the political economy of clientelism in this paper we argue that the political commitment problem provides an explanation for why much income redistribution takes an inefficient form particularly employment in the public sector a job is a credible way of redistributing when it provides rents such as in situations with moral hazard and employment is optimal ex post moreover a job is selective and reversible and thus ties the continuation utility of a voter to the political success of a particular politician we show that the need to make offers of employment incentive compatible leads to inefficiencies in the supply of public goods we also show that such inefficient redistribution becomes relatively attractive in situations with high inequality and low productivity inefficiency is increased when the stakes from politics are high when inequality is high and when money matters less than ideology in politics

what determines female autonomy evidence from bangladesh abstract this paper examines the determinants of female autonomy within households in a developing country in particular we investigate the relative contributions of earned versus unearned income in enhancing women s autonomy and the role of employment outside of their husband s farm in a simple theoretical model it is demonstrated that earned income could be more important than unearned income in empowering women using data from rural bangladesh empirical estimations confirm this prediction and also reveal the surprising fact that it is not employment per se but employment outside their husbands farms that contributes to women s autonomy the data also point to the importance of choosing the correct threat point in theoretical analyses of female autonomy

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

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

legislative organization and pollution taxation the role of political institutions in shaping public policy has been analyzed in isolation from corruption and legislative organization specifically bicameralism has received minimal attention we analyze pollution taxation when decisions are influenced by several veto players such as legislative chambers our theory predicts that an increase in the number of veto players e g moving from uni to bi cameralism pushes the pollution tax towards the social optimum with the effect being conditional on corruption as such dispersion around the optimal tax is lower under bicameralism empirical tests using data from 86 countries support the theory

ideology and the growth of government abstract we analyze the impact of ideology on the size of government in a simple model the government sets redistribution and provision of public services according to the preferences of the median voter ideology is defined in terms of preferences for public services and the impact of ideology on the size of government is shown to increase with mean income this idea is tested using measures of ideology based on party manifestos we show that the interaction of ideology and mean income has a major role in explaining the increase and divergence in government size observed across oecd countries

separation of powers and political accountability political constitutions are incomplete contracts and therefore leave room for abuse of power in democracies elections are the primary mechanism for disciplining public officials but they are not sufficient separation of powers between executive and legislative bodies also helps to prevent the abuse of power but only with appropriate checks and balances checks and balances work by creating a conflict of interest between the executive and the legislature yet requiring both bodies to agree on public policy in this way the two bodies discipline each other to the voters advantage under appropriate checks and balances separation of powers also helps the voters elicit information

a comprehensive analysis of expenditure decentralization and of the composition of local public spending sacchi a and salotti s a comprehensive analysis of expenditure decentralization and of the composition of local public spending regional studies many industrialized countries have recently implemented fiscal decentralization reforms assigning more spending responsibility to sub national governments this paper investigates the causes of the decentralization of different categories of public expenditure in 19 developed countries over the period 1980 2006 different models for each of the spending functions under analysis are estimated adopting a general to specific empirical approach results confirm existing findings on the negative link between regional income disparities and expenditure decentralization a similarly negative relationship is found for a set of demographic variables leading to the conclusion that macroeconomic and more importantly political factors are responsible for the recent increase in decentralization finally the analysis is completed by a study of the factors driving sub n

on the efficiency of equilibria in a legislative bargaining model with particularistic and collective goods this study analyzes the efficiency of equilibria in a multilateral bargaining game in which a legislature divides its budget among collective and particularistic goods in order to disentangle the causes of inefficiency we extend the model of volden and wiseman am polit sci rev 101 79 92 2007 by considering quasi linear utility functions and consensus requirements ranging from simple majority to unanimity although unanimous agreements can be reached under weaker consensus requirements we show that pareto inefficiency is associated with non unanimous consent we also study how i the endogenous selection of the legislature s size or ii a sequential choice of collective and particularistic spending eliminates or attenuates the inefficiency problem

government growth in the twenty first century public choice explanations of government growth fall into three main categories budget maximization theories rational choice models and path dependent models like the ratchet hypothesis the strengths and weaknesses of these theories as explanations for government growth are considered along with some facts about the actual growth of government to conjecture about its trajectory in the twenty first century government size seems to have been constrained in the past primarily by its ability to raise revenue growth rates in the new century thus appear to depend on factors constraining government s ability to continue to expand the tax base

