the resource curse revisited governance and natural resources the paper analyzes the impact of natural resource abundance on selected governance indicators we use a panel data set with observations on a large number of countries over an extended period of time and employ an instrumental variable technique to account for endogeneity the results show that exports of natural resources have above all led to an increase in corruption this result is robust to both different model specifications and an alternative indicator for natural resource abundance for other governance indicators such as law and order and bureaucratic quality we either find no results or results that lack robustness

economic experiments hypothetical surveys and market data studies of insurance demand against low probability high impact risks a systematic review of designs theoretical insights and determinants of demand this paper provides a systematic review of the literature on 80 experimental hypothetical survey and market data studies of insurance demand against low probability high impact risks the objective of the review is to extract lessons from these studies and to outline an agenda for future research we contrast the results of experimental and survey studies to findings from market data we focus on experimental design methods insurance characteristics as well as results about theories heuristics behavioural biases and explanatory variables lessons for policymakers are drawn which can facilitate disaster preparedness

fiscal federalism at work central responses to internal migration in india summary internal migration is thought to have substantial benefits for migrants and for the development of migrant sending and migrant receiving areas in order to facilitate such migration central governments may need to use fiscal transfers to ensure services to migrants address infrastructure shortfalls and ameliorate labor market displacement of natives in fact an extensive mostly normative fiscal federalism literature has argued that central governments ought to use transfers to reduce interjurisdictional externalities such as those due to population displacements we extend this literature empirically by examining the degree to which exogenous longterm migration prompts the redirection of central fiscal resources in india following the literature on distributive politics we argue that transfers in decentralized systems addressing the costs of population movements are influenced by partisan politics using monsoon shocks to migration we show that increases in migration are met with greater central transfers but that these flows are at least 50 greater if the state level executive is in the prime minister s political party consistent with the theory the influence of politics is greatest on parts of the budget subject to greater executive control this politicization may explain why indian states maintain barriers to internal migration despite the development costs of doing so

flooded with debt this study explores if natural disasters are able to trigger a sovereign debt default natural disasters make the debt of a country less sustainable as they worsen the public finances of a country the main findings from our empirical analysis clearly indicate that large scale natural disasters increase significantly the onset probability of a sovereign debt default by about three percentage points it turns out that particularly major earthquakes and storms raise the likelihood of a default as they create the most widespread damage reported worldwide this will limit the debt servicing opportunities of a country in the future

allocating infection the political economy of the swine flu h1n1 vaccine i introduction public choice theory provides a fertile ground to analyze government activity traditional economic theory modeled public officials as pure optimizers of public welfare even at the expense of their private well being by allowing actors in the public sector the opportunity to respond to incentives public choice theory allows behavior that was once difficult to describe in the context of traditional economic models to become logical and rational if public choice theory is correct one would expect to see government officials acting in a manner such that individual self interest could displace the public good the distribution of the h1n1 or swine flu vaccine provides exactly such a forum for testing ii background congressional dominance and the h1n1 virus previous research has focused on the ability of congress to impose its preferences upon bureaus a scenario known as congressional dominance weingast and moran 1983 provide the theoretical framework by which a congressional incentive system emerges first in the budgetary process each agency competes with a host of others for budgetary favors congressmen pursuing their own electoral goals favor those agencies that provide the best clientele service second oversight plays an important role in sanctioning errant agencies this includes new legislation specific prohibitions on activities and other means that serve to embarrass agency heads hurt future career opportunities and foil pet projects finally and perhaps the most effective means of influence congress controls who gets appointed and reappointed weingast and moran 1983 the result is a political structure whereby congress wields substantial influence over the behavior of bureaus not only through direct means i e legislation appointments but also by creating the incentive for bureaus to serve the congress and more specifically the appropriate oversight committees pertaining to each individual bureau congressional dominance outlines one scenario in which legislators utilize their political advantage to secure personal benefits in addition to the congressional incentive system there exists a geographic nature to both the bureaucratic allocation of federal funds and political representation within congress the result of these institutional structures is a bureaucracy seeking to appease the members of its congressional oversight committee by providing a disproportionate share of public benefits to its constituents empirical evidence supporting the claims of congressional dominance theories initially focused on the activities of the federal trade commission in addition to the above study see calvert and weingast 1984 faith leavens and tollison 1982 katzmann 1984 and moran and weingast 1982 among others more recent research focuses on the impact that congress has on a wider range of bureaus young reksulak and shughart 2001 show that irs audit rates are lower in the congressional districts of members on key oversight committees of the irs garrett and sobel 2003 note that congressional oversight committees play a large role in determining the fiscal nature of fema disaster payments drury olson and belle 2005 show that the office of u s foreign disaster assistance responds to the preferences of congress when allocating humanitarian aid garrett marsh and marshall 2006 find a similar congressional influence concerning agricultural disaster relief sitting on a congressional committee has long been viewed as advantageous to the constituents of committee members see arnold 1979 ferejohn 1974 ritt 1976 among many others however identifying causality can prove difficult see for example ray 1980 rundquist and griffith 1976 as self selection could lead members of congress to be placed on committees the services of which their constituencies are particularly in need

