political determinants of government loans in japan abstract this paper examines the political determinants of government banks lending decisions using prefecture level panel data on japan s government loans from 1975 to 1992 it finds that the size of government loans is positively correlated with two political factors 1 the electoral vulnerability of politicians who belong to the ruling liberal democratic party ldp and 2 their seniority these political effects are statistically robust to the inclusion of prefecture fixed effects year fixed effects and other socioeconomic factors and more important are present only in government loans and not in private loans these results suggest that self interested ldp members ab used government loans for political purposes as implied by the political view of government banks

political and economic determinants of the likelihood of privatizing argentine public banks abstract this paper discusses the political economy of bank privatization in argentina following institutional changes related to the implementation of the convertibility plan and to the tequila crisis the empirical results strongly support the hypothesis that political incentives affect the likelihood of privatization we find 1 poorly performing banks were more likely to be privatized 2 overstaffing tended to reduce the probability of privatization 3 large banks were less likely to be privatized and 4 higher levels of provincial unemployment and higher shares of public employees reduced the probability of privatization although the hypotheses were tested for a specific industry in a specific country which makes it possible to control for enterprise performance and institutional characteristics it seems reasonable that similar results might hold in other industries and countries

political business cycles with endogenous election timing evidence from japan this paper empirically investigates the political business cycle hypothesis for japan taking into account the potential two way interaction that originates from the control within certain limitations by the government over election timing of japanese elections using a mixed qualitative and continuous variable simultaneous equation estimation procedure the authors cannot reject the traditional political business cycle manipulation hypothesis causation running from the timing of elections to real gnp growth they also find some limited support for the opportunistic hypothesis strong real gnp growth triggers elections copyright 1991 by mit press

on the vote purchasing behavior of incumbent governments a couple of months before the swedish election in 1998 the incumbent government distributed 2 3 billion sek to 42 out of 115 applying municipalities this was the first wave of a four year long grant program intended to support local investment programs aimed at an ecological sustainable development this temporary grant program differs from traditional intergovernmental grants in several aspects most importantly in the sovereign decision making power given to the incumbent central government in this paper we investigate whether there were any tactical motives behind the distribution of these grants we find support for the hypothesis that the incumbent government used the grant program under study in order to win votes in particular we find strong support for the lindbeck weibull dixit londregan model in which parties distribute transfers to regions where there are many swing voters this result is statistically as well as economically significant we do however not find any support for the model that predicts that the incumbent government transfer money to its own supporters

a model of political equilibrium in a representative democracy abstract this paper studies political equilibrium in a two party representative democracy in which the political parties are policy motivated and voters trade off their policy preferences against their party identity it is shown that the parties will in general adopt differing policy positions in equilibrium and that under certain qualifications the winning policy will lie between the more popular party s preferred policy and a certain utilitarian optimum the winning policy will be closer to this utilitarian optimum the less biased the electorate is in terms of party identification

contribution to productivity or pork barrel the two faces of infrastructure investment abstract this paper proposes a simultaneous equation approach to the estimation of the contribution of transport infrastructure accumulation to regional growth we model explicitly the political economy process driving infrastructure investments in doing so we eliminate a potential source of bias in production function estimates and generate testable hypotheses on the forces that shape infrastructure policy our empirical findings on a panel of france s regions over 1985 92 suggest that electoral concerns and influence activities were indeed significant determinants of the cross regional allocation of transportation infrastructure investments by contrast we find little evidence of concern for the maximization of economic returns to infrastructure spending even after controlling for pork barrel

political competition and pork barrel politics in the allocation of public investment in mexico this paper examines the effect of political competition in local elections in re gional allocation of public investment the study employs data on mexican elections covering the period 1990 95 characterised by an increase in electoral competition and coupled with increasing demands for decentralisation throughout the states empirical evidence supports the hypothesis that regional allocation of public investment by central government was driven by political opportunism and local pork barrel politics a positive relationship was found between the regional allocation of public investment and support for the central ruling party this might indicate that local spending inefficiencies were partially explained by the specific support for the incumbent party

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

bank privatization and performance empirical evidence from nigeria the authors assess the effect of privatization on performance in a panel of nigerian banks for the period 1990 2001 they find evidence of performance improvement in nine banks that were privatized which is remarkable given the inhospitable environment for true financial intermediation their results also suggest negative effects of the continuing minority government ownership on the performance of many nigerian banks the authors results complement aggregate indications of decreasing financial intermediation over the 1990s banks that focused on investment in government bonds and non lending activities enjoyed a relatively higher performance

privatization matters bank efficiency in transition countries abstract to investigate the impact of bank privatization in transition countries we take the largest banks in six relatively advanced countries namely bulgaria the czech republic croatia hungary poland and romania income and balance sheet characteristics and efficiency measures computed from stochastic frontiers are compared across four bank ownership types our empirical results support the hypotheses that foreign owned banks are most efficient and government owned banks are least efficient in addition the importance of attracting a strategic foreign owner in the privatization process is confirmed however counter to the conjecture that foreign banks cherry pick the most profitable opportunities we find that domestic banks have a local advantage in pursuing fee for service business finally we show that both the method and the timing of privatization matter to performance specifically voucher privatization does not lead to increased efficiency and early privatized banks are more efficient than later privatized banks even though we find no evidence of a selection effect