foreign direct investment and the demand for protection in the united states over the past decade foreign direct investment fdi in the united states has grown dramatically changing the composition of many u s industries and bringing foreignowned firms into the domestic political process presumably fdi also has affected the politics of protection by both altering the domestic coalitions around protectionist demands and shifting the potential benefits that protectionism is likely to bring to understand this process we create and test a model that examines the level of inward investment and the extent to which this investment either complements or substitutes for existing import levels import complementing investment we suggest will cause a split in protectionist demands with local producers favoring protectionism and foreign investors pushing for free trade import substituting investment by contrast will create convergent interests between local and foreign producers in both cases inward fdi reshuffles traditional alliances and demands for protection challenging many prevailing views about protectionism in the united states

institutional clusters and economic performance abstract we ran principal component regressions of growth and income on existing measures of institutions to assess which are the most important for economic performance we find that broadly defined institutions of checks and balances as well as a democratic and anti authoritarian culture are the most robust institutional determinants of long run growth in income

effectiveness of electoral systems for reducing government corruption a game theoretic analysis abstract a theoretical model is developed for predicting the relative effectiveness of different electoral systems for reducing government corruption we consider voting games in which parties with known corruption levels and known positions on a major policy question compete for legislative seats we find that approval voting and proportional representation are fully effective in the sense that all equilibria exclude corrupt parties from legislative seats plurality voting is partly effective in the sense that there always exist some equilibria that exclude corrupt parties borda voting is ineffective because for some political situations no equilibria can guarantee the exclusion of corrupt parties journal of economic literature classification number d72

towards micropolitical foundations of public finance abstract observed fiscal policy reflects the incentives embedded in political institutions in this paper we illustrate the effects of two general institutional features separation of powers which is common in presidential congressional political systems and legislative cohesion which is typical of parliamentary systems compared to a simple legislative game separation of powers brings about a smaller size of government and lower waste legislative cohesion induces a more equal distribution but more waste and higher taxes than separation of powers

integration and the structure of public spending he voluminous tax competition literature suggests that increased economic integration leads to reduced tax rates and suboptimal levels of government spending as countries compete for mobile factors of production integration may influence not only the size of the government but also the structure of public spending comprehensive studies analyzing the effect of integration on the overall structure of government spending are rare however this article fills this void by providing an empirical analysis of the effects of economic integration on the overall structure of public spending in a number of organisation for economic co operation and development countries using panel data on the different government spending components for the period 1970 to 2002 the authors find that integration negatively influences government consumption and investment but that there is no empirical evidence that transfers are positively or negatively affected by integration as suggested by the compensation and efficiency views respectively less

bank competition and credit standards this article offers an explanation for the substantial variation of credit standards and price competition among banks over the business cycle as the economic outlook improves the average default probabilities of borrowers decline this affects the profitability of screening and causes bank screening intensity to display an inverse u shape as a function of economic prospects low screening activity in expansions creates intense price competition among lenders and loans are extended to lower quality borrowers as the economic outlook worsens price competition diminishes and credit standards tighten significantly deposit insurance may contribute to the countercyclical variation of credit standards copyright 2004 oxford university press

incentives to cultivate a party vote in candidate centric electoral systems evidence from brazil a prominent question in comparative electoral studies concerns the so called personal vote typically scholars approach this question at a cross national as opposed to a cross party level in this

supplying trade reform political institutions and liberalization in middle income presidential democracies correcting the relative lack of attention to the supply side of trade policy this article addresses how political institutions channel societal demands for protection i hypothesize that strong presidents with significant legislative powers and strong party leaders empowered through electoral rules that rein in the personal vote can help overcome protectionist biases these arguments compare with two institutional alternatives first that protectionism should decrease as electoral district size grows because elections become more proportional and second that the collective action problems in fragmented party systems thwart trade reform i evaluate these hypotheses empirically using pooled time series cross sectional data involving 18 developing countries from 1971 to 1997 i find that delegation to presidents and party leaders is significantly related to trade liberalization and some evidence suggests that the effective number of parties and the size of electoral districts may also influence levels of protectionism

electoral rules and environmental policy abstract this paper investigates the effect of electoral rules on environmental policymaking using several estimators from the program evaluation literature we find that governments set stricter environmental policies under proportional as opposed to majoritarian systems