carbon tax scenarios and their effects on the irish energy sector abstract in this paper we use annual time series data from 1960 to 2008 to estimate the long run price and income elasticities underlying energy demand in ireland the irish economy is divided into five sectors residential industrial commercial agricultural and transport and separate energy demand equations are estimated for all sectors energy demand is broken down by fuel type and price and income elasticities are estimated for the primary fuels in the irish fuel mix using the estimated price and income elasticities we forecast irish sectoral energy demand out to 2025 the share of electricity in the irish fuel mix is predicted to grow over time as the share of carbon intensive fuels such as coal oil and peat falls the share of electricity in total energy demand grows most in the industrial and commercial sectors while oil remains an important fuel in the residential and transport sectors having estimated the baseline forecasts two different carbon tax scenarios are imposed and the impact of these scenarios on energy demand carbon dioxide emissions and government revenue is assessed if it is assumed that the level of the carbon tax will track the futures price of carbon under the eu ets the carbon tax will rise from 21 50 per tonne co2 in 2012 the first year forecasted to 41 in 2025 results show that under this scenario total emissions would be reduced by approximately 861 000 tonnes of co2 in 2025 relative to a zero carbon tax scenario and that such a tax would generate 1 1 billion in revenue in the same year we also examine a high tax scenario under which emissions reductions and revenue generated will be greater finally in order to assess the macroeconomic effects of a carbon tax the carbon tax scenarios were run in hermes the esri s medium term macroeconomic model the results from hermes show that a carbon tax of 41 per tonne co2 would lead to a 0 21 contraction in gdp and a 0 08 reduction in employment a higher carbon tax would lead to greater contractions in output

uncertainty of governmental relief and the crowding out of flood insurance this paper discusses the problem of crowding out of insurance by co existing governmental relief programs the so called charity hazard in the context of different institutional schemes of governmental disaster relief in austria and germany we test empirically whether an assured partial relief scheme as in austria drives a stronger crowding out of private insurance than a scheme promising full relief which is subject to ad hoc political decision making as in germany our general finding is that the institutional design of governmental relief programs significantly affects the demand for private natural hazard insurance

double sided auction mechanism design in electricity based on maximizing social welfare an efficient electricity double sided auction mechanism should control market power and enhance the social welfare of the electricity market based on this goal the paper designs a new double sided auction mechanism in the new mechanism the social welfare contribution of each participant plays a pivotal role because this contribution is the critical factor in market clearing payment settling and transaction matching rules in particular each winner of the auction can gain transfer payments according to his contribution to social welfare in the electricity market and this gives the mechanism the ability to control the market power of some participants at the same time this mechanism ensures that the market organizer balances his budget we then conduct a theoretical and empirical analysis based on the spanish electricity market both of the results show that compared to the uniform pricing mechanism the new mechanism can reduce market power of participants and enhance the social welfare of the electricity market

application of mechanism design to electric power markets republished as competition is introduced across the electric power industry around the world market design for the industry is urgently needed to shape its future structure and performance when generator companies compete with one another in a deregulated market they may not be willing to share the information needed to perform an economic dispatch of the generation using game theory this paper designs a new mechanism that achieves efficiency economic dispatch in spite of this information problem in this mechanism when each company acts in the best of its own interest the outcome is efficient the paper demonstrates the merits of the mechanism by simulations including the ieee 14 bus case this paper contained an incorrect graphic when it originally appeared in the ieee transactions on power systems vol 16 no 1 p 1 8 2001 it is republished here with the correct graphic

the shocking origins of political transitions evidence from earthquakes do earthquakes trigger political transitions using a rich panel dataset of 160 countries observed over 1950 2007 we find that earthquake shocks measured in terms of the effect of ground motion amplitude on death toll have two contradicting effects on political change on the one hand earthquakes drive transitions into democracy due to an affective shock which we interpret to be the reaction of citizens by which they hold the incumbent government responsible for earthquake damages on the other hand earthquakes indirectly hasten transitions into a less democratic regime because they increase the income level contemporaneously possibly due to short term emergency response and recovery expenditures and thus raising the opportunity cost of contesting the incumbent government overall we show that while not leading to a full fledged regime transition earthquake shocks open a new democratic window of opportunity but this window is narrowed by improved economic conditions

does delegation of fiscal policy to an independent agency make a difference evidence from intergovernmental transfers in india abstract one area of fiscal policy in which several countries have delegated responsibility to an independent agency is the distribution of national resource transfers across regional and local governments such delegation is expected to promote equity and efficiency and mitigate distortions created by political incentives this paper tests whether delegation to an independent agency indeed makes a difference by contrasting the impact of partisan politics on two types of fiscal transfers to states in the indian federation over a period of time 1972 1995 the pattern of evidence shows that while the transfers that are determined by the central political executive are indeed distributed to favor particular states that are politically important for the central ruling party the transfers that are delegated to an independent agency serve to constrain such partisan impact

environmental prices uncertainty and learning there is an increasing demand for putting a shadow price on the environment to guide public policy and incentivize private behaviour in practice setting that price can be extremely difficult as uncertainties abound there is often uncertainty not just about individual parameters but about the structure of the problem and how to model it a further complication is the second best nature of real environmental policy making in this paper we propose some practical steps for setting prices in the face of these difficulties drawing on the example of climate change we consider how to determine the overall target for environmental protection how to set shadow prices to deliver that target and how we can learn from the performance of policies to revise targets and prices perhaps most significantly we suggest that estimates of the marginal cost of environmental protection rather than the marginal benefit will often provide the more consistent and robust prices for achieving targets