electoral influence and economic policy political origins of financial aid to small business in japan the debate surrounding the role of bureaucrats and politicians in japan s economic policymaking process has largely been advanced through the presentation and discussion of case studies some cases have shown that economic policy is dominated by japan s bureaucracy whereas others have shown that electoral politics has been the primary determining factor to be sure both the bureaucracy and the liberal democratic party ldp have been influential and sorting out when and in what economic policy areas each has its influence remains a puzzle this article addresses this issue by developing and testing a model of electoral influence that specifies the conditions under which one would expect electoral considerations to take precedence over more institutionalized bureaucratic procedures in the economic policy making process the model is informed by the idea that some economic policy areas are more important to japan s previously ruling ldp than others and what these are depends on the characteristics of

public resource allocation and electoral systems in the u s and japan this paper introduces alternative measures of net budgetallocation and legislative representation they are neutral tothe size of total expenditure and tax collection as well as tochanges in the population and the size of the legislature which makes them suitable for panel data exercises andinternational comparative studies regression analyses of 50u s states and 47 japanese prefectures using these indiceshighlight similarities and differences in public resourceallocation between respective democracies that reflect theirpolitical and electoral systems

electoral institutions hometowns and favored minorities evidence from japanese electoral reforms this article presents evidence that electoral institutions affect the geographic distribution of both candidate electoral support and government resources the author exploits two electoral reforms in japan to identify the effect of institutional incentives 1 the 1994 electoral reform from a multimember single nontransferable vote sntv system to a mixed member majoritarian mmm system with a single member district smd component and a proportional representation component and 2 the 1925 electoral reform from a predominantly smd system to a multimember sntv system using several new data sets the two main findings of this article are that 1 japanese representatives competing in multimember sntv districts had more geographically concentrated electoral support than those competing in smds and that 2 intergovernmental transfers appear to be more concentrated around liberal democratic party ldp incumbents home offices under the multimember sntv system than under the mmm system the findings in this article highlight the connection between institutions and geographic patterns of representation

legislative influences in japanese budgetary politics following world war ii w w ii japan adopted a democratic parliamentary system since its formation in 1955 the liberal democratic party ldp had monopolized japanese legislature diet for over 35 years however it is said that at the center of the budgetary process was the ministry of finance mof elite bureaucrats rather than politicians are typically seen as the agenda setter the action of politicians in particular members of the ldp to influence the budgetary resource allocation has been largely unexamined this paper empirically examines the influence of the ldp on the supplementary budget formation and on the revenue sharing we find that the ldp had a significant impact on the budget formation further we find that the ldp manipulated transfers from the central government to local governments presumably to maintain its electoral positions

political business cycles in the parliamentary system abstract in the parliamentary system the cabinet may call a general election before the term of the house members matures if the timing is judged favorable econometric tests to differentiate the following two hypotheses are proposed and applied to the japanese data under the manipulative cabinet hypothesis the cabinet decides the timing of the election by political reasons and manipulates an economy to have a boom in time i e elections cause booms similar to the presidential system while the opportunistic cabinet hypothesis states that the cabinet does not manipulate the economy but calls an election when positive private sector shocks cause high growth and low inflation i e booms trigger elections findings indicate that the japanese cabinet has acted opportunistically rather that manipulatively

orchestrating rent seeking contests contests have different sometimes quite complex organisational structures in particular while most of the existing literature focusses on simultaneous contests multistage contests are also quite frequently encountered this paper seeks to provide a rationale for the latter by endogenising the choice of a contest structure which is made by an organiser of a contest interested in maximising the efforts expended by the contenders

a theory of privatisation public enterprises around the world have proved to be highly inefficient primarily because they pursue strategies such as excess employment that satisfy the political objectives of politicians who control them privatization of public enterprises can raise the cost to politicians of influencing them since subsidies to private firms necessary to force them to remain inefficient are politically harder to sustain than wasted profits of the state firms in this way privatization leads to efficient restructuring of firms moreover privatization is more effective when combined with a tight monetary policy and when the new owners of firms are profit maximizing investors rather than their employees or even managers copyright 1996 by royal economic society

electoral goals and center state transfers a theoretical model and empirical evidence from india we construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations these considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not a testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers we test this prediction using indian data for 14 states from 1974 75 to 1996 97 we find that a state which is both aligned and swing in the last state election is estimated to receive 16 higher transfers than a state which is unaligned and non swing

equilibrium patterns of competition in ocs lease sales an equilibrium model of bidding behavior is developed that accounts for observed fluctuations in the degree of competition to acquire offshore petroleum leases as one might expect such fluctuations are related to the heterogeneity of geological prospects that are offered for sale with a relatively high degree of competition to acquire tracts of the highest quality the equilibrium configuration of bids is also shown to reflect structural characteristics such as capital market constraints that may restrict competition in the lease auction empirical evidence is presented which tends to confirm our general theory of bidding equilibria but which contradicts the popular notion that capital constraints have restricted competition in ocs lease sales policy implications are discussed in the concluding section

politicians and banks political influences on government owned banks in emerging markets abstract government ownership of banks is very common in countries other than the united states this paper provides cross country bank level empirical evidence about political influences on these banks it shows that government owned banks increase their lending in election years relative to private banks this effect is robust to controlling for country specific macroeconomic and institutional factors as well as bank specific factors the increase in lending is about 11 of a government owned bank s total loan portfolio or about 0 5 of the median country s gdp per election per government owned bank