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

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

balanced budget redistribution as the outcome of political competition this paper models balanced budget redistribution between socio economic groups as the outcome of electoral competition between two political parties equilibrium is unique in the present model and a sufficient condition for existence is given requiring that there be enough stochastic heterogeneity with respect to party preferences in the electorate the validity of hotelling s principle of minimum differentiation and of director s law are examined under alternative hypotheses concerning administrative costs of redistributions and voter s possibilities both of abstaining from voting and of becoming campaign activists for one of the parties the policy strategy of expected plurality maximization is contrasted with the strategy of maximizing the probability of gaining a plurality incomes are fixed and known so lump sum taxation is feasible however constraints on tax transfer differentiation between individuals are permitted in the analysis

theoretical comparisons of electoral systems abstract elements of an economic theory of political institutions are introduced a variety of electoral systems are reviewed cox s threshold is shown to measure incentives for diversity and specialization of candidates positions when the number of serious candidates is given duverger s law and its generalizations are discussed to predict the number of serious candidates duverger s law is interpreted as a statement about electoral barriers to entry and this idea is linked to the question of the effectiveness of democratic competition as a deterrent to political corruption the impact of post electoral bargaining on party structure in presidential and parliamentary systems is discussed

political parties and the size of government in multiparty legislatures examining cross country and panel data evidence this article tests the effect of an increase in the number of represented political parties and the size of the majority party on the size of government proxied by central government expenditure as a percentage of gdp in multiparty legislatures the author argues that an increase in the number of represented parties leads to higher central government expenditure conversely as the size of the majority party grows from a bare minimum majority to above the supermajority level it has a nonlinear specifically cube effect on central government expenditure panel data on central government expenditure from 110 countries are used to test these arguments the results corroborate the theoretical claims and are robust in regression models where fixed effects were introduced and endogeneity was corrected finally an increase in the number of represented parties leads to higher government spending on subsidies and transfers but to lower spending on public goods

antenatal and maternal health care utilization evidence from northeastern states of india this article examines the role played by the various socio economic and community level factors in determining the antenatal and maternal health care utilization pattern using the data from the national family health survey carried out in india in 1998 99 our analysis document that autonomy enjoyed by women and exposure to media has a significant impact on maternal heath care utilization even after controlling for other attributes particularly their education and household economic status availability of a rural health facility in the village and other community level programme propagates the utilization of health care

aid effectiveness and the politics of personalism this article examines how political institutions that provide an incentive to cultivate a personal vote condition the relationship between foreign aid and economic growth in developing country democracies politicians in aid recipient countries with high levels of personalism are more likely to pursue corruption and target government spending to narrow constituencies because personalism affects these outcomes it provides incentives to use foreign aid for politically motivated spending at the expense of investing foreign aid in growth promoting public goods using panel data from 61 aid recipient democracies from 1961 to 2001 the author finds that aid increases growth in democracies with less personalist institutions but decreases growth in countries with high personalism the author also shows that personalism conditions the relationship between aid and the composition of government spending aid increases spending on public goods relative to narrow particularistic goods in countries with low person

how the electoral college influences campaigns and policy the probability of being florida this paper analyzes how us presidential candidates should allocate resources across states to maximize the probability of winning the election by developing and estimating a probabilistic voting model of political competition under the electoral college system actual campaigns act in close agreement with the model there is a 0 9 correlation between equilibrium and actual presidential campaign visits across states both in 2000 and 2004 the paper shows how presidential candidate attention is affected by the states number of electoral votes forecasted state election outcomes and forecast uncertainty it also analyzes the effects of a direct national popular vote for president

trade credit and the propagation of corporate failure an empirical analysis using an exhaustive data set on claims held by trade creditors suppliers on failed trade debtors customers we quantify the importance of trade credit chains for the propagation of corporate bankruptcy we show that trade creditors experience significant trade credit losses due to trade debtor failures and that creditors bankruptcy risks increase in the size of incurred losses by exploring the roles of financial constraints and creditor debtor dependences we infer that the trade credit failure propagation mechanism is driven by both credit losses and demand shrinkage finally we show that the documented propagation mechanism constitutes a significant part of the overall bankruptcy frequency suggesting that it has measurable implications for the aggregate level