welfare measures when agents can learn a unifying theory we extend graham s 1981 welfare analysis under uncertainty to a dynamic environment where the agent can delay and obtain information the dynamic willingness to pay locus unifies the concepts of option price dynamic wtp commitment costs and quasi option value option price dynamic wtp corresponds to the ex ante wtp when the agent ignores recognises the learning opportunity the commitment cost or the difference between option price and dynamic wtp equals the annualised and monetised quasi option value state contingent contracts have added value by allowing trading among agents with heterogeneous access to future information and delay opportunities

the size and scope of government comparative politics with rational politicians we try to demonstrate how economists may engage in research on comparative politics relating the size and composition of government spending to the political system a downsian model of electoral competition and forward looking voting indicates that majoritarian as opposed to proportional elections increase competition between parties by focusing it into some key marginal districts this leads to less public goods less rents for politicians more redistribution and larger government a model of legislative bargaining and backward looking voting indicates that presidential as opposed to parliamentary regimes increase competition between both politicians and voters this leads to less public goods less rents for politicians less redistribution and smaller government we confront these predictions with cross country data from around 1990 controlling for economic and social determinants of government spending we nd strong and robust support for the prediction that the size of government is smaller under presidential regimes and weaker support for the prediction that majoritarian elections are associated with less public goods

do voters demand responsive governments evidence from indian disaster relief abstract using rainfall public relief and election data from india we examine how governments respond to adverse shocks and how voters react to these responses the data show that voters punish the incumbent party for weather events beyond its control however fewer voters punish the ruling party when its government responds vigorously to the crisis indicating that voters reward the government for responding to disasters we also find evidence suggesting that voters only respond to rainfall and government relief efforts during the year immediately preceding the election in accordance with these electoral incentives governments appear to be more generous with disaster relief in election years these results describe how failures in electoral accountability can lead to suboptimal policy outcomes

bureaucratic discretion or congressional control regulatory policymaking by the federal trade commission this paper extends stigler and peltzman s approach to regulation by incorporating a legislature the model yields comparative statics results and hence testable implications the paper then tests between two opposing approaches about regulatory agency behavior the first assumes agencies operate independently of the legislature and hence exercise discretion the second assumes that congress controls agency decisions the recent behavior of the federal trade commission provides the empirical setting substantial evidence is found for the specific predictions of the model including the hypothesis of systematic congressional influence over ftc decisions

the industrial organization of congress or why legislatures like firms are not organized as markets this paper provides a theory of legislative institutions that parallels the theory of the firm and the theory of contractual institutions like market institutions legislative institutions reflect two key components the goals or preferences of individuals here representatives seeking reelection and the relevant transactions costs we present three conclusions first we show how the legislative institutions enforce bargains among legislators second we explain why given the peculiar form of bargaining problems found in legislatures specific forms of nonmarket exchange prove superior to market exchange third our approach shows how the committee system limits the types of coalitions that may form on a particular issue

the probability of being president economic models of politics typically use the expected value of a candidate s vote share to proxy electoral probability in this paper the authors introduce a risk calculation to augment the evaluation of a candidate s or party s expected vote share and they divide this risk element into its systematic and unsystematic components for the same reason that systematic risk is a primary focus of portfolio management the authors discover that an analogous systematic risk component is central to presidential elections their approach accounts for correlations in vote swings among states piercing the fiction of a state by state or local campaign strategy copyright 1993 by mit press

targets of violence evidence from india s naxalite conflict this paper considers how shocks to rural incomes intensify violence in india s naxalite insurgency using variation in annual rainfall in a panel of district level fatal incidents between 2005 and 2011 i find that deficient rainfall generally spurs targeted violence against civilians but the number of maoist attacks against security forces only increases in mining districts this finding consistent with the idea that the relationship between income shocks and conflict depends on the type of targets and the revenue sources of the rebels in particular the fighting capacity of rebel groups against government forces could benefit more from negative rural income shocks if the group s resources are sufficiently independent from the agricultural economy as is the case in mining areas

inducing truthful revelation of generator reliability abstract liberalised electricity markets often include a capacity remuneration mechanism to allow generation firms recover their fixed costs various de rating factors and or penalties have been incorporated into such mechanisms in order to reward the unit based on the contribution they make to system security which in turn depends on the unit s reliability however this reliability is known to the firm but not to the regulator we adopt a mechanism design approach for capacity payments based on a declaration by the firm of their reliability the mechanism scales payments and penalties according to this declared reliability such that the firm s profit maximising strategy is to truthfully reveal its reliability a stochastic mixed complementarity problem mcp is used to model the interactions between the firms and we apply this methodology to a test system using irish electricity market data truth telling is induced increasing the efficiency of capacity payments while eliminating the requirement for the regulator to allocate resources to discovering reliability

