nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒10‒15
five papers chosen by
Eugene Beaulieu
University of Calgary

  1. Enforcement, private political pressure and the GATT/WTO escape clause By Bagwell,K.; Staiger,R.W.
  2. Why do Politicians Delegate? By Alberto Alesina; Guido Tabellini
  3. The Nature and Role of the Civil Service in Japanese Government Decision-making By Kazumasa Okubo
  4. A Political Economy Theory of the Soft Budget Constraint By James A. Robinson; Ragnar Torvik
  5. A theory of civil conflict and democracy in rentier states By Silje Aslaksen; Ragnar Torvik

  1. By: Bagwell,K.; Staiger,R.W. (University of Wisconsin-Madison, Social Systems Research Institute)
    Date: 2004
  2. By: Alberto Alesina; Guido Tabellini
    Date: 2005–10–06
  3. By: Kazumasa Okubo (MOF - Ministry of Finance Japan, Policy research Institute)
    Abstract: The nature and the role of the civil service in Japan are sufficiently elusive that analysis of the governmental policy-making process tends to focus on the extremes of party politics or the bureaucratic policy-making process, neither of which, in isolation, can reveal the real decision-making process. Analysis of governmental decision-making must focus more on the relation between politicians and civil servants. To this end, principal-agent analysis is useful, but questions remain as to who is the principal and who the agent. The prevailing assumption is that the Liberal Democratic Party LDP (currently the ruling coalition party) is the principal, and civil servants the agent1. However, since cabinet members are the masters of civil servants, an argument could be made that the prime minister and cabinet members must necessarily be the principal. This is particularly the case when other members of the LDP oppose the policies of the prime minister and cabinet members. In fact, who is the principal has varied from time to time and from event to event and politicians have always competed with each other to be the real principal to the civil servants agent. Despite this, there has been a prevailing misunderstanding that civil servants have enormous power to influence politicians and are able to neglect their minister's instructions. By providing an analysis of the historical development and the nature of the civil service in Japan, this paper attempts to present a more accurate picture of the relationship between politicians and civil servants and to describe the role of the civil service in the decision-making process. It also seeks to explain why, despite their role as agent for whatever principal, civil servants are widely regarded as powerful and reliable but also, in some cases, as culpable and blameworthy.
    Keywords: Japan, civil service, policy making, decision-making
    JEL: E61 G18
    Date: 2005–07
  4. By: James A. Robinson (Department of Government, Harvard University); Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology)
    Abstract: Why do soft budget constraints exist and persist? In this paper we argue that the prevalence of soft budget constraints can be best explained by the political desirability of softness. We develop a political economy model where politicians cannot commit to policies that are not ex post optimal. We show that because of the dynamic commitment problem inherent in the soft budget constraint, politicians can in essence commit to make transfers to entrepreneurs which otherwise they would not be able to do. This encourages such entrepreneurs to vote for them. Though the soft budget constraint may induce economic inefficiency, it may be politically rational because it influences the outcomes of elections. In consequence, even when information is complete, politicians may fund bad projects which they anticipate they will have to bail out in the future.
    Keywords: Political Economy; Investment; Development
    JEL: H20 H50 O20
    Date: 2005–08–06
  5. By: Silje Aslaksen (Department of Economics, Norwegian University of Science and Technology); Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology)
    Abstract: The effects of resource rents on the political equilibrium have been studied in two main types of models. The first tradition employs models of conflict, and studies how resource rents affect the intensity and duration of civil conflict. The second tradition employs political economy models, where resource rents affect the political equilibrium because the costs and benefits of buying votes change. Although providing much insight, a primary disadvantage of these two model traditions is that they have little to say about when democracy emerges, and about when conflict emerges. This question is simply determined by the type of model one chooses to study. Yet an important empirical literature suggests that a main effect of resource rents may be exactly that it affects the political choice between democracy and civil conflict. In this paper, by integrating the earlier model traditions, we suggest the simplest possible framework we can think of to study this choice. The institutional outcome in our theory is consequently endogenous. We show how factors such as resource rents, the extent of electoral competition, and productivity affect economic and political equilibria, and discuss how our approach, mechanisms and results differ from the earlier theories.
    Keywords: Political economy; Resource curse; Endogenous democratic institutions
    JEL: H1 D72 D74 Q32
    Date: 2005–05–15

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