the power of parties evidence from close municipal elections in norway we show that small shifts in representation can affect policy in proportional election systems using data from norway we find that a larger left wing party leads to more property taxation higher child care spending and less elderly care spending while local public goods appear to be a non partisan issue these effects are partly due to shifts in bloc majorities and partly due to changes in the left right position of the council keeping the majority constant the estimates on spending allocations are rather imprecise but they are consistent with evidence on politicians fiscal preferences and patterns in media attention this article is protected by copyright all rights reserved

political cycles in oecd economies this paper studies whether the dynamic behaviour of gnp growth unemployment and inflation is systematically affected by the timing of elections and of changes of governments the sample include the last three decades in 18 oecd economies we explicitly test the implication of several models of political cycles both of the opportunistic and of the partisan type also we confront the implication of recent rational models with more traditional approaches our results can be summarized as follows a the political business cycle hypothesis as formulated in nordhaus 1975 on output and unemployment is generally rejected by the data b inflation tends to increase immediately after elections perhaps as a result of pre electoral expansionary monetary and fiscal policies c we find evidence of temporary partisan differences in output and unemployment and of long run partisan differences in the inflation rate as implied by the rational partisan theory by alesina 1987 d we find virtually no evidence of permanent partisan differences in output growth and unemployment

expectations about voter choices a comment the only essential differences in the examples analyzed above are in the assumptions that are used to derive or directly specify the choice behavior that the candidates expect from any given voter conditional on his utility function when the central behavioral assumption from the traditional models was used the equilibrium was a median outcome a conclusion directly analogous to what happens in the corresponding unidimensional traditional voting models when the central behavioral assumptions from the probabilistic voting model developed in coughlin and nitzan 1981 were used the equilibrium was at the maximum of the expected log utility function a conclusion directly analogous to what happens in the model in coughlin and nitzan 1981 indeed it was only when the corresponding assumptions from ledyard 1984 were used i e the particular assumptions that ledyard used to derive the choice behavior that the candidates expect from any given voter conditional on his utility function that the conclusions were substantially different from the conclusions derived from earlier models this reflects the important role these assumptions play in making ledyard s conclusions about candidate strategies substantially different from earlier results in the literature on spatial models of elections

political uncertainty and macroeconomic performance abstract it is often claimed that politically induced economic flucturations are harmful for the society in this paper we show that this conjecture is not necessarily correct and such fluctuations can actually improve society s macroeconomic performance

strategic extremism why republicans and democrats divide on religious values party platforms differ sharply from one another especially on issues with religious content such as abortion or gay marriage given the high return to attracting the median voter why do vote maximizing politicians take extreme positions in this paper we find that strategic extremism depends on an intensive margin where politicians want to induce their core constituents to vote or make donations and the ability to target political messages toward those core constituents our model predicts that the political relevance of religious issues is highest when around one half of the voting population attends church regularly using data from across the world and within the united states we indeed find a nonmonotonic relationship between religious extremism and religious attendance

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

debt contracts banks and aggregate liquidity abstract the use of debt contracts in private trade credits leads to an overabundance of liquidity and a shortage of long term investments relative to the first best banks can avoid this problem by offering loan commitments or lines of credit thus helping to reduce aggregate liquidity

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

the limits of political compromise debt ceilings and political turnover we study the desirability of limits on the public debt and of political turnover in an economy where incumbents have an incentive to set public expenditures above the socially optimal level due to rent seeking motives parties alternate in office and cannot commit to future policies but they can forge a political compromise where each party curbs excessive spending when in office if it expects future governments to do the same in contrast to the received literature we find that strict limits on government borrowing can exacerbate political economy distortions by making a political compromise unsustainable this tends to happen when political turnover is limited conversely a tight limit on the public debt fosters a compromise that yields the efficient outcome if political turnover is vigorous our analysis thus suggests that to sustain good economic policies a society needs to restrict either the extent of political turnover or the ability of governments to issue debt but not both

