a political economy model of congressional careers our main goal is to quantify the returns to a career in the united states congress we specify a dynamic model of career decisions of a member of congress and estimate this model using a newly collected dataset given estimates of the structural model we assess reelection probabilities estimate the effect of congressional experience on private and public sector wages and quantify the value of congressional seat moreover we assess how an increase in the congressional wage or the imposition of term limits would affect the career decisions of politicians and the returns from a career in congress

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

interest rate pass through monetary policy rules and macroeconomic stability abstract in this paper we analyze equilibrium determinacy in a sticky price model in which the pass through from policy rates to retail interest rates is sluggish and potentially incomplete in addition we empirically characterize and compare the interest rate pass through process in the euro area and the u s we find that if the pass through is incomplete in the long run the standard taylor principle is insufficient to guarantee equilibrium determinacy our empirical analysis indicates that this result might be particularly relevant for bank based financial systems as for instance that in the euro area

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

taxing variable cost environmental regulation as industrial policy abstract conventional wisdom has it that a country that enacts strict environmental regulations will place its firms at a competitive disadvantage this view has been challenged recently some commentators argue that stricter regulation will enhance domestic competitiveness strict regulations induce innovation we evaluate this argument in a strategic trade model in very special cases a strengthening of regulation may result in a shift of profits from foreign to domestic firms this is not a general result however environmental regulation should of course be imposed to control externalities but it is unlikely that it will serve to generate industrial advantage

when does the prime rate change abstract we study the frequency of prime rate changes we model the prime rate as a time series variable that can be changed only at some cost this yields a logit model in which the probability of a prime rate change is a function of market variables we test this model using data from a micro data set that gives the dating of prime rate changes the results indicate that adjustment costs are important to the prime rate adjustment process and that changes in exogenous variables have a significantly larger effect on the probability of a prime rate increase than decrease

interest rate pass through and monetary transmission evidence from individual financial institutions retail rates official interest rate changes should influence short rates on money market instruments and retail products such as deposit accounts and mortgages but complete pass through is often taken for granted this paper provides a theoretical and econometric framework for assessing the evidence for this assumption using seventeen years of monthly data for rates on thirteen deposit and mortgage products offered by individual uk financial institutions the methodology allows for asymmetries and non linearities in adjustment and the results show that the speed of adjustment in retail rates depends on whether the perceived gap between retail and base rates is widening or narrowing

equilibrium pollution taxes in open economies with imperfect competition abstract this paper argues that imperfect competition in global markets creates a strategic interaction between governments that can lead to the inefficient distortion of pollution taxes this distortion can be decomposed into a rent capture effect and a pollution shifting effect the rent capture effect lowers equilibrium taxes as each country attempts to gain a competitive advantage over its trading partner and thereby capture foreign rent through net exports the pollution shifting effect raises equilibrium taxes as each country attempts to transfer production and its associated pollution to the other country this effect vanishes if pollution is perfectly transboundary because shifted pollution causes as much damage to the domestic environment as does domestic pollution the net effect on symmetric equilibrium taxes is negative except in the special case of perfect competition with no transboundary pollution in this case the two effects are mutually offsetting and the nash equilibrium is efficient when pollution is at least partially transboundary there also arises the usual transboundary externality and this reinforces the negative net strategic effect giving rise to equilibrium taxes that are lower than what is globally efficient

monetary policy rules macroeconomic stability and inflation a view from the trenches i estimate a forward looking monetary policy reaction function for the federal reserve for the periods before and after paul volcker s appointment as chairman in 1979 using information that was available to the fomc in real time from 1966 to 1995 the results suggest broad similarities in policy and point to a forward looking approach to policy consistent with a strong reaction to inflation forecasts during both periods this contradicts the hypothesis based on analysis with ex post constructed data that the instability of the great inflation was the result of weak fomc policy responses to expected inflation a difference is that prior to volcker s appointment policy was too activist in reacting to perceived output gaps that retrospectively proved overambitious drawing on contemporaneous accounts of fomc policy i discuss the implications of the findings for alternative explanations of the great inflation and the improvement in macroeconomic stability since then

endogenous timing in duopoly games stackelberg or cournot equilibria abstract simultaneous versus sequential play is studied in an extended game in a preplay stage players decide whether to select actions in the basic game at the first opportunity or to wait until observing their rivals first period actions in one extended game players first decide when to select actions without committing to actions in the basic game the equilibrium has a simultaneous play subgame unless payoffs in a sequential play subgame pareto dominate those payoffs in another extended game deciding to select at the first turn requires committing to an action both sequential play outcomes are the equilibria only in undominated strategies

