New Economics Papers
on Collective Decision-Making
Issue of 2010‒07‒17
eight papers chosen by

  1. Political cycles and economic performance in OECD countries: empirical evidence from 1951-2006 By Potrafke, Niklas
  2. On Domains That Admit Well-behaved Strategy-proof Social Choice Functions By Shurojit Chatterji; Remzi Sanver; Arunava Sen
  3. Elections, Fiscal Policy and Fiscal Illusion By Paulo Reis Mourão; Linda Gonçalves Veiga
  4. National Politics and International Agreements. By Hubert Kempf; Stéphane Rossignol
  5. Sarpanch raj: is the President all powerful? By Palaniswamy, Nethra
  6. On the formation of coalitions to provide public goods: Experimental evidence from the lab By Dannenberg, Astrid; Lange, Andreas; Sturm, Bodo
  7. Essays on Policy Competition By Mittermaier, Ferdinand
  8. Revealed Cores: Characterizations and Structure By Stefano Vannucci

  1. By: Potrafke, Niklas
    Abstract: This paper examines whether electoral motives and government ideology influence short-term economic performance. I employ data on annual GDP growth in 21 OECD countries over the 1951-2006 period and provide a battery of empirical tests. In countries with two-party systems GDP growth is boosted before elections and, under leftwing governments, in the first two years of a legislative period. These findings indicate that political cycles are more prevalent in two-party systems because voters can clearly punish or reward political parties for governmental performance. My findings imply that we need more elaborate theories of how government ideology and electoral motives influence short-term economic performance.
    Keywords: political cycles, partisan politics, electoral motives, government ideology, short-term economic performance, panel data
    JEL: C23 O57 D72
    Date: 2010–07–09
  2. By: Shurojit Chatterji (School of Economics, Singapore Management University); Remzi Sanver (Department of Economics, Istanbul Bilgi University); Arunava Sen (Indian Statistical Institute)
    Abstract: In this paper, we investigate domains which admit "well-behaved", strategy-proof social choice functions. We show that if the number of voters is even, then every domain that satisfies a richness condition and admits an anonymous, tops-only, unanimous and strategy-proof social choice function, must be semi-single-peaked. Conversely every semi-single-peaked domain admits an anonymous, tops-only, unanimous and strategy-proof social choice function. Semi-single-peaked domains are generalizations of single-peaked domains on a tree introduced by Demange (1982). We provide sharper versions of the results above when tops-onlyness is replaced by tops-selectivity and the richness condition is weakened.
    Keywords: Voting-rules, Strategy-proofness, Restricted Domains, Tops-Only domains.
    JEL: D71
    Date: 2010–05
  3. By: Paulo Reis Mourão (Universidade do Minho - NIPE); Linda Gonçalves Veiga (Universidade do Minho - NIPE)
    Abstract: This paper tests the joint hypotheses that policymakers engage in fiscal policy opportunism and that voters respond by rewarding that opportunism with higher vote margins. Furthermore, it investigates the impact of fiscal illusion on the previous two dimensions. Empirical results, obtained with a sample of 68 countries from 1960 to 2006, reveal that opportunistic measures of expenditures and revenues generate larger winning margins for the incumbent and that the opportunistic manipulation of fiscal policy instruments is larger when the current government is less likely to be reelected. Furthermore, fiscal illusion contributes to the entrenchment of incumbent policymakers in office and promotes opportunistic behaviour.
    Keywords: fiscal policy, voting, opportunism, fiscal illusion
    JEL: D7 E6 H3
    Date: 2010
  4. By: Hubert Kempf (Centre d'Economie de la Sorbonne - Paris School of Economics et Banque de France); Stéphane Rossignol (LIRAES - Université Paris Descartes et Centre d'Economie de la Sorbonne)
    Abstract: International agreements about transnational issues are difficult to reach, as the examples of the Copenhagen summit or the never-ending discussions of the future of the European Union make clear. In this paper, we relate this difficulty to the political process and the conflicts of interest attached to an agreement, both within and between national electorates, related to national income distributions. We set up a political economy model of a two-country world economy, where an international agreement on the financing of an international public good has to be negociated by two elected national delegates. We prove that any international agreement involves higher taxes in both countries than in the case of no-agreement. If reachable, an IA may generate losers in either country. If the political process involves a constraint on tax rates, an agreement may or may not be reached. Finally, when an agreement is reached, it may exhibit strategic delegation when the median voters are the Condorcet winners in both countries : this delegation is the outcome of the struggle by electorates to transfer the tax burden to the other country's taxpayers. In brief, the fate of an international agreements depends on national politics and distributive issues in the involved countries.