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

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

political reputations and campaign promises we analyze conditions under which candidates reputations may affect voters beliefs over what policy will be implemented by the winning candidate of an election we develop a model of repeated elections with complete information in which candidates are purely ideological we analyze an equilibrium in which voters strategies involve a credible threat to punish candidates who renege on their campaign promises and in which all campaign promises are believed by voters and honored by candidates we characterize the maximal credible campaign promises and find that the degree to which promises are credible in equilibrium is an increasing function of the value of a candidate s reputation jel d8

endogenous credible commitment and party competition over redistribution under alternative electoral institutions political parties competing in elections for the power to set public policy face the problem of making credible their policy promises to voters i argue that this commitment problem crucially shapes party competition over redistribution the model i develop shows that under majoritarian electoral rules parties efforts to achieve endogenous commitment to policies preferred by the middle class lead to different behavior and outcomes than suggested by existing theories which either assume commitment or rule out endogenous commitment thus left parties can have incentives to respond to rising income inequality by moving to the right in majoritarian systems but not under proportional representation the model also generates new insights about the anti left electoral bias often attributed to majoritarian electoral rules and the strategic use of parliamentary candidates as a commitment device i find evidence for key implications of this logic using panel data on party positions in 16 parliamentary democracies

unemployment and inflation consequences of unexpected election results the empirical evidence toward rational partisan theory of business cycles is mixed and thus inconclusive this is due to the enormous heterogeneity of the existing empirical studies only a few of these test explicitly for the central theoretical innovation that post electoral blips in economic activity depend on the degree of the electoral surprise using polling data we present empirical evidence in favor of rational partisan theory for a panel of oecd countries

external debt capital flight and political risk abstract this paper explains the simultaneous occurence of large external debts private capital outflows and low domestic capital formation we consider a general equilibrium model in which two government types with conflicting distributional goals randomly alternate in office uncertainty over the fiscal policies of future governments generates capital flight and small domestic investment and induces the government to overaccumulate external debt the model also predicts that left wing governments are more inclined to restrict capital outflows than right wing governments finally we examine how political uncertainty affects the risk premium and how debt repudiation may occur after a regime change

political parties and political shirking using ada roll call voting scores for the 1947 2006 period i find that senators shirk in their last term the degree of shirking is limited by political parties which constrain the politician in his last term and varies by post senate career choices the results highlight the importance of political parties in the repeated game that is electoral politics

why vote for losers voting theory generally concludes that in first past the post elections all votes should go to effective candidates duverger s law and parties should adopt a similar platform median voter theorem however such predictions are not always met in practice we show why divergence and vote dispersion is a natural outcome when a parties are opportunistic b there is uncertainty on the position of the median voter and c elections are repeated voting for losers increases the informational content of elections and may induce mainstream parties to relocate towards extremists as a result to maximize their probability of being elected they do not adopt median

testing limits to policy reversal evidence from indian privatizations abstract we examine the effect of regime change on privatization in the 2004 indian election the pro reform bjp was unexpectedly defeated by a less reformist coalition stock prices of government controlled companies that had been slated for privatization by the bjp dropped 3 5 relative to private firms government controlled companies that were under study for possible privatization fell 7 5 relative to private firms this is consistent with investor belief of a point of no return where advanced reforms are more difficult to reverse further analysis suggests that layoffs combined with the privatization announcement served as a credible commitment to privatize

an overlapping generations model of electoral competition this paper presents a dynamic model of political competition between two parties with different policy preferences a party is explicitly modeled as a sequence of overlapping generations of candidates all of whom face finite decision horizons in general there is a conflict between the interests of the individual policymakers and those of the party which includes subsequent generations of candidates we characterize this conflict and suggest a scheme of intergenerational transfers within the party which can resolve or mitigate this conflict the paper shows how the overlapping generations model can be usefully applied to the political arena this abstract was borrowed from another version of this item

