media scrutiny and the quality of public officials i investigate whether attempts by the media to determine a candidate s fitness for office lowers the average quality of public officials what i call the media scrutiny paradox media scrutiny imperfectly signals heterogeneous candidates type but imposes privacy costs and reputational costs on politicians the quality of office holders falls if the selection effect is adverse and outweighs the screening effect a low quality information signal which could result if the media focus on irrelevant aspects of behavior makes the screening effect small and the media paradox more likely to hold individuals of good character might invest more in their reputation and have more at stake from being falsely identified as a rapscallion the actual malice standard established in new york times v sullivan likely increased relatively the cost of candidacy for good people and lowered the quality of officials

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

electoral outcomes with probabilistic voting and nash social welfare maxima abstract this paper provides unexpected support to nash s view of how bargaining determines the social choice we first present a spatial model of electoral competition with probabilistic voting and a very close relation between voters preferences and their choice probabilities the outcome of the electoral competition game is then shown to be precisely the social alternative that maximizes a nash type social welfare function theorem 1 this electoral outcome is also interpreted as a unanimity likelihood maximum corollary 1 within our framework existence and uniqueness of such an outcome are guaranteed corollaries 2 and 3

multiparty electoral competition in the netherlands and germany a model based on multinomial probit a typical assumption of electoral models of party competition is that parties adopt policy positions so as to maximize expected vote share here we use euro barometer survey data and european elite study data from 1979 for the netherlands and germany to construct a stochastic model of voter response based on multinomial probit estimation for each of these countries we estimate a pure spatial electoral voting model and a joint spatial model the latter model also includes individual voter and demographic characteristics the pure spatial models for the two countries quite accurately described the electoral response as a stochastic function of party positions we use these models to perform a thought experiment so as to estimate the expected vote maximizing party positions we go on to propose a model of internal party decision making based both on pre election electoral estimation and post election coalition bargaining this model suggests why the various parties in the period in question did not adopt vote maximizing positions we argue that maximizing expected vote will not in general be a rational party strategy in multiparty political systems which are based on proportional representation

bureaucrats or politicians part ii multiple policy tasks abstract policies are typically chosen by politicians and bureaucrats this paper investigates first the normative criteria with which to allocate policy tasks to elected policymakers politicians or non elected bureaucrats politicians are preferable if there is uncertainty about social preferences and flexibility is valuable or if policy complementarities and compensation of losers is important bureaucrats are preferable if time inconsistency and short termism is an issue or if vested interests have large stakes in the policy outcome we then compare this normative benchmark with the case in which politicians choose when to delegate and show that the two generally differ

setting the agenda electoral competition commitment of policy and issue salience by committing policy an incumbent in effect disowns an issue when she maintains policy flexibility the issue remains electorally salient electoral competition shapes political commitment decisions and collapses the multi dimensional issue space into a low dimensional space of electorally salient issues

macroeconomic policy in a two party system as a repeated game this paper considers the interaction of two parties with different objectives concerning inflation and unemployment and rational and forward looking wage setters if discretionary policies are followed an economic cycle related to the political cycle results in equilibrium this cycle is significantly different from the traditional political business cycle reputational mechanisms due to the repeated interaction of the two parties and the public or commitments to a common policy rule can improve upon the discretionary outcome by reducing or eliminating the magnitude of the economic fluctuations

extremism campaigning and ambiguity this paper studies a model of how political parties use resources for campaigning to inform voters each party has a predetermined ideology drawn from some distribution parties choose a platform and campaign to inform voters about the platform we find that the farther away parties are from each other on average the less resources are spent on campaigning on average thus if parties are extreme less information is supplied than if parties are moderate we also show that if a public subsidy is introduced we have policy convergence given some mild technical restrictions on the public subsidy

corporate campaign contributions repeat giving and the rewards to legislator reputation abstract are politicians who follow a strategy of reputational development rewarded with high levels of corporate campaign contributions reputational clarity could help to reduce uncertainty about a candidate and lead to greater campaign contributions from favored interests alternatively such clarity could alienate those who disagree and prevent the politician from obtaining contributions from groups on both sides of an issue we outline an approach that considers conditions under which a politician would or would not prefer reputational development and policy stance clarity and consistency in the context of repeat dealing with special interests our proxy for reputational development is the percentage of repeat givers to a legislator using data on corporate political action committee pac contributions to members of the u s house during the seven electoral cycles from 1983 84 to 1995 96 we explore a variety of alternative hypotheses and find that greater reputational development is rewarded with g

