more shock than therapy market transition employment and income in russia 1991 1995 sixteen predictions from market transition theory are assessed using survey data on employment earnings and income in russia during the first five years of market reform although the private sector has grown self employment is still rare incomes are down and unemployment is up a distended income distribution reflects unprecedented income inequality distinctive features of late soviet era stratification persist low returns to education a gender gap in earnings and low earnings among professionals the russian market transition offers more opportunity in trade consumer services and speculation and less in manufacturing than do other emerging makets this corresponds to merchat capitalism and contradicts the predictions of market transition theory everything the communists told us about communism was a lie everything they told us about capitalism turns out to be true popular russian joke circa 1996

the market transition debate toward a synthesis in his seminal 1989 article a theory of market transition victor nee offered a new theory of social inequality and applied it to the study of the problem of transition from state socialist redistributive economy to market capitalism nee claimed that the emergence of markets in state socialist redistributive economies had unexpected consequences the most privileged stratum or class of state socialism the redistributors lost some of their privilege while those at the bottom of the state socialist hierarchy the direct producers benefited for earlier formulations see szelenyi and konrad 1969 szelenyi 1978 and whyte 1984 as a result inequality as measured by income or access to scarce goods was reduced nee s theory identified the mechanisms by which markets generated equality under redistributive systems if wages are not administratively set but established by transactive relations then producers are likely to have more power market power if markets operate then human capital is likely to be rewarded more while political loyalty is likely to matter less market incentive if there are markets in a redistributive economy then entrepreneurship becomes an alternative avenue of socioeconomic mobility market opportunity nee 1989 data collected in 1985 in rural china offered support to the theory of market transition between 1977 and 1985 overall income inequalities in china declined the income gap between urban residents and farmers shrank the income gap in the countryside between peasants and cadres also narrowed the decline of inequality arguably was the result of deregulation of state policies in agriculture after 1977 chinese peasants received land their production targets were less strictly regulated by planners and they were allowed to bring their produce to urban markets as

mass privatization state capacity and economic growth in post communist countries why did the transition from socialism to capitalism result in improved growth in some countries and significant economic decline in others scholars have advanced three main arguments 1 successful countries rapidly implemented neoliberal policies 2 failures were not due to poli cies but to poor institutional environments and 3 policies were counterproductive because they damaged the state we present a state centered theory and empirically demonstrate for the first time one of several possible mechanisms linking neoliberal policies to poor economic performance mass privatization programs where implemented created a massive fiscal shock for post communist governments thereby undermining the development of private sector gover nance institutions and severely exacerbating the transformational recession we performed cross national panel regressions for a sample of 25 post communist countries between 1990 and 2000 and found that mass privatization programs negatively affected economic growth state capacity and property rights protection we further tested these findings with firm level data from a rep resentative survey of managers in 3 550 companies operating in 24 post communist countries within countries that implemented mass privatized programs newly privatized firms were sub stantially less likely to engage in industrial restructuring but considerably more likely to use bar ter and accumulate tax arrears than their state owned counterparts

politics and markets dual transformations the articles published in this issue of the journal help advance the debate on market reform in former socialist states in our comment besides dealing with data analysis issues we suggest several ways to improve the level of debate about substantive issues these suggestions include more attention to politics including path dependence and more attention to middle level generalizations from other developing market societies

tightening up declining class mobility during russia s market transition this study analyzes intergenerational occupational mobility in late soviet and post soviet russia using data from six surveys belying claims that class differences did not matter in the soviet union the authors find that social origin did affect occupational opportunity during russia s soviet period but the transition from state socialism to a market economy tightened the link between origins and destinations men and women were equally constrained by their social origin even though they faced significantly different opportunity structures in both periods as the economic transformation took hold fewer russians experienced upward mobility and more were downwardly mobile political and economic transition not the demographic replacement of retiring cohorts by younger ones strengthened the association between origins and destinations career mobility during the 1990s took the form of a regression toward origins as workers who had the most upward mobility during the soviet era lost the most in the tr