analysis of a small open economy the case of energy prices in canada the analysis suggests that land rental price decrease in the long run as a consequence of higher energy prices energy demand from agriculture decreases if land and energy are substitute inputs the necessary and sufficient conditions for expecting increasing average farm size decreasing agricultural output and number of farms also have been provided the analysis considers a competitive equilibrium environment with specific proviso that land prices adjust in response to higher domestic energy prices simple expressions for calculating long run agricultural responses to higher domestic energy prices were derived and used in estimating such responses for canadian agriculture

how they lost the presidency abstractfor the second time in this century and the fifth time in us history the 2016 presidential popular vote winner was not elected president one day before the election the author predicted

credibility and policy convergence in a two party system with rational voters the traditional approach to modeling political parties behavior based upon the contribution of anthony downs 1957 assumes that the parties unique objective is to win elections thus they maximize their popularity the crucial implication of this assumption for a two party system is that if the two parties have the same information about voters preferences full convergence of policies results from electoral competition this is the crucial implication of the median voter theorem more generally it may be argued that different parties are motivated differently because they represent different constituencies parties may not care only about winning elections per se but also about the quality of the policies resulting from an election in this case the candidates of the two parties view winning an election not only as a goal per se but also as a means of implementing a better policy for their respective constituencies this paper shows that electoral competitions imply dynamic inconsistency if the voters are modeled as rational and forwardlooking agents and parties do not care exclusively about being elected but also about which policy to implement once elected the dynamic inconsistency arises as follows the parties have an incentive to announce convergent platforms to increase their chances of election however if the elected party is not committed to its electoral platform it has an incentive to follow its most preferred policy rather than the policy announced in its platform if voters are rational they account for this incentive thus in general in a one shot electoral game the only timeconsistent equilibrium is one in which no convergence is possible the two parties follow their most preferred policies and the voters rationally expect this outcome full convergence of parties platforms results only as a limiting case when the parties are completely indifferent with respect to the quality of the policies resulting from the election thus these results differ from the existing literature on ideologically motivated politicians for instance donald wittman 1977 1983 randall calvert 1985 which implicitly assumes the possibility of binding commitments to electoral platforms complete or partial policy convergence can be the outcome of political competition if the interaction between the parties and the voters is modeled as an infinitely repeated game in fact if the candidates have concave objective functions the welfare maximizing policy rule implies a complete convergence of parties policies however this cooperative and agreed upon policy may or may not be sustainable as a subgame perfect equilibrium depending on parameter values in particular it depends on the discount rates of the two parties the degree of polarization of their preferences and the relative popu graduate school of industrial administration carnegie mellon university pittsburgh pa 15213 and national bureau of economic research cambridge ma 02138 this paper is based upon a chapter of my unpublished doctoral dissertation at harvard university i am greatly indebted to jeffrey sachs for directing my attention toward these issues and for many conversations i also wish to thank andrew abel dilip abreu olivier blanchard ramon caminal andrew caplin alex cukierman morris fiorina benjamin friedman herschel grossman howard rosenthal and the referees for very useful comments the responsibilitv af anv n mtnkieis af calrirp nfnlv mine the result of policy convergence in a two party system is more general than the median voter theorem for discussions of convergence results not at the median see john ledyard 1984 peter coughlin 1984 coughlin and shmuel nitzan 1981 melvin hinich 1977 for earlier work on spatial competition see richard mckelvey 1975 hinich ledyard and peter ordeshook 1972 1973 and the references quoted therein the present paper focuses on the result of convergence rather than on the median voter theorem per se

incomplete information and ideological explanations of platform divergence one of the paradoxes of formal spatial voting models is the robustness of the theoretical result that candidates will converge toward centrists positions and the empirical observation of persistent policy divergence of candidates a solution is that candidates are ideological have policy preferences when candidates have policy preferences and incomplete information about voter preferences then platform divergence is theoretically predicted experimental tests of the ideological model are presented it is shown that platform divergence is significant when candidates are ideological and have incomplete information about voter preferences however candidate positions are more convergent on average than the theory predicts suggesting that subjects value winning independently of the expected payment