the cost of intraparty competition the single nontransferable vote and money politics in japan many scholars have argued that money politics in japan has been driven in part by the imperatives of intraparty competition under the single nontransferable vote sntv system used for lower house

the catalyst model of development lessons from bangladesh s success with garment exports abstract this paper identifies on a preliminary basis the major elements that have contributed to bangladesh s resounding success with garment exports the lessons to be learned from bangladesh s success with garment exports as they apply to the search for a workable development strategy in low income developing countries with very unfavorable initial conditions are profound enough to warrant further in depth research designed to generalize the preliminary findings the paper sketches a catalyst model of development based on the experience of bangladesh s success with garment exports the model can be considered as a foreword to as well as a hypothesis for this future research first the catalyst model of development is a model for initiating development in an outward oriented direction based on the pioneering efforts of foreign and local catalysts second the catalyst model of development is a model for transmitting throughout the entire economy the development initiated by catalysts third the catalyst model of development is a model for sequencing realistic policy reforms starting from equal footing export incentives i e equal footing with foreign competitors parallel to the increasing industrial competence gained through world market competition initiated and transmitted throughout the economy by the catalysts

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

determinants of child morbidity and factors governing utilization of child health care evidence from rural india prevention as well as effective treatment of respiratory infections and diarrhoea depends on several individual household and community level factors the objective of this article is to estimate the role played by such factors in determining the occurrence of such diseases and utilization of formal health care for children under the age of three in india the major findings are briefly enlisted as follows first a woman with greater educational qualification and autonomy in terms of her power to take decisions on her own control over household resources and complete freedom to move beyond the confines of her household exerts a significant influence on the probability of seeking care in addition to this formal care is more likely to be sought for children whose mothers are more exposed to the media programmes devised to enhance utilization of formal health care for children should be targeted to catering for the needs of the vulnerable group i e female child predominantly residing in households b

reversal of fortunes democratic institutions and foreign direct investment inflows to developing countries does increased democracy promote or jeopardize foreign direct investment fdi inflows to less developed countries we argue that democratic institutions have conflicting effects on fdi inflows on the one hand democratic institutions hinder fdi inflows by limiting the oligopolistic or monopolistic behaviors of multinational enterprises facilitating indigenous businesses pursuit of protection from foreign capital and constraining host governments ability to offer generous financial and fiscal incentives to foreign investors on the other hand democratic institutions promote fdi inflows because they tend to ensure more credible property rights protection reducing risks and transaction costs for foreign investors hence the net effect of democracy on fdi inflows is contingent on the relative strength of these two competing forces our argument reconciles conflicting theoretical expectations in the existing literature empirical analyses of fifty three developing countries from 1982 to 1995 substantiate our claims we find that both property rights protection and democracy related property rights protection encourage fdi inflows after controlling for their positive effect through property rights protection democratic institutions reduce fdi inflows these results are robust against alternative model specifications statistical estimators and variable measurements

the impact of competition on management quality evidence from public hospitals in this paper we examine the causal impact of competition on management quality we analyze the hospital sector where geographic proximity is a key determinant of competition and english public hospitals where political competition can be used to construct instrumental variables for market structure since almost all major english hospitals are government run closing hospitals in areas where the governing party has a small majority is rare due to fear of electoral punishment we find that management quality measured using a new survey tool is strongly correlated with financial and clinical outcomes such as survival rates from emergency heart attack admissions ami more importantly we find that higher competition as indicated by a greater number of neighboring hospitals is positively correlated with increased management quality and this relationship strengthens when we instrument the number of local hospitals with local political competition adding another rival hospital increases the index of management quality by one third of a standard deviation and leads to a 10 7 reduction in heart attack mortality rates

electoral rules and corruption is corruption systematically related to electoral rules recent theoretical work suggests a positive answer but little is known about the data we try to address this lacuna by relating corruption to different features of the electoral system in a sample of about eighty democracies in the 1990s we exploit the cross country variation in the data as well as the time variation arising from recent episodes of electoral reform the evidence is consistent with the theoretical priors larger voting districts and thus lower barriers to entry are associated with less corruption whereas larger shares of candidates elected from party lists and thus less individual accountability are associated with more corruption individual accountability appears to be most strongly tied to personal ballots in plurality rule elections even though open party lists also seem to have some effect because different aspects roughly offset each other a switch from strictly proportional to strictly majoritarian elections only has a small negative effect on corruption jel e62 h3