    Keywords: International agreements, bargaining, delegation, voting.
    JEL: D72 H77
    Date: 2010–06
  5. By: Palaniswamy, Nethra
    Abstract: The policy of mandated representation (reservation) for disadvantaged social groups in Indian village councils or Gram Panchayats has been the subject of numerous studies. The implicit, and often unstated, assumption that underlies most of these studies is that the president of the council is the only one who wields effective power. However, the Gram Panchayat is comprised of several elected representatives, each of whom represents a village; and, in principle, a voting mechanism governs decision making within the Gram Panchayat. In this context, the focus on the president as the de-facto decision maker is equivalent to assuming a model of “Sarpanch Raj,” or a model of local government where the president (Sarpanch) dominates the council. This model is typically based on the premise that the president of the council possesses –either on account of her informal powers or on account of her formal agenda setting powers- the de-facto power to dominate. However, whether these informal or formal powers of the president translate into such de facto power may well depend on other factors, such as local power structures. Indeed, extensive anecdotal evidence suggest that presidents elected on reserved seats—i.e. members of the disadvantaged Scheduled Castes (SCs) and Scheduled Tribes (STs), and women —face considerable difficulties when they are situated amid representatives who come from powerful castes or belong to the local elite. Whether a Sarpanch Raj is indeed the de facto model of local governance in India is therefore an unanswered empirical question. This paper examines the question of Sarpanch Raj, using a unique data set from 80 Gram Panchayats and 225 villages in the Indian state of Karnataka. We exploit the design of the policy of mandated representation in order examine whether the Sarpanch Raj model is robust to the inclusion of elected representatives of the village council. The model of Sarpanch Raj is critically examined in the context of two key mandates of the Gram Panchayat: public good provision, and the targeting of household-level benefits under various anti poverty programs. The results suggest that the president is not the sole decision maker of the council, and that the council is in fact a more broad-based body where the voices of other elected village representatives matter. Decision making in the council is, however, not one among equals. In particular, the results suggest that the effectiveness of Scheduled Caste representatives depends on the caste of the president.
    Keywords: Affirmative action, Decentralization, gram panchayat, local government, Political economy, political reservation, Scheduled Castes (SCs), Scheduled Tribes (STs),
    Date: 2010
  6. By: Dannenberg, Astrid; Lange, Andreas; Sturm, Bodo
    Abstract: The provision of public goods often relies on voluntary contributions and cooperation. While most of the experimental literature focuses on individual contributions, many real-world problems involve the formation of institutions among subgroups (coalitions) of players. International agreements serve as one example. This paper experimentally tests theory on the formation of coalitions in different institutions and compares those to a voluntary contribution mechanism. The experiment confirms the rather pessimistic conclusions from the theory: only few players form a coalition when the institution prescribes the full internalization of mutual benefits of members. Contrary to theory, coalitions that try to reduce the freeriding incentives by requiring less provision from their members, do not attract additional members. Substantial efficiency gains occur, however, both along the extensive and intensive margin when coalition members can each suggest a minimum contribution level with the smallest common denominator being binding. The experiment thereby shows that the acceptance of institutions depends on how terms of coalitions are reached. --
    Keywords: public goods,institutions,coalition formation,cooperation
    JEL: C72 C92 D71 H41
    Date: 2010
  7. By: Mittermaier, Ferdinand
    Date: 2010–01–22
  8. By: Stefano Vannucci
    Abstract: Characterizations of the choice functions that select the cores or the externally stable cores induced by an underlying revealed dominance digraph are provided. Relying on such characterizations, the basic order-theoretic structure of the corresponding sets of revealed cores is also analyzed
    Keywords: Core, choice functions, dominance digraphs, revealed preference
    JEL: C70 C71 D01
    Date: 2010–04

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