One is that China experienced three consecutive years of bad weather while the other is that national policies were wrong in that they reduced and misallocated agricultural production. The relative importance of these two factors to the famine remains widely discussed but highly controversial among China scholars. This paper uses provincial-level demographic panel data and a Bayesian empirical approach in an effort to distinguish the relative importance of weather and national policy on China's great demographic disaster. Our findings are consistent with the view that national policies were more important than weather in generating the famine. Consequently, executives in parliamentary systems might have greater incentive to manage continuously their level of popular support, or political approval, than their Presidential counterparts.
Fiscal policy is one important tool governments use to manage political approval.
Hence, fiscal policy in parliamentary systems might differ systematically from fiscal policy in Presidential systems, and this might generate systematic differences in the two systems' business cycles. Our empirical findings suggest that governments in each democracy respond to falling political approval by pursuing fiscal policies that provide incentives for contemporaneous consumption expenditures. We quantify the way that the specific policies differ between the two democracies, and show that such policies are not in an electorate's economic interest. We develop theoretical models of single unit ascending bid auctions when there is a risk that the seller or winning buyer may default on the auction contract. We characterize equilibrium in both types of auctions and show that equilibrium in high-bid auctions is inefficient.