time period t is given by 1 r sub 2 n sub 2 t thus the number of representatives who will enter congress in time period t l is given by mathematical expression omitted equations 1 and 2 allow one to recursively solve for n sub 1 t 1 m j for all m j 1 i

why voters vote for incumbents but against incumbency a rational choice explanation in recent elections voters supported initiatives to limit the number of terms that their representatives may serve yet at the same time overwhelmingly re elected their incumbents we provide a theoretical explanation for this and other puzzles associated with voting on term limitations the pattern of voting on term limits can be explained by the desire to redistribute power from one party to another from one branch of government to another and from districts with long term incumbents to districts whose representatives have served only for a short time span we test these hypotheses by looking at voting patters on california proposition 140 and the vote on the 22nd amendment with generally positive results

a critique of the proposed tests of the natural rate rational expectations hypothesis the failure of the governments of most industrialised countries over the past decade to deal successfully with the problems of rising unemployment and high and often accelerating rates of price and wage inflation has revived interest in the pre keynesian macro economics of sound money and has renewed the controversy of the 1930 s over what governments should or should not do if they wish to achieve full employment with reasonable price stability in democratic societies keynesian economics has come under attack both by those who primarily oppose interventionist policies on ideological grounds and by the so called new classical macro economists who adhere to the natural rate of unemployment hypothesis nrh advanced by phelps i967 and friedman i 968 and the hypothesis of rational formation of expectations reh originally due to muth i96i armed with this joint natural rate rational expectations nr re hypothesis the new classical macro economists have argued that in a world capable of being represented by linear or log linear relations with a unique and stable equilibrium and no information discrepancy between the government and the private sector no government macro economic policy whether monetary or fiscal no matter how ingeniously formulated and how effectively implemented can have any systematic or lasting impact upon the level of output or the rate of unemployment 2 clearly this fundamental policy

adjusted p and f tests and the keynesian classical debate the debate over the manner in which changes in money growth rates affect real economic activity and over the role that systematic monetary policy plays in this relationship has been a protracted one yet it remains unresolved this paper shows that a model proposed by fischer 13 in which multi period ahead expectational errors in money growth are crucial for the determination of real economic aggregates is empirically superior to two leading alternatives when the three are estimated on a sample of u s quarterly data spanning the 1970s in addition we show that the test used to demonstrate these results a version of davidson and mackinnon s 9 p test which we adjust experimentally to remove small sample biases in its size is in this application more powerful than the more commonly used f ratio form of the likelihood ratio test we use these results on relative power to explain and reconcile some conflicting decisions to which the two alternative tests lead

unit root hypothesis new classical and keynesian models abstract following perron econometrica 1989 57 1361 1401 the variables in the new classical and keynesian output equations are shown to be trend stationary therefore these models are evaluated for the united states with the standard non nested hypothesis tests the majority of these tests have rejected the new classical in favour of the keynesian approach

fragmented government effects on fiscal policy new evidence most industrialized countries entered the 1980s with their public finances in disarray at the time persistent deficits pushed up public debt to gdpratios despite such similarities deficit spending varies substantially between countries and within countries over time recent theoretical and empirical research has considered how differences in political arrangements affecting national policy formation might explain variation in fiscal policies pursued using a panel of 22 oecd countries over the 1971 1996 period this paper extends previous literature on the effects of fragmented government on fiscal policy outcomes in various directions first we focus on data relating to central government instead of general government as all theories refer to central government second not only do we analyze the effect of size fragmentation of government we also examine government s position vis a vis parliament and government s political fragmentation we find evidence that more fragmented government defined in terms of the number of political parties in a coalition or the number of spending ministers have higher deficits there is also some evidence that governments that dispose of excess seats in parliament have lower deficits right wing governments appear to have been fiscally more responsible in the seventies political fragmentation does not affect government s budget deficit

a disequilibrium model of rational expectations for the u k so far the new classical model and the policy ineffectiveness proposition have been tested essentially within an equilibrium framework and disequilibrium methods of estimation have been used to estimate the labor market models in this paper the authors develop an aggregate goods market model for the united kingdom in which the new classical rational expectations hypothesis and the disequilibrium approach are integrated their estimates of the model show that the structural parameters are well determined and price adjustment in the united kingdom is very sluggish therefore the new classical policy ineffectiveness proposition is not valid for the united kingdom copyright 1991 by royal economic society