bank credit commitments credit rationing and monetary policy when loan needs are uncertain and bankruptcy is costly contracts resembling bank credit commitments dominate ordinary debt contracts the fees charged on commitments reduce bankruptcy risk by smoothing out borrowers loan payments reduced bankruptcy risk entitles borrowers to larger loans thereby reducing the risk of quantity rationing even if commitments reduce rationing risk monetary policy is not necessarily weaker under commitment finance a rise in lenders cost of funds perhaps reflecting a monetary contraction can reduce the expected value of a project more under a commitment than under an ordinary debt contract copyright 1994 by ohio state university press

cross border externalities and cooperation among representative democracies abstract this paper analyzes the provision of public goods with cross border externalities by representative democracies the level of provision of each country is decided by a policy maker elected by majority rule at the country level we compare the case in which policy makers set their policies noncooperatively with the case in which they set their policies through coasian cooperation cooperation induces policy makers to internalize cross border externalities but it also induces strategic voters to elect a policy maker who cares less about the public good to reduce their public good contribution the former effect increases public good provision while the latter reduces it we show that once voters incentives are taken into account whether cooperation is beneficial depends neither on voters preferences nor on the magnitude of spillovers nor on the size bargaining power or efficiency of each country instead it depends only on the curvature of the demand for the public good cooperation increases decreases public good provision when the demand function is more less convex than the unit elastic demand function hence the desirability of international cooperation depends mostly on the type of public good considered

the theory of the firm in long run equilibrium in a recent series of articles economists have investigated the comparative statics of the neoclassical firm in a competitive environment with the specific proviso that output price adjusts in response to changes in factor prices the older theory of the firm such as is found for example in paul samuelson 1947 is deficient in this regard metaphors such as short run have been used to gloss over the inconsistency of holding output price constant in the face of changing costs through changing factor prices in this paper a simple yet thorough analysis of a firm in a competitive industry i e a firm facing zero entry and adjustment cost conditions is given new results pertaining to restrictions on the behavior of such firms are offered also the length and complexity of established results is substantially reduced

partisan views on the economy in this paper it is argued that political parties may have incentives to adopt a partisan view on the working of the economic system our approach is based on a dynamical spatial voting model in which political parties are policy oriented this model revolves around two interrelated issues x and y the policy maker sets x directly there exist two views on the relationship between x and y model uncertainty confronts policy makers with the problem of the selection of a model to base their actions on we show that if voters have imperfect information about the working of the economic system that model selection contains a strategic element policy makers are inclined to adopt a view on the working of the economic system which fits in with their preferences

dormancy as a strategic response to detrimental public policy organizations in democratic societies often encounter detrimental public policies that are later reversed through rather predictable political cycles the standard organizational responses to detrimental public policies examined in the literature include exiting the market altogether attempting to change the public policy through various political strategies or passively complying with the policy however these responses might not be suitable when a detrimental policy is likely to be reversed in this paper i consider organizational dormancy which entails a temporary reduction in an organization s level of activity as a viable alternative response i propose that some organizations might be able to undergo a period of strategic inactivity in response to the onset of a detrimental public policy and maintain this inactivity until a favorable public policy returns i also propose that such dormancy is rewarded when the favorable policy returns an investigation of a panel of private commercial banks in the indian banking industry from 1981 to 2004 lends support to this proposal

proportional representation with citizen candidates we construct a simple model incorporating bothcitizen candidates and proportional representation andinvestigate its properties in a basic case with auniform distribution of citizen ideal points and purepolicy motivations and in further cases which allowof office rents and other distributions ofpreferences the idea of citizen candidates developedby osborne and slivinski 1996 besley and coate 1997 endogenises the decision to stand as acandidate and allows explicit study of the number andtype of candidates as an equilibrium phenomenon theidea of proportional representation allows a moreflexible relationship between the pattern of votescast and the final policy outcome and also providesa richer model of political representation ourdiscussion points to the widespread possibility ofequilibria involving non median policy outcomes provides insights into the relationship betweenproportional representation and the equilibrium numberof candidates and also provides an explicit accountof the trade off between candidate benefitsdistributed on a winner take all basis and those thatare mediated through proportional representation

