New Economics Papers
on Collective Decision-Making
Issue of 2007‒11‒03
eleven papers chosen by

  1. Legitimating the European Union: The Contested Meanings of an EU Constitution By Florian Oberhuber
  2. Political Budget Cycles in Papua New Guinea By Ebrima Faal
  3. Business Cycles, Political Incentives and the Macroeconomy: Comparison of Models By Reichenvater, Arno
  4. Special Interests, Regime Choice, and Currency Collapse By Lim, Jamus Jerome
  5. Voting as a Rational Choice: Why and How People Vote to Improve the Well-Being of Others By Aaron Edlin; Andrew Gelman; Noah Kaplan
  6. Strategy-Proofness and Single-Crossing By Alejandro Saporiti
  7. Search by Committee By James Albrecht; Axel Anderson; Susan Vroman
  8. Bicameral Politics in the European Union By Bjorn Hoyland; Sara Hagemann
  9. Election Results and Opportunistic Policies: An Integrated Approach By Toke S. Aidt; Francisco José Veiga; Linda Gonçalves Veiga
  10. Still the Economy, Stupid: Economic Voting in the 2004 Presidential Election By Jeffrey S. DeSimone; Courtney LaFountain
  11. The War in Iraq and the 2006 U.S. Elections By Paul M. Sommers