embeddedness and contractual relationships in china s transitional economy interfirm contracts represent common economic relations in the marketplace they are also deeply embedded in social relations and social institutions in the context of china s transitional economy this study examines how three mechanisms economizing transaction costs network based social relations and institutional links affect interfirm contractual relationships in 1 the choice of search channels for contractual partners 2 the formality and provisions in a contract and 3 the intensity of social interaction in contract implementation empirical evidence is drawn from information collected on 877 contracts from 620 firms in two chinese cities beijing and guangzhou the authors find distinct roles of social relations institutional links and regulatory environments in the initiation of contractual partners and the forms of contracts adopted whereas transaction specific factors play a significant role in the intensity of social interaction in contract implementation these findings suggest the interplay among economic calculativeness social networks and institutional links and the complementarity in the underlying theoretical ideas

how does globalization affect the implicit tax rates on labor income capital income and consumption in the european union this article analyzes the effects of globalization on implicit tax rates itrs on labor income capital income and consumption in the eu15 and central and eastern european new member states cee nms we find supportive evidence for an increase in the itr on labor income in the eu15 but no effect on the itr on capital income there is evidence of convergence in terms of the itr on consumption as countries with higher than average itr on consumption respond to globalization by decreasing their tax rates there are important differences among the welfare regimes within the eu15 social democratic countries have decreased the tax burden on capital but increased that on labor due to globalization globalization exerts a pressure to increase taxes on labor income in the conservative and liberal regimes as well taxes on consumption decrease in response to globalization in the conservative and social democratic regimes in the cee nms there is no effect of globalization on the itr on labor and capital income but we find a negative impact on the itr on consumption in the cee nms with higher than average itr on consumption jel h23 h24 h25 f19 f21

does globalization affect growth evidence from a new index of globalization the study develops an index of globalization covering its three main dimensions economic integration social integration and political integration using panel data for 123 countries in 1970 2000 it is analysed empirically whether the overall index of globalization as well as sub indexes constructed to measure the single dimensions affect economic growth as the results show globalization indeed promotes growth the dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries although less robustly information flows also promote growth whereas political integration has no effect

do low corporate income tax rates attract fdi evidence from central and east european countries fifty six bilateral country relationships combining 7 home countries from the eu and the us and 8 central and east european host countries ceecs of foreign direct investment fdi from 1995 2003 are used in a panel gravity model setting to estimate the role of taxation as a determinant of fdi while gravity variables explain most of the variation of fdi inflows the bilateral effective average tax rate beatr is roughly equally important to other cost related factors the semi elasticity of fdi with respect to taxes is about 4 3 this value is above those of earlier studies in absolute terms and can partly be attributed to using the beatr instead of the statutory tax rate our results indicate that tax lowering strategies of ceec governments seem to have an important impact on foreign firms location decisions

after state socialism the political origins of transitional recessions transitions from state socialism created a startling range of initial economic outcomes from renewed growth to deep economic crises debates about the causes have largely ignored the political dis

the soviet transition from socialism to capitalism worker control and economic bargaining in the wood industry analyses oftlze transition from state socialisnz to capitalism pically focus on political impedimerlrs and underesritnate tlle economic obsracles to economic rransformatior1 based or1 a c ase srudy c f the soviet o o d indusrr y we argue tlzur there hill he no economic tr ansition so long as enterprises rerain two hisroric features nanzely anarchy in pr oduction and barqainit g in exrernal r elarions far jtom consrituting a re olution tlze witllerirlg away of the party srate has esaggerared rlle parhologies of rhe old econotnic order barrer has hecome nzo1 e inzpor tant conglonzerates ha1 e strengrhened their monopoly and wrkers 1la1 e greater conrr ol of tlze shop floor if there is a nzolbemenr to sar d a nzar ket economy at all it is to sar da jb1 m ofmerchant capitalisnz rlzut deepens economic under de elol nzet t and lz arts tlze rise of nzodern bourgeois capiralism