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

special interest groups and the allocation of public funds i propose a fully rational model of government contracting that explains differences in local government spending from grants and other income in this model violations of fungibility arise from dynamic interactions between politicians and interest groups with the ability to raise funds for the local government the predictions of the model are tested by exploiting unique features of windfalls received by states under a settlement with the tobacco industry although windfalls are legally unrestricted the median state increased spending on tobacco control programs from zero to 2 30 per capita upon receipt of funds the marginal propensity to spend on such programs is 0 20 from settlement revenue and zero from overall income states which were not involved in the settlement lawsuits spend less these results cannot be explained by existing models in the literature

does partisan affiliation impact the distribution of spending evidence from state governments expenditures on education abstract how and why does partisan affiliation impact policy using a regression discontinuity strategy and focusing on state education spending we find that democratic and republican governors allocate spending differently in particular school districts with higher shares of minority students receive larger state transfers than other districts under democratic governors a similar pattern occurs in state transfers to higher education institutions this is true regardless of whether the governor is eligible for reelection we find no evidence that democrat governors are simply sending money to areas with a larger share of democrats these results suggest that the observed policy divergence is driven by differences in preferences of elected candidates

democracy as an equilibrium observation shows that while democracy is fragile in poor countries it is impregnable in developed ones to explain this pattern i develop a model in which political parties propose redistributions of incomes observe the result of an election and decide whether to comply with the outcome or to launch a struggle for dictatorship democracy prevails in developed societies because too much is at stake in turning against it more income can be redistributed in developed than in poor countries without threatening democracy limits on redistribution arise endogenously so that constitutions are not necessary for democracy to endure a democratic culture characterizes the equilibrium

would letting people vote for multiple candidates yield policy moderation abstract we investigate whether letting people vote for multiple candidates would yield policy moderation we do so in a setting that takes three key features of elections into account namely strategic voting endogenous candidacy and policy motivation on the part of the candidates we consider two classes of voting rules one class consists of the voting rules where each voter casts several equally weighed votes for the different candidates the other class consists of the voting rules where each voter rank orders the candidates we identify conditions under which these voting rules yield policy moderation we also show that these voting rules may yield policy extremism instead of policy moderation if one or several of the conditions is not satisfied finally we find that amongst these voting rules the extent of policy moderation is maximal under the borda count if we consider only equilibria where all candidates are serious contenders however this result does not carry over to spoiler equilibria where approval voting can yield more moderate policy outcomes than the borda count

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

interest groups and the electoral control of politicians abstract we develop a model of interest group influence in the presence of repeated electoral competition in each period of the game an interest group attempts to buy an incumbent s policy choice and a voter chooses whether to replace the incumbent with an unknown challenger the voter faces a tension between retaining good politician types and rewarding past performance the model predicts that above average incumbents face little discipline but others are disciplined increasingly and re elected at a higher rate as the interest group becomes more extreme extensions of the model consider term limits long lived groups and multiple groups

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

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

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

a theory of self fulfilling political expectations abstract in their pursuit of being re elected politicians might not choose high quality policies but just conform to popular wisdom the larger are the office spoils and the more precise is an incumbent s knowledge of voter opinion the more likely that she will resort to such populism my main result is that the public s trust or distrust in politicians behavior may be self fulfilling when voters assess the quality of an incumbent politician they will compare her policy choices with their own prior opinion if voters think that the incumbent was just trying to conform a failure to do so will be even more damaging for the incumbent s election chances however this only increases the incumbent s incentives to conform which indeed confirm voters skepticism loosely put a skeptic voter attitude tends to generate conformist politicians while a trusting attitude tends to generate confident ones

