temporary import and export quotas and the current account abstract this paper provides a comprehensive analysis of temporary import and export quotas in a two period optimization model imposing much weaker restrictions on preferences and production technologies than in the existing literature we demonstrate that under net substitutability the imposition of a temporary quota which reduces imports by a small amount improves the current account and causes an appreciation of the real exchange rate if the initial equilibrium is quota restricted the effects of tightening the quota are ambiguous by contrast under substitutability a tightening of export quotas necessarily leads to a current account deficit regardless of the nature of the initial equilibrium

candidate reputations and the incumbency effect abstract a major shortcoming of the classical median voter model is that its central prediction convergence of platforms to the median voter s ideal is seldom observed one reason is that the classical model neglects the importance of voter expectations as a determinant of votes here we associate voters expectations about candidates with past as well as current candidate pronouncements and assume that incumbents whose actions are consistent with their reputations are perceived as less risky than challengers in equilibrium candidates choose distinct platforms typically neither adopts the median voter s ideal point either candidate may win depending on how well the incumbent s reputation reflects current voter tastes and how relatively risky the electorate perceives the challenger to be

a theory of voting equilibria a voting equilibrium arises when the voters in an electorate acting in accordance with both their preferences for the candidates and their perceptions of the relative chances of various pairs of candidates being in contention for victory generate an election result that justifies their perceptions voting equilibria always exist and the set of equilibria can vary substantially with the choice of voting system we compare equilibria under the plurality rule approval voting and the borda system we consider a candidate positioning game and find that the plurality rule imposes little restriction on the position of the winning candidate in three candidate races while approval voting leads to a winner positioned at the median of the voter distribution we contrast campaign activities intended to influence voter preferences with activities meant to influence only perceptions of candidate viability

electoral competition in heterogeneous districts this paper considers a model of elections in which parties compete simultaneously for multiple districts i show that if districts are heterogeneous then a unique two party equilibrium exists under plurality rule in which further entry is deterred the equilibrium requires that parties choose noncentrist policy platforms and not converge to the ideal policy of the median voter these characteristics are consistent with empirical observation in contrast to those of single district models necessary and sufficient conditions for the existence of the equilibrium are then characterized and related to duverger s law the existence of multiple party equilibria in this environment is also considered

transparency in parliamentary voting how does transparency affect voting behavior to answer this question we exploit a switch from a show of hands to electronic voting in the upper house of the swiss parliament the change which took place halfway through the 2011 2015 legislative period also brought about the online publication of individual voting records using the lower house as a control group we compare individual voting decisions in a set of identical votes in both chambers this unique framework makes it possible to estimate the causal effect of increased transparency on legislators choices since the reform members of the upper house are less likely to deviate from the majority decision of their party legislators representing the same canton are also less likely to cast an aligned vote suggesting that voters lose influence over their representatives in parliament

tariffs capital controls and equilibrium real exchange rates a general equilibrium intertemporal model with optimizing consumers and producers is developed to analyse how the equilibrium real exchange rate rer reacts to changes in the degree of restrictions to intra and intertemporal trade in particular the effects of changes in the level of import tariffs and of changes in taxes on foreign borrowing on the path of equilibrium rers are investigated in the case of import tariffs both temporary and anticipated changes are considered it is shown that in this intertemporal framework equilibrium real exchange rates can exhibit interesting and convoluted behaviour in particular results that contradict the traditional wisdom can be obtained a number of extensions are also discussed tarifs douaniers controles sur les flux de capitaux et taux de change reels d equilibre l auteur developpe un moddle d equilibre general inter temporel dans lequel consom mateurs et producteurs optimisent pour analyser les reactions du taux de change reel d equilibre aux changements dans le degre de restriction du commerce intra et inter temporel en particulier l auteur analyse les effets de changements dans le niveau des tarifs douaniers sur les importations et des taxes sur les emprunts a l etranger sur le sentier d equilibre du taux de change reel dans le cas des tarifs a l importation l auteur examine a la fois les changements temporaires et anticipes on montre que dans ce cadre intertemporel le comportement des taux de change reels d equilibre est interessant et contournm les resultats obtenus contredisent ceux suggeres par la sagesse conventionnelle l auteur discute aussi un certain nombre d extensions de ces resultats

sequential elections and overlapping terms voting for us senate abstract this paper presents a model in which voters attempt to balance the ideological positions of their senate representatives candidate positions are determined endogenously through a primary system the median voter theorem is applied in each election to determine winning platforms based on voter preferences which may differ from their individual bliss points contrary to the original median voter theorem the main implications of this model are that i convergence on platform positions is not achieved in the general election and ii extremist candidates defeat moderates in the stable long run equilibrium

