supermajority voting requirements for tax increases evidence from the states abstract this paper measures the effect of state level supermajority requirements for tax increases on tax rates unobserved attitudes towards taxation tend to influence both the adoption of supermajority requirements and tax policy consequently one cannot distinguish between the effect of these requirements and their correlation with these unobserved attitudes a model is presented in which legislatures controlled by a pro tax party adopt a supermajority requirement to reduce the majority party agenda control the propensity of pro tax states to adopt supermajority requirements results in an underestimate of the true effect of these requirements on taxes to correct this identification problem the paper first uses fixed effects to control for unobserved attitudes and then employs instruments that measure the difficulty of amending state constitutions the paper concludes that supermajority requirements have significantly reduced taxes

fiscal policy outcomes and electoral accountability in american states clear fiscal policy effects appear in american state gubernatorial and legislative elections between 1968 and 1992 independent of the effects of incumbency coattails term limits and macroeconomic conditions the results show that accountability is generally stronger following a period of unified party control than under divided government voter reactions to taxes and spending relative to the state economy are conditional on expectations which differ for each party net of these expectations republican gubernatorial candidates lose votes if their party is responsible for unanticipated increases in the size of the state budget democrats do not and indeed may be rewarded for small increases independent of this the incumbent governor s party is punished in legislative elections for failing to maintain fiscal balance taken together these results show how electoral accountability for fiscal policy outcomes is strong but highly contingent on a complex configuration of party labels partisan control expectations and institutions

the role of party reputation in the formation of policy abstract this paper shows that a party can credibly establish a platform more moderate than the ideology of its members and thereby raise the probability that the party s nominee wins the election a lame duck incumbent optimally implements his party s platform in order to maintain his party s reputation for having a moderate platform this increases the likelihood that his party retains power when candidates credibly locate themselves in policy space via this mechanism we show that if candidates are sufficiently impatient then their policies are bounded away from one another the policy convergence result is not robust

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

price discrimination and quality improvement this paper models quality improvements when multiple quality levels can sell owing to differences in consumers valuations of quality improvements firms can collude to price discriminate so that consumers with high valuations pay a price premium while others receive a quality level below the highest available imposing minimum quality standards or price ceilings can ensure that only the highest quality level of each product is sold such intervention reduces the quality adjusted price paid by consumers but also reduces the incentives for firms to innovate when enough consumers have high valuations such intervention must be welfare reducing owing to reduced innovation jel classification o31 l16 discrimination par les prix et amelioration de la qualite ce memoire presente un modele d amelioration de la qualite quand on peut vendre des produits a divers niveaux de qualitea cause des differences dans les evaluations d amelioration de qualite par les consommateurs les entreprises peuvent entrer en collusion pour faire de la discrimination par les prix de maniere a ce que les consommateurs qui apprecient davantage la qualite paient une prime pendant que les autres consommateurs recoivent une qualite au dessous de ce qui est la meilleure qualite disponible si on impose des normes de qualite minimale ou des plafonds aux prix on peut s assurer que seuls les produits de la plus haute qualite seront vendus de telles interventions reduisent le niveau de prix ajuste pour la qualite paye par les consommateurs mais reduisent aussi les incitations des entreprises a innover quand un nombre suffisant de consommateurs apprecient beaucoup la qualite de telles interventions peuvent reduire le niveau de bien etre a cause des innovations moins importantes

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

party politics governors and economic policy in this article we evaluate the role of elections in governors state tax policy making does it matter for state taxes whether the governor is a democrat or republican and whether she is eligible for re election or faces a binding term limit using a regression discontinuity design and a panel of u s states we find that the manner in which governors of different parties implement different tax policies turns crucially on the incumbent s eligibility for re election re electable democratic governors increase income taxes relative to similarly situated republicans yielding divergence between party policy positions however governors facing a binding term limit exhibit the reverse policy difference resulting in a movement of policy back together

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

do political parties matter evidence from u s cities are cities as politically polarized as states and countries no is the answer from our regression discontinuity design analysis which shows that whether the mayor is a democrat or a republican does not affect the size of city government the allocation of local public spending or crime rates however there is a substantial incumbent effect for mayors we investigate three mechanisms that could account for the striking lack of partisan impact at the local level and find the most support for tiebout competition among localities within metropolitan areas

a model of political equilibrium in a representative democracy abstract this paper studies political equilibrium in a two party representative democracy in which the political parties are policy motivated and voters trade off their policy preferences against their party identity it is shown that the parties will in general adopt differing policy positions in equilibrium and that under certain qualifications the winning policy will lie between the more popular party s preferred policy and a certain utilitarian optimum the winning policy will be closer to this utilitarian optimum the less biased the electorate is in terms of party identification

a downsian spatial model with party activism a unidimensional spatial model is proposed in this article although its formal structure parallels the spatial model of electoral competition this model examines the decisions of individuals as they choose whether or not to become activists in one of two political parties an individual calculus of participation is developed that is similar to the spatial interpretation of the calculus of voting this calculus is then generalized by examining conditions that may hold for aggregate activism probabilities and the relationship between the two forms is investigated some results are then presented which concern the distributions of activists in the two parties these results in general conform to the existence of party cleavages in which there are two stable equilibrium distributions of activists such that the two parties activists are relatively cohesive internally and relatively distinctive externally finally some suggestions are offered about how this model can be combined with the spatial model of candidate competition to provide a more complete model of elections

