economic performance and u s senate elections reply major criticisms made by chressanthis and shaffer c s are addressed the authors failure to include noneconomic variables in the regression model the inclusion of open elections in the sample and the use of variables other than the state unemployment rate as economic performance measures errors in c s s interpretations are noted additional regression results are reported using modifications of the authors original model these suggest that the change notrelative change as in c s in state unemployment rate is superior and that the authors model yields a stronger effect of state economic performance on election outcomes than does the c s model

causality testing of the popularity function an empirical investigation for the federal republic of germany 1971 1982 relying on allensbach and infratest data it is asked if there is a relation between the perception of the general economic situation and the voting intention modern time series techniques are employed box jenkins analysis and granger causality tests the test results as well as ex post predictions show that voting intentions are strongly influenced by the perceived economic situation thus the null hypothesis of no relationship between the variables can not only be rejected by using classical econometric methods as is done in previous studies but also by employing modern time series procedures

unemployment rates and political outcomes an incentive for manufacturing a political business cycle in recent years the interdependence of politics and economics has received an increasing amount of attention by both economists and political scientists the explanation for this interest lies in the rediscovery of political economy and may be at least partly due to the recent experiences that governmental advisors have had with simultaneously increasing inflation and unemployment conventional macroeconomic approaches have failed to pin point causes for the stagflation and to provide methods for solving the problem the traditional economic policies may have failed in part because these traditional solutions were simply not plausible in the political environments in which they were proposed it is the intent of a growing body of work to develop macromodels with endogenous political sectors the inference made in this literature is that 1 the economy can be manipulated or affected by a political sector and that 2 there is an incentive for the political sector to manipulate the economy this literature has however just begun to formalize the interaction of the political and economic sectors and empirical work is virtually nonexistent the purpose of this paper is to present some evidence on these two inferences in section 1 the first inference is examined in section ii literature on which the first inference is based is reviewed and evidence on the possible incentive to create such a cycle is presented in section iii concluding remarks are offered

welfare consequences of the six year presidential term evaluated in the context of a model of the u s economy we evaluate the six year presidential term proposal in the context of a model of the u s economy characterized by a short run but not a long run trade off between inflation and unemployment votes and public welfare are separately conceptualized as functions of inflation and unemployment which are indirectly controlled by the president through manipulation of government spending in a series of simulation experiments the vote maximizing choice of policy instruments led to less we fare loss with six than with four year terms under most conditions ironically vote maximizing was shown to lead not only to short and long term welfare loss but also to long run political disadvantage

are ghettos good or bad spatial separation of racial and ethnic groups may theoretically have positive or negative effects on the economic performance of those groups we examine the effects of segregation on outcomes for blacks in schooling employment and single parenthood we find that blacks in more segregated areas have significantly worse outcomes than blacks in less segregated areas we control for the endogeneity of location choice using instruments based on political factors topographical features and residence before adulthood a one standard deviation decrease in segregation would eliminate one third of the black white differences in most of our outcomes

fiscal federalism quantitative studies we often think of fiscal decisions as being made by a single government but in the united states the reality is that an astounding number of entities have the power to tax and spend state local and federal governments all play crucial roles in the u s fiscal system and the interrelation has been the source of continuing controversy this fact is the focus of the seven papers and commentaries presented in this volume the result of a conference sponsored by the nber the contributors use various quantitative tools to study policy issues obtaining results that will interest policymakers and researchers working in the areas of taxation and public finance the first three papers study the distribution of power and responsibilities among the various levels of government john joseph wallis and wallace e oates look at the extend and evolution of decentralization in the state and local sector robert p inman examines the growth of federal grants and the structure of congressional decision making and jeffrey s zax investigates the effects of the number of government jurisdictions on aggregate local public debt and expenditures the next three papers look at the deductibility of state and local taxes on federal tax returns using an econometric analysis douglas holtz eakin and harvey s rosen examine the effects of deductibility on revenue sources and level of expenditures lawrence b lindsey looks at how deductibility affects the level and type of taxation george r zodrow uses a two sector general equilibrium model to investigate revenue effects of deductibility finally charles r hulten and robert m schwab analyze the problem of developing an accurate estimate of income for the state and local sector finding that conventional accounting procedures have underestimated the income generated by a startling 100 billion