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

spatial equilibrium with entry this paper examines spatial equilibrium in political competition when established parties choose their platforms competitively while rationally anticipating entry of a vote maximizing third party the resulting equilibrium is substantially different from the hotelling median equilibrium established parties are spatially separated and third parties will generally lose the election this provides one theoretical explanation for the stability of two party systems namely that non cooperative behavior between established parties can effectively prevent third parties from winning

temporary trade taxes welfare and the current account abstract the welfare and trade balance effects of temporary import tariffs and export subsidies are compared ruling out complementarities a reduction in tariffs improves welfare while increasing export subsidies may not in general tariffs or export subsidies have an ambiguous effects on trade balance

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

an explanation for why senators from the same state vote differently so frequently abstract this paper explains why rational well informed voters elect politicians with divergent platforms given well defined constituencies and the costliness of any individual politician creating transfers across all interest groups we show that different politicians from the same district can successfully represent vastly different constituencies and still have each politician producing the support maximizing level of transfers our explanation focuses on how obtaining wealth transfers reduces successful constituencies returns to obtaining additional transfers the evidence strongly rejects alternative explanations based upon the median voter and polarized policy preference approaches

effectiveness of electoral systems for reducing government corruption a game theoretic analysis abstract a theoretical model is developed for predicting the relative effectiveness of different electoral systems for reducing government corruption we consider voting games in which parties with known corruption levels and known positions on a major policy question compete for legislative seats we find that approval voting and proportional representation are fully effective in the sense that all equilibria exclude corrupt parties from legislative seats plurality voting is partly effective in the sense that there always exist some equilibria that exclude corrupt parties borda voting is ineffective because for some political situations no equilibria can guarantee the exclusion of corrupt parties journal of economic literature classification number d72

political parties and political shirking using ada roll call voting scores for the 1947 2006 period i find that senators shirk in their last term the degree of shirking is limited by political parties which constrain the politician in his last term and varies by post senate career choices the results highlight the importance of political parties in the repeated game that is electoral politics

the provision of public goods under alternative electoral incentives politicians who care about the spoils of office may underprovide a public good because its benefits cannot be targeted to voters as easily as pork barrel spending we compare a winner take all system where all the spoils go to the winner to a proportional system where the spoils of office are split among candidates proportionally to their share of the vote in a winner take all system the public good is provided less often than in a proportional system when the public good is particularly desirable we then consider the electoral college system and show that it is particularly subject to this inefficiency

credibility and policy convergence in a two party system with rational voters the traditional approach to modeling political parties behavior based upon the contribution of anthony downs 1957 assumes that the parties unique objective is to win elections thus they maximize their popularity the crucial implication of this assumption for a two party system is that if the two parties have the same information about voters preferences full convergence of policies results from electoral competition this is the crucial implication of the median voter theorem more generally it may be argued that different parties are motivated differently because they represent different constituencies parties may not care only about winning elections per se but also about the quality of the policies resulting from an election in this case the candidates of the two parties view winning an election not only as a goal per se but also as a means of implementing a better policy for their respective constituencies this paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forwardlooking agents and parties do not care exclusively about being elected but also about which policy to implement once elected the dynamic inconsistency arises as follows the parties have an incentive to announce convergent platforms to increase their chances of election however if the elected party is not committed to its electoral platform it has an incentive to follow its most preferred policy rather than the policy announced in its platform if voters are rational they account for this incentive thus in general in a one shot electoral game the only timeconsistent equilibrium is one in which no convergence is possible the two parties follow their most preferred policies and the voters rationally expect this outcome full convergence of parties platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election thus these results differ from the existing literature on ideologically motivated politicians for instance donald wittman 1977 1983 randall calvert 1985 which implicitly assumes the possibility of binding commitments to electoral platforms complete or partial policy convergence can be the outcome of political competition if the interaction between the parties and the voters is modeled as an infinitely repeated game in fact if the candidates have concave objective functions the welfare maximizing policy rule implies a complete convergence of parties policies however this cooperative and agreed upon policy may or may not be sustainable as a subgame perfect equilibrium depending on parameter values in particular it depends on the discount rates of the two parties the degree of polarization of their preferences and the relative popu graduate school of industrial administration carnegie mellon university pittsburgh pa 15213 and national bureau of economic research cambridge ma 02138 this paper is based upon a chapter of my unpublished doctoral dissertation at harvard university i am greatly indebted to jeffrey sachs for directing my attention toward these issues and for many conversations i also wish to thank andrew abel dilip abreu olivier blanchard ramon caminal andrew caplin alex cukierman morris fiorina benjamin friedman herschel grossman howard rosenthal and the referees for very useful comments the responsibilitv af anv n mtnkieis af calrirp nfnlv mine the result of policy convergence in a two party system is more general than the median voter theorem for discussions of convergence results not at the median see john ledyard 1984 peter coughlin 1984 coughlin and shmuel nitzan 1981 melvin hinich 1977 for earlier work on spatial competition see richard mckelvey 1975 hinich ledyard and peter ordeshook 1972 1973 and the references quoted therein the present paper focuses on the result of convergence rather than on the median voter theorem per se