self imposed term limits in reconciling voters behavior with legislative term limits dick and lott argue that since more senior representatives are better at rent seeking there is an inefficient tendency to re elect incumbents in their model term limits are preferred collectively by constituencies even though no constituency would independently oust its incumbent representative however many term limits are unilaterally self imposed in particular the 22nd amendment limiting presidents terms to two and their model cannot explain these limits in this comment i suggest that term limits may be self imposed by risk averse voters who prefer cycling between left and right wing candidates to a once and for all election that imposes a candidate of a single ideology on the entre electorate the market failure that makes term limits helpful is that out of power minorities cannot bribe the median voter

multiparty government and economic policy making multiparty government has often been associated with poor economic policy making with distortions like lower growth rates and high budget deficits one proposed reason for such distortions is that coalition governments face more severe common pool problems since parties use their control over specific ministries to advance their specific spending priorities rather than practice budgetary discipline we suggest that this view of multiparty government is incomplete and that we need to take into account that coalitions may have established certain control mechanisms to deal with such problems one such mechanism is the drafting of a coalition agreement our results when focusing on the spending behavior of cabinets formed in 17 western european countries 1970 1998 support our claim that coalition agreements matter for the performance of multiparty cabinets in economic policy making more specifically we find clear support for an original conditional hypothesis suggesting that coalition agreements significantly reduce the negative effect of government fragmentation on government spending in those institutional contexts where prime ministerial power is low

congressional voting on term limits between 1990 and 1995 twenty three states unilaterally imposedterm limits on their own delegations tocongress in 1995 the house ofrepresentatives defeated a constitutionalamendment that would have limited the termsfor all of congress only weeks later thesupreme court struck down the individualstate laws in 1997 the house againbrought the issue to a vote which alsofailed this paper models congressionalvoting on term limits with a simple gamewithin an interest group theory withlegislators as imperfect agents ofconstituents the game foremost predictsthat members from term limited states wouldbe more likely to support term limits inthe first vote but no more likely on thesecond vote the empirical section employsprobit multinomial logit and orderedprobit maximum likelihood estimations toconfirm the stated hypotheses among otherresults in particular both the joint andconditional probability of a yea on thefirst vote and a subsequent nay on thesecond vote is higher for members fromstates that had unilaterally self imposedterm limits the results are robust tomodel specification estimator andalternative sampling implications areproposed in the concluding comments

term limits causes and consequences this paper consults multiple literatures to specify andevaluate the economic rationales for term limitation particularly on congress i first consider theories that aroseto explain among related issues why individual states mightunilaterally self impose term limits on their own delegationsto congress next i consider two main lines of argument foruniversal limits both of which begin with the empiricalphenomenon of high and rising congressional tenure first supporters of term limits argue that higher tenure biaseslegislatures toward inefficiency big government highspending second higher tenure creates inefficient anti competitive conditions in the legislative election market term limitation would remedy these inefficiencies by virtue ofdecreasing average tenure these claims are then evaluated inlight of the evidence amassed in the literature based on theliterature reviewed this paper finds that while term limitswill reduce average tenure there is no evidence to suggestthat term limits will affect the underlying causes of theseinefficiencies further research on a more general reform which would strike deeper at these underlying causes isimplied

does legislative turnover adversely affect state expenditure policy evidence from indian state elections the effect of legislative turnover on the size and composition of government expenditures in indian states over the 1980 2000 period is examined the paper finds that excessive turnover in indian state elections results in inefficient government expenditure policy first the higher the turnover the larger the government size second excessive turnover affects the allocative efficiency of government expenditures by skewing the composition of government spending toward pure consumption and away from more productive investment expenditures third the effect of turnover on fiscal policy is not linear public consumption expenditure is convex in turnover while public investment expenditure is concave in turnover

behavioral and institutional determinants of political business cycles the link between business cycles and the democratic politicalsystem has long been recognized by economists however thedeterminants of political business cycles are not well understood we discuss several institutional and behavioral determinants ofthose cycles such as revolving door appointments term limits andpreferences of the incumbent politician electorate and businesscommunity concerning the intertemporal pattern of publicexpenditure we show how they affect the cycle s amplitude in thecontext of a rational expectations model

an application of a kaldorian export led model of growth to the united states a kaldorian export led model of growth is analysed using post second world war united states data the structural parameter restrictions of the model are confirmed by the estimates kaldor s model which was originally conceived to be illuminating for describing a region or a small open economy is able to describe the annual fluctuations in the growth rate of a large open economy like that of the united states with only minor adjustments