host country reforms and fdi inflows how much difference do they make summary this study examines the effects of various policies on foreign direct investment fdi flows from the perspective of the eclectic theory of international investment and hence the advantages of foreign ownership host country location and internationalization host country policies can influence fdi flows primarily through their influence on the advantages of location in the host country pooled cross section and time series data for 49 less developed countries ldcs over 1970 95 are used to examine the effects of several different types of policy institutional variables including corporate tax rates tariff rates the degree of openness to international capital flows exchange rate distortions contract enforcement nationalization risk bureaucratic delay and corruption a multivariate analysis of the effects on fdi flows of each type of policy with and without controls for other relevant determinants is conducted two different sources of fdi data are employed as well as two different measures of capital controls although there are methodological problems in estimation and especially collinearity problems and relatively severe availability constraints for some of the relevant measures the results demonstrate the relevance and importance for fdi flows of many of the policy institutional variables under study they also indicate that the results from panel methods yield results that differ rather significantly from those obtained from pure cross section analysis because of complementarity between the various elements of a healthy investment climate the effects of some policy reforms estimated from models which do not control for changes in other policies may overstate the effectiveness of individual policy reforms

environmental policy in majoritarian systems abstract this paper sheds new light on the determination of environmental tax policies in majoritarian federal electoral systems such as the u s and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental taxes in the absence of majority bias the socially preferred policy would be federal district level taxation which accounts both for cross boundary pollution and differences in industry concentration across districts in majoritarian systems however where the legislature consists of geographically distinct electoral districts the majority party at the national or state level favors home districts depending on the location of polluting industries and the associated damages the majority party may therefore impose sub optimally high or low pollution taxes due to a majority bias majority bias can influence the social welfare ranking of alternative environmental tax policies in some cases majority bias may make decentralized or federal uniform taxation the preferred solution

differentiating mixed member electoral systems mixed member majoritarian and mixed member proportional systems and government expenditures the increasing use of mixed member electoral systems has led to an explosion of research attempting to specify their effects yet there has been no work on the economic policy effects of such systems even though this has been a significant subject of debate for scholars analyzing other electoral systems an analysis of mixed member system policy effects is problematic given the wide variation in institutional rules among different systems this article attempts to determine whether the institutional differences between mixed member majoritarian mmm and mixed member proportional mmp systems lead to differences in policy outputs the political economy literature finds that government expenditures are positively correlated with electoral system proportionality our statistical analysis of government expenditures in 17 mixed member systems between 1990 and 2000 shows that mmp systems which are more proportional than mmm systems are correlated with higher levels of government spending thus the mmm mmp

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

contingent deficit sanctions and moral hazard with a stability pact abstract we show how a stability pact based on deficit sanctions eliminates the exacerbation of debt accumulation that may arise from monetary unification moreover with sanctions contingent on the observed state of the economy the pact avoids aggravating the situation of a country in recession moral hazard problems arise if the state also depends on unobservable politically costly fiscal effort this could explain why sanctions under the actual stability and growth pact are only automatically waived in extreme recessions and why the procedure linking observed deficits and sanctions involves a long and detailed assessment of a country s situation

procyclical capital regulation and lending we use a quasi experimental research design to examine the effect of model based capital regulation on the procyclicality of bank lending and firms access to funds in response to an exogenous shock to credit risk in the german economy capital charges for loans under model based regulation increased by 0 5 percentage points as a consequence banks reduced the amount of these loans by 2 1 to 3 9 percentage points more than for loans under the traditional approach with fixed capital charges we find an even stronger effect when we examine aggregate firm borrowing suggesting that microprudential capital regulation can have sizeable real effects

heterogeneous preferences and in kind redistribution theory and evidence abstract this paper examines the impact of social heterogeneity on in kind redistribution we contribute to the previous literature in two ways we consider i the provision of several public goods and ii agents different not only in income but also in their preferences over the various goods provided by the public sector in this setting both the distribution and size of goods provision depend on the heterogeneity of preferences our main result is that preference heterogeneity tends to decrease in kind redistribution while income inequality tends to increase it an empirical investigation based on united states census bureau data confirms these theoretical findings