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

political business cycles and central bank independence this paper develops a dynamic model of rational partisan business cycles in which wage contracts overlap elections and wage setters have to make a prediction about the election result empirical analysis of 20 oecd countries supports the theoretical implication that left wing incumbents increase output but increased expectation of a left wing regime reduces it the model is extended to incorporate the effects of alternative measures of central bank independence cbi the measure of objective independence outperforms the other measures and it is found that cbi reduces politically induced business cycles

long run comparative statics under output and land price uncertainty several authors have noticed that in the uncertain short run the supply function may slope downward and the input demand functions may slope upward these possibilities prevent the setup of unambiguous tests of rational behavior in this article testable hypotheses for the competitive firm operating in a price uncertain environment are derived assuming a long run horizon some of these hypotheses take the form of slutsky type relations involving the relative input demand functions the ratios of input to output quantities homogeneity restrictions involving input and output mean prices in general are absent under uncertainty conditions for restoring this homogeneity are also discussed the main result is the rediscovery of the importance of relative quantities for the analysis of a long run equilibrium

gender interactions within hierarchies evidence from the political arena this paper studies gender interactions within hierarchical organizations using a large data set on the duration of italian municipal governments elected between 1993 and 2003 a municipal government can be viewed as a hierarchy whose stability over time depends on the degree of cooperation between and within ranks we find that in municipalities headed by female mayors the probability of early termination of the legislature is higher this result persists and becomes stronger when we control for municipality fixed effects as well as for non random sorting of women into municipalities using regression discontinuity in gender mixed electoral races decided by a narrow margin the likelihood that a female mayor survives until the end of her term is lowest when the council is entirely male and in regions with less favourable attitudes towards working women this evidence is suggestive that group dynamics are an important factor in driving the gender difference other interpretations receive less support in the data our results may provide an alternative explanation for the underrepresentation of women in leadership positions

economic reform voting and local political intervention evidence from india abstract this paper uses the indian tariff reforms of the early nineties to estimate how voters hurt by economic reforms respond regions more hurt by the tariff reform increased their support for both the party that initiated their suffering and parties with similar preferences in favor of poverty centric policies this response is surprisingly sophisticated where voters did not simply punish incumbents for negative income shocks and correctly discounted initial anti reform stances by opposition parties that later turned out to be false furthermore the strength of this voting response varied with both geography and local political incentives suggesting that the economic effects of reforms might vary substantially in large and decentralized democracies

optimal districting with endogenous party platforms representation is one of the most important criteria by which to judge electoral systems in this paper i focus on one aspect of representative democracy the formation of electoral district boundaries it is well known that majoritarian systems give rise to highly biased seat vote curves causing representation to be less than ideal what should therefore be the optimal constituency design when the objective is to maximize voters welfare i show that when parties take account of districting while setting platforms then the district design problem reduces to a very simple rule do nothing when voters are risk neutral and when voters are risk averse choose a bias that is against the largest partisan group calibrating the model on data of the u s state legislative elections during the 1990s i show that the welfare gain due to optimal districting is very small

party competition in a heterogeneous electorate the role of dominant issue voters this paper provides a theoretical model of party competition in a heterogeneous electorate the latter consists of numerous groups of dominant issue voters who base their voting decision primarily on one issue of the political agenda parties follow a lexicographic objective function aiming to gain power at minimum programmatic concessions the emerging pattern of movement in policy platforms is fundamentally different to the concept of convergence proposed by the spatial theory of voting rather than the centre of the scale of policy preference its extreme ends occupied by dominant issue voters attract the policy platforms the difference in policy platforms is not reduced the conclusions are found to be compatible with some major empirical findings of the manifesto research group

on the comparative statics of a competitive industry with inframarginal firms recently economists have begun to develop a theory of the perfectly competitive firm and industry in long run equilibrium in contrast to the traditional model2 in which all prices are parametric this new theory takes explicit recognition of the fact that output price must adjust to exogenous changes in input prices before the industry can be said to be in long run competitive equilibrium the focus of this analysis has been to derive implications of competitive theory which can be tested using data generated by observing individual firms in