positional goods conspicuous consumption and the international demonstration effect reconsidered abstract ragnar nurkse s early formulation of the international demonstration effect explicitly eschewed the possibility that international emulation of the rich has anything to do with status seeking or to use veblen s phrase with conspicuous consumption this paper argues in favor of a reassessment of nurkse s formulation in the light first of recent analyses of advanced countries by hirsch frank and scitovsky which show the powerful welfare implications of consumption based on status seeking and in the light second of the large sociological literature that has investigated the modernization process in developing countries the analysis casts doubt on nurkse s eschewal of status seeking behavior at the international level and suggests an alternative view with a profoundly different set of welfare implications for the third world

reinterpreting the role of inflation in politico economic models the author attempting to analyze the interplay between politics and economics is faced with a large number of problems ranging from an always too small and idiosyncratic data set to the lack of any generally accepted theory of the process which has testable implications my aims have been 1 to show that past studies have typically treated inflation in an extremely naive way disregarding the fact that it may have political pluses if unanticipated and 2 to test the sensitivity of established formulations to what i believe is the more useful view of voter behavior given in model ii since model i and model ii represent polar extremes of amnesiac and eidetic behavior tests of intermediate lag structures are clearly in order because of administration peculiarities however lost data points will pose a serious problem

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

general economic conditions and national elections the fact that economic conditions influence voters is a leading commonplace of conversation in election years the question is is this fact in fact a fact despite the overwhelming popularity of the fact it has received neither an explicit theoretical analysis presumably because it is so obvious that economic adversity should create political adversaries nor until recently a satisfactory statistical analysis gerald h kramer has presented a multivariate analysis of congressional elections which would strongly suggest that fluctuations in the rate of unemployment have no appreciable effect upon elections but that fluctuations in per capita real income are influential in the following pages i propose to 1 reaffirm his finding on the electoral unimportance of ordinary fluctuations in unemployment 2 argue that contrary to kramer fluctuations in real income also do not have important electoral effects and 3 present an argument based upon rational voter behavior for the unimportance of general economic conditions in national elections

voters as fiscal conservatives voters penalize federal and state spending growth this is the central result of my analysis of voting behavior in presidential senatorial and gubernatorial elections from 1950 1988 the composition of federal spending growth seems irrelevant the vote loss to the president s party from an extra dollar of defense or nondefense spending is the same however in gubernatorial elections expansion of state welfare spending exacts a disproportionate political price deficit financing of federal or state spending does not appear to matter politically i conclude by discussing the obvious question of why government budgets have grown in the face of this voter hostility

local public works and intergovernmental transfers under asymmetric information abstract this paper studies local public works decisions in a hierarchical setting under bidimensional asymmetric information a local authority plans to undertake a public work and delegates its construction to a firm the federal government decides whether to fund the project without being informed of either the project s benefit or the constructor s efficiency the local authority knows these values to deal with this informational gap the federal government designs a public work contract specifying transfers to the local authority and to the firm we show under which circumstances cost sharing and compensations emerge as incentive devices then we identify which projects are effectively constructed more works with low high benefits are undertaken shut down than under full information

business cycle and political election outcomes evidence from the chilean democracy this paper explores the influence of economic variables in chilean presidential elections we use a panel where the dependent variable corresponds to the share of the vote obtained by the incumbent at a municipal level in the presidential elections of 1989 1993 and 1999 we focus on the unemployment rate and the output gap and find that both have a significant influence on the vote we also find that if the mayor is from the same coalition as the incumbent people will further punish the incumbent when regional unemployment is above national unemployment

money politics and the post war business cycle abstract the political economy literature has enshrined as stylized fact the view that lower inflation and temporarily lower growth follow the election of republican presidents and has emphasized political manipulation of monetary policy as an explanation support for the monetary explanation comes in econometric work that largely ignores identification issues that dominate the literature on measuring the effects of monetary policy we generalize a standard vector autoregression framework to accommodate discrete political party variables we find almost no support for the view that political effects on the macroeconomy operate through monetary policy and only weak evidence that political effects are significant at all