unconventional monetary policy fiscal side effects and euro area im balances we study the macroeconomic effects of unconventional monetary policy in the euro area using structural vector autoregressions identified with external instruments the instruments are based on the common unexpected variation in euro area sovereign yields for different maturities on policy announcement days we first show that expansionary monetary surprises are effective at lowering public and private interest rates and increasing economic activity consumer prices and inflation expectations we then document that the shocks lead to a rise in primary public expenditures and a widening of internal trade balances

capital income taxation equilibrium determinacy and the taylor principle abstract the taylor principle disregards nominal capital income taxation the paper derives a tax adjusted taylor principle and shows that empirical studies on monetary policy rules tend to reach too strong conclusions concerning the appropriateness of the monetary policy response to inflation

unconventional monetary policies in the euro area japan and the united kingdom the global financial crisis hit hard in the euro area the united kingdom and japan real gdp from peak to trough contracted by about 6 percent in the euro area and the united kingdom and by 9 percent in japan in all three cases central banks cut interest rates aggressively and then as policy rates approached zero deployed a variety of untested and unconventional monetary policies in doing so they hoped to restore the functioning of financial markets and also to provide further monetary policy accommodation once the policy rate reached the zero lower bound in all three jurisdictions the strategy entailed generous liquidity support for banks and other financial intermediaries and large scale purchases of public and in some cases private assets as a result central banks balance sheets expanded to unprecedented levels this paper examines the experience with unconventional monetary policies in the euro zone the united kingdom and japan the paper starts with a discussion of how quantitative easing forward guidance and negative interest rate policies work in theory and some of their potential side effects it then reviews the implementation of unconventional monetary policy by the european central bank the bank of england and the bank of japan including a narrative of how central banks responded to the crisis and the evidence on the effects of unconventional monetary policy actions

does electoral accountability affect economic policy choices evidence from gubernatorial term limits this paper analyzes the behavior of u s governors from 1950 to 1986 to investigate a reputation building model of political behavior we argue that differences in the behavior of governors who face a binding term limit and those who are able to run again provides a source of variation in discount rates that can be used to test a political agency model we find evidence that taxes spending and other policy instruments respond to a binding term limit if a democrat is in office the result is a fiscal cycle in term limit states which lowers state income when the term limit binds

has the ecb s monetary policy prompted companies to invest or pay dividends abstractthis paper focuses on the influence of the european central bank s ecb monetary policies on non financial firms it sheds light on non financial firms decisions regarding leverage and on how the ecb s conventional and unconventional policies may have affected them the paper also examines how these policies influenced non financial firms decisions on capital allocation primarily capital spending and shareholder distribution for example dividends and share repurchases we use an exhaustive and unique dataset comprised of income statements and balance sheets of leading non financial firms operating in the european economic and monetary union emu the main results suggest that ecb s monetary policies have encouraged firms to raise their debt burden especially after the global recession of 2008 finally the ecb s policies especially after 2011 also seem to have led non financial firms to allocate more resources not just to capital spending but to shareholder distribution as well

estimated general equilibrium models for the evaluation of monetary policy in the us and europe a persistent criticism of general equilibrium models of monetary policy which incorporate nominal inertia in the form of the new keynesian phillips curve nkpc is that they fail to capture the extent of inflation inertia in the data in this paper we derive a general equilibrium model based on optimising behaviour but which also implies a data consistent nkpc specifically our model accounts for nominal inertia in both price and wage setting as well for habits in consumption using us and european data from 1970 to 1998 our parameter estimates reveal that i there is relatively more inertia in price setting in europe ii wage contracts last longer in the us iii the extent of backward looking behaviour in price and wage setting is statistically significant but small in both the us and europe and iv significant habits effects are present in european consumption finally we simulate the effects of monetary policy and find that while the magnitude of the impact of monetary policy on the endogenous variables in our estimated models are similar to other econometric studies the dynamic paths for variables display less inertia than is typically found in studies which use output gaps to proxy changes in marginal costs