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

federalism and accountability with distorted election choices abstract random factors such as bad weather or exogenous economic shocks affect the re election of politicians and can reduce accountability such distorted election choices interact with the architecture of government contrasting centralized with decentralized political systems this study shows that centralization is likely to result in higher accountability if election choices are subject to small random distortions furthermore equity and efficiency arguments for uniform policies in centralized systems are derived as these are likely to result in the better overall performance of politicians and in more equal performance across regions

on the indirect effect of biofuel american journal of agricultural economics advance access published june 24 2013 o n the i ndirect e ffect of b iofuel d avid z ilberman g eoff b arrows g al h ochman and d eepak r ajagopal david zilberman zilber11 berkeley edu is a professor and robinson chair in the agricultural and resource economics department at uc berkeley and a member of the giannini foun dation geoff barrows geoffrey barrows gmail com is a gsr graduate student researcher in the department of agricul tural and resource economics at uc berkeley gal hochman hochman aesop rutgers edu is an associate professor at rut gers university deepak rajagopal rdeepak ioes ucla edu is an assistant professor at ucla this research was supported by the energy biosciences institute we would like to thank scott kaplan and eunice kim for their invaluable assistance this article was presented in an invited paper session at the 2013 assa annual meeting in san diego ca the articles in these sessions are not subjected to the journal s standard refereeing process economists have found that lca has multi ple flaws khanna and crago 2012 in current biofuel polices and many have reservations about the use of lca as a major regulatory tool but accepting that lca is used for regu lation our challenge is to use economic analysis to evaluate the use of iluc in computing the ghge of biofuel in the policy process in the next section we develop an economic foundation for the computation of iluc and derive a related indirect effect the indirect food consumption effect ifce of biofuels this is followed by the discussion of other indi rect effects the third segment investigates the reliability of iluc estimates and their use in the regulatory process which is followed by a conclusion conceptual analysis of the use of lca in computing ghge of biofuels to better view the lca of ghge of bio fuel from an economic perspective we will develop a simple conceptual model let b denote the amount of a biofuel we analyze lca considers the ghge resulting from the production of b units of biofuel throughout the supply chain assume that biofuel production includes two stages production of feedstock and processing used to produce the biofuel the ghge generated in producing the biofuel can be decomposed into 1 the emissions from the production of the feedstock denoted by gf and 2 emissions from processing denoted by gp the calculation of the ghge of the feedstock gf considers the ghge of activ ities both on the farm use of tractors and other machinery and off the farm produc tion of fertilizers lca is seeking to calculate impact coefficients based on average perfor mance that will enable the assessment of the annual ghge associated with a proposed amer j agr econ 1 6 doi 10 1093 ajae aat038 the author 2013 published by oxford university press on behalf of the agricultural and applied economics association all rights reserved for permissions please e mail journals permissions oup com downloaded from http ajae oxfordjournals org at university of california los angeles on august 22 2014 biofuel policies were partially motivated by concerns about climate change therefore qualifications for the benefit of these poli cies were based on the amount of green house gas emissions ghge of particular biofuels for example entitlement for subsi dies and mandates associated with the u s energy independence and security act of 2007 requires remaining below upper bounds of ghge per gallon the computation of the ghge of biofuel are based on lifecycle analy sis lca which takes into account emissions throughout the supply chain including fertil izer production and use shipping and refining searchinger et al 2008 introduced the indi rect land use change iluc of biofuel pro duction which is the extra ghge resulting from the expansion of acreage of a feedstock such as corn to accommodate the increase in price associated with the introduction of bio fuel governments have considered including iluc in computing ghge of various biofu els to determine compliance with policies like the renewable fuels standard rfs or low carbon fuel standard lcfs thus inclusion of the iluc in the computation ghge of a fuel will make it more difficult to qualify for the rfs this paper identifies some of the chal lenges associated with the application of lca and in particular the use of iluc as part of the estimated ghge of biofuel

income shocks and hiv in africa we examine how variation in local economic conditions has shaped the aids epidemic in africa using data from over 200 000 individuals across 19 countries we match biomarker data on individuals serostatus to information on local rainfall shocks a large source of income variation for rural households we estimate infection rates in hiv endemic rural areas increase by 11 for every recent drought an effect that is statistically and economically significant income shocks explain up to 20 of variation in hiv prevalence across african countries suggesting existing approaches to hiv prevention could be bolstered by helping households manage income risk better the relationship between income and health has long been of interest to economists and a lengthy literature documents strong linkages between economic conditions and many important health outcomes currie 2009 there has been much less progress however in understanding the economic foundations of the hiv aids epidemic one of the most important global health challenges such an understanding might yield particular dividends in sub saharan africa ssa where over a million people continue to become newly infected with the disease each year unaids 2010 in this article we explore the role of negative income shocks in shaping the

the land use change time accounting failure abstract this paper builds on the disconnection between scientific evidence and policy assumptions about the temporal profile of land use change luc emissions whereas natural scientists find evidence of a decreasing time profile of luc emissions european energy policy relies on a steady time profile we investigate the consequences of using such a uniform constant time profile when assessing biofuel projects with cost benefit analysis a widespread economic tool for public project assessment we show that the use of the uniform time profile distorts luc emissions costs downwards upwards when carbon prices grow slower faster than the discount rate we illustrate our results with the conversion of grassland to wheat cultivation for bioethanol production in france under current assumptions in public project assessment we find a 70 overestimation of costs related to direct luc emissions we propose two tools to aid in decision making and address the decision error finally we provide contextual policy recommendations