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

granger causality and the time series analysis of political relationships political scientists have employed causal modeling techniques for quite some time in most cases however they have relied on methods of a static cross sectional variety time series methods have been disseminated and applied but these have not been expressly causal the problem of assessing the causal character or direction of political relationships over time has not been addressed granger 1969 has suggested a notion of causality that is applicable in longitudinal analysis the study and application of granger s idea of causation now is widespread in economics and business this discussion evaluates the usefulness of applying granger causality in the study of political relationships granger s definition of causality is introduced several popular procedures for assessing granger causality are reviewed and certain problems surrounding interpretation of those empirical tests are elucidated the virtues and pitfalls of granger causal analysis then are illustrated in an analysis of an important topic in international political economy and also in a reanalysis of a recent granger causal investigation of arms races

the selection principle and market failure in systems competition abstract if governments stepped in where markets failed reintroducing markets through the backdoor of systems competition will again result in market failure three models are presented which illustrate this wisdom the first is concerned with congestion prone public goods and shows that fiscal competition may be ruinous for the governments the second considers the insurance function of redistributive taxation and shows that systems competition may suffer from adverse selection the third studies the role of quality regulation and shows that systems competition may be a competition of laxity resulting in inefficiently low quality standards

economic expectations and voting behavior in united states house and senate elections past individual level studies of economic voting 1 have incorrectly operationalized the model they employ by using past oriented rather than future oriented questions and 2 have failed to examine the level of economic voting in united states senate elections using the 1978 national election study we show that economic voting exists in senate but not house elections presumably due to the differences in electoral context even when economic voting occurs however there is no guarantee that the public will influence the direction of macroeconomic policy

equilibrium political budget cycles political business cycle theories generally rely on nominal rigidities and voter myopia this paper offers an equilibrium theory that preserves some basic insights from earlier models though with significant refinements the political budget cycle emphasized here is in fiscal policy rather than output and inflation it arises via a multidimensional signal process one can consider the welfare implications of proposals to mitigate the cycle and the effects of altering the electoral structure copyright 1990 by american economic association

social democracy christian democracy constitutional structure and the welfare state the literature on the determinants of welfare state effort displays many inconsistencies and contradictins this article takes imoprtant stepts toward resolving these issues with the use of pooled

political accountability and the room to maneuver a search for a causal chain many studies of the room to maneuver make no provision for popular evaluation of policy they assert rather than demonstrate popular satisfaction with policy choices and macroeconomic outcomes the authors present a framework that explicitly models channels for popular preferences to influence policies and outcomes results for economic policy making in britain do not support the room to maneuver thesis in the authors sample 1981 to 1997 the british government was responsive to changes in political evaluations and its policy choices effectively fed back into popular evaluations of government policy however this accountability mechanism worked outside the real economy shifts in popular evaluations induced changes in policy but had no impact on inflation and economic growth government capacity to shape macroeconomic outcomes was limited and popular influence over economic policy was ineffectual this form of accountability probably existed because british citizens had difficulty gauging the real impacts of their government s policies

economic insecurity and social policy expansion evidence from interwar europe what is the impact of economic insecurity on the development of institutions of social insurance existing studies have examined this question by exploring the impact of various measures of economic volatility on aggregate government expenditures or revenues these aggregate data are however an imperfect proxy of the character of institutions of social protection to overcome the limitations of earlier studies this article explores the conditions under which economic insecurity leads to the extension of the level of social insurance coverage i argue that economic insecurity sharpens a sectoral cleavage between coalitions in high risk and low risk sectors workers and some employers in high risk sectors will favor the introduction of social insurance institutions characterized by broad levels of coverage and a high redistribution of costs across occupations in contrast a cross class alliance in low risk sectors will oppose proposals aiming at the introduction of redistributive social policies fearing that these policies will turn them into subsidizers of high risk industries a redistributive social insurance policy will be introduced only if the high risk coalition is larger the article tests both the micro and macro level implications of this theory by examining the development of unemployment insurance policies in interwar europe i gratefully acknowledge comments from carles boix peter gourevitch and two anonymous referees many thanks to stefano bartolini john fitzgerald and michael tomz for sharing data with me