endogenous timing in strategic environmental policymaking in this paper we endogenize the timing of policymaking in a simple two country model of strategic environmental policy we consider a timing game in which two policymakers non cooperatively decide their preferred sequence of moves before setting emission tax rates we show that whether the policymakers implement emission tax policies simultaneously or sequentially crucially depends on the magnitude of environmental damages when the damages are insignificant the tax rates are strategic substitutes and the simultaneous move policymaking emerges in equilibrium in contrast when the damages are significant the tax rates are strategic complements and sequential move policymaking emerges we also extend the model by allowing for differences in the vulnerability to environmental damages between countries when the differences are large the unique equilibrium of the game is the situation where the less vulnerable country acts as a leader in the case where multiple equilibrium emerges the risk dominant equilibrium is also that where the less vulnerable country leads

second mover advantage and price leadership in bertrand duopoly we consider the issue of first versus second mover advantage in differentiated product bertrand duopoly with general demand and asymmetric linear costs we generalize existing results for all possible combinations where prices are either strategic substitutes and or complements dispensing with common extraneous and restrictive assumptions we show that a firm with a sufficiently large cost lead over its rival has a first mover advantage for the linear version of the model we invoke a natural endogenous timing scheme coupled with equilibrium selection according to risk dominance the analysis yields as the unique equilibrium outcome sequential play with the low cost firm as leader

the effectiveness of quantitative easing evidence from japan abstract this study contributes to current research on quantitative easing we provide a novel analysis of the quantitative easing effectiveness as an unconventional monetary policy tool in japan over the last two decades the paper advances current research on quantitative easing by exploring quantitative easing through the prism of the monetary transmission mechanism we examine the response of japanese regional banks to the quantitative easing operations conducted by the bank of japan from the early 2000s till 2015 the analysis is performed within the framework of the bank lending channel under the unconventional monetary policy strategies we find that small sized regional banks underline the significant positive effect of quantitative easing on gross domestic product and inflation that works through the securities holdings and leverage preferences monetary authorities should pay particular attention to policies for such banks and banks with a high level of non performing loans deposit growth after a quantitative easing shock is only present in large sized banks with low npls holdings

taxes and subsidies for pollution intensive industries as trade policy abstract this paper constructs a model of international oligopoly with negative externalities in production in which optimal environmental policy responses to foreign emission tax and subsidy programs can be calculated it is shown that by granting subsidies for abatement efforts or for a heavily taxed polluting input domestic net welfare is improved by capturing a greater share of the world market since the subsidy programs are supposed to improve the quality of the global environment they can be justified on environmental grounds in addition we show that a pigouvion emission tax restores efficiency in natural resource allocation whereas subsidy programs are in principle used as instruments in imperfectly competitive international markets

endogenizing leadership in tax competition abstract in this paper we extend the standard approach of horizontal tax competition by endogenizing the timing of decisions made by the competing jurisdictions following the literature on the endogenous timing in duopoly games we consider a pre play stage where jurisdictions commit themselves to move early or late i e to fix their tax rate at a first or second stage we highlight that at least one jurisdiction experiments a second mover advantage we show that the subgame perfect equilibria spes correspond to the two stackelberg situations yielding to a coordination problem in order to solve this issue we consider a quadratic specification of the production function and we use two criteria of selection pareto dominance and risk dominance we emphasize that at the risk dominant equilibrium the less productive or smaller jurisdiction leads and hence loses the second mover advantage if asymmetry among jurisdictions is sufficient pareto dominance reinforces risk dominance in selecting the same spe three results may be deduced from our analysis i the downward pressure on tax rates is less severe than predicted ii the smaller jurisdiction leads iii the big country higher tax rate rule does not always hold

financial intermediation and macroeconomic analysis a macroeconomic framework in which fi nancial intermediation matters for the allocation of resources allocation of resources in this paper i fi rst discuss why neither standard macroeconomic models that in this paper i fi rst discuss why neither standard macroeconomic models that abstract from fi nancial intermediation nor traditional models of the bank lending abstract from fi nancial intermediation nor traditional models of the bank lending channel are adequate as a basis for understanding the recent crisis i argue that channel are adequate as a basis for understanding the recent crisis i argue that instead we need models in which intermediation plays a crucial role but in which instead we need models in which intermediation plays a crucial role but in which intermediation is modeled in a way that better conforms to current institutional intermediation is modeled in a way that better conforms to current institutional realities in particular we need models that recognize that a market based fi nan realities in particular we need models that recognize that a market based fi nan cial system one in which intermediaries fund themselves by selling securities in cial system one in which intermediaries fund themselves by selling securities in competitive markets rather than collecting deposits subject to reserve require competitive markets rather than collecting deposits subject to reserve require ments is not the same as a frictionless system ments is not the same as a frictionless system i then sketch the basic elements of an approach that allows fi nancial inter i then sketch the basic elements of an approach that allows fi nancial inter mediation and credit frictions to be integrated into macroeconomic analysis in a mediation and credit frictions to be integrated into macroeconomic analysis in a straightforward way i show how the model can be used to analyze the macroeco straightforward way i show how the model can be used to analyze the macroeco nomic consequences of the recent fi nancial crisis and conclude with a discussion of nomic consequences of the recent fi nancial crisis and conclude with a discussion of some implications of the model for the conduct of monetary policy some implications of the model for the conduct of monetary policy