how lasting is voter gratitude an analysis of the short and long term electoral returns to beneficial policy dominant theories of electoral behavior emphasize that voters myopically evaluate policy performance and that this shortsightednessmayobstructthewelfare improvingeffectofdemocraticaccountability however weknowlittleabouthow long governments receive electoral credit for beneficial policies we exploit the massive policy response to a major natural disaster the 2002 elbe flooding in germany to provide an upper bound for the short and long term electoral returns to targeted policy benefits we estimate that the flood response increased vote shares for the incumbent party by 7 percentage points in affected areas in the 2002 election twenty five percent of this short term reward carried over to the 2005 election before the gains vanished in the 2009 election we conclude that given favorable circumstances policy makers can generate voter gratitude that persists longer than scholarship has acknowledged so far and elaborate on the implications for theories of electoral behavior democratic accountability and public policy

the local electoral impacts of conditional cash transfers evidence from a field experiment abstract i assess the impacts of targeted government transfers on a local incumbent s electoral performance i use the randomized roll out of a cct program in the philippines although the program was usually implemented in all villages in a municipality a subset of beneficiary municipalities were randomly selected to receive the program in a randomly selected subset of villages a number of municipalities are tightly controlled by political dynasties and thus i can test whether the effects are dependent upon the political environment in a competitive political environment incumbent vote share is 26 percentage points higher in municipalities where the program was implemented in all villages than in municipalities where the program was implemented in half of them the program had no impact in municipalities with low levels of political competition further there is evidence consistent with the argument that incumbents compensated households in control villages by redistributing their own budget there

the political economy of government responsiveness theory and evidence from india the determinants of government responsiveness to its citizens is a key issue in political economy here we develop a model based on the solution of political agency problems having a more informed an politically active electorate strengthens incentives for governments to be responsive this suggests that there is a role both for democratic institutions and the mass media in ensuring that the preferences of citizens are reflected in policy the ideas behind the model are tested on panel data from india we show that public food distribution and calamity relief expenditure are greater controlling for shocks where governments face greater electoral accountability and where newspaper circulation is highest

is there a local knowledge advantage in federations evidence from a natural experiment in economics the local knowledge advantage is arguably one of the key arguments in favor of decentralizing the public sector however empirical investigations of this particular effect have been scarce this paper tests the existence of the local knowledge advantage in a real world setting specifically it looks at the variation in local knowledge across regions based on the origins and careers of regional politicians assuming that politicians who have spent more time in a particular region possess more and better knowledge of that region than outsiders to avoid the reverse causality problem the paper investigates how local origins affected the performances of politicians in a natural experimental environment studying the responses of regional governors in russia to disastrous forest fires in 2010 we confirm that local knowledge improves gubernatorial performance in a highly centralized federation such as russia though the effect is dependent on access to federal resources obtainable through close ties to the federal center we also discuss alternative interpretations of the local origins of politicians and test whether the effects found are indeed more plausibly explained by local knowledge

ghost house busters the electoral response to a large anti tax evasion program the incentives of political agents to enforce tax collection are key determinants of the levels of compliance we study the electoral response to the ghost buildings program a nationwide anti tax evasion policy in italy that used innovative monitoring technologies to target buildings hidden from tax authorities two million buildings were registered as a result of the program our difference in differences identification strategy exploits both variation across towns in the ex ante program scope to increase enforcement as well as administrative data on actual building registrations local incumbents experience an increase in their reelection likelihood as a consequence of the policy in addition these political returns are higher in areas with lower tax evasion tolerance and with higher speed of public good provision implying complementarity among enforcement policies the underlying tax culture and government efficiency

poverty and famines an essay on entitlement and deprivation this book focuses on the causes of starvation in general and famines in particular the traditional analysis of famines is shown to be fundamentally defective and the author develops an alternative analysis

attribution error in economic voting evidence from trade shocks this article exploits the international transmission of business cycles to examine the prevalence of attribution error in economic voting in a large panel of countries from 1990 to 2009 we find that voters on average exhibit a strong tendency to oust the incumbent governments during an economic downturn regardless of whether the recession is home grown or merely imported from trading partners however we find important heterogeneity in the extent of attribution error a split sample analysis shows that countries with more experienced voters more educated voters and possibly more informed voters all conditions that have been shown to mitigate other voter agency problems do better in distinguishing imported from domestic growth jel e3 e6

learning about voter rationality we model the accountability relationship between voters and politicians to clarify what can and can t be learned about voter rationality from existing evidence from the behavior literature we make two key points first we show that evidence on the electoral consequences of natural disasters and economic shocks typically interpreted as evidence for voter irrationality is consistent with a canonical model with rational voters second we show that the evidence on the electoral consequences of disaster response typically interpreted as evidence for voter rationality is consistent with the same model with irrational voters hence neither body of evidence can adjudicate between rational and irrational voting behavior we also derive new hypotheses that can better guide future empirical work attempting to assess voter rationality

taxes subsidies and insurance as drivers of united states coastal development abstract ever increasing coastal populations in the united states and worldwide are putting growing quantities of people and property at risk due to coastal disasters at the same time poorly planned development policies and practices erode the natural capital of coastal regions eliminating existing landscape protection from intense wind and waves government tax subsidy and insurance policies can encourage or discourage particular forms of development in the u s there is no consistent set of incentives or disincentives for coastal development and many programs have ambiguous or contradictory goals federal programs are highly fragmented being administered by a variety of government agencies state and local governments can also implement policies to improve coastal disaster protection but often fail to do so in other cases state and local policies designed for local economic growth work against the goals of federal policy increasing flood damage risk while relying on federal aid once disaster does strike these programs frequently lead to perverse subsidies where economically inefficient policies degrade natural capital and foster economic inequality in this study we evaluate the existing tax subsidy and insurance structures that led to coastal development patterns on the u s gulf coast over the last sixty years and propose alternative policies that could create a more sustainable just economically efficient and storm adaptive region