the role of energy in real business cycle models abstract this paper modifies hansen s 1985 analysis of a real business cycle mode with indivisible labor by explicitly including energy as a productive input and modelling the relative price of energy as an exogenous random process one goal is to determine the extent to which the introduction of energy price shocks reduces the reliance of the real business cycle model on unobserved technology shocks the other goal following christiano and eichenbaum 1991 is to compare the correlation between real wages and hours predicted by the energy inclusive model to that predicted by hansen s model

two round elections one round determinants evidence from the french municipal elections using a new database of french municipalities that covers 821 towns and two elections 2001 and 2008 we examine how the budget structure degree of electoral competition and the economic context affect the share of votes for the incumbent we take into account the institutional details of the two round structure of the electoral process created by french electoral rules dual ballot under plurality rules we show that in the first round of the electoral process spending on equipment including infrastructures can influence the voter and that electoral competition has a strong impact on the incumbent s score in the second round the incumbent s vote is affected more by national considerations and local budget variables have no effect we show that the dynamics between the first and the second rounds are intense the results suggest that the determinants of each round s outcome in a two round electoral process are different

electoral competition with uncertainty averse parties abstract the non existence of equilibria in models of electoral competition involving multiple issues is one of the more puzzling results in political economics in this paper we relax the standard assumption that parties act as expected utility maximizers we show that equilibria often exist when parties with limited knowledge about the electorate are modeled as uncertainty averse what is more these equilibria can be characterized as a straightforward generalization of the classical median voter result

why only nixon could go to china right wing politicians sometimes can implement policies that left wing politicians cannot and vice versa contemporary wisdom has it that only nixon could have gone to china we develop a model to explain this phenomenon a policy issue could depend on information on which every one could potentially agree on policy or on values on which agreement is impossible politicians who value both reelection and policy outcomes realize the nature of the issue whereas voters do not only a right wing president can credibly signal the desirability of a left wing course of action the nixon paradox can hold then if citizens vote retrospectively on the issue

multicandidate equilibrium in american elections the united states presidential election of 1992 is anexample of a multicandidate contest involving bothdemocratic and republican candidates using a spatialmodelling approach i analyze candidate policystrategy for such elections under the assumption thatvoters choose according to the multivariate votingmodel of behavioral research this model representsvoters decisions as probabilistic functions of theirpolicy preferences and political partisanship isuggest reasons why partisan voting motivatescandidates to locate near their party s partisans inthe policy space and illustrate this argument withrespect to the 1992 presidential election the resultsof computer simulations suggest that these motivationslead to multicandidate spatial equilibria which arerobust to changes in the model s parameters partisanship appears to be an important source ofstability in multicandidate electoral competition

salience agenda choices by competing candidates which issues are discussed by candidates in an election campaign why are some issues never discussed model tractability is lost quickly when dealing with these questions partly because of the multidimensional voting inherent in models of multiple issues our model features two candidates for office who can talk about any subset of issues allowing uncertainty both on the part of voters and candidates and taking candidates to be office motivated candidates move first and simultaneously announcing any positions they choose on any issues to us salience is simply the discussion of an issue in a campaign if both candidates and voters are expected utility maximizers we find salience results in that candidates typically want to talk about everything or they are indifferent between talking and nonsalience leaving the expected utility framework we present an example using knightian uncertainty or maxmin expected utility with multiple priors of gilboa schmeidler to illustrate how robust nonsalience and salience of issues might be generated

an amplification mechanism in a model of energy this paper investigates a propagation mechanism of the energy price shock in a model where capital utilization is associated with costly energy consumption endogenous depreciation is an important element of the model as it has been shown to produce a significant negative effect of energy prices on output i show that the amplifying effect of endogenous depreciation is determined by the choice of the functional form and calibration strategy for the energy cost function my estimates of the energy cost function allow to conclude that the energy price shock has only a moderate effect on output in this model while endogenous depreciation mitigates rather than amplifies the effect of the energy price shock

elections and the strategic use of budget deficits we present a model in which a conservative incumbent with preferences for low public spending can strategically run a budget deficit to prevent the left wing opposition candidate from choosing high public spending if elected and possibly also to ensure his own reelection we find that the incumbent never manipulates the opposition candidate s public spending if he can ensure his own reelection and that a conservative incumbent who runs a budget deficit to ensure his reelection may somewhat paradoxically choose high public spending before the election

imperfect competition and the effects of energy price increases on economic activity the authors show that modifying the standard neoclassical growth model by assuming that competition is imperfect makes it easier to explain the size of the declines in output and real wages that follow increases in the price of oil plausibly parameterized models of this type are able to mimic the response of output and real wages in the united states the responses are particularly consistent with a model of implicit collusion where markups depend positively on the ratio of the expected present value of future profits to the current level of output copyright 1996 by ohio state university press