electoral competition and agricultural support in oecd countries agricultural trade protectionism in developed countries remains a politically charged issue yet few studies have attempted to explain the political dynamics behind this important trade issue we consider agricultural subsidies as a type of distributive policy that targets the agricultural sector at the expense of consumers and taxpayers based on cox 1987 1990 and myerson 1993 we argue that electoral systems that encourage politicians to appeal to a narrow constituency tend to have a higher level of agricultural support we test this theoretical hypothesis using oecd agricultural support data disaggregated by commodity and country a cross classified multilevel model is employed to account for complex variation of agricultural support across countries commodities and time our empirical results show that electoral systems that encourage politicians to target narrow broad constituencies are associated with relatively high low levels of agricultural subsidies

mother s autonomy impact on the quality of children s healthcare in india given the poor condition of children s health in developing countries this article seeks to examine two hypotheses concerning healthcare for children first does mother s autonomy influence the quality of child healthcare and second which is related to the first whether mother s autonomy reduces the apparent gender bias in child healthcare using household survey data from bihar and uttar pradesh in india the article finds that for the most part as the mother s autonomy measured several different ways increases the quality of care for children improves the results also indicate that gender bias exists in the provision of quality healthcare for children male children generally receive better quality care however for several measures of female autonomy an increase in such autonomy reduces the bias the results of this analysis have important policy implications and provide additional insight into the state of affairs of children s health in rural india

corruption and the composition of government expenditure abstract this paper asks whether predatory behavior by corrupt politicians distorts the composition of government expenditure corruption is found to reduce government spending on education in a cross section of countries

redistributive politics with distortionary taxation abstract this paper proposes a first step towards a positive theory of tax instruments we present a model of redistributive politics that extends those of myerson r myerson incentives to cultivate minorities under alternative electoral systems amer polit sci rev 87 1993 856 869 and lizzeri and persico a lizzeri n persico the provision of public goods under alternative electoral incentives amer econ rev 91 2001 225 239 two politicians compete in terms of targeted redistributive promises financed through distortionary taxes we solve for the case of both targetable and non targetable taxes we prove that there is an imperfect efficiency targetability trade off on the tax side politicians prefer targetable taxes over non targetable ones especially when the latter are less efficient yet targetable taxation is always used even when it is very inefficient compared to non targetable taxes

fiscal implications of immigration a net present value calculation focusing on the net fiscal effects the gain from admitting immigrants is computed for a welfare state with large expenditures and a large tax burden sweden prices and behavior are held constant which allows a detailed analysis of the effects of immigration the present value of future tax revenues minus outlays is potentially large usd 23 500 per young working age immigrant but an average new immigrant represents a net government loss of usd 20 500 the dominant factors are employment rates and age for young working age immigrants the break even participation rate for which the gain would be zero is 60 well below the empirical rate for this group

political selection under alternative electoral rules we study the patterns of political selection in majoritarian versus proportional systems political parties face a trade off in choosing the mix of high and low quality candidates high quality candidates are valuable to voters and thus help to win elections but they crowd out loyal candidates who are most preferred by the parties under proportional representation politicians selection depends on the share of swing voters in the entire electorate in majoritarian elections it depends also on the distribution of competitive versus safe single member districts we show that a majoritarian system with only a few competitive districts is less capable of selecting good politicians than a proportional system as the share of competitive districts increases the majoritarian system becomes more efficient than the proportional system however for a large enough share of competitive districts a non monotonic relation arises the marginal positive effect of adding high quality politicians on the probability of winning the election is reduced and highly competitive majoritarian systems become less efficient than proportional ones in selecting good politicians

city level analysis of the effect of political regimes on public good provision this paper uses u s city level data on five public expenditure categories to test empirically whether the form of local government affects the amount of public good provision this also serves as an empirical test of a theory of national politics that predicts higher provision of public good in parliamentary than in presidential regimes the robust results indicate that at the city level the mayor council form of government provides significantly more public good than the council manager form of government for two of the public expenditure categories and at the national level presidential regimes provide more public good than do parliamentary regimes

taking credit redistribution and borrowing in an age of economic polarization several recent studies link rising income inequality in the united states to the global financial crisis arguing that us politicians did not respond to growing inequality with fiscal redistribution instead americans saved less and borrowed more to maintain relative consumption in the face of widening economic disparities this article proposes a theory in which fiscal redistribution dampens the willingness of citizens to borrow to fund current consumption a key implication is that pretax inequality will be more tightly linked with credit in less redistributive countries the long run partisan composition of government is in turn a key determinant of redistributive effort examining a panel of eighteen oecd democracies the authors find that countries with limited histories of left wing participation in government are significantly more likely see credit expansion as prefisc inequality grows compared to those in which the political left has been more influential