the congressional bureaucratic system a principal agent perspective with applications to the sec this paper provides the theoretical perspective and empirical support for congressional dominance of agency decisions my thesis is twofold first because much of the previous evidence on this question is not evidence at all many scholars intuition and conclusions are based on a logically flawed foundation second i have provided here and in previous work a look at a variety of different agencies and in each case have shown how the events can plausibly be interpreted as involving congress agency problems within the congressional bureaucratic system are real and substantial just as they are within corporations however as in the latter institutional forms develop within the congressional system to partially if not wholly mitigate these problems the logical perspective together with the evidence provide a strong case against the agency dominance hypothesis as typified by the early sections of niskanen 1971 and wilson 1980

the political economy of fema disaster payments a central contribution of public choice theory to the analysis of government activity is in viewing the activities of government not as determined by some single altruistic dictator but rather as the result of a process involving individual political agents who react to the incentives they face federal disaster relief administered by the federal emergency management agency fema is one activity that is ripe for political influence due to the process of disaster declaration and relief after a disaster strikes a particular state the governor makes a request to the president for disaster assistance following a governor s request the president then decides whether to declare the state or region a disaster area only after a disaster has been declared by the president can disaster relief be given fema is in charge of determining the level of relief funding for the area but additional appropriations are determined by congress in cases requiring large amounts of funding beyond fema s allocated budget the act which governs the rules of federal disaster declaration and expenditures gives the president the authority to declare a disaster without the approval of congress

election or disaster support in this study i explore whether the public spending provided in response to a natural disaster is affected by upcoming elections the theory on retrospective voting argues that politicians are kept responsible by the electorate for the damage caused by a natural catastrophe at the same time voters reward government officials when they react promptly by taking actions that limit the negative consequences thus disaster support in the aftermath might not always only be provided to improve the economic situation after a disaster but also for political purposes my estimates seem to confirm this idea since roughly 10 per cent of the disaster related public spending provided in an election year is attributed to rent seeking rather than need it turns out that the existence of these election cycles can partly be explained by cross country differences for instance elections have a stronger effect in countries that are characterised by fewer checks and balances presidential system and majority elections one interesting result is that the role of media in electoral manipulation changes when a disaster has happened in the year before

attribution bias in consumer choice when judging the value of a good people may be overly influenced by the state in which they previously consumed it for example someone who tries out a new restaurant while very hungry may subsequently rate it as high quality even if the food is mediocre we produce a simple framework for this form of attribution bias that embeds a standard model of decision making as a special case we test for attribution bias across two consumer decisions first we conduct an experiment in which we randomly manipulate the thirst of participants prior to consuming a new drink second using data from thousands of amusement park visitors we explore how pleasant weather during their most recent trip affects their stated and actual likelihood of returning in both of these domains we find evidence that people misattribute the influence of a temporary state to a stable quality of the consumption good we provide evidence against several alternative accounts for our findings and discuss the broader implications of attribution bias in economic decision making

impacts of ethanol on planted acreage in market equilibrium the magnitude of land conversion caused by biofuels expansion largely determines whether biofuels reduce net greenhouse gas emissions to examine this issue we model how equilibrium changes in input use and land allocation decisions respond to market and policy induced increases in corn ethanol demand we demonstrate why total cropland area unambiguously increases with increased ethanol demand the impact of ethanol price subsidies and consumption mandates are examined in the context of technical change if ethanol demand is elastic enough an exogenous increase in corn yields leads to cropland expansion with price subsidies yield increases under consumption mandates reduce land use copyright 2010 oxford university press

the market value of variable renewables the effect of solar wind power variability on their relative price this paper provides a comprehensive discussion of the market value of variable renewable energy vre the inherent variability of wind speeds and solar radiation affects the price that vre generators receive on the market market value during windy and sunny times the additional electricity supply reduces the prices because the drop is larger with more installed capacity the market value of vre falls with higher penetration rate this study aims to develop a better understanding on how the market value with penetration and how policies and prices affect the market value quantitative evidence is derived from a review of published studies regression analysis of market data and the calibrated model of the european electricity market emma we find the value of wind power to fall from 110 of the average power price to 50 80 as wind penetration increases from zero to 30 of total electricity consumption for solar power similarly low value levels are reached already at 15 penetration hence competitive large scale renewable deployment will be more difficult to accomplish than as many anticipate

the effects of adaptation measures on hurricane induced property losses which fema investments have the highest returns abstract this paper evaluates the relative effectiveness of fema expenditures on hurricane induced property losses we find that spending on fema ex ante mitigation and planning projects leads to greater reductions in property losses than spending on ex post adaptation programs specifically a one percent increase in annual spending on ex ante risk reduction and warning projects reduces damages by 0 21 percent while a one percent increase in ex post recovery and clean up spending reduces damages by 0 12 although both types of program spending are effective we find the marginal return from spending on programs that target long term mitigation and risk management to be almost twice that of spending on ex post recovery programs with the predicted increases in the frequency and severity of north atlantic hurricanes in the future our findings suggest there are important potential gains that could be realized from the further diversification of fema spending across project categories

