the impact of divided government on legislative production it seems obvious that divided governments should produce less legislation than unified governments yet studies have consistently failed to find such an effect because almost all existing studies focus on the experience of the u s national government the data have limited analysis to a consideration of executive legislative division and ignore the impact of division between bicameral chambers the state level data set employed in this study is not so limited the results show that divided legislatures decrease the production of laws by almost 30 nonetheless consistent with previous studies using national level data executive legislative divisions have no impact of legislative production the reason for this asymmetry is theoretically motivated additional hypotheses of interest are also tested including whether republican controlled legislative chambers are more conservative than democratic chambers in the sense of producing fewer laws than their democratic counterparts

international impacts on domestic political economy a case of japanese general elections abstract the objective of this paper is twofold first this paper emphasizes that in a parliamentary system such as in japan election timings become endogenous in that good economic performances tend to trigger elections second impacts of international factors such as foreign exchange reserves and elections of the united states on domestic economic performances will be examined in the context of political business cycles this paper finds only a limited link between economic performance and international variables except one that upcoming elections in the united states tend to cause a higher rate of growth in japan evidence suggests that although blatant policies such as a beggar thy neighbor policy were not adopted a more subtle international cooperation in the form of japanese expansion to pull up the united states economy has been used

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

economic and political determinants of budget deficits in developing countries abstract the evidence from a large sample of developing countries tends to reject the empirical implications of optimizing models of the process of determination of fiscal deficits tax rates seigniorage and inflation the paper also presents some preliminary evidence that an important reason for the failure of the equilibrium approach to fiscal policy is that fiscal deficits are partly determined by political factors and that cross country differentials in budget deficits may depend on measures of political instability in particular as suggested by a number of recent theoretical approaches an increase in the degree of political instability appears to lead to greater budget deficits

personal traits and individual choices taking action in economic and non economic decisions abstract in a large number of decisions the option that does not require a specific action such as filling in a form is chosen frequently it is a stylized fact that opt in or opt out designs for otherwise identical choices lead to vastly different outcomes choice options are chosen more frequently simply because they are the no action alternative or default option however direct empirical evidence on the reasons for the popularity of defaults is scarce we devised a special survey module for the dutch dnb household survey to study potential explanations for default choices we find that the popularity of the default option is related to different personal traits in economic and non economic decisions financially literate individuals are more likely to take action and opt out the default option in economic decision making in non economic decisions procrastination increases the popularity of the default while individuals who care much about the opinion of others are more inclined to deviate from the default

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

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

the impact of inequality on the transmission of monetary policy abstract we consider a model to detect the relation between household debt and the transmission of monetary policy in an eu member state with independent monetary policy and high income inequality romania we find that households response to changes in monetary conditions depends on their income and indebtedness profile the transmission of monetary policy is more effective for middle income households which are more indebted and have adjustable rates as lower policy rates ease the consumption constraints on these households low income households respond mainly to budgetary policies as the increase in disposable income matters most for the bottom quintile top income quintile reacts more to monetary policy than bottom quintile but less than middle income quintiles lower inequality is associated with stronger effectiveness and higher homogeneity of monetary policy transmission in turn higher inequality is associated with less effectiveness and higher heterogeneity of the impact of the monetary policy

overview of the special issue on policy implications of and lessons from the global financial crisis this paper reviews the special issue policy implications of and lessons from the global financial crisis and its themes global liquidity and the use of international reserves real and financial economic patterns before and during the global financial crisis

american ambivalence towards abortion policy development of a heteroskedastic probit model of competing values theory using elaboration likelihood models and insights from the recent core beliefs literature we show that conflicting core beliefs lead to ambivalence about policy choices hypotheses policy choices about abortion are heterogeneous this heterogeneity across individuals is a function of the underlying conflict in their beliefs about the role of women and the sanctity of human life methods a heteroskedastic probit model is developed to test the hypotheses results heterogeneity is observed for six of seven abortion policy choices when core values conflict respondents are more ambivalent in their policy responses and more difficult for our standard models to predict

inflation and taxation with optimizing governments this paper examines the empirical validity of the predictions that if governments minimize the deadweight loss from raising revenue through inflation and tax finance there should be a positive contemporaneous association between inflation and the level of tax burdens the authors examine the empirical validity of this prediction using data from great britain france germany japan and the united states inflation and tax rates are as likely to be negatively as positively correlated so the results cast doubt on the empirical relevance of simple models in which governments with time invariant tastes choose monetary policy to equate the marginal deadweight burdens of inflation and taxes copyright 1990 by ohio state university press