flip flopping ideological adjustment costs in the united states senate models of electoral competition in which candidates can change position at no cost predict the convergence of platforms in a two candidate election such convergence is at odds with empirical observation in this paper i undertake a study of candidate positioning in the united states senate and determine the extent to which electoral costs associated with changing position explain the ideological positions taken by senators using over 50 years of roll call voting data i use a simulated method of moments approach to estimate a dynamic model of candidate positioning for u s senators the ndings support a model in which senators face convex costs to changing position with the best tting model being one with linear costs of adjustment the model thus predicts severe punishments for ip opping senators those who make large changes in position as a result of the signi cant costs associated with adjusting position the empirical validity of the median voter theorem which depends upon candidates being able to change position at no cost is called into question

political parties and the business cycle in the united states 1948 1984 this paper tests the existence and the extent of a politically induced business cycle in the u s in the post world war ii period the cycle described in this paper is different from the traditional political business cycle of nordhaus it is based on a systematic difference between the monetary policies of the two parties in a model with labor contracts from an explicit optimization problem we derive a system of equations for output and money growth then we successfully test the non linear restriction imposed by the theory on the parameters of the system of equations we cannot reject the hypothesis that money growth has been systematically different under the two types of administration and that this difference contributes to explain output fluctuations

media as watchdogs the role of news media in electoral competition abstract we develop an equilibrium model to analyze the role of the media in electoral competition when policy payoffs are state dependent party policies do not converge to the median voter s ideal policy if the media report only party policies news analysis about the state though possibly biased can discipline off equilibrium deviations and make the parties adopt more centrist policies since voters are rational the party favored by the media need not win with a higher probability instead media bias may reduce the effectiveness of electoral competition and lead to more polarized policies

energy price impacts modelling in the agriculture sector abstract energy price impacts in the agriculture sector are mainly of economic and non economic types however economic impacts are well researched this paper surveys the various types of energy price impacts and different estimation techniques used in the past the study suggests that the energy price impacts estimation from a systems model of the agriculture sector is the best for several reasons for this purpose a price endogenous sectoral programming model of agriculture can be developed in a partial or general equilibrium framework however data requirements for this are enormous

hiding information in electoral competition abstract we model a two candidate electoral competition in which there is uncertainty about a policy relevant state of the world the candidates receive private signals about the true state which are imperfectly correlated we study whether the candidates are able to credibly communicate their information to voters through their choice of policy platforms our results show that the fact that private information is dispersed between the candidates creates a strong incentive for them to bias their messages toward the electorate s prior information transmission becomes more difficult the less correlated are the candidates signals the lower is the signals quality and the stronger is the electorate s prior indeed for weak priors welfare decreases as the prior becomes stronger and welfare always decreases as the signals become less correlated

is there a dead spot new evidence on fomc decisions before elections using new data that chronicle the fed s internal forecast of the output gap from 1973 to 1998 this paper tests for an electoral cycle in the decisions of the federal open market committee fomc the paper provides evidence of a dead spot in the committee s decisions before presidential elections for given values of these internal forecasts the fomc is less likely to decide to tighten monetary policy in the year preceding a presidential election than at other times

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

a tale of two unions divergent platforms and their constituencies the median voter theorem has regularly been used in economics to represent the behaviour of teachers unions little empirical work however tests whether this framework is a good fit for teachers

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

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

are elections in autocracies a curse for incumbents evidence from chinese villages are elections in autocracies a curse for incumbents using panel data from village elections in china the ols regression shows that introducing competitive elections has a relatively small effect on the removal of autocratic incumbents however the effect becomes much larger when the endogenous timing is instrumented with the passage of provincial election laws and village specific election cycles additional evidence also suggests that removing incumbents through competitive elections enhances local governance i interpret these results as suggesting that political selection matters in electoral autocracies

banking and insurance abstract this paper studies the economic role of financial institutions in economies where agents incomes are subject to privately observable idiosyncratic random events the information structure precludes conventional insurance arrangements however a financial institution perhaps best viewed as a savings bank can provide partial insurance by generating a time pattern of deposit returns that redistributes wealth from agents with high incomes to those with low incomes resulting in a level of expected utility higher than that achievable in simple security markets insurance is incomplete because the bank faces a tradeoff between provision of insurance and maintenance of private incentives