social times of network spaces network sequences and foreign investment in hungary to model from its inception interenterprise network formation and its interaction with foreign investment across an entire epoch of rapid and profound economic transformation the authors gathered data on the complete ownership histories of 1 696 of the largest hungarian enterprises from 1987 to 2001 they develop a social sequence analysis to identify distinctive pathways whereby firms use network resources to buffer uncertainty hide or restructure assets or gain knowledge and legitimacy during this period networked property grew stabilized and involved a growing proportion of foreign capital cohesive networks of recombinant property were robust and in fact integrated foreign investment although multinationals through their subsidiaries dissolved ties in joint venture arrangements the authors find evidence that they also built durable networks these findings suggest that developing economies do not necessarily face a forced choice between networks of global reach and those of local embedde

peasants or bankers the american electorate and the u s economy t he usual model of electoral reaction to economic conditions assumes the retrospective economic voter who bases expectations solely on recent economic performance or personal economic experience voter as peasant a second model assumes a sophisticated economic voter who incorporates new information about the future into personal economic expectations voter as banker using the components both retrospective and prospective of the index of consumer sentiment ics as intervening variables between economic conditions and approval we find that the prospective component fully accounts for the presidential approval time series with aggregate consumer expectations about long term business conditions in the approval equation neither the usual economic indicators not the other ics components matter moreover short term changes in consumer expectations respond more to current forecasts than to the current economy the qualitative result is a rational expectations outcome the electorate anticipates the economic future and rewards or punishes the president for economic events before they happen economics moves political behavior with hard times administrations lose support with good times they gain it we know this to be true but when we ask how by what processes the political translation of economic experience occurs the an

the state and economic involution russia through a china lens abstract why has the russian economy declined at the rate the chinese economy has grown in china the party state has made possible the decentralization of property relations and the hardening of budget constraints whereas in russia the disintegration of the party state has led to privatization and soft budget constraints whereas the former combination entailed accumulation the latter combination entailed involution that is an economy that eats away at its own foundations by funnelling resources from production to exchange russia s involution has proceeded in a combined mode that is through a series of phases in which government policies try to rectify the unintended consequences of previous policies involution is also uneven as different industries adopt different strategies some rapidly exited from the old order and then disintegrated while others voiced their demands to the state and declined more slowly

the power to tax analytical foundations of a fiscal constitution preface 1 taxation in constitutional perspective 2 natural government a model of leviathan 3 constraints on base and rate structure 4 the taxation of commodities 5 taxation through time income taxes capital taxes and public debt 6 money creation and taxation 7 the disposition of public revenues 8 the domain of politics 9 open economy federalism and taxing authority 10 toward authentic tax reform prospects and prescriptions epilogue notes selected bibliography index

politics institutions and welfare spending in industrialized democracies 1960 82 electoral turnout as well as left and center governments increase welfare effort that the welfare efforts of governments led by particular types of parties show significant differences and vary notably with the strength of oppositional and junior coalitional parties and that relatively neocorporatist centralized and traditionalistic polities are high on welfare effort overall our findings suggest that contrary to many claims both partisan and nonpartisan facets of democratic politics and political institutions shape contemporary social welfare effort

the evidence on globalisation globalisation is blamed for many socioeconomic shortcomings i discuss the consequences of globalisation by surveying the empirical globalisation literature my focus is on the kof indices of globalisation that have been used in more than 100 studies early studies using the kof index reported correlations between globalisation and several outcome variables studies published more recently identify causal effects the evidence shows that globalisation has spurred economic growth promoted gender equality and improved human rights moreover globalisation did not erode welfare state activities did not have any significant effect on labour market interaction and hardly influenced market deregulation it increased however within country income inequality the consequences of globalisation thus turn out to be overall much more favourable than often conjectured in the public discourse

globalization welfare regimes and social protection expenditures in western and eastern european countries this paper analyzes the effects of globalization on social protection expenditures in european countries the particular focus is on a the eastern european countries and b on differences in globalization effects between welfare regimes we find evidence in favor of the compensation hypothesis in western europe which is driven by the conservative welfare regime outweighing the efficiency effect of globalization in the social democratic welfare regime in eastern european countries the efficiency effect is predominant no globalization effect is found for the liberal and the southern welfare regimes

economic globalization and the welfare state in affluent democracies 1975 1998 prior scholarship is sharply divided on how or if globalization influences welfare states globalization s effects may be positive causing expansion negative triggering crisis and reduction curvilinear contributing to convergence or insignificant we bring new evidence to bear on this crucial debate with a pooled time series analysis of two measures of the welfare state and 16 indicators of economic globalization for 17 affluent democracies from 1975 to 1998 the analysis suggests that 1 state of the art welfare state models warrant revision in the globalization era 2 most indicators of economic globalization do not have significant effects 3 the few significant globalization effects are in different directions and often inconsistent with extant theories 4 the globalization effects are far smaller than the effects of domestic political and economic factors and 5 these effects are not systematically different for liberal vs nonliberal welfare state regimes european vs non european countries or with four alternative dependent variables increased globalization and a modest convergence of the welfare state have occurred but globalization does not unambiguously cause welfare state expansion crisis and reduction or convergence bisherige befunde der sozialwissenschaftlichen forschung zum kausalen verhaltnis von globalisierung und wohlfahrtsstaat sind nicht eindeutig danach kann globalisierung positive effekte haben und zu einem ausbau an wohlfahrtsstaatlichkeit fuhren eine krise des wohlfahrtsstaates oder leistungsreduktionen herbeifuhren kurvilineare wirkungen aufweisen und zu konvergenz beitragen als auch vollkommen insignifikant sein unsere gepoolte zeitreihenanalyse von wohlfahrtsstaatlichkeit und globalisierung in 17 reichen demokratien 1975 1998 hat folgende befunde zu tage gefordert 1 im zeitalter der globalisierung erscheinen bestehende wohlfahrtsstaatsmodelle revisionsbedurftig 2 die mehrzahl der okonomischen globalisierungsindikatoren weist keine signifikanten effekte auf 3 die wenigen signifikanten effekte zeigen in unterschiedliche richtungen und stimmen haufig nicht mit bestehenden theoretischen annahmen uberein 4 die globalisierungseffekte sind deutlich kleiner als die effekte binnenpolitischer variablen und okonomischer faktoren 5 diese effekte unterscheiden sich in liberalen und nicht liberalen wohlfahrtsregimen bzw europaischen und nicht europaischen landern nicht systematisch von einander im analysezeitraum konnen wir sowohl einen anstieg der verschiedenen globalisierungsindikatoren sowie eine moderate konvergenz der verschiedenen wohlfahrtsstaaten konstatieren jedoch kann der prozess der globalisierung nicht eindeutig als kausale ursache fur die unterschiedlichen entwicklungsrichtungen in den verschiedenen wohlfahrtsstaaten identifiziert werden

principle vs pragmatism policy shifts and political competition this article investigates the electoral effect of party policy shifts i argue that whether party policy shifts are damaging or rewarding depends on whether the shift occurs in the pragmatic or principled issue domain on pragmatic issues voters value getting things done policy shifts in this domain signal responsiveness to the changing environment and are likely to be rewarded principled issues however concern core beliefs and values any policy shift in this domain is a sign of inconsistency and lack of credibility which is likely to lead to voter withdrawal these arguments are supported by evidence from 23 advanced democracies over a period of 40 years

capital market development and mass privatization are logical contradictions lessons from russia and the czech republic the introduction of mass privatization policies in russia and the czech republic depended on the creation of impersonal capital markets to finance the needs of privatized companies and to provide a secondary market for the trading of securities yet mass privatization created the contradictory conditions of generating millions of poorly informed shareholders with no efficient markets for the sale of the shares the absence of financial markets created systematic pressures to move assets by illegal or non transparent means to users who value them more privatization created the incentives to destroy the financial markets critical to its success a comparative case analysis of post privatization market formation in both these countries demonstrates that the functional necessity for these markets does not engender their own creation in the absence of institutional mechanisms of state regulation and trust markets become arenas for political contests and economic manipulation the irony of these policies is that a principal lesson has been that market reforms cannot create viable markets only institutional formation can copyright 2002 oxford university press

did globalization restrict partisan politics an empirical evaluation of social expenditures in a panel of oecd countries this paper evaluates empirically how in the course of globalization partisan politics affected social expenditures in a panel of oecd countries i introduce an updated indicator of government ideology and investigate its interaction with the kof index of globalization two basic results emerge first at times when globalization proceeded at an average pace partisan politics had no effect on social expenditures but leftist governments increased social expenditures when globalization was proceeding rapidly second policies differed in the 1980s and 1990s leftist governments pursued expansionary policies in the 1980s yet partisan politics disappeared in the 1990s but not because of globalization

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

partisanship and economic behavior do partisan differences in economic forecasts predict real economic behavior survey data regularly show that assessments of current and expected future economic performance are more positive when a respondent s partisanship matches that of the president to determine if this is a survey artifact or something deeper we investigate whether partisanship is associated with behavioral differences in economic decisions we construct a new data set of county level quarterly taxable sales to examine the effect of partisanship on consumption consumption change following a presidential election is correlated with a county s partisan complexion a result consistent with partisans acting outside the domain of politics in accordance with the opinions they express in surveys these results support an expansive view of the role of partisanship in mass politics and help validate surveys as a method for studying political behavior

the continuing search for a popular tax for the next few years perhaps for a longer time federal tax policy will be inseparably intertwined with deficit reduction policy as a result tax decisions will be more closely related to spending decisions and attention will shift to new kinds of taxes for decades federal tax policy debates have been quite separate from debates over what these taxes are supposed to finance federal tax controversy has focused heavily on the major general revenue sources the individual and corporate income taxes economists have analyzed the effects of these levies on economic behavior and on the distribution of income and this analysis has played a considerable role in policy formulation the substantial reduction in marginal tax rates as well as base broadening indexing and changes in the treatment of depreciation and consumer interest were greatly influenced by the views of economists the frequency of recent changes in the income tax rules capped by the surprisingly comprehensive tax reform legislation of 1986 have left both politicians and tax reformers with little appetite for further tinkering with the income taxes moreover the continuing large deficits in the federal budget only partially offset by growing surpluses in the social security trust fund have forced policymakers to focus on a new aspect of an old problem how to get citizens to want less from their federal government or be willing to pay more for it

partisan politics and public finance changes in public spending in the industrialized democracies 1955 1989 this paper evaluates the role that partisan politics plays in altering public spending levels the analysis covers over three decades of data on the developments of the public sectors in 16 oecd countries the results of the analysis lend firm support to the partisan politics model of special note is the distinction between the electorate and the government ideological preferences and the dominant role that the former plays the results also suggest contrary to conventional wisdom that partisan political influences have not been eliminated with the tightening of linkages to the international economy

partisan cycles in congressional elections and the macroeconomy in the postwar united states the president s party has always done worse in the midterm congressional elections than in the previous congressional election republican administrations exhibit below average and democratic administrations above average economic growth in the first half of each term whereas in the latter halves the two see equal growth our rational expectations model is consistent with these two regularities in presidential elections voters choose between two polarized candidates they then use midterm elections to counterbalance the president s policies by strengthening the opposition in congress since presidents of different parties are associated with different policies our model predicts a spurious correlation between the state of the economy and elections our predictions contrast with those of retrospective voting models in which voters reward the incumbent if the economy is doing well before the election our model performs empirically at least as well as and often better than alternative models

globalization domestic politics and social spending in latin america a time series cross section analysis 1973 97 this study examines the effects of globalization democratization and partisanship on social spending in fourteen latin american countries from 1973 to 1997 using a pooled time series error correction model the authors examine three sets of issues first following debates in the literature on oecd countries they want to know whether social spending has been encouraged or constrained by integration into global markets within this context they examine the extent to which such outcomes might be influenced by two additional sets of domestic political and institutional factors discussed in work on developed countries the electoral pressures of democratic institutions and whether or not popularly based governments are in power the authors show that trade integration has a consistently negative effect on aggregate social spending and that this is compounded by openness to capital markets this is the strongest and most robust finding in the study neither democratic nor popularly based governments consistently affect overall social spending the authors then disaggregate spending into social security transfers and expenditures on health and education they find that popularly based governments tend to protect social security transfers which tend to flow disproportionately to their unionized constituencies but they have a negative impact on health and education spending conversely a shift to democracy leads to increases in health and education spending which reaches a larger segment of the population the authors conclude by emphasizing the contrasting political logics of the different types of social spending

the size and composition of government expenditure abstract this paper tests several leading hypotheses on determinants of government expenditure the purpose is to avoid omitted variables bias by testing the prominent theories in a comprehensive specification to identify persistent puzzles for the current set of theories and to explore those puzzles in greater depth by looking at the composition of government expenditure and the level of government at which it takes place as well as its magnitude using government financial statistics data from the imf covering over 100 countries from 1970 2000 i look at cross sectional and inter temporal variation in government expenditure and both individual categories of expenditure such as defense education health care and different levels of government central and local among other results i find a new explanation for wagner s law widespread evidence that preference heterogeneity leads to decentralization rather than outright decreases in expenditures that a great deal of the expenditure associated with increased trade openness is not in categories that explicitly insure for risk and evidence that both political access and income inequality affect the extent of social insurance

local governments as industrial firms an organizational analysis of china s transitional economy despite widespread skepticism about government ownership in transitional economies china s rapid industrial growth has been led by public enterprises kornai s theory of soft budbet constraints born of the failure of earlier hungarian reforms fosters such skepticism but it assumes as fixed organizational characteristics that in fact vary widely across government jurisdictions local governments with smaller industrial bases have clearer financial incentives and constraints fewer nonfinancial interests in enterprises and a greater capacity to monitor them in china s vast public sector the fastest growth in output and productivity has occurred where government ownership rights are clearest and most easily enforced which enables officials to manage public industry as a diversified market oriented firm

the ecological fallacy revisited aggregate versus individual level findings on economics and elections and sociotropic voting several aggregate level studies have found a relationship between macroeconomic conditions and election outcomes operating in intuitively plausible directions more recent survey based studies however have been unable to detect any comparable relationship operating at the individual voter level this persistent discrepancy is puzzling one recently proposed explanation for it is that voters actually behave in an altruistic or sociotropic fashion responding to economic events only as they affect the general welfare rather than in terms of self interested pocketbook considerations it is argued here that the discrepancies between the macro and micro level studies are a statistical artifact arising from the fact that observable changes in individual welfare actually consist of two unobservable components a government induced and politically relevant component and an exogenous component caused by life cycle and other politically irrelevant factors it is shown that because of this individual level cross sectional estimates of the effects of welfare changes on voting are badly biased and are essentially unrelated to the true values of the behavioral parameters of interest they will generally be considerable underestimates and may even be of the wrong sign an aggregate level time series analysis on the other hand will often yield reasonably good if somewhat attenuated estimates of the underlying individual level effects of interest thus in this case individual behavior is best investigated with aggregate rather than individual level data it is also shown that the evidence for sociotropic voting is artifactual in the sense that the various findings and evidence which ostensibly show sociotropic behavior are all perfectly compatible with the null hypothesis of self interested pocketbook voting

the state led transition to liberal capitalism neoliberal organizational world systems and social structural explanations of poland s economic success neoliberals argue that rapid liberalization and privatization can transform postcommunist economies into western style capitalist systems organizational sociologists argue that these policies produce a unique variety of capitalism while world systems theorists argue that they lead to underdevelopment this article advances a social structural alternative in a crucial case poland s relative economic success resulted from prolonged state ownership and an interventionist state employing various industrial policy tools that facilitated efficiency enhancing market oriented restructuring before ushering in beneficial foreign direct investment the resulting capitalist system closely resembles the typical pattern found in most late industrializers

selection vs accountability an experimental investigation of campaign promises in a moral hazard environment abstract we examine retrospective and prospective voting considerations in an experiment implementing a simple voting model in each period the official chooses how much rent to appropriate from a social endowment announcement of this choice is followed by an election between the official and a randomly selected challenger with the winner becoming the official in the next period we vary two features of the setting a the discount factor and b whether candidates can make costless non binding campaign promises about their behaviour if elected consistent with the model s predictions both raising the discount factor and introducing campaign promises lead to lower rent appropriation by officials and worse electoral outcomes other things equal for incumbents campaign promises despite being cheap talk have real effects promising less appropriation is rewarded by voters but breaking such promises is punished finally we find a weak positive association between campaign promises and officials subsequent behaviour

elite opportunity in transitional economies command economies gave communist era elites administrative control and material privilege but severely restricted money income and private wealth markets and privatization have injected new value into public assets and create unprecedented opportunities for elite insiders these opportunities depend on the extent of regime change and barriers to asset appropriation regime change varies from the survival of the entire party hierarchy to its rapid collapse and defeat in competitive elections barriers to asset appropriation vary with the extent pace and form of privatization and the concentration and liquidity of assets different combinations of such circumstances jointly affect the extent to which prior elites obtain ownership or control of privatized assets use political office to extract larger incomes move into salaried elite occupations or fall out of the elite altogether regime change and barriers to asset appropriation affect change at the national level but outcomes vary across economic sectors because of characteristics of organizations elite positions and assets this elementary theory serves to integrate varied findings from recent research on central europe china and russia and yields predictions for other regions

tax policies in a globalized world is it politics after all in a panel dataset of 17 oecd countries over 1970 1997 we provide empirical support for the joint existence of the efficiency and the compensation effects of globalization our regression analysis shows that higher economic integration and the associated external risk lead to a need for social security policies that require higher taxes the latter take the form of larger social security contributions that are part of taxes on the immobile factors labor the tax burden on the relatively mobile factor capital is affected negatively by increased economic integration

trajectories of fear and hope support for democracy in post communist europe prospects for the successful consolidation of democracy in post communist europe hinge substantially on the trajectory and determinants of popular support surveys in bulgaria czechoslovakia hung

the personal and political underpinnings of economic forecasts recently a great deal of attention has been focused on the impact of prospective evaluations of the economy on vote choice yet little attention has been focused on the actual process whereby such evaluations are formed this paper employs panel data to test a model of the formation of prospective evaluations of inflation and unemployment our findings indicate that retrospective assessments of economic conditions do not greatly influence economic forecasts instead economic forecasts are shaped by personal economic circumstances and partisan assessments of governmental performance the political implications of such findings are discussed

electoral institutions and the politics of coalitions why some democracies redistribute more than others standard political economy models of redistribution notably that of meltzer and richard 1981 fail to account for the remarkable variance in government redistribution across democracies we develop a general model of redistribution that explains why some democratic governments are more prone to redistribute than others we show that the electoral system plays a key role because it shapes the nature of political parties and the composition of governing coalitions hence redistribution our argument implies 1 that center left governments dominate under pr systems whereas center right governments dominate under majoritarian systems and 2 that pr systems redistribute more than majoritarian systems we test our argument on panel data for redistribution government partisanship and electoral system in advanced democracies w hy do some countries redistribute more than others most work on the politics of redistribution starts from the premise that democratic institutions empower those who stand to benefit from redistribution the basic logic is succinctly captured in the meltzer richard 1981 model where the voter with the median income is also the decisive voter with a typical right skewed distribution of income the median voter will push for redistributive spending up to the point where the benefit of such spending to the median voter is outweighed by the efficiency costs of distortionary taxation this argument implies that redistibution is much greater in democracies than in nondemocracies at least of the right authoritarian variety and that among the latter inegalitarian societies redistribute more than egalitarian ones there is some evidence to supportthefirstimplication althoughitisdisputed see ross 2005 but most of the variance in redistribution is probably within the same regime type according to datafromtheluxembourgincomestudy forexample the reduction in the poverty rate in united states as a result of taxation and transfers was 13 in 1994 whereas the comparable figure for sweden was 82 thepovertyrateisthepercentageofhouseholdsbelow 50 of the median income to explain this variance we have to look at political and economic differences

fiscal competition and the pattern of public spending much attention has been given to the impact of fiscal competition on the level of public expenditure but relatively little to the impact on its composition using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital this paper establishes a systematic bias in public spending patterns starting from the non cooperative equilibrium and holding tax rates constant welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers c 1997 elsevier science s a