the effects of congressional appropriation committee membership on the distribution of federal research funding to universities i introduction in 1994 members of the republican party pledged to seek legislation to impose term limits on members of congress this pledge stemmed from the popular belief that senior members of congress tend to promote personal interests or are more influenced by lobbying efforts that may not be representative of their constituents today term limits continue to be discussed but have not been enacted instead many members have focused their energies toward minimizing the time spent on any particular committee of congress believing that tenure on a committee is a more serious concern than simple tenure in congress implicit in these concerns is the issue whether as incumbent politicians plan to retire they will behave differently and if so whether tenure on a congressional committee exacerbates this behavior this article explores the role of membership on the appropriations committee on the distribution of federal research funding to universities specifically it explores whether funding is diverted to these universities because politicians use their position on a committee to promote personal or constituent interests previous research on shirking compares the voting records of politicians on certain issues with demographic and economic characteristics of the politicians constituents this article explores the issue of shirking differently i explore how membership on congressional appropriations committees affects the distribution of federal research funding to universities i look at two types of relationships between the members and the universities first i consider the relationship between members and the universities that are located in the members districts states in the case of senators second i examine the relationship between members and their undergraduate alma mater i use district representa tion to proxy favoritism that reflects a politician s constituents given that in most instances an alma mater affiliation is not the same as district representation i use alma mater affiliation to proxy favoritism that reflects the politician s personal interests federal research funding accounts for more than 60 of research funding received by research universities previous research has shown a positive impact of federal funding on research outcomes see adams and griliches 1998 arora and gambardella 1997 connolly 1997 payne and siow 2002 and payne 2001 except for payne and siow 2002 however these articles do not consider that political diversion of funds may promote or detract from research productivity as with any other federal program this article concentrates on the impact of membership on the house and senate appropriations committees because they wield the greatest power in the allocation of funding 1 using a panel data set spanning 26 years i explore how changes in the composition of the appropriations committees affects the distribution of research funding after controlling for the heterogeneity that exists across different universities the results suggest that both district representation and alma mater affiliation matter thus there is evidence of shirking for personal interests and evidence of members representing their constituents with respect to the representation of one s constituents the strongest results suggest that public universities benefit from representation on both the senate and house committees private universities however only benefit from representation in the senate with respect to alma mater affiliations the results suggest again that public universities benefit from representation on both the senate and house committees private universities also benefit from representation on both the senate and house committees the results also suggest that the tenure of the member on the committee matters as does whether the member is a part of the majority party in power in the congressional chamber

change over tenure voting variance and decision making on the u s courts of appeals existing scholarship on the voting behavior of u s courts of appeals judges finds that their decisions are best understood as a function of law policy preferences and factors relating to the institutional context of the circuit court what previous studies have failed to consider however is that the ability to predict circuit judge decisions can vary in substantively important ways and that judges in different stages of their careers may behave distinctively this article develops a theoretical framework which conceptualizes career stage to account for variability in voting by circuit judges and tests hypotheses by modeling the error variance in a vote choice model the findings indicate that judges are more predictable in their voting during their early and late career stages case characteristics and institutional features of the circuit also affect voting consistency

lifecycle consumption plans social learning and external habits experimental evidence abstract we report results from a laboratory experiment exploring the extent to which individuals can solve a deterministic intertemporal lifecycle consumption optimization problem and the effect of revealing social information on past average consumption amounts as all individuals have identical induced preferences and lifetime incomes such social information could be useful in solving for the optimal consumption path instead we find that the provision of social information on past average levels of consumption results in a greater deviation of consumption from both the unconditional and the conditionally optimal paths we find some improvement in consumption planning relative to the conditional optimum when social concerns external habits are explicitly incorporated into subject s period utility functions as in external habit formation preference specifications our results on the effects of social information on consumption behavior may help to explain the phenomenon of over consumption and under saving that has been observed in many developed countries in recent decades as social information on the behavior of others has become more readily available

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

baby boomer retirement security the roles of planning financial literacy and housing wealth abstract we compare wealth holdings across two cohorts of the health and retirement study the early baby boomers in 2004 and individuals in the same age group in 1992 levels and patterns of total net worth have changed relatively little over time though boomers rely more on housing equity than their predecessors most important planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than non planners instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth

asymmetric information acquisition and behavior in role choice models an endogenously generated signaling game the authors employ a static homogeneous good duopoly model wherein firms can choose to produce in one of two periods the model allows agents to acquire information and then traces the impact of the information pattern on subsequent production behavior asymmetric information acquisition leads to a unique production role choice pattern the informed uninformed firm chooses to assume the leader s follower s role moreover if information is costly the typical equilibrium involves only one firm acquiring information thus identical firms with identical opportunities choose to become asymmetrically informed and produce sequentially this is the unique refined equilibrium outcome copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

trade balance news and exchange rates is there a policy signal abstract contrary to earlier studies surprisingly large us trade deficits are shown to have a significant effect on exchange rates throughout the 1980s three possible reasons for the time varying effect are considered the evidence presented yields the following inference deficit news is likely to have changed expectations of fed intervention that moved exchange rates deficit news probably has an effect on revisions of future deficit expectations and exchange rates change as a result and deficit news may change expectations regarding us trade policy that is reflected in exchange rates