openness government size and the terms of trade this paper investigates the relationship between trade openness and the size ofngovernments both theoretically and empirically we argue that openness can increase the size of governments through two channels 1 a terms of trade externality whereby trade lowers the domestic cost of taxation and 2 the demand for insurance whereby trade raises risk and public transfers we provide a unified framework for studying and testing these two mechanisms our main theoretical prediction is that the relative strength of the two explanations depends on a key parameter namely the elasticity of substitution between domestic and foreign goods moreover while the first mechanism is inefficient from the standpoint of world welfare the second is instead optimal in the empirical part of the paper we provide new evidence on the positive association between openness and government size and we explore its determinants consistently with the terms of trade externality channel we show that the correlation is contingent on a low elasticity of substitution between domestic and foreign goods our findings raise warnings that globalization may have led to inefficiently large governments

the size and composition of government expenditure abstract this paper tests several leading hypotheses on determinants of government expenditure the purpose is to avoid omitted variables bias by testing the prominent theories in a comprehensive specification to identify persistent puzzles for the current set of theories and to explore those puzzles in greater depth by looking at the composition of government expenditure and the level of government at which it takes place as well as its magnitude using government financial statistics data from the imf covering over 100 countries from 1970 2000 i look at cross sectional and inter temporal variation in government expenditure and both individual categories of expenditure such as defense education health care and different levels of government central and local among other results i find a new explanation for wagner s law widespread evidence that preference heterogeneity leads to decentralization rather than outright decreases in expenditures that a great deal of the expenditure associated with increased trade openness is not in categories that explicitly insure for risk and evidence that both political access and income inequality affect the extent of social insurance

policy experimentation political competition and heterogeneous beliefs abstract we consider a two period model in which an incumbent political party chooses the level of a current policy variable unilaterally but faces competition from a political opponent in the future both parties care about voters payoffs but they have different beliefs about how policy choices will map into future economic outcomes we show that when the incumbent party can endogenously influence whether learning occurs through its policy choices policy experimentation future political competition gives it a new incentive to distort its policies it manipulates them so as to reduce uncertainty and disagreement in the future thus avoiding facing competitive elections with an opponent very different from itself the model thus demonstrates that all incumbents can find it optimal to over experiment relative to a counterfactual in which they are sure to be in power in both periods we thus identify an incentive for strategic policy manipulation that does not depend on parties having conflicting objectives but rather stems from their differing beliefs about the consequences of their actions

banks incentives and inconsistent risk models this paper investigates banks incentive to bias the risk estimates they report to regulators within loan syndicates we find that banks with less capital report lower risk estimates consistent with an effort to mitigate capital requirements the sensitivity to capital is robust to bank fixed effects and greater for large risky and opaque credits also low capital banks risk estimates have less explanatory power than those of high capital banks with regard to loan prices indicating that their estimates incorporate less information our results suggest banks underreport risk in response to capital constraints and highlight the perils of regulation premised on self reporting received september 21 2016 editorial decision september 18 2017 by editor philip strahan authors have furnished an internet appendix which is available on the oxford university press web site next to the link to the final published paper online

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

political and monetary institutions and public financial policies in the industrial countries institutions and policies vittorio grilli donato masciandaro and guido tabellini why do countries as similar as the industrialized oecd countries go through such different experience in terms of public deficits and debts or in terms of inflation the answer cannot come from macroeconomic policy responses to different disturbances nor from the principles of optimal taxation but rather from politics this article focuses on the role that particular institutions exert in providing constraints and incentives which shape the actions of policymakers the electoral process and political traditions affect the ability of governments to deal with deficits and mounting debts what seems to matter most it is found is the effect of the durability of governments governments with short horizons act myopically and never quite tackle the hard choices such governments typically exist in countries with an electoral system favouring many small political parties central bank independence promotes low inflation with no apparent costs in terms of real economic performance irrespective of the political institutions in fact there is no link between monetary and fiscal discipline these findings carry powerful implications for countries facing high indebtedness or stubborn inflation but also for the construction of the european economic and monetary union

