out of step out of office electoral accountability and house members voting does a typical house member need to worry about the electoral ramifications of his roll call decisions we investigate the relationship between incumbents electoral performance and roll call support for their party controlling for district ideology challenger quality and campaign spending among other factors through a series of tests of the 1956 1996 elections the tests produce three key findings indicating that members are indeed accountable for their legislative voting first in each election an incumbent receives a lower vote share the more he supports his party second this effect is comparable in size to that of other widely recognized electoral determinants third a member s probability of retaining office decreases as he offers increased support for his party and this relationship holds for not only marginal but also safe members

the motivation and bias of bureaucrats many individuals are motivated to exert effort because they care about their jobs rather than because there are monetary consequences to their actions the intrinsic motivation of bureaucrats is the focus of this paper and three primary results are shown first bureaucrats should be biased second sometimes this bias takes the form of advocating for their clients more than would their principal while in other cases they are more hostile to their interests for a range of bureaucracies those who are biased against clients lead to more efficient outcomes third self selection need not produce the desired bias instead selection to bureaucracies is likely to be bifurcated in the sense that it becomes composed of those who are most preferred by the principal and those who are least preferred

on the mis measurement of legislator ideology and shirking in this paper we show that current statistical measures of legislator s shirking are implicitly based on the electoral concept of a unique majority rule equilibrium point in the policy space where elections are contested we note that such equilibria do not exist generically and present statistical results showing that cross sectional regressions where legislators voting indices are predicted by district average demograhic and economic data are mis specified we also discuss a weaker equilibrium construct the uncovered set and present statistical evidence showing that differences in voting behavior between senators from the same state are positively related to the heterogeneity of the electorate we argue that current evidence alleged to show shirking by senators is equally consistent with senators who perfectly represent an idiosyncratic constituency that cannot be represented by district average data

envy in mission oriented organizations according to the labor donation theory workers adhering to their firms mission are willing to donate a portion of their paid labor in this paper we study how workers fairness concerns limit the firm s ability to extract labor donation from its employees we find that in sectors where the firm s mission is important optimal contracts are such that high ability employees perceive their wage as less fair than low ability employees and they must be rewarded with an envy rent the opposite is true in sectors where the firm s mission does not play a relevant role we empirically test the predictions of the model using the german socio economic panel finding support for our theoretical results

why do different countries choose a different public private mix of educational services we observe a wide range across countries in the percentage of total enrollments that attend private rather than public schools this paper seeks to explain 1 the systematically higher proportion of private enrollments pvt in developing as compared with developed countries at the secondary level and 2 the seemingly random variation across countries within a given level of education and stage of development i argue that the latter is due to differentiated demand and nonprofit supply both of which stem from cultural heterogeneity especially religious heterogeneity in contrast the large pvt at the secondary level in developing countries is hypothesized to stem from limited public spending which creates an excess demand from people who would prefer to use the public schools but are involuntarily excluded and pushed into the private sector the limited public spending on secondary education in turn is modelled as a collective decision which is strongly influenced by the

entry barriers in politics and uncontested elections abstract lott 1986 1987a argues that brand names can be barriers to entry in political markets because political brand names cannot be sold our empirical model examines the effect of inalienability of political capital on entry into nineteenth century british political markets we test the hypothesis that since county races were more expensive than borough races owing to greater costs of information the level of non transferable investment produced by a given number of past campaigns was greater in the rural districts and produced more significant entry barriers

dynamic reform of public institutions a model of motivated agents and collective reputation abstract state capacity is optimized when public institutions are staffed by individuals with public service motivation however when motivated agents value the collective reputation of their place of employment steady state equilibria with both high and low aggregate motivation reputation in the mission oriented sector exist reforming a low motivation institution requires a non monotonic wage path since the effect of higher wages on motivation is negative for a high reputation institution but positive for a low reputation institution a transition to a high reputation steady state requires an initial wage increase to crowd motivated workers in followed by a wage decrease to crowd non motivated workers out

shirking and political support in the u s senate 1964 1984 several empirical studies have suggested that legislators engage in a surprisingly large degree of on the job consumption or ideological behavior these findings cast doubt on the hypothesis that legislators can be modelled as though they seek to maximize political support this paper attempts to determine whether commonly used proxies for ideology in fact represent behavior to which voters are averse the results show that legislators who engage in more of this behavior lose general election support without generally receiving compensating increases in partyprimary support a corollary to this result is that voters punish shirking legislators significantly

modeling charitable giving using a box cox standard tobit model there is a large literature investigating the determinants of charitable giving in particular price and income elasticities we find that many of the most often reported results from this literature rely on a model specification that is inappropriate when applied to recent federal tax file data we develop a standard tobit model with a box cox transformation parameter that nests a number of other specifications the box cox model yields estimates of price elasticities and expected charitable contributions that differ from those obtained using the typical specification additionally we find that the use of sample weights provides potentially important policy insights copyright 1991 by mit press

shirking and sorting in a political market with finite lived politicians this paper analyzes principal agent slack in the context of a political market composed of voters challengers and incumbents the introduction of a last period via finite livedness in combination with voters imperfect information about politicians preferences causes time varying shirking behavior on the part of politicians political markets eventually sort out those politicians with significantly deviant policy preferences potentially providing a solution to the last period problem and enabling politicians to make credible commitments in the extreme sorting can insure that it is not worthwhile for potential shirkers to run for office a systematic relationship between political shirking and number of terms in office may exist and depends on how quickly sorting takes place we show that evidence of little if any shirking is quite consistent with politicians having diverse and strongly held policy preferences in addition if sorting is a significant feature of political markets cross sectional studies will tend to oversample little and non shirking politicians compared to longitudinal studies reinterpretations of existing empirical work are also discussed

trying to explain home bias in equities and consumption investors hold a substantially larger proportion of their wealth portfolios in domestic assets than standard portfolio theory would suggest a phenomenon called equity home bias in the absence of this bias investors would optimally diversify domestic output risk using foreign equities therefore consumption growth rates would tend to co move across countries even when output growth rates do not empirically however consumption growth rates tend to have a lower correlation across countries than do output growth rates a phenomenon i call consumption home bias in this paper i discuss these two biases and their potential relationship as suggested by the literature

brand names and barriers to entry in political markets the most obvious implication of this discussion is that barriers to entry in politics will raise the costs of governments transferring wealth more generally it will raise the cost of public provision of goods and services in the case of transfers the inefficiency created by barriers depends on whether one values government transfers the total transfer the transfer to the beneficiaries plus the politician s commission is maximized by the politician who can create support the most efficiently for other governmental services which are viewed as efficiency creating e g national defense these barriers reduce the amount of a valuable output we desire to purchase this result also supplies a possible efficiency explanation for the limitation on the number of terms imposed on the presidency and many governorships brand names are not really the barriers information costs are what cause brand name to be used and are the more fundamental barrier to entry what we are arguing is that private and not public organizations can in certain respects better overcome these information costs

collateral avoids ponzi schemes in incomplete markets without introducing either debt constraints or transversality conditions to avoid the possibility of ponzi schemes we show the existence of equilibrium in an infinite horizon incomplete markets economy with a collateral structure

wage elasticities in working and volunteering the role of reference points in a laboratory study we experimentally test how effort responds to wages randomly assigned to accrue to individuals or to a charity in the presence of expectations based reference points or targets when individuals earn money for themselves higher wages lead to higher effort with relatively muted targeting behavior when individuals earn money for a charity higher wages instead lead to lower effort with substantial targeting behavior a reference dependent theoretical framework suggests an explanation for this differential impact when individuals place less value on earnings such as when accruing earnings for a charity instead of themselves more targeting behavior and a more sluggish response to incentives should result results from an additional experiment add support to this explanation when individuals select into earning money for a charity and thus likely place a higher value on those earnings targeting behavior is muted and no longer generates a negative effort response to higher wages data and the online appe

how important is pro social behaviour in the delivery of public services a number of papers have suggested that pro social behaviour in the workplace may be sensitive to the institutional environment but there is little empirical research that attempts to test this directly using data on worker behaviour this is the aim of this paper we show that individuals in the non profit sector are significantly more likely to do unpaid overtime than those in the for profit sector however we find no evidence of adjustment along either the extensive or intensive margins when individuals change sectors the results of our analysis therefore point to selection and we find supporting evidence that individuals do self select on the basis of their propensity to donate labour

default and punishment in general equilibrium we extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by thinking of assets as pools the equilibrating variables include expected delivery rates along with the usual prices of assets and commodities by reinterpreting the variables our model encompasses a broad range of adverse selection and signalling phenomena in a perfectly competitive general equilibrium framework perfect competition eliminates the need for lenders to compute how the size of their loan or the price they quote might affect default rates it also makes for a simple equilibrium refinement which we propose in order to rule out irrational pessimism about deliveries of untraded assets we show that refined equilibrium always exists in our model and that default in conjunction with refinement opens the door to a theory of endogenous assets the market chooses the promises default penalties and quantity constraints of actively traded assets

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

televising legislatures some thoughts on whether politicians are search goods the evidence that televising legislative sessions helps politicians from homogeneous districts where everyone agrees with his positions but hurts politicians from heterogeneous districts does not differentiate between whether politicians are search or experience goods while evidence does exist that politicians are search goods e g lott 1987b it relies on the presence of the last period problem if the conclusion that politicians are search goods is correct it has important implications because it contradicts the commonly held belief that it is the threat of re election that prevents politicians from behaving opportunistically it also indicates that there are fundamental differences between firm and political brand names

is it punishment sovereign defaults and the decline in trade sovereign defaults are associated with declines in defaulting countries trade are these declines the result of trade sanctions as the trade sanctions argument of sovereign borrowing would suggest we devise an empirical strategy to evaluate this issue based on the idea that if trade sanctions are causing the declines bilateral trade with creditor countries should fall more than trade with other countries we find that this is not the case the analysis does not yield much evidence of broader punishment strategies including a league of major creditors either these results contradict the predictions of the trade sanctions theory of sovereign borrowing

the economics of career concerns part i comparing information structures many incentives in organizations arise not through explicit formal incentive contracts but rather implicitly through career concerns this paper models career concerns through agents trying to manipulate the market assessment of their future productivity the information flow from current actions to market assessment is therefore crucial in determining the nature of these incentives improved information may either increase or reduce incentives the impact of information provides a major distinction between the explicit and implicit incentives model the paper derives general results on comparisons of information structures which serve as counterparts to the standard results on information structures in the principal agent model sufficient statistic impact of a blackwell garbling comparison of inclusive information structures 1999 the review of economic studies limited

dynastic political privilege and electoral accountability the case of u s governors 1950 2005 i introduction political dynasties which pass on public offices and other political privileges from family member to family member have been important in the united states throughout its history this paper investigates whether dynastic political privilege enhances incumbent accountability to voters as incumbents with family political capital work to maintain favorable reputations even in the incumbents last period this would mitigate last period problems in contrast with earlier empirical results in which incumbents in their last period in office deliver inferior economic results we test the hypothesis that dynastic political privilege increases accountability using data for 1950 2005 on u s governors including a new data set on the family relationships of politicians the constitution of the united states embodies the political ideals of the founders whose goal was to establish a republican national government that was responsible to the nation s people that specified the powers of the federal government that recognized the rights of the states and that incorporated checks and balances which would limit governmental power this new government was to be a direct contrast to and repudiation of monarchy in one of the most explicit repudiations of monarchy the constitution forbids the grant of titles of nobility by both the federal government and the states constitution of the united states article i sections 9 and 10 see the federalist papers number 39 for james madison s statements on the most decisive importance of the ban on titles of nobility library of congress 1961 242 interestingly however the constitution does not directly forbid hereditary office provided that the inheritor of the office is elected to it or appointed to it by constitutional means for example early in the nineteenth century the nation elected john quincy adams son of the second president as its sixth president dal bo dal bo and snyder 2009 carefully examine u s congressional dynasties from 1789 to 1996 and find that political power in the united states is self perpetuating this seems not only contrary to our nation s fundamental political principles but it also seems to hand over opportunities for rent seeking to relatives of successful politicians furthermore it is inefficiently anticompetitive because under such a system many highly qualified candidates are frozen out of office for reasons other than qualifications and anticipated productivity in office thus at first glance this process of family privilege in politics appears repugnant and contrary to the republican principles of our national political system there are however at least two other views of inherited political privilege which see it as socially useful first it is possible that political skills are actually inheritable so that dynastic political privilege may be socially productive that is relatives of office holders may gain special access to knowledge and skills that is only available to other potential office holders at much higher cost if at all the second and perhaps more important way in which inherited political privilege could be socially productive is that it may mitigate public sector principal agent problems the political system of the united states presents substantial principal agent problems as the voters cannot directly control the behavior of incumbent officials this gives office holders opportunities to act against the voters interests through corruption shirking on the job consumption at public expense promoting narrow ideology and others dynastic political privilege may make these behaviors more costly the possibility that opportunistic behavior in office may damage other family members political prospects disciplines current office holders making them more likely to exercise care in serving their constituents interests the main mechanism for voters to discipline incumbents is through elections

why voters vote for incumbents but against incumbency a rational choice explanation in recent elections voters supported initiatives to limit the number of terms that their representatives may serve yet at the same time overwhelmingly re elected their incumbents we provide a theoretical explanation for this and other puzzles associated with voting on term limitations the pattern of voting on term limits can be explained by the desire to redistribute power from one party to another from one branch of government to another and from districts with long term incumbents to districts whose representatives have served only for a short time span we test these hypotheses by looking at voting patters on california proposition 140 and the vote on the 22nd amendment with generally positive results

an analysis of the impact of congressional term limits we examine the impact of a six term tenure limit on members of the u s house of representatives the first part of this study develops a methodological framework for simulating the quantitative impact of term limits the second part of this study uses this framework to estimate the effects of term limits on i the value of holding office ii turnover and iii the size of the democratic majority in the house both steady state and transition period effects are explored i introduction the widespread support for term limitations seems to have caught both popular commentators and academic researchers by surprise 1 why do voters want them and what is the likely impact of such legislation a small but growing literature concentrates on the first of these two questions adams and kenny 1986 dick and loft 1993 in contrast this paper addresses the second in particular it investigates the empirical consequences of imposing a twelve year six term tenure limit on the members of the u s house of representatives both the degree and timing of the impact of the alternative regimes are investigated here the issue of timing arises because term limits can have very different effects depending upon how they treat currently serving congressmen we focus our investigation on the two legislative regimes that we believe have the greatest chance of being implemented limited grandfathering and complete grandfathering 2 assuming term limit legislation is passed in 1992 we trace out the time paths of the effects associated with each of these regimes as we shall see there are important transitional differences between the two the paper proceeds as follows section ii addresses the methodology used in this analysis section iii considers the impact of term limits on i the value of holding office ii turnover and iii the democratic majority in the house section iv concludes ii methodology the first concern of this paper is to model the seniority structure of the house in the absence of congressional term limits let n t identify the number of congressmen in their nth term at time t let r define the proportion of congressmen that successfully move from term n to term n l note that there are a number of reasons for not continuing to an additional term besides electoral defeats there are voluntary departures to seek other elective office or private sector employment retirements and deaths given any set of continuation rates r sub 1 r sub 2 and an initial distribution of representatives across terms n sub 1 t n sub 2 t one can construct what the seniority structure of congress will look like any number of periods into the future for instance the number of congressmen in their jth term at time t m is given by mathematical expression omitted where n sub 1 t 1 m j identifies the number of representatives who enter congress in time period t 1 m j t 1 and j and m o ifj m 1 one simply takes the number of congressmen currently serving their j m th term and multiplies this by the appropriate product of continuation rates if j m 1 one needs to identify the number of congressmen who will enter congress in time period t l m since congress always has 435 members the number of arrivals must always equal the number of departures the number of first term congressmen who leave office at the end of time period t is given by 1 r sub 1 n sub 1 t similarly the number of second term congressmen who leave office at the end of time period t is given by 1 r sub 2 n sub 2 t thus the number of representatives who will enter congress in time period t l is given by mathematical expression omitted equations 1 and 2 allow one to recursively solve for n sub 1 t 1 m j for all m j 1 i

does hospital competition harm equity evidence from the english national health service increasing evidence shows that hospital competition under fixed prices can improve quality and reduce cost concerns remain however that competition may undermine socio economic equity in the utilisation of care we test this hypothesis in the context of the pro competition reforms of the english national health service progressively introduced from 2004 to 2006 we use a panel of 32 482 english small areas followed from 2003 to 2008 and a difference in differences approach the effect of competition on equity is identified by the interaction between market structure small area income deprivation and year we find a negative association between market competition and elective admissions in deprived areas the effect of pro competition reform was to reduce this negative association slightly suggesting that competition did not undermine equity

campaign finance reform a public choice perspective the federal election campaign act as passed in 1971 and amended in 1974represented landmark federal legislation it imposed new restrictions oncampaign contributions and contained path breaking provisions for the useof public funds to partially finance the campaigns of qualifyingpresidential candidates the nominal intent of the legislation was torestrain the skyrocketing campaign costs and the feared abuses thatgrowing dependencies on such money engendered three decades later withthe campaign spending arms race still raging congress sought toimpose further constraints on campaign spending with enactment of thebipartisan campaign reform act of 2002 bcra competing theories ofgovernment regulation are reviewed to better understand the intent andlikely consequences of the 2002 legislation in particular and campaignfinance regulation in general a simple model of the campaign spendingprocess highlights the likely causes of the rapid growth in campaignspending data and evidence are presented to test hypotheses concerningthe timing of and underlying motivations for bcra

demand for environmental goods evidence from voting patterns on california initiatives this article studies voting behavior on 16 environmental ballot propositions in california in order to characterize the demand for environmental goods the environment is found to be a normal good for people with mean incomes but some environmental goods are inferior for those with high incomes at least when supplied collectively an important price of environmental goods is reduced income in the construction farming forestry and manufacturing industries income and price can explain most of the variation in voting there is little need to introduce preference variables such as political ideology

the mechanics of commercial banking liberalization and growth abstract this paper formalizes the effects of liberalization across the border of deposit taking and lending activities on the regime of competition in the banking market and on the rate of growth of the economy we extend two economy based deidda 2006 s banking model in which originally each economy hosts at least one operating bank we introduce two gats defined modes of commercial banking liberalization namely the commercial presence mode and the cross border mode additionally we introduce the possibility of strategic behavior by competing banks in equilibrium the extended model provides a causal link between the cost structure of the banking industry the regime of competition in the liberalized banking sector and the rate of growth of the economy under alternative modes of liberalization in particular we show a threshold effect in terms of economic development above certain economic development the banking sector operates competitively and supports an accelerating rate of growth generating a bidirectional self reinforcing link between commercial banking liberalization and growth the pace of growth is further increased with respect to a scenario where such behavior is not present by the presence of strategic behavior by competing banks in equilibrium

not for profit entrepreneurs abstract entrepreneurs who start new firms may choose not for profit status as a means of committing to soft incentives such incentives protect donors volunteers consumers and employees from ex post expropriation of profits by the entrepreneur we derive conditions under which completely self interested entrepreneurs opt for not for profit status despite the fact that this status limits their ability to enjoy the profits of their enterprises we also show that even in the absence of tax advantages unrestricted donations would flow to non profits rather than for profit firms because donations have more significant influence on the decisions of the non profits

public service motivation as an argument for government provision a public service motivation psm inclines employees to provide effort out of concern for the impact of that effort on a valued social service though deemed to be important in the literature on public administration this motivation has not been formally considered by economists when a psm exists this paper establishes conditions under which government bureaucracy can better obtain psm motivated effort from employees than a standard profit maximizing firm the model also provides an efficiency rationale for low powered incentives in both bureaucracies and other organizations producing social services 2000 elsevier science s a all rights reserved

working or shirking expenses and attendance in the uk parliament this paper studies the determinants of mps expense claims and of their attendance at parliamentary meetings using a multiple regression framework we correlate the expenses with three sets of variables constituency characteristics political variables and individual characteristics we then look at the ratio of parliamentary expenses claimed to votes cast in parliament as a crude measure of value for money this take on the data provides a somewhat benign view of the usage of expense claims we use the results to reflect on two views of the motivation of mps the public choice view and the public service view

looking beyond reelection revising assumptions about the factors motivating congressional behavior this paper challenges the assumption inherent in most models of legislative behavior namely that congressmen are driven by the desire for reelection i offer an alternative perspective incumbents seek to maximize their discretionary investments and the income generated by the job the only constraint on this behavior is that legislators provide a satisfactory level of constituency service a product that i suggest entails slight opportunity and few manufacturing costs for congressmen and one that is unlikely to lose its value with increased production i also demonstrate that increases in salary and discretionary investments have lengthened congressional careers

a critical review and an extension of the political shirking literature after substituting actual and real changes for proposed and nominal changes in budgetary and employment levels it is clear that the size and scope of the federal leviathon had not been reduced over 1982 83 it is also clear that the agencies which witnessed real budget cuts over this period were of minor importance in terms of the total u s budget future research on why only small agencies receive real budget cuts will provide us with a better understanding of the budgetary process

whither the nonprofit wage differential estimates from the 1990 census this article provides new estimates of the nonprofit for profit wage differential in the u s economy using observations on 4 1 million private sector employees from the 1990 census i find either zero or slightly positive economy wide wage differences between nonprofit and for profit employees in a standard earnings equation format significant wage differentials are found at the disaggregated occupation and industry level and provide a basis for testing hypotheses explaining nonprofit for profit wage differences

occupational social value and returns to long hours this paper examines the phenomenon of uncompensated long hours in jobs with pro social characteristics and presents evidence that long hour wage premiums and occupational social value are substitutes in compensating salaried workers who supply hours exceeding the standard working week i show that the social value of an occupation in particular the degree to which jobs involve helping or providing service to others is inversely related to long hour pay allowing for heterogeneity in the degree to which workers value their job s helping orientation lets me explore how gender differences in employees attitudes toward pro social behaviour can explain some of the observed occupational sorting trends and gender differences in long hour compensation women tend to be more strongly drawn to helping occupations and at the same time receive lower long hour premiums in these jobs relative to men i offer a theoretical framework to rationalize the empirical trends

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

the public pay gap in britain small differences that don t matter the existing literature on inequality between private and public sectors focuses on cross section differences in earnings levels forward looking agents however care about income and job mobility too which we show are substantially different between the two sectors using data from the bhps we estimate a model of income and employment dynamics allowing for unobserved heterogeneity in the propensity to be employed in eitherjob sector we detect a positive average public premium both in income flows and in the present discounted sum of future income flows we also find that income inequality is lower but more persistent in the public sector there is an ongoing debate as to whether public sector workers experience better or worse pay conditions than their private counterparts a recurring message in the recent literature is that although raw differences can be large most are likely to reflect differences in the composition of the workforce both in terms of observed characteristics such as age and education and in terms of unobserved characteristics nevertheless a look at labour markets in the two sectors suggests that individuals do perceive some differences between the sectors katz and krueger 1991 document the fact that blue collar workers are willing to queue to obtain public sector jobs whereas highlyskilled workers are notoriously hard to recruit and retain in the public sector the focus of most of the literature on public pay gaps is on cross section differences in earnings levels 2 yet the public private differences are arguably equally marked in terms of income mobility income volatility and job loss risk than in terms of mean income levels public sector employers are widely perceived to offer more job security 3 there is also plentiful evidence of relative wage compression in the public sector moreover as we shall point out public sector incomes are substantially more persistent over time than private sector incomes the motivating point of this article is that forward looking agents are likely to care about income and job mobility as well as income levels so that a more general assessment of the existence and magnitude of a public premium should be based on

ex ante implications of sovereign default i study how the possibility of default on external debts affects other capital allocation decisions in a small open economy in the model default has an option value derived from the randomization over ex post default regimes which depends on country specific productivity shocks this feature of default reduces incentives for ex ante diversification which would reduce exposure to the productivity shock as a result if the economys debt to capital ratio is allowed to cross a fixed threshold identified in the model the unique equilibrium exhibits an allocation of capital that is less productive in expectation and more volatile than in a benchmark model without default the model therefore captures a number of salient features of emerging and less developed countries where low levels of international risk sharing have gone hand in hand with frequent and recurring default events

barriers to competition and the effect on political shirking 1953 1992 economists and political scientists have offered a variety of explanations for why legislators might rationally choose to ignore the preferences of their constituents political parties and presidents the broad conclusion of this literature is that there is an element of shirking in congressional voting the objective of this paper is to suggest that the effects of shirking in congressional voting may have increased over time largely in response to the raising of barriers to competition in congressional elections thereby enabling legislators to vote their own preferences without fear of losing reelection we use a quasi experimental design that controls for the effects of party region electoral safety presidential control of the white house and constituency factors in isolating the causal effects of barriers to entry on a continuous series of roll calls regarding the raising of the debt limit between 1953 and 1992 we find that shirking in legislative voting on debt limit legislation is a post 1970s phenomenon

attendance rates political shirking and the effect of post elective office employment attendance rates political shirking and the effect of post elective office employment i introduction political shirking the degree to which a politican s actions deviate from the wishes of his constituents can take many different dimensions economists e g amacher and boyes 1978 davis and porter 1989 dougan and munger 1989 kalt and zupan 1984 lott 1987d nelson and siberberg 1987 and peltzman 1984 have debated whether shirking exists in how a politician votes when he does vote this divergence is measured through some particular special interest voting ratings e g american conservative union americans for democratic action etc however shirking can obviously take as many forms as there are outputs that a politician produces besides how he votes he also produces services for his constituents involving everything from being personally available to listen to the constituents grievances to ensuring effective handling of case work by his staff see for example fiorina 1977 fenno 1978 and cain et al 1987 1 one dimension that has not been sufficiently examined is the extent to which politicians shirk by failing to vote on pending legislation 2 no attention has been given to which mechanisms will make this particular type of shirking relatively more costly most economists agree that opportunitic behavior by politicians is limited by the threat of reelection e g amacher and boyes 1978 barro 1973 kalt and zupan 1984 nelson 1976 and telser 1976 3 by implication the level of shirking should be the greatest when a politician decides to leave office however this opportunistic behavior might be reduced to the extent that political parties or constituencies impose costs for shirking through affecting politicisns post elective office career or the careers of their children thus a politicians last term in elective office may not represent his last period in any meaningful sense the next section outlines the differing views on how politicians act when they no longer face the threat of reelection section iii describes some empirical evidence on what mechanisms may prevent this last period problem the final section discusses the impliactions of these results ii the last period whether economists view politicians as ideologues e g kau and rubin 1979 and kalt and zupan 1984 or as simply attempting to maximize political support e g barro 1973 ferejohn 1986 nelson 1976 and peltzman 1984 the threat of reelection is seen as preventing shirking as kalt and zupan 1984 298 phrase it it appears that the proximity of the next election inhibits ideological shirking even those who do not view the last period as affecting how a politician votes argue that it will affect how often he votes lott 1987a 1987b has argued that if voters can determine and elect politicians that have ideological preferences corresponding exactly to the wishes of constituents politicians voting patterns should continue to reflect those values even when the cost of shirking in terms of forgone future votes is low the penalty to ideologues of not votingfor their constituency in the last period when they no longer face reelection is the forgone utility from not doing what they personally value assuming that politicians also desire leisure politicians should continue to vote for what they believe in but they should vote less frequently since they no longer receive the additional return of larger future support mechanisms to overcome this last period problem have been suggested by becker and stigler 1974 9 10 they argue that opportunistic behavior can be controlled if officeholders face the loss of a pension or equivalently a posted bond in the event of opportunistic behavior in their last term however the actual pension system does not effectively eliminate the last period for politicians since retirement payments are not based on cheating in the last period

term limits time horizons and electoral accountability term limits have been known to reduce electoral accountability by removing the possibility of reelection thus affecting economic policy choices i e the lame duck effect we show that the magnitude and statistical significance of this effect is influenced by the expected length of a future career by using incumbent age as a proxy for expected career length we find that the lame duck effect is statistically observable only among those politicians with long careers ahead using data on us governors from 1950 to 2005 we find evidence that the influence of term limits is heterogeneous primarily influencing young incumbents who hope to have long careers and thus have stronger incentives to remain accountable to voters indeed we find little evidence of a lame duck effect among older incumbents suggesting that their already shortened time horizons may offset the term limit effect

shirking representation and congressional behavior voting on the 1983 amendments to the social security act our central goals at the outset of the paper were three 1 to report on the relative significance of a sophisticated measure of constituent economic interest and a commonly used variable ada score that purports to measure the personal ideology of the candidate 2 demonstrate that the constituent economic interest variable should be adjusted to account for the fact thatvoters not citizens are the only effective principals in influencing a legislator s voting activities and 3 call into question on both theoretical and empirical grounds the claim that legislators shirk their responsibilities to voters by voting their own ideological preferences in order to evaluate our efforts consider table 5 for a large majority 15 of the 18 relevant runs the ideological variable is significant our measure of constituent economic interests does not eliminate the explanatory power of the ideological voting variable but this does not indicate shirking as opposed to shirking we may observe ideological voting because 1 it provides brand name capital 2 it represents the ideological preferences of the constituents or 3 it acts as a measure of median voter economic preferences further ada scores do not allow us to differentiate between these competing explanations for 11 of the 18 models one of the economic variables accounts for a significant portion of the variance in the dependent variables the results derived from our measure of constituent economic interests contradict most findings of the lasi school and raise questions about the validity of the empirical characterization of constituent interests in that research a breakdown of the results by chamber indicates that significant differences in the degree of ideological voting between the house and senate may exist this is important in that most research has focused only on the senate where ideological voting is more prevalent for the house table 5 reveals the constituent economic interest variable isalways significant and in fully one half of the relevant regressions it is theonly significant variable knocking ada out of the race as noted earlier the insignificance of ada is some indication of the absence of ideological shirking though its significance may indicate only measurement error voter ideology or reputational capital in the senate the results are more evenly split though it is clear that the adjusted for reelection constituency economic interest variable is an improvement ada is significant in all 12 senate regressions and the respective economic variables are significant in 5 or just under half this side by side comparison is provocative though it remains to be tested in detail but our preliminary conclusions can be stated as follows first as peltzman 1984 suggested a better specification of economic interest and constituency representation reduces though it does not eliminate the role of the ada variable in the senate second we find evidence that ideological shirking if it exists is much smaller in the house in fact from an institutional perspective it can be argued that economic interests are dominant since house districts are smaller and more homogeneous further the shorter terms for house members may make them more directly accountable to voters and smaller groups of voters may force a lesser reliance on pure ideological campaigning and require a more personal presentation of self

a reexamination of the principal agent relationship in politics abstract that senators from the same state often have a large difference in their ideological voting records has proven inconvenient for a literature that has largely relied on a median voter model of elections one exception is palfrey review of economic studies 1984 51 139 156 whose analysis implies the hypothesis that the expected difference in such voting records varies directly with the variance of that state s density function of constituent ideological preferences this paper provides empirical testing consistent with this hypothesis the paper then argues that currently accepted methodology for measuring senatorial shirking is systematically biased towards indicating shirking and provides empirical analysis consistent with this argument

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

the incentive effects of missions evidence from experiments with ngo employees and students abstract this paper studies the incentive effects of an organization s mission on the effort provision of agents across treatments i exogenously vary how much the agents and their projects missions match in the first study ngo employees are assigned the role of agents in an online one shot principal agent experiment in the second study i replicate the experimental design with a student subject pool in both experiments the agents effort choices are for any given piece rate increasing in their mission match in a third study a laboratory experiment with a finitely repeated principal agent game with random matching i do not find a motivational effect of missions unlike in my first two studies

an accurate measurement of the crowd out effect income effect and price effect for charitable contributions in the past empirical research on charitable contributions has focused on two issues estimating the income and price elasticities of contributions and estimating the extent to which government funding crowded out private contributions the two fundamental problems in all these studies are the differences in the underlying conceptual models and the use of imperfect data for empirical analysis this paper addresses both of these problems

financial integration and international risk sharing abstract conventional wisdom suggests that financial liberalization can help countries insure against idiosyncratic risk there is little evidence however that countries have increased risk sharing despite widespread financial liberalization we show that the key to understanding this puzzling observation is that conventional wisdom assumes frictionless international financial markets while actual markets are far from frictionless financial contracts are incomplete and contract enforceability is limited when countries remove official capital controls default risk is still present as an implicit barrier to capital flows if default risk were eliminated capital flows would be six times greater and international risk sharing would increase substantially

signaling and screening of workers motivation abstract this paper develops a model in which workers are heterogeneous in their intrinsic motivation to work at a firm we characterise optimal incentive schemes and examine how the firm can attract and select highly motivated workers to fill a vacancy when workers motivation is private information while posting a higher wage increases the probability of filling the vacancy it decreases the expected average quality of job applicants because less motivated workers are induced to apply the optimal wage scheme entails a trade off between the probability of filling the vacancy the rents left to the worker and the expected worker s motivation

the relationship between congressional spending and tenure with an application to term limits whether term limits would increase or decrease federal spending depends on the reason for the causal relationship between tenure and spending we investigate this subject by empirically studying congressional spending and tenure for all united states house and senate members who entered congress between the 94th and 102nd congresses 1975 1992 as our measure of congressional spending we use the national taxpayers union s congressional spending scores our study finds that a statistically significant relationship exists between congressional spending and tenure for some groups of congressmen we then test three hypotheses relating tenure and spending no single hypothesis is consistent with all of our empirical results nevertheless the small sizes of the empirical effects estimated in this study suggest that term limits would have an inconsequential impact on the level of federal spending at least via the moral hazard mechanisms described in this paper

voting and imitative behavior political behavior generates private benefits by helping people fit in with desired friends a voter imitates other voters but at the same time they imitate him an equilibrium solution requires exogenous variables the narrow self interest of the participants the reduced form makes one s vote a function of the narrow self interest of others as well as one s own in accord with the model a person s party identification depends on his ethnic group s current income and its income in 1909 as well as his own income i introduction what determines how people vote most economists such as peltzman 1980 have emphasized self interested motivations but kau and rubin 1982 and kalt and zupan 1984 claim that ideology based in part on altruism influences voting patterns both hypotheses have the same fundamental flaw they focus on the consequences of the policies for which people vote in the peltzman model a person votes for those policies which maximize his real income i call this narrow self interest in the standard altruism models of economists a person maximizes some weighted average of the real income of himself and others 1 however an individual s vote has a minuscule impact on the outcome of any election therefore his vote for a policy yields extremely small expected returns through the impact of that policy on the voter other returns from voting will dominate in determining behavior if such returns exist some economists for example brennan and buchanan 1984 have recognized this problem with the standard or economic view no one however has developed an alternative theory based on other returns to voting the key point of this paper is that political behavior can generate private benefits by helping people fit in with desired friends and associates a herd effect to give this phenomenon a name political positions are thus chosen not because they produce the desired outcomes for voters but rather because voters want to associate with certain people who have certain positions that is people imitate others in choosing political positions the idea for imitation in political positions is hardly new berelson et al 1954 provide a prima facie case for imitation in voting behavior they found that a person s political position was closely related to the political positions of his coworkers and friends of course these results could be attributable to the fact that these groups share common characteristics but the berelson data also show that people change their political position toward that of their associates a phenomenon more difficult to explain by the common characteristic hypothesis imitation is uninteresting as a predictor of behavior by itself however a voter imitates other voters but at the same time they imitate him an equilibrium solution requires exogenous variables i assume these to be the narrow self interest of the participants the resulting model differs from a simple narrow self interest model in the reduced form one s political decision is a function of the narrow self interest of others as well as one s own narrow self interest imitation along with the self interest of the participants leads both to additional tests of imitation and makes the imitation model of interest in understanding political behavior imitation could be an attempt to please others who have a primitive preference for friends who imitate themselves alternatively imitation could signal an offer of friendship by the imitator without invoking preferences for friends who imitate such signalling could therefore explain why people care whether somebody imitates their political behavior or not imitation could also arise from another process people s views of appropriate behavior could be determined by the behavior of those with whom they associate 2 narrow self interest can also generate a form of imitation imitating the behavior of people with like interests who are more informed

dynamic income progressive taxes and the timing of charitable contributions using an econometric model of charitable giving and a 10 year panel of tax return data i find that previous studies have underestimated the effects of permanent income and overestimated the effects of permanent changes in tax prices the significant statutory tax changes that occurred during the 1980s especially in 1986 serve to identify the key model parameters my results imply that people smooth their giving when transitory income changes but also time their giving to exploit transitory changes in tax prices the results also raise questions about how effectively the tax incentives permanently influence the level rather than just the timing of charitable giving by individuals

voluntary donations and public expenditures in a federal system proponents of the new federalism argue that nonprofit organizations and local governments will fully offset federal social service expenditure cutbacks the author analyzes this proposition as a competitive game in which donations are motivated by private and public good considerations the author characterizes the response of political economic equilibrium to exogenous changes in federal expenditures when local voters are cognizant of donor reactions partial replacement is the most likely outcome though others are possible copyright 1987 by american economic association

corporate philanthropy and productivity evidence from an online real effort experiment contributing to a social cause can be an important driver for workers in the public and nonprofit sectors as well as in firms that engage in corporate philanthropy or other corporate social responsibility policies this paper compares the effectiveness of a social incentive that takes the form of a donation received by a charity of the subject s choice to a financial incentive we find that social incentives lead to a 13 rise in productivity regardless of their form lump sum or related to performance or strength the response is strong for subjects with low initial productivity 30 whereas high productivity subjects do not respond when subjects can choose the mix of incentives half sacrifice some of their private compensation to increase social compensation with women more likely to do so than men furthermore offering subjects some discretion in choosing their own payment schemes leads to a substantial improvement in performance comparing social incentives to equally costly increases in private compensation for low productivity subjects reveals that the former are less effective in increasing productivity but the difference is small and not statistically significant data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1985 this paper was accepted by uri gneezy behavioral economics

small is beautiful motivational allocation in the non profit sector we build an occupational choice general equilibrium model with for profit firms non profit organizations and endogenous private warm glow donations lack of monitoring on the use of funds implies that an increase of funds of the non profit sector because of a higher incomein the for profit sector a stronger preference for giving or an inflow of foreign aid worsens the motivational composition and performance of the non profit sector we also analyze the conditions under which donors through linking donations to the motivational composition of the non profit sector non profits themselves through peer monitoring or the government using a tax financed public funding of non profits can eliminate the low effectiveness equilibrium we present supporting case study evidence from humanitarian emergencies and developing country ngo sector and humanitarian emergencies

fiscal effects of the voter initiative in the first half of the twentieth century abstract this paper compares the fiscal policy of initiative and noninitiative states in the first half of the twentieth century states with initiatives had higher combined state and local expenditure after controlling for income and other demographics but a lower ratio of state to local expenditure this together with existing evidence from later in the century suggests that the voter initiative does not have a consistent effect on the overall size of state and local government however it does systematically lead to more decentralized expenditure

competition and incentives with motivated agents a unifying theme in the literature on organizations such as public bureaucracies and private nonprofits is the importance of mission as opposed to profit as an organizational goal such mission oriented organizations are frequently staffed by motivated agents who subscribe to the mission this paper studies incentives in such contexts and emphasizes the role of matching the mission preferences of principals and agents in increasing organizational efficiency matching economizes on the need for high powered incentives it can also however entrench bureaucratic conservatism and resistance to innovations the framework developed in this paper is applied to school competition incentives in the public sector and in private nonprofits and the interdependence of incentives and productivity between the private for profit sector and the mission oriented sector through occupational choice jel d23 d73 h41 l31 the late twentieth century witnessed a historic high in the march of market capitalism with unbridled optimism in the role of the profit motive in promoting welfare in the production of private goods moreover this generated a broad consensus on the optimal organization of private good production through privately owned competitive firms when it comes to the provision of collective goods no such consensus has emerged debates about the relative merits of public and private provision still dominate this paper suggests a contracting approach to the provision of collective goods it focuses on two key issues how to structure incentives and the role of competition between providers at its heart is the idea that organizations that provide collective goods cohere around a mission 2 thus production of collective goods can be viewed as mission oriented

legislator voting and shirking a critical review of the literature we set out to critically review the progress in answering two related questions what determines how legislators vote and how can shirking by legislators be measured in the first category the hypothesis that legislators shirk in order to indulge their personal ideological preferences has led researchers astray the theoretical underpinning is shaky on two counts first legislators who indulge their preferences at the expense of their constituents preferences put themselves at a competitive electoral disadvantage second the original two stage procedure used to measure ideological shirking is severely flawed among many other problems the residual measure of shirking implicitly assumes that the median voter is the relevant constituent principal for the legislator agent

efficiency and the role of default when security markets are incomplete this paper argues that default plays an important positive role in the economy if markets are incomplete and traders are only able to enter into contracts that they will be able to execute regardless of future events contingent contracting may be severely restricted moreover opening new markets may not relieve these restrictions default promotes efficiency in a way that opening new markets does not by making it possible for traders to enter into contracts that they will be able to execute with high probability but not with certainty copyright 1993 by american economic association

the social sub optimality of competitive elections comment buchler public choice 133 3 4 439 456 2007 models elections as methods of making social choices among different options and argues that increased electoral competition may produce inferior outcomes however competitive elections also play a role in affecting the behavior of candidates and of elected officials in office once this role is recognized competitive elections must be seen as a necessary but not sufficient ingredient in the production of socially optimal government

compensation in the nonprofit sector we investigate the determinants of pay in the nonprofit sector using data for 25 55 year olds from the 1994 88 current population survey outgoing rotation groups our results are consistent with the hypothesis that compensation is primarily determined in competitive markets without labor donations to nonprofit employers one implication is that nonprofit workers receive virtually the same wages as observationally equivalent employees in similar positions with profit seeking enterprises we cannot rule out the possibility of nonprofit penalties or premiums for selected groups however the differentials are generally small and competition appears to play a dominant role in nonprofit wage setting

term limits and electoral competitiveness evidence from california s state legislative races california s legislative term limits have dramatically reduced campaign expenditures real expenditures during the three general elections after the term limits initiative passed in 1990 were lower than in even 1976 this drop has occurred at the same time that races have become closer contests and more candidates are running for office by any measure term limits have coincided with large changes in the level of political competition even before term limits have forcibly removed a single politician from office the changes are so large that more incumbents are being defeated races are closer more candidates are running and fewer single candidate races than occur at any other time during our sample period from 1976 to 1994

political shirking opponent quality and electoral support several recent papers in the public choice literaturesuggest that legislators shirk or vote in a mannercontrary to constituent interest this paper exploresthe relationship between senatorial shirking andelectoral consequences i model political shirking opponent quality and election outcomes assimultaneous and find significant evidence of arelationship between shirking over the senatorial termand electoral outcomes however i find that voterspunish recent shirking much more than they punishearly term shirking and that senators apparently actconsistently with this relationship

incentives choice and accountability in the provision of public services this paper discusses a theoretical framework to study the issues of competition and incentives without relying on the standard profitoriented market model in the context of the debates about public service reform in the u k it uses the idea that the production of public services coheres around a mission and discusses how decentralized service provision can raise productivity by matching motivated workers to their preferred missions our focus on competition and incentives cuts across traditional debates about public versus private ownership and allows for the possibility of involving private non profits we also address concerns about the consequences of allowing more flexibility in mission design and competition on inequality

incentives and the sorting of altruistic agents into street level bureaucracies many street level bureaucrats such as caseworkers have the dual task of helping some clients while sanctioning others we develop a model of such a street level bureaucracy and study the implications of its personnel policy on the self selection and allocation decisions of agents who differ in altruism towards clients when bureaucrats are paid flat wages they do not sanction and the most altruistic types sort into bureaucracy pay for performance induces some bureaucrats to sanction but necessitates an increase in expected wage compensation which can result in sorting from both the top and bottom of the altruism distribution we also show how client composition affects sorting and why street level bureaucrats often experience an overload of clients

predicting the institutional effects of term limits in this paper we develop a model to predict the seniority turnover and transition consequences of term limit reforms for any institution with a regularized procedure for rotating membership with this model we can predict the number of members who will be serving in their last term at any given time once an institution reaches a stable state under term limit reforms for example our results show that for the u s senate current term limit proposals will result in a substantial increase in the number of lame duck members and a significant reduction in average seniority we make no claims as to the public policy effects of term limit proposals however our model can be used to design a proposal that will maximize any benefits or minimize any public policy effects found to be associated with term limit reforms

home bias and international risk sharing twin puzzles separated at birth abstract we document that international home bias in debt and equity holdings declined during the period 1993 2003 at the same time as international risk sharing increased using panel data regressions for oecd countries we demonstrate that less home bias is associated with more international risk sharing more generally we show that more financial integration is associated with more risk sharing when we measure financial integration as the ratio of foreign assets to gross domestic product our results indicate that risk sharing and international financial integration are closely related empirical phenomena

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

debt constrained asset markets we develop a theory of general equilibrium with endogenous debt limits in the form of individual rationality constraints similar to those in the dynamic consistency literature if an agent defaults on a contract he can be excluded from future contingent claims markets trading and can have his assets seized he cannot be excluded from spot markets trading however and he has some private endowments that cannot be seized all information is publicly held and common knowledge and there is a complete set of contingent claims markets since there is complete information an agent cannot enter into a contract in which he would have an incentive to default in some state in general there is only partial insurance variations in consumption may be imperfectly correlated across agents interest rates may be lower than they would be without constraints and equilibria may be pareto ranked

the social role of not for profit organizations hospital provision of charity care during the 1980s the state of new york shifted from a straight block grant to a matching grant method for reimbursing hospitals with the matching rate varying from 0 to 75 percent across years these changes allow estimation of pure income and price effects for hospitals supply of uncompensated care charity and bad debts the price efrect is positive and significant but no income effect was found hospitals in more concentrated markets provide more charity care as do teaching hospitals and the presence of public hospitals in a market reduces private hospitals provision of charity care

sovereign default interest rates and political uncertainty in emerging markets abstract a large body of the empirical literature shows that high turnover rates length of tenure of policymakers and the degree of conflict within a country affects sovereign spreads debt and default rates we help to rationalize such claims by including these political features in a dynamic stochastic small open economy model of sovereign debt and default in this way we offer a complementary approach to the econometric analyses in the literature consistent with the data the quantitative analysis shows that politically unstable and more polarized economies experience higher default rates and larger level and volatility of sovereign interest rate spreads

international real business cycles we ask whether a two country real business cycle model can account simultaneously for domestic and international aspects of business cycles with this question in mind we document a number of discrepancies between theory and data the most striking discrepancy concerns the correlations of consumption and output across countries in the data outputs are generally more highly correlated across countries than consumptions in the model we see the opposite

campaign war chests as a barrier to entry in congressional races i introduction issues surrounding the nature and degree of competition in political races have been examined extensively in both the economic and political science literature with most attention focused on the interplay between incumbent and challenger expenditures and electoral success this study extends our understanding of political competition by investigating the impact of an incumbent s war chest on a challenger s decision to mount a campaign 1 for this purpose a war chest is defined as a pool of unencumbered funds accumulated prior to the start of a campaign for elective office 2 sorauf 1988 182 has observed that early receipts even without early spending discourage competition in the primary and attractive challengers in the general election jacobson 1985 26 has argued the most effective strategy for keeping a seat in congress is to avoid serious opposition contemporary critics and reformers of campaign financing practices use such words as frighten intimidate and overpower to describe the role of an incumbent s war chest 3 despite this kind of attention little is actually known about the degree to which war chests diminish entry or reduce the quality of a challenge we present three alternative mechanisms to explain how an incumbent s war chest might deter entry each is based upon a war chest serving as a credible commitment to spend heavily if challenged specifically war chests may either represent excess capacity in financing a campaign or serve as a signal of non observable incumbent characteristics that define a formidable opponent aside from determining whether an incumbent is challenged a war chest might also affect the quality of the challenger for example potential candidates with prior political experience may be unwilling to risk their political capital on a long shot proposition to test for these effects on entry into house races a trichotomous logit model is estimated the choices are uncontested race contested by an ordinary challenger and contested by an experienced challenger although the empirical model is not sufficiently rich to fully distinguish among competing mechanisms the regression results are robust incumbent war chests negatively affect the likelihood of a contested race and the quality of the challenger ii war chests as a barrier to entry becker 1958 106 in comparing economic and political competition observed i n an ideal political democracy competition is free in the sense that no appreciable costs or artificial barriers prevent an individual from running for office in the theory of the firm entry occurs when the expected postentry stream of profits minus the cost of entry is positive analogously an individual will enter a political race when the expected gain from holding office is positive expected gain as defined by baron 1989 is a function of campaign costs the probability of winning and the personal valuation placed by the candidate on the office the first two determinants are partly endogenous depending upon the strategic interplay of the candidates the third aside from its direct effects indirectly affects the first two for example persons hungry for office may be committed to expending greater effort and funds on their campaigns thus increasing their probability of winning similarly as lott has emphasized nontransferable brand name capital would be another factor creating a commitment to aggressively pursue office thereby affecting campaign costs and the probability of winning 4 that some challengers are deterred however need not imply the existence of a political market failure in a contestability sense the lack of a viable challenger on the ballot does not imply a lack of competition good representation will discourage entry similarly the fact that some incumbents will aggressively seek re election frightening away potential challengers is not a sign that competition is lacking

time series evidence on shirking in the u s house of representatives this paper presents time series evidence on the voting behavior of members of the u s house of representatives from 1975 to 1990 the empirical results indicate that voting behavior of individual congressmen is remarkably stable over time we find no evidence of economically significant last term effects on voting behavior nor are there important effects of legislative tenure on voting patterns the most significant deviations in voting behavior occur for congressmen who failed to win their reelection bid suggesting that sizable deviations from previous policy positions may result in swift retribution by constituents in the district

does financial globalization promote risk sharing article i nfo in theory one of the main benefits of financial globalization is that it should allow for more efficient international risk sharing in this paper we provide an empirical evaluation of the patterns of risk sharing among different groups of countries and examine how international financial integration has affected the evolution of these patterns using a variety of empirical techniques we conclude that there is at best a modest degree of international risk sharing and certainly nowhere near the levels predicted by theory in addition only industrial countries have attained better risk sharing outcomes during the recent period of globalization developing countries have by and large been shut out of this benefit even emerging market economies many of which have reduced capital controls and all of which have witnessed large increases in cross border capital flows have seen little change in their ability to share risk we find that the composition of flows may help explain why emerging markets have not been able to realize this presumed benefi to f financial globalization in particular our results suggest that portfolio debt which had dominated the external liability stocks of most emerging markets until recently is not conducive to risk sharing