the politics of persuasion when voters are rational a democratic society is considered where the voters but not the politicians are uncertain about how the economy works the parties therefore have a strategic motive to misinform the voters will the voters learn how the economy works and will the policy decisions be efficient it turns out that the degree of polarization of the political parties is crucial if the parties are very polarized voters will not trust the parties and the policy will not reflect how the economy actually works whereas the opposite is true if the parties are less polarized

globalization and the changing logic of collective action globalization transforms collective action in domestic and international politics as the scale of markets widens and as economic organization becomes more complex the institutional scale of political structures can become insufficient for the provision of an appropriate range of public goods a process of this sort occurred prior to the emergence of the modern nation state which itself constituted a paradigmatic response to this predicament today however a complex process of globalization of goods and assets is undermining the effectiveness of state based collective action overlapping playing fields are developing made up of increasingly heterogeneous transnational local and intermediate arenas the residual state retains great cultural force and innovative projects for reinventing government are being tried nevertheless the state s effectiveness as a civil association has eroded significantly and this may lead to a crisis of legitimacy

divide et impera strategic underpricing in privatizations in several recent initial public offerings in privatization casesshares seemed to be severely underpriced in this paper weprovide a political economy explanation for this apparentunderpricing using a variant of grossmann and helpmann s 1996 model of special interest politics we demonstrate thatgovernments may raise their election chances by rationinginvestors because the resulting broader distribution of sharesmakes regulation that is favorable to the privatized firm morepopular somewhat surprisingly even revenues from theprivatization can be increased through rationing the model alsoexplains the common practice of bonus systems designed to preventinvestors from taking profits immediately

redistributive politics and economic efficiency the political process often compensates the losers from technical change or international competition in an economically inefficient way namely by subsidizing or protecting declining industries instead of encouraging the movement of resources to other more productive uses we find that a dynamic inconsistency in the game of redistributive politics contributes to this outcome to achieve economically efficient outcomes it is necessary that those making economically inefficient choices not be given offsetting transfers but the political process distributes income on the basis of political characteristics which are in general different from the economic characteristics that are rewarded by the market we identify circumstances in which the inefficient choosers have desirable political characteristics and are therefore immune from threats of having to face the economic consequences of their choices

public support to innovation and imitation in a non scale growth model abstract this paper studies technology policy within a version of jones s 1995 r d based models of economic growth journal of political economy 103 759 784 non scale r d based growth framework that incorporates imitation of foreign techniques in the model imitation is the most important source of productivity growth at the beginning of the convergence process whereas innovation dominates later on in addition the transitional dynamics of the model can account for well known empirical regularities regarding the relationship between the level of economic development and public support to technology innovation and imitation the paper shows as well that even though policy in jones type non scale models has no long run growth effects level effects can be substantial

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

behavioral and institutional determinants of political business cycles the link between business cycles and the democratic politicalsystem has long been recognized by economists however thedeterminants of political business cycles are not well understood we discuss several institutional and behavioral determinants ofthose cycles such as revolving door appointments term limits andpreferences of the incumbent politician electorate and businesscommunity concerning the intertemporal pattern of publicexpenditure we show how they affect the cycle s amplitude in thecontext of a rational expectations model

a comparison of prospective and retrospective voting with heterogeneous politicians a long standing empirical literature has been concerned with determining whether voters vote prospectively or retrospectively despite this interest little is known about the consequences of one voting regime versus another this study addresses this deficiency we find that voter welfare can be greatly affected by the candidate selection technique employed by voters among other findings we show that electing the best candidate does not always maximize voter welfare furthermore myopic voting is sometimes superior to farsighted voting these findings have implications for interpretations of empirical studies of voter behavior

monetary policy delegation and polarisation there is by now a comprehensive literature beginning with rogoff 1985 arguing that a government should delegate monetary policy to a central banker who is independent and more conservative than the government itself this will reduce the inflationary bias typically at the cost of stabilisation for a democratic society this result would suggest that the median voter should prefer that monetary policy is delegated to an independent central banker who is more conservative than herself typically the central banker is chosen by the government and the government is chosen by the electorate thus there is some albeit perhaps a weak link between the preferences of the electorate and the central banker although the central banker presumably should be chosen for a long period of time waller and walsh 1996 he has to be chosen at some point in time this paper contains a political economy model where the central issue in politics is the choice of central banker and

how cynical can an incumbent be strategic policy in a model of government spending abstract when parties with different preferences compete for election strategic manipulation of state variables for electoral purposes can occur even with rational voters this paper presents a model in which government resources can be used productivity for the benefit of everybody or unproductively for the benefit of the ruling party s constituency a government more inclined to unproductive spending may choose to collect public resources inefficiently in order to produce the importance of spending decisions in the election the model highlights the strategic role of policy decisions that affect incentives and constraints faced by future governments and their impact on election results