household financial planning and savings behavior greater personal responsibility toward financial decision making is being advocated on a global basis individuals and households are encouraged to take a more active approach to personal finance in this paper we examine behavioral factors which lead households toward savings and financial planning across a panel of 1253 dutch households in line with the available literature we find that an individual s propensity to save decreases with age and is higher among the financial literate moreover we find that saving behavior varies across generations and is significantly dominant among baby boomers this generation effect however weakens once we account for more individual specifics our results offer evidence for parental influence and for the effects of the psychological and behavioral metrics of numeracy self efficacy locus of control and future orientation a good understanding of these personality variables helps to explain why some take financial responsibility while others do not

the life cycle model of consumption and saving a central implication of life cycle models is that agents smooth consumption we review the empirical evidence on smoothing at frequencies from within the year up to across a lifetime we find that life cycle models particular those which incorporate realistic features of markets and goods have more empirical successes than failures we also show that some apparent deviations from theoretical predictions imply very small welfare losses for agents finally we emphasize that the coherence of life cycle models imposes an important discipline when incorporating new features into models

bicameralism and majoritarian equilibrium recent papers have established that bicameralism can support a non empty core in majority voting games in two dimensional policy spaces we generalise this result to the n dimensional case and provide a discussion of multi cameralism bicameralism generates a core of potentially stable equilibria by institutionalising opposition between mutually oriented median voters this provides a clear link with the standard median voter model and with more traditional analyses of bicameralism

bicameral sequence theory and state legislative evidence theory voting sequence is a strategic variable between bicameral chambers decisions by chambers to acquire costly information affect the payoffs chambers receive from sequencing choices thus it is also a strategic variable between bicameral chambers hypotheses 1 because of incentives to take advantage of one chamber s informational expertise when chambers share relatively homogeneous policy preferences house chambers in legislatures dominated by a single party will initiate adopted legislation in greater proportion relative to legislatures that are not dominated by a single party 2 a cost advantage in acquiring information grows with an increasing disparity in the number of legislators between bicameral chambers lower information acquisition costs in the larger bicameral chamber account for a persistent first mover advantage for that chamber methods hypotheses are derived from a game theoretic model in which informational endowments are endogenously chosen by bicameral chambers and in which voting sequence is endogenously determined implications of the model are tested with an original data set developed from the session laws of thirty three state legislatures results under specified conditions bicameral chambers sequence themselves to take advantage of one chamber s informational expertise under other conditions bicameral chambers will not take advantage of a chamber s informational expertise the main theoretical results conclude 1 that one party legislatures take greater advantage of informational expertise relative to divided party legislatures 2 that senators have an incentive to specialize in more risky policy environments relative to house members and 3 that there is an informational basis for house chambers to initiate more adopted legislation than senate chambers the empirical results are consistent with hypothesis 1 the results are consistent with hypothesis 2 although an alternative noncontradictory theory might also account for the result

regulatory behaviour under threat of court reversal theory and evidence from the swedish electricity market this paper investigates how regulators influence outcomes in regulated markets when their decisions are subject to the threat of court review we develop a theoretical model that provides a number of behavioural implications when i all regulators dislike having their decisions overturned by courts ii inexperienced regulators care more about not having their decisions overturned than experienced regulators and iii experienced regulators also care about consumer surplus the theoretical implications are tested using a database of swedish regulatory decisions from the electricity distribution sector we provide empirical evidence that inexperienced regulators are more likely to set higher regulated prices than experienced regulators and as the complexity of the case increases there are on average more overturned decisions and higher prices for inexperienced regulators the links between experience complexity and regulatory outcomes are both statistically and economically significant simulations show that if those decisions that were not appealed had been appealed then the court would have lowered the prices by 10 on average

understanding the heterogeneity of savings and asset allocation a behavioral economics perspective why do saving rates and the proportion of savings invested in stocks substantially increase with income this paper sheds light on this question from the perspective of a new bounded rationality life cycle model it has been shown elsewhere that this model is better than existing ones at predicting how savings and asset allocation choices vary over the life cycle in this paper it is shown that a very simple version of the same model also allows for a better understanding of the variation in savings and asset allocation choices across income groups

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

on measuring partisanship in roll call voting the u s house of representatives 1877 1999 on measuring partisanship in roll call voting the u s house of representatives 1877 1999 we propose a method of assessing party influence based on a spatial model our method provides the first test of whether observed values of the widely used rice index of party dissimilarity are consistent with a partyless null model it also avoids problems that beset previous estimators substantively we find evidence of party influence in all but one congress since 1877 moreover our indicator of party pressure is systematically higher for the sorts of roll calls that party theorists believe are more pressured procedural organizational and label defining votes our results refute the widespread notion that parties in the house have typically had negligible influence on roll call voting behavior they also document important changes in party influence associated with the packing of the rules committee in 1961 and the procedural reforms of 1973

political factors in international economics an overview abstract the intellectual interaction between politics and economics is not new theolder term to describe what economists do political economy which until recently survived only in french translation and on the masthead of one of the premier professional journals is a case in point a more pertinent example is provided by developments over the past two decades in the field of industrial organization the shift from an exclusively public interest view of economic regulation to one in which regulation is seen as the result of interaction between utility maximizing politicians and various interest groups 1 the extension of such ideas to international economics is i believe both necessary and desirable and as these papers indicate with the right experimental design it can also prove highly illuminating