strategic institutional choice voters states and congressional term limits states choices on term limits are quantified as a multiple categorical variable capturing variation in the type of limits passed measures of relative political influence in congress explain much of this variation using 1992 data on the american states the model controls for unobserved heterogeneity due to voter access to direct democracy in some states at 2002 values for congressional tenure and federal spending the model predicts approximately eight to ten additional states would choose to limit their own members terms but cannot under a supreme court ruling we discuss implications for institutional federalism and the potential passage of similar political institutions across the states

political determinants of budget deficits coalition effects versus minority effects this paper reexamines some recent empirical evidence on the hypothesis that institutional arrangements in the political process affect budget deficits the results of roubini and sachs 1989b are replicated and sensitivity analysis indicate that their results are robust however the main conclusion of roubini and sachs that coalition governments are less capable of budgetary discipline needs to be modified a reformulation of their variable representing political cohesion reveals that it captures the effects of minority governments rather than majority coalition governments the data support the hypothesis that it is harder to negotiate in parliament than within a government

the economics of split ticket voting in representative democracies in u s elections voters often vote for candidates from different parties for president and congress voters also express dissatisfaction with the performance of congress as a whole and satisfaction with their own representative the authors develop a model of split ticket voting in which government spending is financed by uniform taxes the benefits from this spending are concentrated while the model generates split ticket voting overall spending is too high only if the president s powers are limited overall spending is too high in a parliamentary system the authors model can be used as the basis of an argument for term limits copyright 1997 by american economic association

the relevance of unanticipated money growth in explaining output variation this paper tests a reduced form equation in which real gnp for the united states is explained by deviations of multi period m1 growth rates from ex ante expectations of those rates formed from one to eight quarters earlier the theoretical model is suggested by stanley fischer s 1977 article and may be thought of as a new keynesian model the equations are tested in both level and first difference specifications to allow for possible unit roots empirical results strongly support this model in preference to new classical and keynesian alternatives ex ante expectations or m1 growth are formed from multi period forecasts made by chase econometrics inc between 1970 and 1979

attendance rates political shirking and the effect of post elective office employment attendance rates political shirking and the effect of post elective office employment i introduction political shirking the degree to which a politican s actions deviate from the wishes of his constituents can take many different dimensions economists e g amacher and boyes 1978 davis and porter 1989 dougan and munger 1989 kalt and zupan 1984 lott 1987d nelson and siberberg 1987 and peltzman 1984 have debated whether shirking exists in how a politician votes when he does vote this divergence is measured through some particular special interest voting ratings e g american conservative union americans for democratic action etc however shirking can obviously take as many forms as there are outputs that a politician produces besides how he votes he also produces services for his constituents involving everything from being personally available to listen to the constituents grievances to ensuring effective handling of case work by his staff see for example fiorina 1977 fenno 1978 and cain et al 1987 1 one dimension that has not been sufficiently examined is the extent to which politicians shirk by failing to vote on pending legislation 2 no attention has been given to which mechanisms will make this particular type of shirking relatively more costly most economists agree that opportunitic behavior by politicians is limited by the threat of reelection e g amacher and boyes 1978 barro 1973 kalt and zupan 1984 nelson 1976 and telser 1976 3 by implication the level of shirking should be the greatest when a politician decides to leave office however this opportunistic behavior might be reduced to the extent that political parties or constituencies impose costs for shirking through affecting politicisns post elective office career or the careers of their children thus a politicians last term in elective office may not represent his last period in any meaningful sense the next section outlines the differing views on how politicians act when they no longer face the threat of reelection section iii describes some empirical evidence on what mechanisms may prevent this last period problem the final section discusses the impliactions of these results ii the last period whether economists view politicians as ideologues e g kau and rubin 1979 and kalt and zupan 1984 or as simply attempting to maximize political support e g barro 1973 ferejohn 1986 nelson 1976 and peltzman 1984 the threat of reelection is seen as preventing shirking as kalt and zupan 1984 298 phrase it it appears that the proximity of the next election inhibits ideological shirking even those who do not view the last period as affecting how a politician votes argue that it will affect how often he votes lott 1987a 1987b has argued that if voters can determine and elect politicians that have ideological preferences corresponding exactly to the wishes of constituents politicians voting patterns should continue to reflect those values even when the cost of shirking in terms of forgone future votes is low the penalty to ideologues of not votingfor their constituency in the last period when they no longer face reelection is the forgone utility from not doing what they personally value assuming that politicians also desire leisure politicians should continue to vote for what they believe in but they should vote less frequently since they no longer receive the additional return of larger future support mechanisms to overcome this last period problem have been suggested by becker and stigler 1974 9 10 they argue that opportunistic behavior can be controlled if officeholders face the loss of a pension or equivalently a posted bond in the event of opportunistic behavior in their last term however the actual pension system does not effectively eliminate the last period for politicians since retirement payments are not based on cheating in the last period