policy biases with voters uncertainty about the economy and the government abstract we model policy choices where parties competing for election are better informed than voters about the state of the economy in addition voters are uncertain about the incumbent s preferences and the median voter s vote potentially depends on the state of the economy the incumbent may bias his policy in order to convey information to the voters and raise his chance of reelection the bias depends crucially on which kind of uncertainty is the most important uncertainty about preferences leads to moderate policies while uncertainty about the state of the economy leads to extreme policies

an information rationale for the power of special interests political decisions are often biased in favor of special interests at the expense of the general public and they are frequently inefficient in the sense that the losses incurred by the majority exceed the gains enjoyed by the minority this article explains the bias in terms of information asymmetries and the free rider problem first incumbents increase their reelection prospects by biasing policy toward groups that are better able to monitor their activities second because smaller groups are better able to overcome the free rider problem of costly monitoring policy will be biased in their favor third the effect of asymmetric monitoring on voter welfare is ambiguous the inefficiencies created by the policy bias are offset by a positively valued selection bias incumbents of above average quality are more likely to survive voter scrutiny than are low quality types

partisan conflicts and parliamentary dominance the norwegian political business cycle this is the author s final accepted and refereed manuscript to the article the final publication is available at www springerlink com

war politics an economic rational voter framework the frequency of foreign conflict initiations in the united states is found to be significantly greater following the onset of recessions during a president s first term than in other periods the authors develop an economic theory of the political use of wars which links the election cycle war decisions and economic performance consistent with the observed relationships among these events an incumbent leader with an unfavorable economic performance record may initiate a war to force the learning of his war leadership abilities and thus salvage with some probability his reelection this obtains despite voter rationality and informational symmetry copyright 1995 by american economic association

three candidate spatial competition when candidates have valence stochastic voting we study the effects of stochastic probabilistic voting on equilibrium locations equilibrium vote shares and comparative statics in a setup with three heterogeneous candidates and a single dimensional issue space comparing the equilibria with and without stochastic voting we find that under an appropriate level of uncertainty about voter behavior the model has a pure strategy nash equilibrium psne that is free from several non plausible features of the psne under deterministic voting this result is robust to extensions to asymmetric density and plurality maximization

factor hoarding and the propagation of business cycles shocks this paper analyzes the role of variable capital utilization rates in propagating shocks over the business cycle to this end we formulate and estimate an equilibrium business cycle model in which cyclical capital utilization rates are viewed as a form of factor hoarding we find that variable capital utilization rates substantially magnify and propagate the impact of shocks to agents environments the strength of these propagation effects is evident in the dynamic response functions of various economy wide aggregates to shocks in agents environments in the statistics that we construct to summarize the strength of the propagation mechanisms in the model and in the volatility of exogenous technology shocks needed to explain the observed variability in aggregate u s output other authors have argued that standard real business cycle rbc models fail to account for certain features of the data because they do not embody quantitatively important propagation mechanisms these features include the observed positive serial correlation in the growth rate of output the shape of the spectrum of the growth rate of real output and the correlation between the forecastable component of real output and various other economic aggregates allowing for variable capital utilization rates substantially improves the ability of the model to account for these features of the data

motives and competitive assets for internationalization a comparison between emerging and developed economy international construction contracting firms this study aims to evaluate the differences in the internationalization of emerging and developed economies firms using an integrated theoretical approach this paper examines the motives and comp

the economics and politics of the structure of public expenditure the paper derives a complete system ofdemand equations for public consumptionexpenditures as the outcome of rationalbehaviour in a model where governmentmaximizes expected electoral support theallocation of expenditures is found todepend not only on the prices of publicservices and total expenditure and tosatisfy the constraints of demand theory which have been the focus of attention ofprevious empirical studies of theallocation of public expenditures but inaddition on the prices of privateconsumption goods the distribution ofvoter incomes and the expected change invoter support from varying the levels ofpublic provision

equilibrium in multicandidate probabilistic spatial voting this paper presents a multicandidate spatial model of probabilistic voting in which voter utility functions contain a random element specific to each candidate the model assumes no abstentions sincere voting and the maximization of expected vote by each candidate we derive a sufficient condition for concavity of the candidate expected vote function with which the existence of equilibrium is related to the degree of voter uncertainty we show that under concavity convergent equilibrium exists at a minimum sum point at which total distances from all voter ideal points are minimized we then discuss the location of convergent equilibrium for various measures of distance in our examples computer analysis indicates that non convergent equilibria are only locally stable and disappear as voter uncertainty increases