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

the elasticity of derived net supply and a generalized le chatelier principle the marshall 1920 hicks 1963 rules for the elasticity of derived demand for an input which demonstrate how the price elasticity of demand for the input changes as the price elasticity of demand for the product the price elasticity of supply of a competing factor the first factor s cost share and the elasticity of substitution between the two factors change have been generalized to the case where there are n inputs and one output by sato and koizumi 1970 1973 andrieu 1974 and razin 1974 have also generalized the marshall hicks rules to the case where there is one output and three inputs but one of the inputs is fixed however since most real life firms or industries produce a wide variety of products it would appear to be useful to obtain rules for the price elasticity of derived supply for an output where other output and input markets are allowed to adjust to the change in the price of the first output the recent increases in energy prices have perhaps provided a reason for renewed interest in the microeconomic determinants of industry supply in section 5 below we derive analogues to the marshall hicks sato koizumi rules in a multiple output framework in section 2 we list our assumptions on the technology and note some preliminary results from duality theory in section 3 we define the elasticity of derived net supply and we show that it will always be nonnegative in our model we also compare the elasticity of derived supply which takes into account adjustments induced by an increase in the price of the output in other input and output markets with an ordinary price elasticity of supply which holds the prices of the other inputs and outputs fixed we also compare the above two elasticities with intermediate elasticities of derived supply that are obtained by assuming that some input and output prices are fixed but others are not we find that the more markets that adjust to the price increase in the first market the smaller the elasticity of derived supply becomes in the first market we could term this an inverse le chatelier principle since it acts in a manner which is seemingly opposite to the usual le chatelier principle cf samuelson 1947 pp 36 39 which says that the more markets that we allow to adjust to the effects of a price increase in the first market the larger is the elasticity of supply in the first market however the two le chatelier principles are not really opposed as we shall see later our inverse le chatelier principle formally contains samuelson s le chatelier principle as a special case in section 4 we consider the comparative statics effects of an exogenous increase in the price of the first good on a weighted average of other prices as well as on a weighted average of changes in the industry supply of other outputs and changes in the industry demand for other inputs taking into account the general equilibrium repercussions on other markets of the increase in the price of the first good

tariffs employment and the current account real wage resistance and the macroeconomics of protectionism using a standard complete specialization model of a small open economy within a rigorous intertemporal optimization framework and with contract based wage rigidity we show that permanent tariffs lead to a current account deterioration and a fall in employment contradicting most of the literature on macroeconomic effects of import tariffs the crucial factor in this complete reversal of standard results is the impact of tariffs on domestic real product wages via wage indexation temporary tariffs will have less of a negative impact on the ca or potentially even a positive impact because they increase the consumption rate of interest the terms at which future consumption can be traded for current consumption and so increase private savings extensions towards incorporating a more general production structure investment and the use of tariff revenues to provide wage subsidies are presented this abstract was borrowed from another version of this item

tariffs quotas and welfare in a monetary economy abstract the effects of tariffs and quotas on welfare in a monetary economy are considered it is shown that while both policies improve the balance of payments they have different lifetime welfare implications even when they are equivalent in the long run the speed of adjustment is shown to be more rapid under a tariff than under a quota therefore adjustment costs associated with changes in money holdings are lower under a tariff while those associated with changes in consumption are higher simulation results are used to examined the implications of various structural parameters for lifetime utility under the two policies

carbon geography the political economy of congressional support for legislation intended to mitigate greenhouse gas production over the last 5 years the u s congress has voted on several pieces of legislation intended to sharply reduce the nation s greenhouse gas emissions given that climate change is a world public bad standard economic logic would predict that the united states would free ride and wait for other nations to reduce their emissions within the congress there are clear patterns to who votes in favor of mitigating greenhouse gas emissions this paper presents a political economy analysis of the determinants of pro green votes on such legislation conservatives consistently vote against such legislation controlling for a representative s ideology representatives from richer districts and districts with a lower per capita carbon dioxide footprint are more likely to vote in favor of climate change mitigation legislation representatives from districts where industrial emissions represent a larger share of greenhouse gas emissions are more likely to vote no jel q54 q58 r50

proportional representation with citizen candidates we construct a simple model incorporating bothcitizen candidates and proportional representation andinvestigate its properties in a basic case with auniform distribution of citizen ideal points and purepolicy motivations and in further cases which allowof office rents and other distributions ofpreferences the idea of citizen candidates developedby osborne and slivinski 1996 besley and coate 1997 endogenises the decision to stand as acandidate and allows explicit study of the number andtype of candidates as an equilibrium phenomenon theidea of proportional representation allows a moreflexible relationship between the pattern of votescast and the final policy outcome and also providesa richer model of political representation ourdiscussion points to the widespread possibility ofequilibria involving non median policy outcomes provides insights into the relationship betweenproportional representation and the equilibrium numberof candidates and also provides an explicit accountof the trade off between candidate benefitsdistributed on a winner take all basis and those thatare mediated through proportional representation