loss aversion in politics we study how loss aversion affects the political equilibrium in a simple majority voting model first we show a status quo bias which leads to path dependence second loss aversion implies a moderating effect on the most extreme voters third in a dynamic setting the effect of loss aversion diminishes with the length of the planning horizon of voters however in the presence of a projection bias majorities are partially unable to understand how fast they will adapt to a new policy this makes changes less likely and induces time inconsistency policy changes are timid at the beginning while in later periods they are made progressively more radical fourth in a stochastic environment loss aversion yields a significant distaste for risk but also a smaller attachment to the status quo the application of these results to a model of redistribution leads to empirically plausible implications

electoral bias and policy choice theory and evidence this paper develops an approach to studying how bias in favor of one party due to the pattern of electoral districting affects policy choice we tie a commonly used measure of electoral bias to the theory of party competition and show how this affects party strategy in theory the usefulness of the approach is illustrated using data on local government in england the results suggest that reducing electoral bias leads parties to moderate their policies

electoral competition under the threat of political unrest this paper examines how voting and the outcomesof majority rule elections are affected by factors beyond the control of the winning party we present a model that helps to predict how threats against the electoral process ineuence 1 platform choice by political parties 2 which party wins the election and 3 the policy outcomes enally implemented in a democracy where the majority winner sets policy dissatiseed groups including groups outside the electoral process may still be able to interfere with that policy a losing party may organize a coup voters may riot unions may go on strike investors may take their capital abroad terrorists and foreign powers may threaten disruption and loss of life foreign powers may withdraw aid or even impose a trade embargo we analyze the effect of these nonelectoral factors on electoral outcomes we consider a majority rule electoral competition between two political parties with ideal policies lying to either side of the median voter s ideal policy we allow for only a one dimensional policy space but the disruption possibility leads to a twodimensional outcome space as evident in the examples given above the actors threaten

candidates credibility and re election incentives i study elections between citizen candidates who cannot make binding policy commitments before taking office but who are accountable to voters due to the possibility of re election in each period a representative voter chooses among heterogeneous candidates with known policy preferences the elected candidate chooses the policy to implement and how much rent seeking to engage in when in office as the voter decides both which candidate to elect and subsequently whether the candidate is retained this framework integrates elements of electoral competition and electoral accountability i show that in the best stationary equilibrium when utility functions are concave over policy non median candidates are elected over candidates with policy preferences more closely aligned with the voter in this equilibrium there are two candidates who are elected at some history and the policies these candidates implement in office do not converge this divergence incentivizes candidates to engage in less rent seeking increasing voter welfare copyright 2013 oxford university press

gender gaps in policy making evidence from direct democracy in switzerland this paper uses a unique data set on individual voting decisions to shed new light on gender gaps in policy making our analysis focuses on switzerland the world leader in direct democracy where all citizens directly decide on a broad range of policies at the ballot box analysing all federal votes held between 1981 and 2003 we show that there are large gender gaps in the areas of health environmental protection defence spending and welfare policy the gender gaps typically persist even conditional on socio economic characteristics we also find that female policy makers have a substantial effect on the composition of public spending but a small effect on the overall size of government

are we witnessing a paradigm shift in the analysis of political competition this presidential address assesses the crisis of the downsian model of political competition in light of the mounting evidence on policy divergence and evaluates the possibility that the new theories of politicians quality and political selection provide an alternative theoretical conceptualization of political competition based on a critical review of the literature and on the author s works on content analysis of policy speeches income redistribution politicians quality and political legislation cycles this address concludes that multidimensional downsian models of political competition are adequate to explain policy divergence and points out the serious theoretical and empirical problems that models of political selection have to solve

political rents and voter information in search equilibrium abstract political parties committed to grab rents may run for election and even win if citizens are uninformed but how is the political equilibrium affected if citizens can mitigate this information problem through costly information search we propose a political equilibrium theory with endogenous information search and turnout we show that i the political equilibrium generates political uncertainty characterized by a distribution of rent policies i i the expectation of this rent distribution is inversely u shaped in the information search cost i i i turnout is lower and rents are higher the more proportional is the electoral system

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy