nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2014‒10‒03
eight papers chosen by
Stan C. Weeber, McNeese State University

  1. Isolated Capital Cities, Accountability, and Corruption: Evidence from US States By Filipe R. Campante; Quoc-Anh Do
  2. Political Selection with Pessimistic Voters By Alvaro Forteza
  3. Public Education and Social Security: A Political Economy Approach By Tetsuo Ono
  4. Partisanship, Ideology, and Representation in Latin America By Sebastián Saiegh
  5. Exchange Rate Populism By Sainan Huang; Cristina Terra;
  6. Strategic choice of sharing rules in collective contests By Pau Balart; Sabine Flamand; Orestis Troumpounis
  7. Financial Crises, Political Constraints, and Policy Responses By Zorobabel Bicabay; Daniel Kapp; Francesco Molteni
  8. Coordination efficiency in multi-output settings: a DEA approach By Laurens CHERCHYE; Bram DE ROCK; Veerle HENNEBEL

  1. By: Filipe R. Campante (Harvard University); Quoc-Anh Do (Département d'économie)
    Abstract: We show that isolated capital cities are robustly associated with greater levels of corruption across US states, in line with the view that this isolation reduces accountability. We then provide direct evidence that the spatial distribution of population relative to the capital affects different accountability mechanisms: newspapers cover state politics more when readers are closer to the capital, voters who live far from the capital are less knowledgeable and interested in state politics, and they turn out less in state elections. We also find that isolated capitals are associated with more money in state-level campaigns, and worse public good provision.
    JEL: D72 D73 H41 H83 K42 R23
    Date: 2014–08
  2. By: Alvaro Forteza (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República.)
    Abstract: I analyze political agency models with potentially two equilibria, one in which elections are e¤ective selection mechanisms and only "good" individuals participate in politics and another one in which elections are not e¤ective and "bad" individuals participate in politics. These equilibria are self-ful.lling prophecies: if citizens expect a low-quality political class, bad individuals will participate and the political class will have low quality. If citizens expect a high-quality political class, only good individuals will have incentives to participate and the political class will be of high quality. The model exhibits only the good equilibrium if the proportion of good individuals in the society is su¢ ciently high. I analyze the impact of popularity shocks and redistribution on the set of equilibria.
    Keywords: Agencia polÌtica, selecciÛn polÌtica, equilibrios m?ltiples
    JEL: E69 P16
    Date: 2013–10
  3. By: Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This study presents an overlapping-generations model with altruism towards children. We characterize a Markov-perfect political equilibrium of voting over two policy issues, public education for the young and social security for the old. The model potentially generates two types of political equilibria, one favoring public education and the other favoring social security. One equilibrium is selected by the government to maximize its objective. It is shown that (i) longevity affects equilibrium selection and relevant policy choices; and (ii) private education as an alternative to public education and a Markov-perfect political equilibrium can gen- erate the two types of equilibria.
    Keywords: Public education; Social security; Intergenerational conflict
    JEL: H52 H55 I22
    Date: 2013–09
  4. By: Sebastián Saiegh
    Abstract: This paper uses joint scaling methods and similar items from three large-scale surveys to place voters, parties and politicians from different Latin American countries on a common ideological space. Contrary to the conventional wisdom, the findings reveal that the "median" voter in Latin America is located to the left of the ideological spectrum, and that voter's ideological locations are highly correlated with their partisan attachments. The location of parties and leaders suggests that three distinctive clusters exist: one located at the left of the political spectrum, another at the center, and a third to the right. The results also indicate that legislators in Brazil, Chile, Mexico and Peru tend to be more "leftist" than their voters. The ideological drift, however, is not large enough to substantiate the claim that a representation gap exists in those countries.
    Keywords: Civil Society, Public Administration & Policy Making, Representation gap, Ideological drift, Ideology, Partisanship
    Date: 2014–08
  5. By: Sainan Huang; Cristina Terra; (Université de Cergy-Pontoise, THEMA and ESSEC School Business; Université de Cergy-Pontoise, THEMA; )
    Abstract: East Asian and Latin American economies present opposite exchange rate electoral cycles: exchange rates tend to be more depreciated before and appreciated after elections among East Asian economies, while the opposite is true in Latin America. We propose a explanation for these empirical findings where the driving force of the opposite exchange rate populism in these two regions is their difference in the relative size of tradable and non-tradable sectors, coupled with the distributive effect of exchange rates. In a setup where policy-makers differ in their preference bias towards non-tradable and tradable sectors, the exchange rate is used a noisy signal of the incumbent's type in an uncertain economic environment. The mechanism behind the cycle is engendered by the incumbent trying to signal he is median voter's type, biasing his policy in favor of the majority of the population before elections.
    Date: 2014
  6. By: Pau Balart; Sabine Flamand; Orestis Troumpounis
    Abstract: Competition between groups often involves prizes that have both a public and a private component. The exact nature of the prize not only affects the strategic choice of the sharing rules determining its allocation but also gives rise to an interesting phenomenon not observed when the prize is either purely public or purely private. Indeed, we show that in the two-groups contest, for most degrees of privateness of the prize, the large group uses its sharing rule as a mean to exclude the small group from the competition, a situation called monopolization. Conversely, there is a degree of relative privateness above which the small group, besides being active, even outperforms the large group in terms of winning probabilities, giving rise to the celebrated group size paradox.
    Date: 2014
  7. By: Zorobabel Bicabay (African Development Bank); Daniel Kapp (European Central Bank); Francesco Molteni (Université Paris 1 and LabEx ReFi)
    Abstract: We analyze the political environment in the wake of financial crises and try to infer its implications on decision making and economic policies. Concretely, we investigate if a shift in the ideology of the government or changes of political constraints drive the implementation of economic policies around periods of financial stress. To this end, we apply a simultaneous equations approach to evaluate governments' responses to financial crises, given the impact of crises on the political and social environment. This method allows us to disentangle the direct effects from financial crises on public policy from the indirect effects induced by political and social changes. The proposed policy response model is able to take into account the possibility of a selection bias. The direct and indirect effects from financial crises on the political process are shown, where the indirect effect is defined as the impact of financial crises on the political orientation and political constraints. Furthermore, results suggest that changes in the political environment during financial crises do affect policy responses, although the effect is highly heterogeneous across different types of crises.
    JEL: C15 G01 G17 G22 G32
    Date: 2014–09–15
  8. By: Laurens CHERCHYE; Bram DE ROCK; Veerle HENNEBEL
    Abstract: We extend a recently developed methodology for measuring the efficiency of Decision Making Units (DMUs) in the case of multiple inputs and outputs. The methodology accounts for economies of scope through the use of joint inputs, and explicitly includes information about the allocation of inputs to particular outputs. We focus on possible efficiency gains by reallocating inputs across outputs. We introduce a measure of coordination efficiency, which captures these efficiency gains. We demonstrate the practical usefulness of our methodology through an efficiency analysis of education and research conducted at US universities.
    Date: 2014–08

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