monetary policy in exceptional times this paper describes the way in which the european central bank ecb the federal reserve and the bank of england conducted monetary policy since the beginning of the financial crisis in august 2007 we argue that both quantitative easing and the other non standard measures introduced by central banks that changed the composition of the asset side of their balance sheets so called qualitative easing acted mainly through their effects on interest rates and in particular on money market spreads rather than solely through quantity effects in terms of the money supply we perform a quantitative exercise on the euro area which estimates the effect of the reduction of these spreads to the broader economy michele lenza huw pill and lucrezia reichlin

a non standard monetary policy shock the ecb s 3 year ltros and the shift in credit supply abstract we study the macroeconomic effects of the 3 year long term refinancing operations ltros introduced by the ecb in december 2011 with the aim of reducing the obstacles to credit supply through the mitigation of liquidity and funding risks in the euro area banking system therefore we interpret the measure as a credit supply shock which is identified both recursively and with sign restriction methods using the euro area bank lending survey bls the size of the shock due to the ltros is computed using both the april 2012 bls and the special ad hoc questions on the ltros conducted in february 2012 the counterfactual exercises suggest that the 3 year ltros lifted prospects for real gdp and loan provision to non financial corporations and increased goods prices over the next two to three years thereby avoiding a major credit crunch

von stackelberg and cournot duopoly choosing roles under what circumstances will firms agree on the choice of roles of leader and follower in the von stackelberg duopoly model a key determinant is the slope of the firms reaction function in either price or quantity space the duopolists will disagree over the choice of roles if they have downward sloping reaction functions each will prefer to be the leader they will also disagree if they have upward sloping reaction functions and similar profit functions each will prefer that the other be the leader preferences between von stackelberg and cournot outcomes are also considered

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

why did the incumbency advantage in u s house elections grow theory a simple rational entry argument suggests that the value of incumbency consists not just of a direct effect reflecting the value of resources such as staff attached to legislative office but also of an indirect effect reflecting the fact that stronger challengers are less likely to contest incumbent held seats the indirect effect is the product of a scare off effect the ability of incumbents to scare off high quality challengers and a quality effect reflecting how much electoral advantage a party accrues when it has an experienced rather than an inexperienced candidate hypothesis the growth of the overall incumbency advantage was driven principally by increases in the quality effect methods we use a simple two equation model estimated by ordinary least squares regression to analyze u s house election data from 1948 to 1990 results most of the increase in the incumbency advantage at least down to 1980 came through increases in the quality effect i e the advantage to the incumbent party of having a low quality challenger this suggests that the task for those wishing to explain the growth in the vote denominated incumbency advantage is to explain why the quality effect grew it also suggests that resource based explanations of the growth in the incumbency advantage cannot provide a full explanation

drawing conclusions from structural vector autoregressions identified on the basis of sign restrictions abstract this paper discusses the problems associated with using information about the signs of certain magnitudes as a basis for drawing structural conclusions in vector autoregressions we also review available tools to solve these problems for illustration we use dahlhaus and vasishtha s 2019 study of the effects of a u s monetary contraction on capital flows to emerging markets we explain why sign restrictions alone are not enough to allow us to answer the question and suggest alternative approaches that could be used

environmental taxes and first mover advantages this paper studies whether governments prefer to be leaders or followers in environmental policies to analyze this question i assume transboundary pollution and two countries that have to decide whether to set environmental taxes sequentially or simultaneously when taxes are set sequentially an effect denoted as the sequential setting effect arises that raises the equilibrium taxes i show that whether governments prefer to be leaders or followers in taxes depends on the degree to which environmental pollution spills over to trading partners when this overspill is low enough taxes are strategic complements and both the leader and the follower obtain greater welfare than under a simultaneous tax setting however the leader country obtains greater welfare than the follower in this case governments set taxes sequentially when the degree to which environmental pollution spills over to trading partners is high enough taxes are strategic substitutes and governments set taxes simultaneously in this case each government wants to avoid becoming the follower in taxes

strategic delegation of environmental policy making a common claim is that nations should cooperate in environmental policy making however there is little empirical support that noncooperative decision making results in too low environmental standards and taxes we develop a theoretical model and show that if the median voter cares sufficiently for the environment she has an incentive to delegate policy making to a politician that cares more for the environment than she does herself by doing so she mitigates the race to the bottom in environmental taxes in contrast if environmental policies are determined cooperatively with other countries the median voter has an incentive to delegate policy making to a politician that cares less for the environment than she does herself so as to free ride on international environmental agreements

flip flopping ideological adjustment costs in the united states senate models of electoral competition in which candidates can change position at no cost predict the convergence of platforms in a two candidate election such convergence is at odds with empirical observation in this paper i undertake a study of candidate positioning in the united states senate and determine the extent to which electoral costs associated with changing position explain the ideological positions taken by senators using over 50 years of roll call voting data i use a simulated method of moments approach to estimate a dynamic model of candidate positioning for u s senators the ndings support a model in which senators face convex costs to changing position with the best tting model being one with linear costs of adjustment the model thus predicts severe punishments for ip opping senators those who make large changes in position as a result of the signi cant costs associated with adjusting position the empirical validity of the median voter theorem which depends upon candidates being able to change position at no cost is called into question

endogenous price leadership we consider a linear price setting duopoly game with differentiated products and determine endogenously which of the players will lead and which one will follow while the follower role is most attractive for each firm we show that waiting is more risky for the low cost firm so that consequently risk dominance considerations as in harsanyi and selten a general theory of equilibrium selection in games mit press cambridge ma 1988 allow the conclusion that only the high cost firm will choose to wait hence the low cost firm will emerge as the endogenous price leader

the ecb and the interbank market this paper analyses the impact on the macroeconomy of the ecb s non standard monetary policy implemented in the aftermath of the collapse of lehman brothers in the fall of 2008 we study in particular the effect of the expansion of the intermediation of transactions across central bank balance sheets as dysfunctional financial markets seize up which we regard as a key channel of transmission for non standard monetary policy measures our approach is similar to lenza et al 2009 but we introduce the important innovation of distinguishing between private intermediation of interbank transactions in the money market and central bank intermediation of bank to bank transactions across the eurosystem balance sheet we do this by exploiting data drawn from the aggregate monetary and financial institutions mfi balance sheet which allows us to construct a new measure of the policy shock represented by the ecb s increasing role as a financial intermediary we find that bank loans to households and in particular to non financial corporations are higher than would have been the case without the ecb s intervention in turn the ecb s support has a significant impact on economic activity two and a half years after the failure of lehman brothers the level of industrial production is estimated to be 2 higher and the unemployment rate 0 6 percentage points lower than would have been the case in the absence of the ecb s non standard monetary policy measures

using repeat challengers to estimate the effect of campaign spending on election outcomes in the u s house previous studies of congressional spending have typically found a large positive effect of challenger spending but little evidence for effects of incumbent spending those studies however do not adequately control for inherent differences in vote getting ability across candidates high quality challengers are likely to receive a high fraction of the vote and have high campaign expenditures even if campaign spending has no impact on election outcomes to avoid that bias this paper examines elections in which the same two candidates face one another on more than one occasion differencing eliminates the influence of any fixed candidate or district attributes estimates of the effects of challenger spending are an order of magnitude below those of previous studies campaign spending has an extremely small impact on election outcomes regardless of who does the spending campaign spending limits appear socially desirable but public financing of campaigns does not

a structural model of electoral accountability this paper proposes a structural approach to measuring the eects of electoral ac countability we estimate a political agency model with imperfect information in order to identify and quantify discipline and selection eects using data on u s governors for 1982 2012 we nd that the possibility of reelection provides a signi cant incentive for incumbents to exert eort we also nd a selection eect although it is weaker in terms of its eect on average governor performance according to our model the widely used two term regime improves voter welfare by 4 2 compared to a one term regime and nd that a three term regime may improve voter welfare even further

introduction to monetary policy and capital accumulation the papers in this symposium address the issue of multiple equilibria that can be induced by monetary policy in models with capital accumulation in particular they examine how the taylor principle under which interest rates respond more than proportionately to increases in inflation can generate multiple equilibria they also explore the design of policies to avoid the problem of multiple equilibria and indeterminacy

unconventional economic policies and sentiment an international assessment this paper estimates using bayesian and global vars the spillover effects of unconventional fiscal and monetary policies implemented in the united states and in the eurozone during the last decade consumer confidence and investor sentiment indicators are introduced in the models in order to highlight the signalling channel in the responses to economic policy innovations in times of crisis our results reveal that consumer and investor perceptions of innovative economic measures are relevant to study the pass through of economic policies to the real sector in times of crisis and zero lower bound interest rates in particular the signalling channel plays an important role in successful unconventional economic policies moreover if unconventional economic policies have an impact abroad the effects are similar to those measured in the domestic country region consequently coordination and transparency are a prerequisite for ensuring short term growth after a global financial crisis

congressional committees and the political economy of federal outlays the literature on the organization of the united states congress has been dominated by distributive and informational theory one important source of disagreement between these two theories is their characterization of whether individual legislators can engage in pork barrel activities here we provide evidence which indicates that the pork barrel is alive and well in the contemporary united states congress we focus on whether members of power and constituency committees can direct disproportionate federal expenditures to their districts finding strong and systematic evidence of pork barrel activities by committee members provides empirical support for distributive theories of legislative organization

strategic voting for noncooperative environmental policies in open economies in this paper we construct a political economy model of strategic environmental policymaking with different degrees of product differentiation and different market structures and examine how strategic voting decisions are affected by the choice of environmental policy instruments tax or standard we show that in a cournot market structure voters elect tax setting policymakers who are more green than themselves when product differentiation and or environmental externalities are more prominent in a bertrand market structure they elect more green tax setting policymakers than themselves on the other hand they elect standard setting policymakers who are less green than themselves the results confirm the advantage of the overall use of emission tax over that of emission standard regarding the welfare effect of strategic voting

the effectiveness of the ecb s unconventional monetary policy comparative evidence from crisis and non crisis euro area countries abstract during the european financial crisis the european central bank implemented a series of unconventional monetary policy measures we argue that these programs lowered the bond yield spreads of euro area countries this hypothesis is tested using pooled ols estimations and two different datasets monetary policy event dummies and the purchase volumes of the securities markets programme smp overall we find significantly negative effects on bond yield spreads for both datasets leading us to accept the hypothesis while the omt reduces the spreads of both crisis and non crisis countries ltros and the lowering of the deposit rate to 0 percent are mainly effective in non crisis countries the smp lowers the spreads of crisis countries but it has the opposite effect on non crisis countries this converse effect is explained by the risk that increasingly accumulates on the ecb s balance sheet through the smp and that way constitutes a fiscal risk for non crisis countries the results are confirmed by pooled ols estimations that measure the effect of unconventional monetary policy on central government debt

heterogeneous transmission mechanism monetary policy and financial fragility in the eurozone the eurozone economic activity and banking sector have shown substantial fragility over the last years with remarkable country heterogeneity using detailed data on lending conditions and standards we analyse along several key dimensions of heterogeneity how financial fragility has affected the transmission mechanism of the single eurozone monetary policy the analysis shows that the monetary transmission mechanism is time varying and influenced by the financial fragility of the sovereigns banks firms and households the impact of monetary policy on aggregate output is stronger during the financial crisis especially in countries facing increased sovereign financial distress this amplification mechanism moreover operates through the credit channel both the bank lending and the non financial borrower balance sheet channels our results suggest that the bank lending channel has been to a large extent neutralized by the ecb non standard monetary policy interventions but the policy framework until the end of 2011 was insufficient to overcome credit availability problems stemming from deteriorated firm net worth and risk conditions especially for small firms in countries under stress matteo ciccarelli angela maddaloni and jose luis peydro

explaining and forecasting bank loans good times and crisis abstractthis article aims to develop a parsimonious model to explain and forecast bank loans to nonfinancial companies during calm periods as well as in situations of financial turmoil it focuses on the french context over a period including financial banking and sovereign debt crises theoretical views and intuitions led us to gauge the marginal informational content of a large set of leading indicators in var and vecm models and to investigate potential nonlinearity in credit dynamics in accordance with firms and banks balance sheet effects the growth rate of equity prices appears to be one of the most interesting leading indicator as well as a significant threshold variable for explaining regime switching however it appears difficult to accurately predict the right credit dynamics regimes a simple var model finally performs better

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

strategic environmental policy eco dumping or a green strategy abstract the porter hypothesis claims that a strong environmental policy best serves the interests of a nation s export industry while this hypothesis seems to be based on some form of bounded rationality this paper argues that governments may have good reasons for setting an especially strong environmental policy even though firms are fully rational if the available abatement technology turns the environment into an inferior input competitiveness is spurred by a strong environmental policy the government should take advantage of this and set an especially strict emission quota or an especially high emission tax the findings in the paper also has consequences for the desirability of international cooperation with respect to national environmental policy if a strict environmental policy spurs competitiveness the environment is better protected without cooperation

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

some evidence on the empirical significance of credit rationing this paper examines the credit rationing debate using detailed contract information on over one million commercial bank loans from 1977 to 1988 while commercial loan rates are sticky consistent with rationing this stickiness varies with loan contract terms in ways that are not predicted by equilibrium credit rationing theory in addition the proportion of new loans issued under commitment does not increase significantly when credit markets are tight despite the fact that borrowers without commitments can be rationed whereas commitment borrowers are contractually insulated from rationing overall the data suggest that equilibrium rationing is not a significant macroeconomic phenomenon

does trade openness matter for aggregate instability abstract this paper presents a cash in advance model of a small open economy and shows that whether an inflation targeting interest rate rule introduces aggregate instability depends in general on the degree of openness to international trade this result emerges regardless of whether prices are sticky or flexible in a closed economy as the monetary authority responds to movements in inflation the resulting changes in interest rates affect aggregate consumption through an intertemporal substitution effect and an inflation tax effect in a small open economy this policy also induces changes in the terms of trade which depending on the degree of openness can generate counteracting effects on consumption as a consequence the implications of interest rate rules on macroeconomic stability in an open economy differ from those in a closed economy

endogenous timing in general rent seeking and conflict models we examine simultaneous versus sequential choice of effort in a two player contest the timing of moves determined in a preplay stage prior to the contest subgame as well as the value of the prize is allowed to be endogenous contrary to endogenous timing models with an exogenously fixed prize the present paper finds the following 1 players may decide to choose their effort simultaneously in the subgame perfect equilibrium spe of the extended game 2 the spe does not need to be unique in particular there is no unique spe with sequential moves if the direct costs of effort are zero 3 symmetry among players does not rule out incentives for precommitment to effort locally away from the cournot nash level 4 finally there may be no correlation between win probability and strategic incentives in our framework a finding most central in the analysis of fixed prize contests

pork barrel politics and electoral returns at the local level does the targeted spending of public resources provide electoral benefits for incumbents despite the attention of scholars to that question the empirical results are mixed thus far the present paper supplies insights into the electoral benefits of discretionary funding on local elections i study the consequences of pork barrel politics in 7355 competitive mayoral elections in slovakia between 2006 and 2018 finding that more grants from the central government enhance the likelihood of mayors winning reelection the same advantage applies to mayors whose municipalities receive grants in local election years the effects of the number of grants obtained as well as the timing of their distribution are however moderated by municipal population more specifically a larger number of grants and resources obtained near the end of the mayoral term provides electoral benefits only to small town mayors but give no advantage to the mayors of larger urban areas

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

seniority in legislatures we construct a stochastic game model of a legislature with an endogenously determined seniority system we model the behavior of the legislators as well as their constituents in an infinitely repeated divide the dollar game each legislative session must make a decision on redistributional issues modeled as a divide the dollar game however each session begins with a vote in which the legislators decide by majority rule whether or not to impose on themselves a seniority system legislative decisions on the redistributional issues are made by the baron ferejohn rule an agenda setter is selected by a random recognition rule which in our model is a function of the seniority system selected the agenda setter makes a proposal on redistributional issues and the legislature then votes whether to accept or reject the agenda setters proposal if the legislature rejects the proposal another agenda setter is randomly selected and the process is repeated if the legislature accepts the proposal the legislative session ends and the voters in each legislative district vote whether to retain their legislator or throw it out of office the voters verdict determines the seniority structure of the next period legislature we find a stationary equilibrium to the game having the property that the legislature imposes on itself a non trivial seniority system and that legislators are always reelected