electoral systems and public spending we study the effects of electoral institutions on the size and composition of public expenditure in oecd and latin american countries we emphasize the distinction between purchases of goods and services which are easier to target geographically and transfers which are easier to target across social groups we present a theoretical model in which voters anticipating government policymaking under different electoral systems have an incentive to elect representatives more prone to transfer public good spending in proportional majoritarian systems the model also predicts higher total primary spending in proportional majoritarian systems when the share of transfer spending is high low after dee ning rigorous measures of proportionality to be used in the empirical investigation we e nd considerable support for our predictions

electoral competition with third party entry in the lab abstract electoral competition between two vote share maximizing candidates in the context of the unidimensional spatial model leads to platform convergence both candidates end up proposing the ideal policy of the median voter downs 1957 palfrey 1984 famously argued that if third candidate entry is expected after the two main candidates choose their platforms the unique equilibrium is such that the two main candidates locate substantially far from each other by conducting a laboratory experiment we put this popular idea to test for the first time we allow entry to take place with four different probabilities and find that indeed the degree of polarization of the two main candidates platforms increases as third candidate entry becomes more likely to occur providing strong evidence in support of palfrey 1984 s formal results and underlying intuition

the terms of trade and the current account the harberger laursen metzler effect the paper examines the effect of terms of trade changes on a small country s spending and current account assuming optimizing behavior in an intertemporal framework with perfect international capital mobility a temporary future terms of trade deterioration implies a deterioration improvement of the trade balance whereas a permanent terms of trade deterioration has an ambiguous effect depending on the rate of time preference nominal and real variables are considered via exact price indexes two periods and an infinite horizon are examined

would letting people vote for multiple candidates yield policy moderation abstract we investigate whether letting people vote for multiple candidates would yield policy moderation we do so in a setting that takes three key features of elections into account namely strategic voting endogenous candidacy and policy motivation on the part of the candidates we consider two classes of voting rules one class consists of the voting rules where each voter casts several equally weighed votes for the different candidates the other class consists of the voting rules where each voter rank orders the candidates we identify conditions under which these voting rules yield policy moderation we also show that these voting rules may yield policy extremism instead of policy moderation if one or several of the conditions is not satisfied finally we find that amongst these voting rules the extent of policy moderation is maximal under the borda count if we consider only equilibria where all candidates are serious contenders however this result does not carry over to spoiler equilibria where approval voting can yield more moderate policy outcomes than the borda count

devaluation levels versus rates abstract in a context of infinitely lived families a la sidrauski where consumers are lump sum compensated for the inflation tax and there is no capital mobility it is shown that a devaluation improves while an increase in the rate of devaluation deteriorates the balance of payments

trade restrictions with imported intermediate inputs when does the trade balance improve the author s model demonstrates that when imports are predominantly intermediate inputs as they are in most developing countries import restrictions can not always be relied upon to improve the trade balance such restrictions act as a supply shock to the economy unless nontraded goods are intensive users of imported intermediaries the general equilibrium consequence of import restrictions is a large enough reduction in export supplies to swamp the direct effect of the restrictions the result is a deterioration of the trade balance

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

levels and long term trends in earnings inequality overcoming current population survey censoring problems using the gb2 distribution over its history the march current population survey cps has increasingly captured the upper tail of the distribution of all sources of income this together with time consistency problems in top coding means that users of both the public use and restricted access cps will understate the level of wage earnings and income inequality in earlier years and overstate their growth over time we address this problem by modeling the personal earnings of full time full year workers using the generalized beta distribution of the second kind calculating gini coefficients from the estimated parameters and comparing them with past findings

on the dynamic non equivalence of tariffs and quotas in the monetary model of the balance of payments abstract this is a reply to a comment by daniel fried and tower 1984 regarding the observation in blejer and hillman 1982 that the adjustment mechanism of the monetary model of the balance of payments provides another instance of tariff quota asymmetry

the last period problem in politics do congressional representatives not subject to a reelection constraint alter their voting behavior this study of roll call voting behavior in the u s house of representatives empirically documents the existence of an important simultaneity bias in the heretofore much investigated relationship between legislator ideological shirking and the security with which a legislator holds office the results indicate that while greater security allows a policymaker more leeway for ideological consumption increases in ideological on the job consumption also diminish a policymaker s security in office