the nature of transactions in the u s aggregate goods market abstract a model to estimate the proportion of transactions taking place in the new classical disequilibrium and keynesian markets is developed to estimate the aggregate u s goods market our results show that more than 14 of the transactions take place in the new classical equilibrium markets and the rest in the keynesian markets

reconciling voters behavior with legislative term limits a puzzle exists over why voters continually re elect their congressional and state representatives although these same voters often support initiatives to limit the number of terms that their legislators may serve residents of california colorado and oklahoma voted in 1990 to limit the terms of their state legislators to tenures ranging from six to twelve years 1 in california these same voters however re elected 87 of 91 or 96 percent of all incumbent state representatives and senators whose terms they sought to limit 2 among re elected incumbents 67 or 77 percent had served as long as or longer than the maximum term prescribed under their state s term limit initiative voters defeated only two incumbents who would have been removed under the terms of california s tenure restrictions had they been in effect similar voter behavior characterized recent state elections in colorado and oklahoma 3 more generally these seemingly contradictory voter preferences also are apparent in public opinion polls at the federal level while 62 percent of voters immediately prior to the 1990 general elections indicated their intentions to reelect their congressman that same poll showed that only 24 percent said they approve of the way congress is handling its job gallup and newport 1990 pp 36 37 support for term limit initiatives and the low public esteem of legislators as a group both appear to be inconsistent with voters strong preferences for their own representative and the regular reelection of incumbents

a reexamination of the principal agent relationship in politics abstract that senators from the same state often have a large difference in their ideological voting records has proven inconvenient for a literature that has largely relied on a median voter model of elections one exception is palfrey review of economic studies 1984 51 139 156 whose analysis implies the hypothesis that the expected difference in such voting records varies directly with the variance of that state s density function of constituent ideological preferences this paper provides empirical testing consistent with this hypothesis the paper then argues that currently accepted methodology for measuring senatorial shirking is systematically biased towards indicating shirking and provides empirical analysis consistent with this argument

the influence of ideology on congressional voting i introduction the question of what determines congressional voting on legislation has inspired a number of recent empirical analyses all are in agreement that congressional voting on specific bills is correlated with the economic self interest of the representative s constituents and a measure of the representative s ideology as indicated by his broader voting record however the interpretation of the empirical results regarding the influence of ideology has generated more debate than consensus in the current literature kau and rubin 1979 find evidence that a congressman s ideology influences his voting but also find evidence for an alternative but not mutually exclusive hypothesis that a congressman s rating by ideological groups reflects membership in a logrolling coalition kalt and zupan 1984 argue that although a representative s votes are likely to reflect the economic interests and the ideology of his constituents the weak incentive for the constituent principal to monitor the voting behavior of his representative agent gives the representative the opportunity to shirk or vote according to his personal ideology rather than his constituents both nelson and silberberg 1987 and mcarthur and marks 1988 find that the degree of shirking increases as the opportunity cost of shirking decreases in contrast to the above findings peltzman 1984 argues that ideological voting by congressmen need not necessarily reflect shirking but instead may be a way for the representative to cheaply provide his constituents with information about his general position on issues what appears to be shirking allowed by an imperfect principal agent relationship may instead be signaling designed to at least partially overcome the imperfect nature of the relationship lott 1987 extends peltzman s signaling argument by hypothesizing that if politicians are viewed by constituents as search goods rather than experience goods then they will have an incentive to establish a political brand name by establishing a consistent ideological voting record dougan and munger s 1989 approach is similar to lott s they argue that politicians with strongly held views that match those of their constituents make ideal representatives because they are less likely to vote against their constituents interests when pressured by special interest groups an incumbent therefore has an incentive to invest in reputational capital by maintaining the consistency over time of his broader voting record because this reputational capital generates quasi rents in electoral competition with candidates who possess less of it neither lott nor dougan and munger find evidence of shirking in their analyses of congressmen s broader voting records as measured by ideological groups ratings dougan and munger also develop a variable intensity of commitment version of the reputational capital hypothesis this version contends that voters with unambiguously liberal or conservative ideologies may prefer a candidate whose voting record indicates that his views are more extreme than their own such a zealous candidate voters believe is even less likely to be influenced by special interest groups a congressman serving an unambiguously liberal or conservative constituency therefore has an incentive to establish and maintain an extremely ideological overall voting record in contrast a congressman serving a constituency with centrist ideological preferences has an incentive to establish an overall voting record that matches his constituency s ideological leanings the systematic deviation of a congressman s voting record from his constituents preferences when near either extreme of the ideological spectrum is not inconsistent with a faithful principal agent relationship one cannot help but be struck by the observation that those researchers finding evidence consistent with shirking studied voting on specific legislation whereas those researchers finding no evidence of shirking studied representatives broader voting records as measured by ideological ratings