does the samaritan s dilemma matter evidence from u s agriculture the samaritan s dilemma posits a downside to charity recipients may rely on free aid instead of their own efforts anecdotally the expectation of free assistance is thought to be important for decisions about insurance and risky behavior in numerous settings but reliable empirical evidence is scarce we estimate whether the samaritan s dilemma exists in u s agriculture where both private crop insurance and frequent federal disaster assistance are present we find that bailout expectations are qualitatively and quantitatively important for the insurance decision furthermore aid expectations reduce both expenditure on farm inputs and subsequent crop revenue jel d72 h84 q18

can extreme rainfall trigger democratic change the role of flood induced corruption using a new dataset of extreme rainfall covering 130 countries from 1979 to 2009 this paper investigates whether and how extreme rainfall driven flooding affects democratic conditions our key finding indicates that extreme rainfall induced flooding exerts two opposing effects on democracy on one hand flooding leads to corruption in the chains of emergency relief distribution and other post disaster assistance which in turn impels the citizenry to demand more democracy on the other hand flooding induces autocratic tendencies in incumbent regimes because efficient post disaster management with no dissent chaos or plunder might require government to undertake repressive actions the net estimated effect is an improvement in democratic conditions

strategic behavior by federal agencies in the allocation of public resources how do government agencies allocate program resources some authors presume that agencies seek to maximize program objectives others suggest agencies favor the districts important to the president s election in addition agencies may distribute larger program resources to those districts whose congressional representatives are best positioned to help the agency we examined how federal government agencies responded both to the 2006 election when control of congress shifted from the republican to the democratic party and to the 2010 election when the house switched from democratic to republican control we used a difference in difference analysis to evaluate the impact of each election on the agencies allocations of contracts agencies generally responded to the elections by allocating more contract resources to districts represented by the winning party however federal agencies reacted differently to changing political environments depending on the characteristics of the agency for example after the 2006 election those agencies with programs favored by republican members of congress allocated more resources to democratic districts these republican agencies presumably are the most vulnerable to the risk of losing future appropriations democratic agencies and neutral agencies facing no significant threats to their appropriations did not respond to the election as strongly finally more vulnerable districts received the most support especially by the republican agencies we reaffirmed these results by using the 2010 congressional elections in which the political orientations of the districts favored with more contract distributions was reversed

explaining the oil advantage effects of natural resource wealth on incumbent reelection in iran why does natural resource wealth prolong incumbency using evidence from parliamentary elections in the islamic republic of iran the author shows that natural resource revenues boost incumbent reelection rates because they are used to provide public or private goods to constituents which incentivizes voters to reelect incumbents over challengers to test this hypothesis the author employs originally assembled data on five parliamentary elections in iran 1992 2008 in longitudinal hierarchical regression analyses at the district and province levels by leveraging iran s mixed member electoral system he shows that the resource incumbency mechanism works primarily in single member districts with little evidence of an incumbency advantage for politicians in resource rich multimember districts building on the rentier theory of natural resource wealth the results suggest that voting for the incumbent is attributable to patronage and public goods distribution the findings offer new insights into the understudied context of iranian legislative elections illustrate the mechanisms driving the relationship between resource wealth and incumbency advantage at the subnational level in a nondemocratic setting and highlight the mediating effects of electoral institutions on the resource incumbency relationship

presidential elections and federal reserve policy an empirical test traditional macro economic models of federal reserve fed behavior typically assume that the fed enjoys a well defined objective function based on social welfare and generally predict counter cyclical monetary policy the increasing observation of procyclical monetary policy has led many researchers to investigate new models of fed behavior several recent papers imply that procyclical fed behavior is due to a lack of political accountability friedman 7 toma 23 and shughart and tollison 21 all attribute considerable bureaucratic discretion to the fed and seek to explain monetary policy by examining typical bureaucratic objectives other papers such as pierce 19 20 weintraub 26 and kane 10 11 argue that the fed operates in an arena filled with political constraints that cause sub optimal monetary policy but these constraints are not modeled explicitly one possible political constraint on fed behavior is the incumbent president s desire for re election in the political business cycle pbc literature presidential re election opportunities are enhanced by the production of a precise set of inflation and unemployment outcomes leading up to the election thus to the extent that presidents desire cyclical macro economic outcomes there will be executive pressure on the fed to create or accommodate such outcomes the effect this pressure will have on fed policy is ultimately an empirical question but most models deal with it by assumption traditional macro modeling assumes a zero effect while the pbc models implicitly assume that a favorable election cycle is a primary goal of all economic policymakers this paper examines presidential influence on the federal reserve by testing for an election cycle in money growth the major result is the identification of a regular 16 quarter cycle in money growth corresponding with presidential elections this cyclical effect is found to be stable over time and significant under a wide range of model specifications further when the cyclical component of money growth is used to simulate a simple macro model it produces a classic political business cycle in inflation and real output growth

selling labor low wage responses to productivity shocks in developing countries productivity risk is pervasive in underdeveloped countries this paper highlights a way in which underdevelopment exacerbates productivity risk productivity shocks cause larger changes in the wage when workers are poorer less able to migrate and more credit constrained because of such workers inelastic labor supply this equilibrium wage effect hurts workers in contrast it acts as insurance for landowners agricultural wage data for 257 districts in india for 1956 87 are used to test the predictions with rainfall as an instrument for agricultural productivity in districts with fewer banks or higher migration costs the wage is much more responsive to fluctuations in productivity