the housing market impact of state level anti discrimination laws 1960 1970 abstract this paper measures the housing market impact of state level anti discrimination laws in the 1960s using household level and census tract data state fair housing laws were the direct antecedents of the federal fair housing act of 1968 and policy variation across states facilitates estimates of the laws impact during the 1960s blacks housing market outcomes improved relative to whites and the proportion of exclusively white census tracts declined markedly but there is little evidence that the fair housing laws contributed to those changes there is some evidence that black renters may have benefited from the laws but the bulk of the evidence suggests insignificant effects on blacks housing market outcomes the level of residential segregation and the value of property in predominantly black neighborhoods

economic conditions and national elections post sample forecasts of the kramer equations there has long been a division of opinion among economists concerning the effects of economic developments on voting behavior in his well known study kramer 1971a concluded that the fluctuations in economic activity have a systematic influence on u s congressional elections his findings were challenged by various economists including stigler 1973 the purpose of this paper is to extend the analysis of kramer s results by examining the post sample forecast performance of his models as noted by christ 1966 pp 546 49 the acid test of a time series model is its ability to perform well outside the sample period the results discussed below demonstrate that kramer s equations have relatively good post sample predictive ability the findings thus support the view that short term economic fluctuations have important effects on national elections however the results also suggest that economic factors alone are not sufficient to account for all variations of voter behavior

taxes federal grants local public spending and growth abstract in a dynamic model with both private and local public capital accumulation this paper examines how federal and local income taxes local consumption tax and federal matching grants for local public consumption and local public investment affect the long run equilibrium equilibria of private consumption private capital accumulation local public consumption and local public capital stock

presidential and congressional vote share equations three vote share equations are estimated and analyzed in this paper one for presidential elections one for on term house elections and one for mid term house elections the sample period is 1916 2006 considering the three equations together allows one to test whether the same economic variables affect each and to examine various serial correlation and coattail possibilities the resulting three equation model can then be analyzed dynamically which is done in section 4 the main conclusions are briefly 1 there is strong evidence that the economy affects all three vote shares and in remarkably similar ways 2 there is no evidence of any presidential coattail effects on the on term house elections the presidential vote share and the on term house vote share are highly positively correlated but this is because they are affected by some of the same variables 3 there is positive serial correlation in the house vote in that the previous mid term house vote share positively affects the on term house vote share and the previous on term house vote share positively affects the mid term house vote share 4 the presidential vote share has a negative effect on the next mid term house vote share the most likely explanation for this is a balance argument where voters are reluctant to let one party become too dominant ruled out as possible explanations for this fourth result is any reversal of a coattail effect since there is no evidence of an effect in the first place and a regression to the mean since the positive serial correlation in the house vote implies no such regression also it is not simply voting against the party in the white house because the presidential variable is a vote share variable not a 0 1 incumbency variable

parochial interests and the centralized provision of local public goods evidence from congressional voting on transportation projects abstract local public goods financed from a national tax base provide concentrated benefits to recipient jurisdictions but disperse costs creating incentives for legislators to increase own district spending but to restrain aggregate spending due to the associated tax costs while these common pool incentives underpin a variety of theoretical analyses which tend to predict inefficiencies in the allocation of public goods there is little direct evidence that individual legislators respond to such incentives to test for reactions to such incentives this paper analyzes 1998 congressional votes over transportation project funding the empirical results provide evidence that legislators respond to common pool incentives the probability of supporting the projects is increasing in own district spending and decreasing in the tax burden associated with aggregate spending having found that legislators do respond to such incentives i use the parameter estimates to calculate the efficient level of public goods which suggest over spending in aggregate especially in politically powerful districts and large associated deadweight loss

econometric estimations of popularity functions a case study for austria in this paper we investigate the effects of changes in economic conditions on the popularity of political parties in austria after a brief description of the austrian political system we estimate single equations and simultaneous systems of popularity functions for different parties based on traditional theoretical foundations results show that some effects of economic variables on popularity exist although they are different between different policy regimes traditional popularity functions nevertheless outperform models based on the assumption of voters rational expectations which claim that only unexpected changes in economic conditions affect political popularity

the political economy of expenditures by the peruvian social fund foncodes 1991 95 the peruvian social fund foncodes was created by president alberto fujimori in 1991 with the stated objectives of generating employment alleviating poverty and improving access to social services this article uses province level data on monthly expenditures socioeconomic indicators and electoral outcomes to analyze political influences on the timing and geographic distribution of foncodes expenditures between 1991 and 1995 i reach three main conclusions first these expenditures increased significantly before national elections second foncodes projects were directed at provinces in which the marginal political effect of expenditures was likely to be largest third these projects favored the poorest provinces which suggests that the program also had a redistributive function the results are robust to a large number of specifications and controls the peruvian data support predictions made in the literature on political business cycles as well as the literature on political influences on the allocation of discretionary funds

a politico economic approach to intergovernmental lump sum grants this paper develops a positive approach to grant design when the central government and a lobby of local governments are the main agents it develops the hypothesis that the regressivity or progressivity of per capita grants regarding community size is ceteris paribus related to the structure of the lobbying activities of local governments and is independent of hypothetical economies or diseconomies of scale in the production of local public goods an encompassing lobby organisation using a one mayor one vote system of representation supports the regressivity of per capita grants while under proportional representation the lobby will support a design of per capita grants which is progressive towards community size an empirical analysis of lump sum grants in portugal supports the politico economic hypothesis and rejects the hypothesis that economies of scale is the main explanatory cause for the observed regressivity of per capita grants

a new view of political accountability for economic performance most political support models imply that in evaluating economic performance voters use a standard that would provide poor predictions of the future and leave the economy vulnerable to manipulation by vote hungry politicians drawing on macroeconomic theory we develop a simple standard of evaluation which encompasses a concern not only for current economic outcomes but also for accurately assessed future consequences of current policies we find that political support for the president can be explained as well by models that assume that voters use this sophisticated standard as by models that assume voter naivete our analysis questions the wisdom of measures typically used to assess voter evaluation of economic performance in a variety of theoretical contexts the results also help to explain the absence of convincing evidence that governments exploit voter ignorance in manipulating the economy

do conditional cash transfers affect electoral behavior evidence from a randomized experiment in mexico this article reexamines the argument that targeted programs increase pro incumbent voting by persuading beneficiaries to cast ballots against their first partisan choice the evidence comes from the randomized component of progresa the pioneering mexican conditional cash transfer cct program experimental data show that early enrollment in the program led to substantive increases in voter turnout and in the incumbent s vote share in the 2000 presidential election the experiment also reveals that opposition parties vote shares were unaffected by the program thus the electoral bonus generated by ccts may be best explained by a mobilizing rather than persuasive mechanism these findings are difficult to reconcile with the notion that the electoral effects of ccts are a result of prospective concerns triggered by threats of program discontinuation or endogenous program enrollment instead the evidence in this article suggests that ccts mobilizing effects are compatible with programmatic politics

unintended consequence of trade on regional dietary patterns in rural india abstract this paper investigates how trade liberalisation has contributed to a dietary shift from one dominated by traditional staples to one high in animal products a trend that is associated with both improved intake in micronutrients and higher rates of obesity and other diet related diseases in developing countries in the context of india s trade liberalisation in 1991 we examine whether the difference in consumption of cereals and animal products across rural regions before and after the reforms can be attributed to their differential degree of exposure to tariff reductions the estimates reveal that trade reforms have a negative impact on cereal consumption through reducing edible oil prices and a positive effect on the consumption of animal products through enhancing consumer tastes towards these foods these findings provide evidence for the role of trade in supporting dietary diversity and highlight the need for complementary policies to enhance the coherence between trade policy and nutrition actions

entrepreneurial finance credit cards and race this paper examines the impact of financial deregulation on entrepreneurship we assess the impact of credit card deregulation on transitions into self employment using state level removal of credit card interest rate ceilings following the us supreme court s 1978 marquette decision as a quasi natural experiment we find that credit card deregulation increases the probability of entrepreneurial entry with a particularly strong effect for black entrepreneurs we demonstrate that these effects are magnified in states with a history of racial discrimination and link the results to discriminationbased barriers to entry 2012 elsevier b v all rights reserved

race segregation and postal employment new evidence on spatial mismatch abstract the spatial mismatch hypothesis posits that employment decentralization isolated urban blacks from work opportunities this paper focuses on one large employer that has remained in the central city over the twentieth century the u s postal service we find that blacks substitute towards postal work as other employment opportunities leave the city circa 1960 the response is particularly strong in segregated areas where black neighborhoods are clustered near the central business district furthermore this pattern only holds for non mail carriers many of whom work in central processing facilities more recently the relationship between black postal employment and segregation has declined suggesting that spatial mismatch has become less important over time

economic influences on the structure of local government in u s metropolitan areas abstract there is a large degree of variation in the number of general purpose local governments and school districts per square mile and per person among united states metropolitan areas using data from 1982 this paper provides an empirical test of whether economic factors especially variation in demand for local government services partly account for these differences the empirical findings show that after controlling for political historic and institutional factors variations in the characteristics that affect demand for local government services do influence the number of local governments this result is consistent with the hypothesis first put forth by tiebout

residential segregation and socioeconomic outcomes when did ghettos go bad abstract cutler and glaeser 1997 show that urban residential segregation has a strong adverse effect on labor market and social outcomes of young african americans relative to whites we show that this effect is a fairly recent historical phenomenon there is little evidence of such an effect from 1940 to 1970 rather it emerged between 1970 and 1980 and it grew stronger during the 1980s

fiscal flows in the united states and canada lessons for monetary union in europe regional flows of federal taxes and transfers within the united states and canada are used to analyze long term fiscal flows the redistributive element and short term responses to regional business cycles the stabilization element in the united states long run flows amount to 22 cents in the dollar while the stabilization effect is 31 cents in the dollar in canada the redistributive effect is larger 39 cents and the stabilization effect smaller 17 cents federal flows appears to depend on the institutional structure of the country concerned however in both countries the redistributive element is considerably larger than the amounts involved in the ec structural funds program as for stabilization national fiscal policies in the ec appear to have been as effective as federal governments in the united states and canada in cushioning shocks to incomes

presidential politics budget deficits and monetary policy in the united states 1960 1976 this paper has focused on the extent to which the traditional tools of macroeconomic management in the united states monetary and fiscal policy have contributed to a political business cycle regardless of whether politicians can successfully influence real economic variables to their own ends the evidence presented here suggests that they tried and that they enjoyed some at least indirect aid from their independent monetary authorities in doing so several major conclusions emerge

business cycles and the political process the interrelationship between the political sector and the macroeconomy in democratic societies has been examined extensively in recent years research in this area has generally been concerned with two issues first following the lead of kramer 16 various authors have examined the impact of economic conditions on congressional 1 13 21 24 and presidential elections 4 5 the results at the congressional level have been mixed but it is reasonably safe to conclude that economic conditions do affect presidential elections the second issue and the one of primary concern in this study has dealt with the development of models of politico economic interaction the basic concept in these models is that an administration s popularity and therefore the probability of staying in power depends critically on economic conditions knowing this the administration seeks to manipulate the economy in order to maintain power the use of economic tools for political goals by governments is well established in the literature theoretical contributions by nordhaus 20 and macrae 18 have demonstrated the potential for a politically motivated business cycle in a world of politico economic interaction empirical support for the existence of such a cycle is provided by the work of frey and schneider 7 8 9 the main purpose of this paper is to develop a theoretical model of the political business cycle that generates empirically testable proposition the goal is to integrate the theoretical conclusions of a formal model similar to the nordhaus 20 and macrae 18 framework with the empirical support provided by frey and schneider 7 8 9 the possibility of a political business cycle is important for several reasons in macroeconometric models government policy that is endogenous to the system is usually treated as if it were exogenous this may cause serious misspecification errors further forecasts of the future course of economic events which depend heavily on government action will be inaccurate unless the political motivations of governments are considered

presidential popularity and the economy abstract this study tests the hypothesis that the sensitivity of the president s popularity to economic events differs across distinct demographic groups assuming that presidental popularity is negatively related to both the unemployment rate and the inflation rate the electorate is disaggregated according to sex age race education income and political affiliation and separate regressions are estimated for the individual subgroups using quarterly data covering 1976 through 1988 statistically significant differences in the marginal effects of unemployment and inflation on presidential approval are discovered for the various subgroupings

rational adaptive and learning behavior of voters evidence from disaggregated popularity functions for sweden the disaggregated study confirms earlier aggregated studies showing that unemployment strongly affects the popularity of the swedish government the results presented here however suggest that there are differences among popularity functions estimated across groups differing in age income and gender consequently popularity functions estimated at an aggregated level ignore reaction patterns within various groups in society

election goals and income redistribution recent evidence from albania this paper examines the impact of political competition on block grants from federal to sub federal levels of government we model the extent and direction of income redistribution as determined proximately by the political agendas of central decision makers and at a deeper level by the institutions within which they nd themselves operating we contrast two political objective functions that yield di erent empirical predictions of the ways in which politics should a ect scal policy lessons learned here may prove important in understanding limits on the types of redistribution possible via block grants given the institutional framework in both developing and developed countries 2001 elsevier science b v all rights reserved jel classixcation h1 h7 o1

econometrics and presidential elections this paper discusses an econometric equation that explains votes for president as a function of economic events and incumbency information the history of the equation is reviewed the update after the 1992 election is discussed and a prediction for the 1996 election is made conditional on an economic forecast

voting and the economic cycle sophisticated voters assess incumbent competence by filtering out economic cycles which they do not like from trend growth which they do naive voters on the other hand respond only to raw economic growth this implies that voting in the aggregate should respond asymmetrically to the economic cycle upswings are rewarded by the naive but punished by the sophisticated downswings are punished by all voters using an established dataset of over 400 general elections we find that the incumbent vote share a responds differently to trend growth than to the cycle b does not respond significantly to positive variation in the economic cycle and c responds significantly and negatively to negative realizations in the economic cycle in contrast to standard formulations of the grievance asymmetry this asymmetric vote response is found to be independent of trend growth

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

policy oriented voting in response to economic issues this study explores the hypothesis that voting in response to economic problems is policy oriented voters concerned about unemployment ore predicted to give greater support to democratic candidates while those concerned about inflation are predicted to vote more republican in light of evidence from previous research this study investigates the electoral effects of inflation and unemployment as 1 problems directly experienced by the individual and 2 problems deemed serious for the nation as a whole support is strongest for the unemployment side of the hypothesis voters personally affected by unemployment gave a modest boost to democratic candidates in virtually every election and in years of high unemployment the large percentage of voters who fell it was a serious national problem voted heavily democratic as well this study concludes by discussing the important implications these findings have for our understanding of how economic conditions influence voting behavior in american national elections

majority rule bargaining and the under provision of public investment goods abstract despite evidence that modern democracies systematically shortchange public investment goods relatively little theoretical work exists to explain this phenomenon we build on baron and ferejohn s american political science review 83 4 1989 1181 1206 bargaining model to describe public investments in a setting of budgetary politics specifically we show that underinvestment inherently arises from distributive politics within a majoritarian institution the inability of current majorities to contract with future ones drives a wedge between spending on consumption today and investing for future consumption extensions to the model demonstrate that earmarking future returns to specific players and or detaching consumption from investment decisions yields more efficient levels of public investment

fiscal effects of foreign aid in a federal system of governance the case of india abstract this paper models fiscal effects of foreign aid in a federal system of governance our main innovation is to incorporate the inter governmental fiscal link in examining economic fungibility of foreign aid the model is applied to the expenditure decisions of the central government of india the two main findings are i foreign aid merely substitutes for spending that the government would have undertaken anyway funds freed by aid are spent on non development activities and ii in passing earmarked external assistance to states the central government makes a reduction in its transfers to states these findings indicate that the central government s expenditure choices are unaffected by external assistance the implication for donors is that even though their development projects may be associated with very high rates of economic return they could be assisting the central government in financing something very different at the margin for the state governments the finding indicates that they may not be reaping the full benefits of externally procured assistance

the role of economic issues in elections the case of the 1988 chilean presidential referendum in this paper we tested the hypothesis that the performance of the economy is a determinant factor in the voter s preferences the results obtained enable us to corroborate this notion since the model has a high predictive value and the behavior of the economy both in terms of level of activity as well as in its changes comes up consistently as a determinant factor of voting behavior these results are also consistent with those obtained through chilean polls in which it has been ascertained that economic events particularly in the case of those who favored the anti pinochet option no were of utmost importance in the voters decisions the results also confirm the idea that in chile women tend to give economic issues a lesser weight in their political preferences