  1. By: Florian Oberhuber
    Keywords: constitution building; European public space; media; European Convention; Austria; legitimacy; democracy
    Date: 2007–10–15
  2. By: Ebrima Faal
    Abstract: This paper assesses the presence of opportunistic electoral budget cycles in Papua New Guinea. Using quarterly time series data, a clear pattern emerges of pre-election manipulations of fiscal policy by incumbent governments, mainly in the form of increased development spending and overall primary expenditure, followed in some cases by retrenchment in post-election periods. These findings are consistent with the predictions of rational opportunistic political business cycle theory. It is noteworthy that revenue was not statistically significantly related to elections, either in the pre- or post-election period. In this regard, electoral swings in fiscal deficits reflect a preference for influencing expenditures rather than taxation.
    Keywords: Working Paper , Government expenditures , Papua New Guinea , Budget deficits , Business cycles , Political economy ,
    Date: 2007–09–17
  3. By: Reichenvater, Arno
    Abstract: Politicians and political parties are faced with the problem of being elected into power, and later, of being re-elected. These political ambitions are often fuelled by policies that affect the entire economy and business cycles. The purpose of this paper is to compare the various models used to describe how political decision-making may affect business cycles. Both opportunistic and partisan models, and exchange rate manipulation are examined, and empirical evidence is used to view the validity of the models.
    Keywords: business cycles; partisan models; opportunistic models; politics
    JEL: E32 C73
    Date: 2007–05
  4. By: Lim, Jamus Jerome
    Abstract: With heterogeneous productivity and sticky prices in the short run, exchange rate changes can generate real effects on agents in the economy; the result is that the currency regime becomes a policy variable amenable to political competition. This paper discusses how special interests and government policymakers interact in the decisionmaking processes concerning the optimal level of the exchange rate, and how these interactions may lead to a disconnect between the exchange rate and economic fundamentals which---under appropriate conditions---may affect the timing, and possibility, of a currency crisis. The model is also tested empirically with exchange rate data from 25 countries.
    Keywords: Currency crisis; exchange rate policy; special interest politics; new open-economy macroeconomics
    JEL: F34 D72 F41
    Date: 2006
  5. By: Aaron Edlin; Andrew Gelman; Noah Kaplan
    Abstract: For voters with "social" preferences, the expected utility of voting is approximately independent of the size of the electorate, suggesting that rational voter turnouts can be substantial even in large elections. Less important elections are predicted to have lower turnout, but a feedback mechanism keeps turnout at a reasonable level under a wide range of conditions. The main contributions of this paper are: (1) to show how, for an individual with both selfish and social preferences, the social preferences will dominate and make it rational for a typical person to vote even in large elections;(2) to show that rational socially-motivated voting has a feedback mechanism that stabilizes turnout at reasonable levels (e.g., 50% of the electorate); (3) to link the rational social-utility model of voter turnout with survey findings on socially-motivated vote choice.
    JEL: H0 K21
    Date: 2007–10
  6. By: Alejandro Saporiti (School of Social Sciences, University of Manchester, Arthur Lewis Building, M13 9PL Manchester, United Kingdom)
    Abstract: This paper analyzes collective choices in a society with strategic voters and single-crossing preferences. It shows that, in addition to single-peakedness, single-crossingness is another meaningful domain which guarantees the existence of non-manipulable social choice functions. A social choice function is shown to be anonymous, unanimous and strategy-proof on single-crossing domains if and only if it is an extended median rule with n-1 parameters distributed on the end points of the feasible set of alternatives. Such rules are known as positional dictators, and they include the median choice rule as a particular case. As a by-product, the paper also provides an strategic foundation for the so called "single-crossing version" of the Median Voter Theorem, by showing that the median ideal point can be implemented in dominant strategies through a simple mechanism in which each agent honestly reveals his preferences.
    Keywords: Strategy-proofness; single-crossing; median voter; positional dictators
    JEL: D70 D71
    Date: 2007–10
  7. By: James Albrecht; Axel Anderson; Susan Vroman (Department of Economics, Georgetown University)
    Abstract: We consider the problem of sequential search when the decision to stop searching is made by a committee. We show that a symmetric stationary equilibrium exists and is unique given that the distribution of rewards is log concave. Committee members set a lower acceptance threshold than do single-agent searchers. In addition, mean preserving spreads in the distribution of rewards may lower each member's continuation value | an impossibility in the single-agent setting. If committee members are very patient or very impatient, expected search duration is lower than it would be for a single agent, but, for intermediate levels of patience, this comparison may be reversed. Holding the fraction of votes required to stop fixed, expected search duration rises with committee size on patient committees but falls with committee size on impatient committees. Finally, we consider the effect of varying the number of votes required to stop, holding committee size constant. We show that the welfare-maximizing vote threshold increases in the rate of patience and that there is a finite bound on patience such that unanimity is welfare maximizing. Classification-JEL Codes: D71, D72, D83
    Keywords: sequential search, voting, committees
    Date: 2007–07–09
  8. By: Bjorn Hoyland; Sara Hagemann
    Keywords: knowledge; Council of Ministers; European Parliament; political science; political culture; power analysis
    Date: 2007–06–05
  9. By: Toke S. Aidt (University of Cambridge); Francisco José Veiga (Universidade do Minho - NIPE); Linda Gonçalves Veiga (Universidade do Minho - NIPE)
    Abstract: The literature on political business cycles suggests that politicians systematically manipulate economic and fiscal conditions before elections. The literature on vote and popularity functions suggests that economic conditions systematically affect election outcomes. This paper integrates these two strands of literature. We use Rogo? (1990)’s model of the rational political business cycle to derive the two-way relationship between the win-margin of the incumbent politician and the size of the opportunistic distortion of fiscal policy. This relationship is estimated, for a panel of 275 Portuguese municipalities (from 1979 to 2001), as a system of simultaneous equations (by GMM). The results clearly support the theoretical predictions: (1) opportunism pays o?, leading to a larger win-margin for the incumbent; (2) incumbents behave more opportunistically when they expect a close election race.
    Keywords: Voting and popularity functions, opportunism, rational political business cycles, local government, system estimation, Portugal.
    JEL: D72 E32 H72
    Date: 2007
  10. By: Jeffrey S. DeSimone; Courtney LaFountain
    Abstract: Given President Bush's popularity among relatively poor rural residents and lack thereof among wealthier urban dwellers in the 2004 presidential election, analysts have suggested that voters contradicted their economic self-interests. We investigate whether this conventional wisdom implied an absence of economic voting. Using exit poll data, we estimate whether a change in previous four-year financial status affected the propensity to vote for Bush. The main econometric concern is that underlying preferences for Bush might dictate financial status change responses. Beyond income and several other demographic variables, therefore, the regressions hold constant indicators for state and congressional district, religious affiliation, political philosophy and party, and Iraq war support. Even further controlling for approval of Bush's job performance, economic voting is statistically and quantitatively significant. Effects are asymmetric, with status worsening hurting Bush more than status improvement helped, and persist even among subgroups that provided particularly strong or weak support for Bush.
    JEL: H0
    Date: 2007–10
  11. By: Paul M. Sommers
    JEL: D72
    Date: 2007

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