voting on the budget deficit this paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending all voters agree that a balanced budget is ex ante optimal however if there is disagreement between current and future majorities a balanced budget is not a political equilibrium under majority rule under certain conditions a majority of the voters favors a budget deficit and the equilibrium deficit is larger the greater is the polarization among voters copyright 1990 by american economic association

exogenous shocks and democratic accountability evidence from the caribbean this study attempts to contribute to the growing debate over democratic accountability by focusing on the electoral impact of natural disasters and economic crises in the caribbean although largely ignored by political science the polities in the region share a long history of democratic governance as well as extreme vulnerability to adverse weather conditions and global economic fluctuations the caribbean thus offers unusually fertile opportunities for research on the capacity of voters to make rational electoral decisions two key questions are addressed first to what extent do citizens of the caribbean punish incumbents for exogenous economic and climatic shocks second what factors if any help to insulate democratic leaders from blame for conditions largely outside their control contrary to recent research on natural disasters and economic downturns in other contexts the analysis provides no evidence that voting in the caribbean has been characterized by systematic attribution errors or elec

political cycles in a developing economy effect of elections in indian states the author studies the effect of state legislative assembly elections on the policies of state governments in 14 major states of india from 1960 to 1996 she identifies the effect of the timing of elections using an instrument for the electoral cycle that distinguishes between constitutionally scheduled elections and midterm polls she contrasts two levers of policy manipulation fiscal policy and public service delivery to distinguish between alternative models of political cycles the predictions of three models are tested 1 populist cycles to woo uninformed and myopic voters 2 signaling models with asymmetric information 3 a moral hazard model with high discounting by political agents the empirical results for fiscal policy show that election years have a negative effect on some commodity taxes a positive effect on investment spending but no effect on deficits primarily because consumption spending is reduced with regard to public service delivery elections have a positive and large effect on road construction by state public works departments strikingly the fiscal effects are much smaller than the effect on roads the author argues that the pattern of evidence is inconsistent with the predictions of models of voter myopia and asymmetric information she explores an alternative moral hazard model in which the cycle is generated by high political discounting and career concerns persuade politicians to exert greater effort in election years on the management of public works

three dilemmas of environmental accounting abstract economist during the past two decades have tried to logically extended the system of national accounts to include the value of resources environmental systems and their services alternative proposals for improving the accounts have been extensively debated but no agreement has been reached the debate has been fueld by a false implicit belief among the participants that there is one best way to understand how economies interrelate with environmental systems the falsity is exposed through the elaboration of irresolvable dilemmas rather than trying to agree on a single approach the alternative strategy of experimenting with many approaches is espoused the development and use of multiple approaches would be scientifically more rigorous and more likely fail safe

opportunistic political cycles test in a young democracy setting this paper tests the theory of opportunistic cycles in a decade old democracy russia finds strong evidence of cycles and provides an explanation for why previous literature often found weaker evidence using regional monthly panel data we find that 1 the budget cycle is sizable and short lived public spending shifts toward direct monetary transfers to voters 2 the magnitude of the cycle decreases with democracy government transparency media freedom voter awareness and over time and 3 preelectoral manipulation increases incumbents chances for reelection the short length of the cycle explains underestimation of its size by previous literature because of low frequency data used in previous studies

sources of bias in retrospective decision making experimental evidence on voters limitations in controlling incumbents are citizens competent to assess the performance of incumbent politicians observational studies cast doubt on voter competence by documenting several biases in retrospective assessments of performance however these studies are open to alternative interpretations because of the complexity of the real world in this article we show that these biases in retrospective evaluations occur even in the simplified setting of experimental games in three experiments our participants 1 overweighted recent relative to overall incumbent performance when made aware of an election closer rather than more distant from that event 2 allowed an unrelated lottery that affected their welfare to influence their choices and 3 were influenced by rhetoric to give more weight to recent rather than overall incumbent performance these biases were apparent even though we informed and incentivized respondents to weight all performance equally our findings point to key limitations in voters ability to use a retrospective decision rule

the political economy of the essential air service program we find that congressional influences affect the amount of airport subsidies that a congressional district receives through the essential air service eas program the eas program was passed with the goal of helping to continue commercial air service to rural communities following deregulation in the 1970s using data from 1998 2014 we find strong and consistent evidence that subsidies are higher in districts having congressional representation on the house transportation and ways and means committees our empirical results when combined with news reports of members claiming credit for securing eas funding are consistent with the eas serving private and public interests

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

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive

the impact of federal spending on house election outcomes while it is widely believed by academics politicians and the popular press that incumbent members of congress are rewarded by the electorate for bringing federal dollars to their district the empirical evidence supporting that claim is extremely weak one explanation for the failure to uncover the expected relationship between federal spending and election outcomes is that incumbents who expect to have difficulty being reelected are likely to exert greater effort in obtaining federal outlays since it is generally impossible to adequately measure this effort the estimated impact of spending is biased downward because of an omitted variable bias we address this estimation problem using instrumental variables for each house district we use spending outside the district but inside the state containing the district as an instrument for spending in the district federal spending is affected by a large number of actors e g governors senators mayors and other house members in the state delegation

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item