a political theory of populism when voters fear that politicians may have a right wing bias or that they may be in uenced or corrupted by the rich elite signals of true left wing conviction are valuable as a consequence even a moderate politician seeking reelection chooses populist policies i e policies to the left of the median voter as a way of signaling that he is not from the right truly right wing politicians respond by choosing more moderate or even left of center policies this populist bias of policy is greater when the value of remaining in o ce is higher for the politician when there is greater polarization between the policy preferences of the median voter and right wing politicians when politicians are indeed more likely to have a hidden right wing agenda when there is an intermediate amount of noise in the information that voters receive when politicians are more forward looking and when there is greater uncertainty about the type of the incumbent we show that similar results apply when some politicians can be corrupted or in uenced through other non electoral means by the rich elite we also show that soft term limits may exacerbate rather than reduce the populist bias of policies

why a stubborn conservative would run a deficit policy with time inconsistent preferences a conservative government in favor of a low level of public consumption knows that it will be replaced by a government in favor of a larger level of public consumption we show that the resulting level of public consumption is in between the levels the two governments would choose if each were in power both in the present and in the future in particular we show that if the conservative government is more stubborn in a particular sense than the succeeding government the conservative government will borrow more than it would had it remained in power in the future

random errors dirty information and politics rational voters assessments of candidates and policy proposals are unbiased but affected by random errors clean information decreases these errors while dirty information increases them in politics most voting procedures weigh random individual errors asymmetrically thus such errors do not counterbalance one another in the aggregate they systematically affect politics this illuminates the roles of political propaganda and interest groups it helps to explain various puzzles in public choice e g the frequent use of inefficient policy instruments institutional conditions are identified that shape the aggregate impact of individual errors and the politicians incentives to produce dirty information

evolutionary voter sophistication and political business cycles the concept of the sophisticated electorate is central to many contemporary political economic models however no existing studies have yet clarified how voters could develop a sophisticated way of evaluating economic performance this study suggests a transitional hypothesis that removes the constraint that voters have prior knowledge about the macroeconomic environment and the true economic intent of the incumbent government the hypothesis permits behavioral innovation from learning and predicts that the evolutionary process toward sophistication may be triggered by socially suboptimal political business cycles that reveal the self serving characteristic of the government the empirical analyses using recent japanese experiences show that japanese political support behavior shifted from naivete to sophistication in the early 1970s after political manipulation occurred in the 1969 and 1972 parliamentary elections

the politics of ambiguity politicians face a trade off between the policies that maximize their chances of reelection and their most preferred policies or the policies most preferred by the constituency which they represent this paper analyzes this trade off in a dynamic electoral model in which the voters are not fully informed about the preferences of the incumbent first we show that the incumbent follows a policy which is intermediate between the other party s ideal policy and his own ideal policy second we show that often the incumbent has an incentive to choose procedures which make it difficult for voters to pinpoint his preferences with absolute precision thus politicians may prefer to be ambiguous

politicians decision making with re election concerns abstract we study the impact of elected officials re election concerns on their decisions on whether to undertake new projects the value of a project to a jurisdiction depends in part on its elected official s uncertain ability at providing some public goods our main result is that the elected official s willingness to pay for the project differs from voters willingness to pay if the incumbent official expects to lose win the election then she is willing to pay more less than the project s total value to voters we show how our analysis can be applied to bidding wars among jurisdictions for firms

the disadvantage of tying their hands on the political economy of policy commitments incumbents are more likely to be re elected if they have a comparative advantage in the eyes of voters on some central issue this paper argues that incumbents have an incentive to avoid reforms that reduce the government s role in deciding these issues in order to increase their chances of re election this point is illustrated in the context of the choice of an exchange rate regime in an economy characterized by an inflation bias a flexible exchange rate allows the government to use monetary policy as a stabilization tool while fixed exchange rates remove the inflation bias of the economy on the one hand it is shown that a more inflation averse government may refrain from choosing fixed exchange rates in order to capitalize on the inflationary reputation of its opponent this incentive is contrasted with the opposite incentive to tie the hands of the future government should be incumbent be defeated on the other hand it is shown that electoral considerations may reinforce the incentive of the more inflationary government to tie its own hands with fixed exchange rates

out of africa locational determinants of south african cross border mergers and acquisitions abstractsouth africa is the africa s biggest source of outward foreign direct investment this study examines the principal locational motives of cross border mergers and acquisitions cbma by south african firms for the 1990 2014 period the role of inter country cultural and economic linkages is also studied firm level data of south african merger and acquisition activities in 74 host countries are used to estimate a number of model specifications that control for host country economic geographical cultural and institutional characteristics estimations are carried out using random effects negative binomial panel model capturing the host economy market and enhancing efficiency are found to be the two major motives driving south african corporations cbma activities natural resources acquisition seems a less important motive while strategic assets such as patents and technology do not appear to be attractive the role of cultural and economic linkages between the home and the host country is found t