it s the economy and then some modeling the presidential vote with state panel data using data for the 50 us states for presidential elections from 1972 to 2004 two theories for determining state voting outcomes are considered jointly the economy matters and home grown ness theories fixed effects regressions show that measures of the economy matters real income unemployment and a proxy for inflation have the predicted effects on state voting patterns for presidential elections the home grown theory receives mixed support there is weak evidence that incumbent party candidates garner greater support in their home states there is strong support however for the proposition that incumbent party candidates fare worse in the home state of rival party candidates

the economics of choice in the allocation of intergovernmental grants to local authories the empirical study and modelling of processes and motivations behind government behavior has been relatively meager this paper has formulated and estimated a model designed to explain the allocation of intergovernmental grants to local authorities the model takes into consideration the fact that this process is governed by mixed motivations associated with both the desire to adopt policies and actions based on the concept of public interest and with the desire for re election the model was applied to data pertaining to 52 local authorities in israel under two governments the principal findings of the foregoing analysis can be summarized as follows first the behavioral mechanism operating beyond intergovernmental grants allocation is inherent in the political system and equally applies to the two governments second this mechanism is governed both by factors representing objective criteria describing the needs of the populations and by political factors representing the desire for re election differences in the behavior of the two governments seem to be significant as far as some objective variables are concerned but are almost insignificant as far as the political variable is concerned third as in other studies conducted in the u s our findings support the hypothesis that in their attempt to maximize the prospects for re election governments find it preferable to pursue policies which reward their supporters rather than buy off their opponents lastly by allowing per capita grants to be a non monotonous function of the political variable it was found that indeed both governments have increased per capita grants as a function of pol up to a certain level and decreased it thereafter

second generation fiscal federalism the implications of fiscal incentives abstract first generation fiscal federalism fgff studies the performance of decentralized systems under the assumption of benevolent social planners second generation fiscal federalism sgff studies performance based on the fiscal and political incentives facing subnational officials the paper focuses on three aspects of sgff first it considers the design of intergovernmental transfers while fgff emphasizes correcting vertical and horizontal equity sgff emphasizes the importance of fiscal incentives for producing local economic prosperity sgff extends fgff approaches by showing how non linear transfer systems can produce both equalization and high marginal fiscal incentives to produce local economic growth second the paper raises the fiscal incentive approach showing how different tax systems produce different fiscal incentives for political officials to choose policies third the paper discusses the interaction of democracy and fiscal federalism

the political economy of fertilizer subsidy programs in africa evidence from zambia fertilizer subsidy programs have re emerged as popular policy tools in sub saharan africa despite a burgeoning body of literature on program impacts the political economy of the programs remains poorly understood in particular there is a dearth of empirical evidence to support or refute the conventional wisdoms that governments systematically target subsidized inputs to certain areas based on past voting patterns and that fertilizer subsidies win votes this article discusses the theoretical links between government targeting of subsidized fertilizer and voter behavior then uses panel data from zambia to empirically test these conventional wisdoms results suggest that zambia s movement for multi party democracy governments targeted more subsidized fertilizer to households in areas where it had strong support in the previous presidential election however contrary to conventional wisdom marginal changes in the scale or coverage of the fertilizer subsidy program had no statistically significant effect on the share or number of votes won by incumbent presidents

tax decentralization and local government size this paper investigates the relationship between fiscal federalism and the sizes of local governments while many empirical studies emphasized that grants encourage the growth of local public spending and local taxes constrain it they are more silent regarding the effects of different types of tax autonomy the paper addresses this issue by arguing that tax decentralization as organized on tax bases used only by local governments tax separation rather than on tax base sharing would restrain local public expenditures using an unbalanced panel of oecd countries the key finding is that only property taxes mostly based on a tax separation scheme seem to favor smaller local governments thus while tax decentralization is a necessary condition for limiting the growth of local governments it does not appear sufficient as tax separation schemes among government levels would in fact be required

economic backwardness and social tension we propose that relative economic backwardness contributes to the build up of social tension and non violent and violent conflict we test our hypothesis using data on organized mass movements and armed civil conflict the findings show that greater economic backwardness is consistently linked to a higher probability of onset of violent and especially non violent forms of civil unrest we provide evidence that the relationship is causal in instrumental variables estimations using new instruments including mailing speeds and telegram charges around 1900 the magnitude of the effect of backwardness on social tension increases in the two stage least squares estimations

evidence on discrimination in consumer markets economists have contributed to the measurement of racial and ethnic discrimination in consumption and to the identification of its causes especially in housing markets and car sales to test the hypothesis that discrimination exists economists have turned to regression analysis and to audits a matched pair survey technique economists also have developed audit based measures of the incidence and severity of discrimination audit studies find continuing high levels of discrimination against minorities in the marketing of available housing and in car prices audit studies also find that discrimination can be caused both by economic agents prejudice and by their search for profits

does fiscal decentralization constrain leviathan new evidence from local property tax competition this paper reexamines whether fiscal decentralization constrains leviathan government using panel data for pennsylvania we compare actual property tax rates to the leviathan revenue maximizing rates for municipalities school districts and counties using spatial econometric methods we also estimate the degree of spatial dependence at the three levels of local government we find that fiscal decentralization results in stronger intergovernmental competition and lower tax rates we also find evidence of collusion among school districts that exhibit high interdependence but also high tax rates this calls into question the current literature s blind use of spatial dependence as a measure of intergovernmental competition

the labor market impact of state level anti discrimination laws 1940 1960 by the time congress passed the 1964 civil rights act 98 of non southern blacks 40 of all blacks already resided in states with fair employment laws prohibiting labor market discrimination using census data from the integrated public use microdata series the author assesses the impact of fair employment legislation on black workers relative income unemployment labor force participation migration and occupational and industrial distributions in general the fair employment laws adopted in the 1940s appear to have had larger effects than those adopted in the 1950s and the laws had considerably smaller effects on the labor market outcomes of black men than on those of black women

does decentralization increase government responsiveness to local needs evidence from bolivia this paper examines whether decentralization increases the responsiveness of public investment to local needs using a unique database from bolivia empirical tests show that investment patterns in human capital and social services changed significantly after decentralization these changes are strongly and positively related to objective indicators of need nationally these changes were driven by the smallest poorest municipalities investing devolved funds in their highest priority projects the findings contradict common claims that local government is too corrupt institutionally weak or prone to interest group capture to improve upon central government s allocation of public resources d 2002 published by elsevier b v

government subsidies and presidential election outcomes evidence for a developing country summary we explore the effects of government subsidies on presidential elections in chile in 1989 99 we use a panel with three periods the elections of 1989 1993 and 1999 and 229 counties we correct for the potential simultaneity problem deriving from the fact that an incumbent facing a difficult political scenario might react by increasing subsidies to improve his her electoral performance our results indicate that the greater the coverage of these types of programs i e the percentage of people receiving subsidies the higher the votes for the incumbent

foreign counterfeiting of status goods we study the positive and normative effects of counterfeiting i e trademark infringement in markets where consumers are not deceived by forgeries consumers are willing to pay more for counterfeits than for generic merchandise of similar quality because they value the prestige associated with brand name trademarks counterfeiters of status goods impose a negative externality on consumers of genuine items as fakes degrade the status associated with a given label but counterfeits allow consumers to unbundle the status and quality attributes of the brand name products and alter the competition among oligopolistic trademark owners we analyze two policies designed to combat counterfeiting enforcement policy which increases the likelihood of confiscation of illegal items and the imposition of a tariff on low quality imports

the impact of federal spending on house election outcomes while it is widely believed by academics politicians and the popular press that incumbent members of congress are rewarded by the electorate for bringing federal dollars to their district the empirical evidence supporting that claim is extremely weak one explanation for the failure to uncover the expected relationship between federal spending and election outcomes is that incumbents who expect to have difficulty being reelected are likely to exert greater effort in obtaining federal outlays since it is generally impossible to adequately measure this effort the estimated impact of spending is biased downward because of an omitted variable bias we address this estimation problem using instrumental variables for each house district we use spending outside the district but inside the state containing the district as an instrument for spending in the district federal spending is affected by a large number of actors e g governors senators mayors and other house members in the state delegation