macroeconomic conditions in the u s and congressional voting on environmental policy 1970 2008 using the environmental scorecard ratings of congressmen and senators published annually by the league of conservation voters we explore empirically whether political support for pro environment legislation aggregated across each legislative body is sensitive over time to changing economic conditions that is whether there is a political trade off between economic conditions and the environment using lcv scorecard ratings from 1970 to 2008 we find evidence consistent across both the house and senate that political support for the environment is related to per capita income but this general tendency can be decomposed into sharp differences by party

economic reform voting and local political intervention evidence from india abstract this paper uses the indian tariff reforms of the early nineties to estimate how voters hurt by economic reforms respond regions more hurt by the tariff reform increased their support for both the party that initiated their suffering and parties with similar preferences in favor of poverty centric policies this response is surprisingly sophisticated where voters did not simply punish incumbents for negative income shocks and correctly discounted initial anti reform stances by opposition parties that later turned out to be false furthermore the strength of this voting response varied with both geography and local political incentives suggesting that the economic effects of reforms might vary substantially in large and decentralized democracies

polarized platforms and moderate policies with checks and balances abstract in standard spatial models of elections parties with policy preferences take divergent positions their platform positions are less separated than are the parties ideal policies if policy is the result of an executive legislative compromise the policy preferences of the parties can be moderated by voter behavior divided government may result since parties anticipate the moderated outcomes they have an added incentive to choose separated platforms consequently divergence in platforms is greater than in the standard model especially when uncertainty is high and the legislature more powerful than the executive for some parameters parties may even posture by adopting platforms that are more extreme than their true ideal points

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

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

the flypaper effect identifying areas for further research the flypaper effect literature dates back three decades it is overwhelmingly neo classical in approach attempting to improve the median voter demand model and or temper it with public choice supply side perspectives whilst this approach provided valuable early substantial analytical insights more recent papers seem to have contributed only marginally to an understanding of the flypaper effect if indeed it exists at all hence as well as providing a long overdue comprehensive review of the literature on the flypaper effect this paper identifies more productive avenues for further research

beyond the median voter preferences district heterogeneity and political representation despite the centrality of the median voter prediction in political economy models overwhelming empirical evidence shows that legislators regularly take positions that diverge significantly from the preferences of the median voter in their districts however all these empirical studies to date lack the necessary data to directly measure the preferences of the median voter we utilize a unique data set consisting of individual level voting data that allows us to construct direct measures of voter preferences we find that legislators are most constrained by the preferences of the median voter in homogeneous districts

bipolar multicandidate elections with corruption the goals of democratic competition are not only to implement a majority s preference on policy questions but also to provide a deterrent against corrupt abuse of power by political leaders we consider a simple model of multicandidate elections in which different electoral systems can be compared according to these two criteria among a wide class of single winner scoring rules only approval voting is found to satisfy both effectiveness against corruption and majoritarianism for this model

using mandated speed limits to measure the value of a statistical life in 1987 the federal government permitted states to raise the speed limit on their rural interstate roads but not on their urban interstate roads from 55 mph to 65 mph since the states that adopted the higher speed limit must have valued the travel hours they saved more than the fatalities incurred this institutional change provides an opportunity to estimate an upper bound on the public s willingness to trade off wealth for a change in the probability of death our estimates indicate that the adoption of the 65 mph limit increased speeds by approximately 4 percent or 2 5 mph and fatality rates by roughly 35 percent together the estimates suggest that about 125 000 hours were saved per lost life when the time saved is valued at the average hourly wage the estimates imply that adopting states were willing to accept risks that resulted in a savings of 1 54 million 1997 dollars per fatality with a sampling error roughly one third this value we set out a simple model of states decisions to adop

federal tax policies congressional voting and natural resources can abundance of natural resources affect legislators voting behavior over federal tax policies we construct a political economy model of a federalized economy with district heterogeneity in natural resource abundance the model shows that representatives of natural resource rich districts are more less willing to vote in favor of federal tax increases decreases this occurs because resource rich districts are less responsive to federal tax changes due to the immobile nature of their natural resources we test the model s predictions using data on roll call votes in the u s house of representatives over the major federal tax bills initiated during the period of 1945 2003 in conjunction with the presence of active giant oil fields in u s congressional districts our identification strategy rests on plausibly exogenous giant oil field discoveries and exploitation and narrative based aggregate federal tax shocks that are exogenous to individual congressional districts and legislators we find that i resource rich congressional districts are less responsive to changes in federal taxes ii representatives of resource rich congressional districts are more less supportive of federal tax increases decreases controlling for legislator congressional district and state indicators our results indicate that resource richness is approximately half as dominant as the main determinant namely party afiliation in driving legislators voting behavior over federal tax policies

centripetal and centrifugal incentives in electoral systems this paper investigates how electoral laws affect the position taking incentives of parties and candidates it seeks to extend the finding presented in the classical median voter theorem to a wide class of electoral systems or to show the limits of such extension the factors examined are the district magnitude the electoral formula the number of votes each voter is allowed to cast whether voters can cumulate their votes and whether voters can partially abstain i suggest a crude division of electoral systems into those producing predominantly centripetal incentives and those producing predominantly centrifugal incentives among the factors found to produce centripetal incentives at least in noncumulative systems are the following increases in the number of votes per voter outlawry of partial abstention and decreases in the district magnitude in systems allowing the cumulation of votes matters are a bit different

in defense of inequality this is a perfect time to discuss inequality after a period of three decades when wage inequality among men in the united states grew to approximate pre world war ii levels measured inequality apparently has stabilized and may in fact be decreasing claudia goldin and robert a margo 1992 it is therefore a good time to assess the changes to compare the gains and losses i choose this topic not to offend but because i believe inequality is an economic good that has received too much bad press i also think you will agree that it is a good which like any other can be scarce or overly abundant i am neither trying to praise nor defend poverty and i hope it is understood that the link between wages and income is not especially close particularly at lower incomes where nonemployment dominates wages play many roles in our economy along with time worked they determine labor income but they also signal relative scarcity and abundance and with malleable skills wages provide incentives to render the services that are most highly valued further we all buy and sell labor either directly or indirectly as labor is embodied in products to reverse one of the themes of milton friedman s introductory theory class one man s poison can be another s meat together with rising relative wages the post 1950 increase in the job market employment of women is one of our major accomplishments but it is an accomplishment that has been fueled in part by the low wages earned by those the census classifies as private household workers childcare workers workers in laundries and cleaning establishments food service workers etc as the population ages the prospect of increasing dependence on personal assistance looms for the most part personal assistants and aides earn low wages wages that extend the services we can afford friedman s actual observation is however that one man s meat is not necessarily another s poison friedman 1976 the relatively high wages earned by physicians scientists and university professors have attracted many immigrants to the united states would we be better off if they had not immigrated we could in fact reduce wage inequality by simply proscribing immigration because the wage distribution of immigrants is u shaped relative to that of natives see j p smith and b edmonston 1997 p 180 table 5 4 my guess is that most economists faced with such an option would respond by directing attention to the services immigrants provide my objective is to examine the recent period of increasing wage inequality with an eye toward the positive i describe some of the changes that have occurred speculate about the causes and wrap up with illustrations of consequences i contend that growing inequality has created opportunities that have been exploited by many and that the gains are not restricted to the traditional elite moreover when we have adopted policies to mitigate the downside of increasing inequality which is falling real wages in the lower parts of the distribution a surprising number of individuals have also capitalized on those opportunities in ways that are not productive before turning to the data i want to make a few general observations department of economics texas a m university college station tx 77843 4228 i am indebted to martin gritsch for assistance in extracting the data and to barbara charlton for secretarial support i am also indebted to participants in the ucla rand labor workshop and especially to janet currie and james p smith for comments and suggestions on an earlier draft i have drawn heavily on my previous work much of it in collaboration with kevin m murphy

random interactions in the chamber legislators behavior and political distance abstract i investigate the role of social interaction among members of parliament mps and the impact of such interaction on the political distance between parties using the random allocation of seats in the icelandic parliament i find that mp s voting and speech behaviors are affected by the behavior of legislators seated nearby i also show that greater random exposure to mps from different parties ultimately reduces the political distance between parties similar evidence is found using historical data for the u s house of representatives by exploiting the introduction of a lottery mechanism to determine desk assignments in 1845 i argue that random seating arrangements could constitute a low cost way of reducing differences within the political arena

a tale of two unions divergent platforms and their constituencies the median voter theorem has regularly been used in economics to represent the behaviour of teachers unions little empirical work however tests whether this framework is a good fit for teachers

stability in electoral competition a case for multiple votes abstract it is well known that the hotelling downs model generically fails to admit an equilibrium when voting takes place under the plurality rule osborne 1993 this paper studies the hotelling downs model considering that each voter is allowed to vote for up to k candidates and demonstrates that an equilibrium exists for a non degenerate class of distributions of voters ideal policies which includes all log concave distributions if and only if k 2 that is the plurality rule k 1 is shown to be the unique k vote rule which generically precludes stability in electoral competition regarding the features of k vote rules equilibria first we show that there is no convergent equilibrium and then we fully characterize all divergent equilibria we study comprehensively the simplest kind of divergent equilibria two location ones and we argue that apart from existing for quite a general class of distributions when k 2 they have further attractive properties among others they are robust to free entry and to candidates being uncertain about voters preferences

how do senators vote disentangling the role of voter preferences party affiliation and senate ideology this paper develops a methodology for consistently estimating the relative weights in senator utility functions despite the fact that senator ideologies are unobserved the empirical results suggest that voter preferences are assigned only one quarter of the weight in senator utility functions the national party line also has some influence but the senator s own ideology is the primary determinant of roll call voting patterns these results cast doubt on the empirical relevance of the median voter theorem estimation of the model requires only roll call voting data making it widely applicable copyright 1996 by american economic association

long term trends in earnings inequality what the cps can tell us abstract changes in current population survey cps topcoding rules in the 1990s artificially increased measured earnings inequality we create a time consistent cps data series and compare trends in earnings inequality from 1975 to 2001

mr smith and the economy the influence of economic conditions on individual legislator voting this paper estimates the influence of macroeconomic conditions on individual legislator voting over time previous work shows legislator voting to be stable over careers in this paper voting on an ideological issue space ada scores and a fiscal issue space ntu scores from 1976 to 2002 exhibits significant short term cyclicality with economic conditions individual legislators polarize by party in response to rising unemployment and converge in response to rising inflation as legislators accumulate tenure they become more ideologically conservative but more fiscally liberal results are also reported on presidential party divided government and region all results are weaker in the senate than in the house

temporary import quota and the current account this paper studies the effects of a temporary import quota on the real exchange rate and the current account response is determined by the interaction between two opposing forces the intertemporal relative price effect tends to improve the current account while the wealth the intertemporal relative price effect tends to improve the current account while the wealth effect contributes to a deterioration for a sufficiently low degree of intertemporal consumption substitution the wealth effect is shown to dominate in this event the current account deteriorates in response to a temporary quota and improves only after the quota is lifted

the generalised beta as a model for the distribution of earnings abstract we present a neoclassical model of optimising firm behaviour which predicts the earnings distribution to follow the flexible and well known generalised beta distribution of the second kind

u s wage inequality trends and recent immigration how should we assess the changing economic status of workers and families in the united states the answer is obvious to many including outstanding economists who decry the meager wage growth and rising wage and income inequality in the united states since 1979 paul krugman 1992 richard freeman 1996 1997 james tobin 1996 1997 according to freeman 1996 1997 the following facts are not in dispute

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

gender gaps in policy making evidence from direct democracy in switzerland this paper uses a unique data set on individual voting decisions to shed new light on gender gaps in policy making our analysis focuses on switzerland the world leader in direct democracy where all citizens directly decide on a broad range of policies at the ballot box analysing all federal votes held between 1981 and 2003 we show that there are large gender gaps in the areas of health environmental protection defence spending and welfare policy the gender gaps typically persist even conditional on socio economic characteristics we also find that female policy makers have a substantial effect on the composition of public spending but a small effect on the overall size of government

the political economy of the us mortgage default crisis we examine the effects of constituents special interests and ideology on congressional voting on two of the most significant pieces of legislation in us economic history representatives whose constituents experience a sharp increase in mortgage defaults are more likely to support the foreclosure prevention act especially in competitive districts interestingly representatives are more sensitive to defaults of their own party constituents special interests in the form ofhigher campaign contributions from the financial industry increase the likelihood of supporting the emergency economic stabilization act however ideologically conservative representatives are less responsive to both constituent and special interests jel d72 g21 g28

on hierarchical spatial competition in this paper we consider a hierarchical model of spatial electoral competition with two dominant players incumbents and one entrant the incumbents engage in a non cooperative game against each other and act as stackelberg leaders with respect to a vote maximizing entrant we prove that the equilibrium of this game called a hierarchical equilibrium exists and is unique for an arbitrary single peaked distribution of voters ideal points moreover we fully characterize the set of equilibrium strategies and show its equivalence to the set of strategies generated by a perfect foresight equilibrium most of the recently developed models of entry in oligopolistic markets and the theory of political competition deal with the case of dominant firms or parties which face a threat of potential entry these models possess a number of features on which they may be compared and contrasted the most important of these features are the ways in which the existing parties or firms compete against each other for votes or profits and types of expectations the incumbents have about the responses of potential entrants to changes in their decisions in most of the cases an electoral or oligopolistic competition is represented by some type of a non cooperative game played by parties or firms in this paper we also consider a non cooperative model of electoral race where the established parties incumbents compete against each other by offering positions ideologies to the population of voters given the profile of voters preferences over the space of ideologies or issue space each of the established parties attempts to maximize its vote share in making their choices the incumbents however anticipate that a new party an entrant will join the electoral race consistent with the other parties objectives the entrant is assumed to maximize its share of voters while taking the incumbents choices as given the resulting non cooperative game possesses therefore a structural hierarchy the established parties behave as nash players with respect to each other whereas acting as stackelberg leaders with respect to the entrant and correctly anticipating its vote maximizing response to their choices in the issue space the main purpose of this paper is to study the properties of the game we described and in particular to characterize its equilibrium which we will call hierarchical equilibrium naturally some assumptions are needed in order to guarantee the existence of the equilibrium we assume that there are two established parties the issue space i is the uni dimensional interval all voters have symmetric single peaked peaked preferences over i and the distribution of the voters ideal points is represented by a quasi concave continuous density function under these rather mild assumptions we are able to prove the existence and uniqueness of the hierarchical equilibrium and to completely

recent trends in top income shares in the usa reconciling estimates from march cps and irs tax return data although the majority of research on us income inequality trends is based on public use march cps data a new wave of research using irs tax return data reports substantially higher levels of inequality and faster growing trends we show that these apparently inconsistent estimates are largely reconciled if the inequality measure and the income distribution are defined in the same way using internal cps data for 1967 2006 we closely match irs data based estimates of top income shares reported by piketty and saez 2003 our results imply that any inequality increases since 1993 are concentrated among the top 1 percent of the distribution

why do mexican americans earn low wages using current population survey data from november 1979 and 1989 i find that mexican americans earn low wages primarily because they possess less human capital than other workers not because they

using the pareto distribution to improve estimates of topcoded earnings i introduction the public use march current population survey cps is the primary source of data for tracking levels and trends in u s labor earnings and for understanding the factors which influence these trends literatures that have used cps earnings data are vast and include research on the changing returns to education or college major in the labor market autor 2014 gemici and wiswall 2014 earnings differentials across occupations glied ma and pearlstein 2015 earnings volatility hardy and ziliak 2014 elasticity of taxable income burns and ziliak forthcoming and more generally the causes of changes in wage structures and earnings inequality see e g autor katz and kearney 2008 card and dinardo 2002 goldin and katz 2007 juhn murphy and pierce 1993 acemoglu 2002 altonji and blank 1999 and katz and autor 1999 provide reviews of this literature however these literatures that use the public use cps data have been hampered by an attenuated view of the right tail of the labor earnings distribution due to the topcoding of high earnings in the public use cps data 1 importantly the failure to properly correct for inconsistent topcoding has been found to result in biased estimates for a range of outcomes including returns to education hubbard 2011 the size of the earnings gaps between gender and race groups burkhauser and larrimore 2009a the relative economic resources of individuals with and without disabilities burkhauser and larrimore 2009b and population level income inequality burkhauser et al 2012 to correct for topcoding biases public use cps based researchers have generally pursued one of four paths 1 ignoring the topcoding problem 2 making an ad hoc adjustment to topcoded earnings values 3 using a pareto distribution to estimate earnings at the top of the distribution or 4 using cell means or rank proximity swapped data that is based on the still censored internal cps data for example a common ad hoc technique based on estimates from pareto imputations of top earnings is to replace topcoded earnings with a multiple of the topcode threshold so all individuals with topcoded earnings in a year are assumed to have earnings at 1 3 1 4 or 1 5 times the topcode threshold autor katz and kearney 2008 juhn murphy and pierce 1993 katz and murphy 1992 lemieux 2006 however such an approach may misstate top earnings if the wrong multiple is used or if the appropriate multiple changes over time similarly researchers using a pareto imputation of top earnings may misstate those earnings if they are unable to obtain a reasonable fit for the pareto distribution when using available public use data making use of internal march cps files with their much higher censoring levels we show that previous ad hoc estimates and pareto estimations of top earnings based on public use data understate mean earnings at the top of the earnings distribution and hence also understate earnings inequality however as this internal data are also censored albeit at higher levels any results based purely on the internal data will also fail to capture a portion of the income at the very top of the distribution and therefore will also understate inequality hence while cell means based on internal data such as those produced by larrimore et al 2008 and the rank proximity swapped data series which the census began providing in 2010 each allow researchers to replicate results from the internal census data findings using these series will be subject to the same limitations and understatement of true top incomes as the internal values recognizing the limitations of the existing options to correct for topcoding we proceed by using a continuous maximum likelihood estimator along with internal cps data to produce a series of more accurate estimates of top earnings in the cps data our estimates start with actual top earnings from the internal cps combined with a pareto estimate using these data for internally censored observations

truncation bias and the measurement of income inequality 1988 truncation bias and the measurement of income inequality journal of business economic statistics vol 6 no 3 pp 335 337

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy

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

electoral competition with informed and uninformed voters i present a model of electoral competition in which candidates raise campaign contributions by choosing policies that benefit interest groups and then expend those contributions to influence voters who are uninformed about the policies informed voters however vote based on those policies so candidates face a trade off between choosing a policy to generate funds to attract the uninformed vote and choosing a policy to attract the informed vote electoral equilibria are characterized for two categories of policies particularistic and collective in the case of particularistic policies the equilibrium policies of the candidates are separated if the proportion of uninformed voters is sufficiently high and the degree of separation is an increasing function of that proportion the model is extended to include the public financing of elections and incumbency advantages for the case of collective policies the candidates locate at the median of the ideal points of the informed voters and contributions are zero