why doesn t society minimize central bank secrecy i introduction central banks have repeatedly revealed a preference for secrecy in conducting monetary policy in the united states for example the federal reserve has expressed its bias towards policy secrecy in a number of ways ranging from delays in releasing the minutes of federal open market committee fomc meetings to ambiguous policy statements at congressional hearings 1 nevertheless the degree of disclosure required by congress and the court system does not appear to minimize central bank secrecy indeed the fed s right to limit disclosure of policy intentions was upheld in a recent supreme court case 2 furthermore similar social tolerance of central bank secrecy appears in the banking institutions of other countries since legal and social institutions allow for central bank secrecy its presence may be attributed to the preferences of the social planners who designed these institutions in the first place forward looking planners know that monetary policy in future periods will be the outcome of a symbiotic relationship between monetary authorities politicians and private interest groups 3 as the relative importance of these different groups and their preferences change over time so will the policy objectives of the monetary authorities if secrecy is allowed monetary authorities could effect policy changes in response to relationship changes without immediate detection by private markets recognizing this policy effect of secrecy a social planner would design institutions to affect the environment so that desirable future policy formation takes place 4 this paper offers two explanations for why social institutions do not legally minimize central bank secrecy 5 first when establishing institutional disclosure requirements for central banks social planners recognize the tendency for central bankers to be secretive this secrecy imposes costs upon members of society by making shifts in policy objectives more difficult to detect faced with this tendency members of society set legal institutions that appear to require less disclosure because more restrictive laws would induce central bankers to become more secretive in other less informative ways 6 second if the policy objectives that society finds desirable change over time then members of society may directly prefer some degree of central bank secrecy economic theory holds that unanticipated changes in monetary policy can have an economic effect intuitively secrecy allows central banks to conduct unanticipated policy actions in periods when on average society most prefers them for example in periods when public opinion favors pushing down unemployment central banks may conduct a surprise monetary expansion 7 the paper develops examples of each of these two effects using a discretionary equilibrium similar to that in cukierman and meltzer 1986a the desired trade off between two policy objectives changes over time in response to changing political pressures although i use the trade off between output and inflation as an example the basic results hold with any policy trade off that varies over time the policy objectives could include targets for real exchange rates or interest rates for instance the plan of the paper is as follows section ii describes the discretionary equilibrium given institutional settings for the conduct of monetary policy sections iii and iv describe examples of each of the two explanations for secrecy described above concluding remarks follow ii the degree of policy disclosure in a discretionary equilibrium when the policy objectives of the monetary authorities shift over time due to changing economic or political circumstances their choice of discretionary policy also shifts 8 in the absence of a mechanism to pre commit to a particular policy rule the authorities will implement policy changes

wait and see strategy risk management in the internationalization process model we interpret the wait and see strategy as a decision to maintain unchanged the firm s commitments to its business network relationships to explain why firms choose a wait and see strategy we propose an extension to the relationship commitment decisions aspect of the uppsala internationalization process ip model with this development we explain that the wait and see strategy can result from a change in the levels of risk assumed in the firm and not only from the decision to adjust the risk that the firm encounters by changing commitments to its network relationships this development enhances the ability of the ip model to accommodate contextual influences on relationship commitment decisions and to explain a more complete suite of internationalization trajectories extending the theoretical core of the ip model further confirms its efficacy its application to international strategy and its potential to be developed as a general process model of strategic change

context dependent voting and political ambiguity abstract in recent decades psychologists have shown that the standard model of individual choice is often violated one regularly observed violation is that choices are influenced by the decision context to incorporate these effects into politics we introduce a theory of context dependent voting and apply it to the puzzle of why candidates are so frequently ambiguous in their policy pronouncements we show that context dependent voters develop a taste for ambiguity even when they evaluate distances quadratically and exhibit traditional risk aversion turning to aggregate effects we incorporate context dependent voting into a model of electoral competition and show that strategic candidates respond in equilibrium to context dependent voters by offering ambiguous platforms thereby affecting the policy outcome

electoral ambiguity and political representation we introduce a downsian model in which policy relevant information is revealed to the elected politician after the election the electorate benefits from giving the elected politician discretion to adapt policies to his information but limits on discretion are desirable when politicians do not share the electorate s policy preferences optimal political representation generally consists of a mixture of the delegate no discretion and trustee full discretion models ambiguous electoral platforms are essential for achieving beneficial representation nevertheless electoral competition does not ensure optimal representation the winning candidate s platform is generally overly ambiguous while our theory rationalizes a positive correlation between ambiguity and electoral success it shows that the relationship need not be causal