the relationship between congressional spending and tenure with an application to term limits whether term limits would increase or decrease federal spending depends on the reason for the causal relationship between tenure and spending we investigate this subject by empirically studying congressional spending and tenure for all united states house and senate members who entered congress between the 94th and 102nd congresses 1975 1992 as our measure of congressional spending we use the national taxpayers union s congressional spending scores our study finds that a statistically significant relationship exists between congressional spending and tenure for some groups of congressmen we then test three hypotheses relating tenure and spending no single hypothesis is consistent with all of our empirical results nevertheless the small sizes of the empirical effects estimated in this study suggest that term limits would have an inconsequential impact on the level of federal spending at least via the moral hazard mechanisms described in this paper

dynamic government performance honeymoons and crises of confidence we use a formal theoretical framework to explore the interplay between a government s longevity and its performance ministers perform well when their careers are valuable this is so when the government s duration is expected to be long the government s survival depends on its popularity and finally that popularity depends on its ministers performance the feedback loop between performance and longevity means that multiple rational expectations equilibria can arise ministers work hard for a popular government but divert efforts elsewhere if they believe the government is doomed these alternatives are both self fulfilling prophecies however the presence of perhaps small random events that buffet the performance and popularity of a government is sufficient to pin down a unique equilibrium we explore the dynamics that arise a crisis of confidence involving the rapid collapse of a government s performance is sparked when a sequence of negative shocks push the popularity of the government below a unique critical threshold

on the dynamics of balance of payments constrained growth this paper assesses the dynamic behaviour of policies for resolving trade deficits we extend the thirlwall based model by introducing an equation for setting current account policy steady state solutions implying current account equilibrium emerge under autonomous spending contraction exchange rate develuation export expansion and import reduction stability holds with plausible restrictions simulations based upon the united states reveal that autonomous spending import and export policies behave similarly in correcting trade deficits exchange rate devaluation generates considerably slower adjustment corresponding output growth paths are also examined the study formally incorporates dynamics into the thirlwall approach for analysing balance of paymnets constrained growth

an empirical two market disequilibrium model for dutch manufacturing abstract we develop an empirical version of the aggregate two market fixprice model due to barro and grossman maximum likelihood estimation of the model appears to be difficult as a large number of local maxima occurs the number of local maxima is considerably reduced by the introduction of prior information on some of the standard deviations of the disturbance terms in the model satisfactory estimation results are obtained this way the model closely reproduces the post war dutch trade cycle although some problems remain especially with the seventies

towards a positive theory of political rhetoric why do politicians lie this paper presents a model in which politicians can increase the probability of election by making exaggerated claims about the benefits of their own platform referred to as positive campaigning and by exaggerating the undesirable characteristics of their rival i e negative campaigning such lies may be detected at some point in the future and thus result in a costly loss in reputation thus the politician must tradeoff immediate benefits against potential future costs of course this problem is similar to any commercial endeavor a car maker for example is tempted to claim that his car is better and the competition s is worse than it is but it is shown that the lack of transferable property rights to political office makes lying more likely in political markets it is also shown that there is a natural tendency for politicians to engage in more negative campaigning

legislator voting and shirking a critical review of the literature we set out to critically review the progress in answering two related questions what determines how legislators vote and how can shirking by legislators be measured in the first category the hypothesis that legislators shirk in order to indulge their personal ideological preferences has led researchers astray the theoretical underpinning is shaky on two counts first legislators who indulge their preferences at the expense of their constituents preferences put themselves at a competitive electoral disadvantage second the original two stage procedure used to measure ideological shirking is severely flawed among many other problems the residual measure of shirking implicitly assumes that the median voter is the relevant constituent principal for the legislator agent

internationalization and changes in tax policy in oecd countries the importance of domestic veto players this article examines the role that economic and political factors played in tax reform in organization for economic cooperation and development oecd countries from 1986 to 1990 some writers argue that economic integration forced states to reform their tax systems the authors findings indicate that economic openness had an indirect effect on the level of change in marginal tax rates the institutional structure of a country was most important countries that had only one veto player or only one institution or party whose approval was necessary for a bill to become law enacted more sweeping reform than states that had more than one veto player these results suggest that even when international or domestic economic factors might dictate a change in policy reform will not be as sweeping in countries in which agreement among several institutions and or parties is necessary

on the policy ineffectiveness proposition and a keynesian alternative one of the most controversial macroeconomic developments of the last decade has been the rise of the so called new classical nc approach to macroeconomic theory and policy lucas i972 sargent and wallace i975 and barro i 976 have presented models which combine the friedman i968 phelps i970 natural rate theory with assumptions of market clearing and rational expectations as is well known these models deliver the striking result that the mean values of real variables cannot be affected by the government s monetary policy the publication of the theoretical work establishing the impotency result led to much empirical testing of the nc models one of the most successful approaches from the point of view of nc advocates is contained in a series of papers by barro i977 i978 i98i barro and rush i980 and rush i986 recently pesaran i982 has questioned barro s results and claimed that once an implausible assumption is discarded barro s work can be rejected in favour of a keynesian alternative because pesaran has put forth an explicit counter model to barro s work his results are potentially quite important this paper examines in detail pesaran s work and conclusions

the nature of the adas model based on the islm model the aggregate demand and supply model adas is interpreted as a synthesis of the keynesian and neoclassical models it uses the islm model without explaining its nature to derive aggregate demand ad it is combined with an aggregate supply as curve to explain price inflation and output dynamics this paper argues that neither the ad nor as curve is conceptually the same as its microeconomic counterpart and adas is not a synthesis in fact adasimplies that discretionary policy is necessary and that price changes do not perform their traditional negative feedback function

term limits and electoral competitiveness evidence from california s state legislative races california s legislative term limits have dramatically reduced campaign expenditures real expenditures during the three general elections after the term limits initiative passed in 1990 were lower than in even 1976 this drop has occurred at the same time that races have become closer contests and more candidates are running for office by any measure term limits have coincided with large changes in the level of political competition even before term limits have forcibly removed a single politician from office the changes are so large that more incumbents are being defeated races are closer more candidates are running and fewer single candidate races than occur at any other time during our sample period from 1976 to 1994

some further evidence on the policy ineffectiveness proposition nonnested hypothesis tests are used to evaluate the keynesian and three variants of the new classical output equations the author s results based on the u s data show that the keynesian equation could not be rejected by the new classical equations for the periods 1946 85 and 1946 89 when the new classical equations are tested against the keynesian alternative with one minor exception the latter always rejected the former copyright 1992 by royal economic society

electoral accountability and corruption evidence from the audits of local governments we show that political institutions affect corruption levels we use audit reports in brazil to construct new measures of political cor ruption in local governments and test whether electoral account ability affects the corruption practices of incumbent politicians we find significantly less corruption in municipalities where mayors can get reelected mayors with reelection incentives misappropriate 27 percent fewer resources than mayors without reelection incentives these effects are more pronounced among municipalities with less access to information and where the likelihood of judicial punish ment is lower overall our findings suggest that electoral rules that enhance political accountability play a crucial role in constraining politician s corrupt behavior jel d72 k42 017

a simple explanation for why campaign expenditures are increasing the government is getting bigger abstract this paper shows that most of the large recent increases in campaign spending for federal and state offices can be explained by higher government spending this result holds for both federal and state legislative campaigns and gubernatorial races and across many different specifications the irony is that those who seem most concerned about the level of campaign expenditures are also frequently the ones who most strongly support increasing the size of government evidence is also examined on whether it is the composition and not just the level of expenditures that determines campaign expenditures and whether higher government expenditures similarly results in more candidates competing for office finally by focusing on the symptoms and not the root causes of ever higher campaign expenditures this paper argues that the current public policy debate risks changing the form in which payments are made rather than actually restricting the level of competition

estimation of a quarterly macroeconomic model with quantity rationing we specify and estimate a small fix price model with quantity rationing on both the goods and labor markets the side of the market which is rationed is random the model is able to generate a productivity cycle and the degree of capacity utilization is endogenous the rationing scheme allocating supply between the various components of demand is estimated the probabilities of being in the various regimes the intensity of the dispquilibrium on the markets and the results of policy exercises are discussed

predicting the institutional effects of term limits in this paper we develop a model to predict the seniority turnover and transition consequences of term limit reforms for any institution with a regularized procedure for rotating membership with this model we can predict the number of members who will be serving in their last term at any given time once an institution reaches a stable state under term limit reforms for example our results show that for the u s senate current term limit proposals will result in a substantial increase in the number of lame duck members and a significant reduction in average seniority we make no claims as to the public policy effects of term limit proposals however our model can be used to design a proposal that will maximize any benefits or minimize any public policy effects found to be associated with term limit reforms

the price of pork the seniority trap in the u s house abstract using data on federal outlays and u s house elections i estimate the effect of the pork barrel on the quality of officeholders taking into account the fact that seniority creates a dynamic linkage across periods after estimating the parameters governing the influence of seniority on federal outlays and the parameters governing the distributions of candidate quality i conduct several policy experiments to uncover the size of the welfare loss created by the seniority system i find that the seniority system negatively impacts the quality of representatives but has little effect on the outcomes of elections furthermore the most commonly proposed solution to the distortion term limits may have a significant negative effect on the quality of sitting representatives instead of a quantity constraint term limits i propose a change in the relative price of seniority by way of a pigouvian tax on seniority such a policy achieves the first best outcome

short versus long coalitions electoral accountability and the size of the public sector this article examines the policy consequences of the number of parties in government we argue that parties externalize costs not borne by their support groups larger parties thus internalize more costs than small parties because they represent more groups this argument implies that the public sector should be larger the more parties there are in the government coalition we test this prediction using yearly time series cross sectional data from 1970 to 1998 in 17 european countries we find that increasing the number of parties in government increases the fraction of gdp accounted for by government spending by close to half a percentage point or more than one billion current dollars in the typical year we find little support for the alternative claim that the number of legislative parties affects the size of the public sector except via the number of parties in government

a macroeconomic rationing model of the belgian economy despite a wide recognition of the possible theoretical fruitfulness of the quantity rationing approach there prevails an equally wide suspicion as to the possibility of getting sensible econometric results out of this type of specification our aim in the following will be to show that sensible results can indeed be obtained we shall consider for that purpose the belgian goods and labor markets over the years 1953 1978 and specify the econometric model along the lines suggested in the previous chapter

a model of income unemployment and inflation for the usa a simple three equation macroeconomic model is developed to explain the dynamics of output umemployment and inflation for the usa the model is estimated with the annual data for 1946 1989 insights gained through some recent developments are used to specify and estimate the model

constitutional prohibitions in a rent seeking model i extend the standard rent seeking model to allow lobbying fora constitutional prohibition on wealth transfers i examinetwo issues 1 the ability of special interests withsignificant political capacity to block constitutional change and 2 the effect of adding a constitutional stage on totallobbying expenditures defeating a prohibition on wealthtransfers is a public good for rent seekers success inconstitutional politics merely allows them to lobby for wealthtransfers the resulting collective action problem for rentseekers in constitutional politics offsets the generalinterest s free rider problems reducing the probability oftransfers and expected total lobbying expenditures compared tothe traditional rent seeking contest introduction of aconstitutional stage also reverses several comparative staticsresults from the rent seeking game an increase in the numberof rent seekers or the general interest s consumers abilityto organize increase lobbying in the rent seeking game butgenerally reduce expected lobbying in the constitutionalprohibition game

keynesian and new classical models of unemployment revisited several keynesian and new classical models of unemployment for the united states are reevaluated the models are examined for adequacy by testing the cross equation restrictions where appropriate and using diagnostic and nonnested tests that explicitly recognize the problem introduced by generated regressors the best new classical model for the 1946 73 period is found to be adequate when it is estimated over the 1946 85 period whereas the keynesian model is not existing results of tests obtained at the single equation level ignoring generated regressors are not always supported when the test statistics are calculated using the correct covariance matrix or maximum likelihood copyright 1991 by royal economic society