electoral systems and income inequality abstract the goal of this paper is to determine if electoral systems and inequality are linked using high quality data lis database and simple panel methods we show that when the degree of proportionality of a system increases inequality decreases

do electoral rules matter political institutions and foreign direct investment in latin america despite the growing importance of domestic institutions in the political economy literature few studies explore the effects of disaggregated measures of political institutions specifically electoral rules and systems on foreign direct investment fdi building on institutional accounts this articles tests the effects of electoral rules on fdi inflows for 16 latin american countries from 1978 to 2000 using panel data and controlling for common explanations in the fdi literature the authors find that candidate centered electoral systems increase political access for voters and industries supportive of fdi inflows the results show the benefits of unpacking political institutions to explain fdi inflows paving the way for many new research avenues

the political economy of fiscal deficits a survey this paper surveys recent literature both theoretical and empirical regarding political explanations for fiscal deficits political economy suggests conflicts of interest may lie behind the emergence of deficits 1 opportunistic politicians generate deficits to win elections even in conflict with general welfare 2 conflicts of interests between politicians partisan preferences create incentives for at least some incumbents to run deficits and 3 conflicts of interest between different social groups or regions generate tensions in the allocation of government resources leading to overspending this paper reviews these different strands of the literature it also covers contributions that highlight the crucial role of budget institutions in determining the extent to which the political motivations to generate deficits are indeed translated into poor fiscal outcomes promising avenues for future research are highlighted

electoral rules and political selection theory and evidence from a field experiment in afghanistan voters commonly face a choice between competent candidates and those with policy preferences similar to their own this article explores how electoral rules such as district magnitude mediate this trade off and affect the composition of representative bodies and the quality of policy outcomes we show formally that anticipation of bargaining over policy causes voters in elections with multiple single member districts to prefer candidates with polarized policy positions over more competent candidates results from a unique field experiment in afghanistan are consistent with these predictions specifically representatives selected by elections with a single multi member district are better educated and exhibit less extreme policy preferences

electoral institutions and the politics of coalitions why some democracies redistribute more than others standard political economy models of redistribution notably that of meltzer and richard 1981 fail to account for the remarkable variance in government redistribution across democracies we develop a general model of redistribution that explains why some democratic governments are more prone to redistribute than others we show that the electoral system plays a key role because it shapes the nature of political parties and the composition of governing coalitions hence redistribution our argument implies 1 that center left governments dominate under pr systems whereas center right governments dominate under majoritarian systems and 2 that pr systems redistribute more than majoritarian systems we test our argument on panel data for redistribution government partisanship and electoral system in advanced democracies w hy do some countries redistribute more than others most work on the politics of redistribution starts from the premise that democratic institutions empower those who stand to benefit from redistribution the basic logic is succinctly captured in the meltzer richard 1981 model where the voter with the median income is also the decisive voter with a typical right skewed distribution of income the median voter will push for redistributive spending up to the point where the benefit of such spending to the median voter is outweighed by the efficiency costs of distortionary taxation this argument implies that redistibution is much greater in democracies than in nondemocracies at least of the right authoritarian variety and that among the latter inegalitarian societies redistribute more than egalitarian ones there is some evidence to supportthefirstimplication althoughitisdisputed see ross 2005 but most of the variance in redistribution is probably within the same regime type according to datafromtheluxembourgincomestudy forexample the reduction in the poverty rate in united states as a result of taxation and transfers was 13 in 1994 whereas the comparable figure for sweden was 82 thepovertyrateisthepercentageofhouseholdsbelow 50 of the median income to explain this variance we have to look at political and economic differences

global foreign direct investment flows the role of governance infrastructure abstract it is widely argued that a country s economic performance over time is determined to a great extent by its political institutional and legal environment we refer to these institutions and policies as the governance infrastructure of a country we utilize newly developed indices to examine the effects of governance infrastructure on both foreign direct investment fdi inflows and outflows for a broad sample of developed and developing countries over 1995 97 in addition we examine the role of other forms of infrastructure including human capital and the environment the results clearly indicate that governance infrastructure is an important determinant of both fdi inflows and outflows investments in governance infrastructure not only attract capital but also create the conditions under which domestic multinational corporations emerge and invest abroad it would appear that investments in governance infrastructure are subject to diminishing returns so that the benefits in terms of inflows are most pronounced for smaller and developing economies