the political economy of inaction abstract this paper develops a simple model of political inaction in a two party democracy i e it shows the conditions under which both parties will prefer to live with an unsatisfactory and inefficient status quo rather than to raise an issue the risk of raising the issue to either party is the fear of ending up with the other party s policy for example by losing the electron regarded as even worse than the status quo the model shows that the problem is likely to be particularly serious the more evenly matched is political competition the more risk averse the parties the less voters trust the parties the more divided is public opinion and the more important the issue the model is illustrated with a number of examples of real world inaction e g on fiscal deficits abortion the transition to socialism and the fall of the weimar republic in general the analysis also suggests that over a range more representation of political viewpoints implies a smaller likelihood of political action so that democracy implies a tradeoff between representation and the capacity for political action

meyer and peng s 2005 article as a foundation for an expanded and refined international business research agenda context organizations and theories in this commentary we provide an assessment of the jibs decade award winning article by meyer and peng and its impact on the field of international business ib we highlight meyer and peng s focus on a relevant and important phenomenon the emergence of transition economies in central and eastern europe cee as a new class of markets we address the cee focus within the context of meyer and peng s insightful organizing framework built on three organizational archetypes foreign entrants local incumbents and new start ups and the applications of four theories in cee research transaction cost economics agency theory resource based view and institutional theory importantly we suggest that the meyer and peng article can serve as a foundation for further expansion and refinement of ib research in non western contexts including transition economies and the increasingly important emerging markets to advance the literature we also propose a set of ideas of how to push this research forward by expanding meyer and peng s analysis of contexts organizational forms and theoretical perspectives regarding context we discuss the risks of overgeneralization and aggregation and the need to follow a more precise categorization of national economies based on central theoretical characteristics regarding organization type we expand the original set by focusing on state owned or state controlled enterprises and family firms similarly we propose a more comprehensive and in depth treatment of theories employed in research on transition economies and emerging markets to better explore the developments in these theoretical perspectives and utilize the unique framework of such contexts

divided government and u s trade policy theory and evidence if different parties control the u s congress and white house the united states may maintain higher import protection than otherwise this proposition follows from a distributive politics model in which congress can choose to delegate trade policymaking to the president when the congressional majority party faces a president of the other party the former has an incentive to delegate to but to constrain the president by requiring congressional approval of trade proposals by up or down vote this constraint forces the president to provide higher protection in order to assemble a congressional majority evidence confirms that 1 the institutional constraints placed on the president s trade policymaking authority are strengthened in times of divided government and loosened under unified government and 2 u s trade policy was significantly more protectionist under divided than under unified government during the period 1949 90

campaign advertising and political ambiguity this paper develops a model to explain candidates strategic decisions to provide or withhold information about policy positions in the course of an election campaign the analysis treats this problem as a game of imperfect information attention is focused on modeling voter suspicion of candidates whose positions are ambiguous specific numerical examples illustrate that candidate decisions about providing information via informative advertising depend upon candidate policy preferences campaign fund endowments partisan reputations and incumbency status the model also provides theoretical underpinnings for empirical findings regarding the effects of campaign advertising

speed of adjustment and self fulfilling failure of economic reform abstract an economic reform programme where inefficient public labour is laid off is considered the immediate effect is a lowering of wages and increased profitability in the private modern sector over time as capital accumulates in the modern sector wages and production increases big bang reform generates a sharp transitory drop in wages while gradual reform gives a more modest decline in the presence of a subsistence wage constraint popular resistance can cause the cancellation of big bang reform two arguments for gradualism can in that case be made first a more gradual reform requires a less abrupt drop in the wage and will therefore be feasible second the initial wage drop will be stronger if a cancellation of reform is expected and since cancellation is dependent on the severity of the initial wage drop multiple equilibria occurs the existence of multiple equilibria is dependent on the speed of reform sufficiently gradual programmes have a unique successful equilibrium

polarization and inefficient policies of the economy in this case the costs of producing a public good the parties each propose a policy an election is held and the policy of the winning party is implemented voters and parties care about the level of the public good and costs two kinds of sequential equilibria exist revealing where voters learn the true costs and the implemented policy adjusts to costs and non revealing if parties preferences are polarized only non revealing equilibria fulfill a refinement criterion like the intuitive criterion if they are alike only revealing equilibria fulfill this criterion thus less political polarization improves information revelation in electoral democracies policy motivated parties are likely to be better informed about the functioning of the economy than are voters this paper presents a model where two parties but not voters are informed about the cost of producing a public good we study whether an electoral democracy leads to efficient production of the public good given this asymmetry of information in particular under which circumstances will the implemented policy the level of the public good reflect actual costs the main result is that the policy will reflect costs if and only if at least one of the parties has preferences which are sufficiently similar to the median voter s in this sense polarization leads to inefficiency the public good can be for instance infrastructure medicare or military services both a continuum of voters and the parties have preferences over the amount of the good that is provided by the government the preferences of the two parties are situated on each side of those of the median voter the costs of providing the good are not precisely known to the voters who only know the distribution of costs and that they will pay for these costs as taxpayers on the other hand the parties know the costs