job additionality and deadweight spending in perfectly competitive industries the case for optimal employment subsidies abstract this paper links the old literature on employment subsidies with the current theories of contract and regulation one important source of inefficiency of employment subsidies is non additional employment and deadweight spending which occur when private firms receive a subsidy for jobs that would have been created without the subsidy we identify the asymmetry of information between the government and the private firm as the source of these problems when the government proposes optimal incentive contracts to promote employment we show that all employment creations are additional and that the deadweight spending is equal to the information rent which may be null when firms types are discrete

political competition policy and growth theory and evidence from the us this paper develops a simple model to analyse how a lack of political competition may lead to policies that hinder economic growth we test the predictions of the model on panel data for the us states in these data we find robust evidence that lack of political competition in a state is associated with anti growth policies higher taxes lower capital spending and a reduced likelihood of using right to work laws we also document a strong link between low political competition and low income growth

incumbent performance and electoral control in the pure theory of electoral competition citizens compare the platforms of the candidates and vote for the one whose platform is preferred candidate strategies are identified with promises about future performance in office models of this sort have been developed in both static mckelvey 1975 and dynamic kramer 1977 i settings and all appear to have the property that if the set of alternatives is large enough in some sense equilibrium platforms rarely exist but these models have another feature that is quite as disturbing as their instability in the static setting discussed by mckelvey little attention is paid to the possibility that once in office the politician s preferences may diverge from those of his constituents and that he may therefore choose policies at variance from his platform instead it is simply assumed that promises will be kept whether or not such behavior is congruent with the interest of the officeholder it is sometimes argued that an enforcement mechanism may exist to discipline politicians for failing to keep promises but without a specification of the mechanism it is not obvious that it would be in the interests of the

signaling character in electoral competition we study a one dimensional hotelling downs model of electoral competition with the following innovation a fraction of candidates have character and are exogenously committed to a campaign platform this is unobservable to voters character is desirable and a voter s utility is a convex combination of standard policy preferences and her assessment of a candidate s character this structure induces a signaling game between strategic candidates and voters since a policy platform affects voters utilities not only directly but also indirectly through inferences about a candidate s character the model generates a number of predictions starting with a failure of the median voter theorem jel d72 d82

assessing the importance of tiebout sorting local heterogeneity from 1850 to 1990 this paper argues that long run trends in geographic segregation are inconsistent with models where residential choice depends solely on local public goods the tiebout hypothesis we develop an extension of the tiebout model that predicts as mobility costs fall the heterogeneity across communities of individual public good preferences and of public good provision must weakly increase given the secular decline in mobility costs these predictions can be evaluated using historical data we find decreasing heterogeneity in policies and proxies for preferences across i a sample of u s municipalities 1870 1990 ii all boston area municipalities 1870 1990 and iii all u s counties 1850 1990

voter influence and big policy change the positive political economy of the new deal what conditions cause major policy changes under representative government this article addresses that question by providing a theoretically grounded analysis of a massive policy change the new deal it explains how the economic problems of the early 1930s initiated changes on several dimensions of policy federal spending labor market regulation and civil rights the article concludes by considering the broader lessons learned from the political economy of the new deal

the effects of tax competition when politicians create rents to buy political support abstract we set up a probabilistic voting model to explore the hypothesis that tax competition improves public sector efficiency and social welfare in the absence of tax base mobility distortions in the political process induce vote maximising politicians to create rents to public sector employees allowing tax base mobility may be welfare enhancing up to a point because the ensuing tax competition will reduce rents however if tax competition is carried too far it will reduce welfare by causing an underprovision of public goods starting from an equilibrium where tax competition has eliminated all rents a coordinated rise in capital taxation will always be welfare improving for plausible parameter values it will even be welfare enhancing to carry tax coordination beyond the point where rents to public sector workers start to emerge

evidence on electoral accountability in the u s senate are unfaithful agents really punished many have questioned whether voters are able to hold incumbent officials electorally accountable through a retrospective voting strategy we examine u s senate elections from 1962 to 1990 in forty one states explaining which incumbents ran for reelection and their success in seeking reelection we find that an incumbent s deviation from her state party platform decreases the probability that she will run for reelection and win if she runs furthermore the electoral mechanism is found to be more efficient when voters are better informed finally we find that our divergent party platform model provides a better fit than the median voter model

the effects of class size on student achievement new evidence from population variation abstract i identify the effects of class size on student achievement using longitudinal variation in the population associated with each grade in 649 elementary schools i use variation in class size driven by idiosyncratic variation in the population i also use discrete jumps in class size that occur when a small change in enrollment triggers a maximum or minimum class size rule the estimates indicate that class size does not have a statistically significant effect on student achievement i rule out even modest effects 2 to 4 percent of a standard deviation in scores for a 10 percent reduction in class size

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

flip flopping from primaries to general elections abstract i consider a model in which candidates must win a primary election to compete in the general election candidates may choose different policies in the primary and the general election but doing so results in accusations of flip flopping i show that candidates adopt extreme policies in the primaries but then try to move closer to the center for the general election even though primary voters are forward looking and anticipate this policy moderation the extent to which candidates move closer to the center is constrained by flip flopping costs and candidates choose divergent policies in the general election i obtain comparative statics results on candidate policy choices in terms of voter preferences