electoral defeats and local political expenditure cycles abstract a new explanation is offered for a political business cycle on local public expenditure with rational forward looking voters and an endogenous electoral success probability the cycle results from the incumbent s concern with her welfare in case of electoral defeat

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

transparency and political moral hazard this paper analyzes the effects of asymmetric information on the public control of politicians in a world where the politicians pre election promises are not credible we study a model with identical politicians and a representative voter whose interests conflict with those of the politicians the voter s decision to reelect the politician depends on both observable policies of the politician and the outcome of the unobservable policies in equilibrium either optimal decisions for the voter are not taken by the politician or if taken the politician would extract more rent in the latter case politicians are also replaced more frequently

the born global firm an entrepreneurial and capabilities perspective on early and rapid internationalization our 2004 journal of international business studies article innovation organizational capabilities and the born global firm provided a framework for the phenomenon of early and rapid internationalization among young entrepreneurial firms this work can be characterized as an integration of marketing entrepreneurial and capability based thinking around exporting positioned as the born global exporter the article also reported findings from a national study of start up firms that expanded abroad early in their evolution in the present commentary we reflect on the contributions of the 2004 article review the scholarship on the topic over the past decade and offer suggestions for future inquiry while the incidence of early internationalization by firms was a novel concept two decades ago today such firms are found in abundance in many countries yet many unresolved research questions remain including the crucial topic of what happens to born global firms as they grow and mature over time similarly the issue of why some firms internationalize early others late in their evolution and still others choose to remain local is a fundamental question for international business scholarship

third parties in equilibrium under standard assumptions equilibria with three parties normally do not exist in spatial models of electoral competition in this paper i show that such equilibria are possible if it is assumed that voters are uncertain about the exact policies parties will adopt once elected substantive predictions can be derived from the model explaining some features of three party competition first the least risk party will always take the most moderate position second this position is also winning third the two riskier parties are always on opposite sides of the median voter and also of the moderate party

theoretical foundations of emerging economy business research in probing theoretically into central and eastern europe transactions resources and institutions we outlined the contributions of research in central and eastern europe cee to theoretical debates in business research in this retrospective we reflect upon the evolution of the field over the past decade with the fading impact of cee s distinct shared history we suggest that cee best be analyzed as emerging economies rather than as a distinct geographic entity emerging economy business research is converging on common themes and shared theoretical ideas while identifying critical variations that constrain generalizations among and beyond emerging economies this research thus highlights the need to develop a better understanding of the boundary conditions of scholarly theories of business knowledge over the past decade the institution based view has emerged from distinct intellectual traditions in institutional economics organizational theory and the analysis of business government bargaining research in these converging lines of theorizing places contextual variations at the center of explanations of business phenomena around the world we suggest that the institution based view is evolving toward a paradigm and offer suggestions on how to advance this research agenda further in particular by exploring how firms engage with different sets of potentially conflicting institutions at multiple levels and locations

multiparty spatial competition with probabilistic voting i develop a general model of multiparty competition in which parties model voters choices by means of probabilistic choice rules the model is specified in terms of an issue salience coefficient which varies with the importance voters attach to issues as opposed to unmeasured nonissue motivations i show that when the policy salience coefficient is sufficiently low then both vote maximizing and rank maximizing parties have a dominant strategy to adopt the most popular platform which maximizes voter utilities over the entire electorate this most popular platform therefore represents a convergent equilibrium when all parties are vote or rank maximizing numerical estimates suggest that this equilibrium result holds for degrees of issue voting which exceed the parameters behavioral researchers have estimated for various historical elections

electoral competition through issue selection politics must address multiple problems simultaneously in an ideal world political competition would force parties to adopt priorities that reflect the voters true concerns in reality parties can run their campaigns in such a way as to manipulate voters priorities this phenomenon known as priming may allow parties to underinvest in solving the issues that they intend to mute we develop a model of endogenous issue ownership in which two vote seeking parties a invest in policy quality to increase the value of their platform and b choose a communication strategy to prime voters we identify novel feedback between communication and investment in particular we find that stronger priming effects can constrain parties to invest more resources in all issues we also identify the conditions under which parties prefer to focus on their historical issues or to engage in issue stealing