1,722,106 research outputs found
Culture and Institutions
Full text linkA growing body of empirical work measuring different types of cultural traits has shown that culture matters for a variety of economic outcomes. This paper focuses on one specific aspect of the relevance of culture: its relationship to institutions. We review work with a theoretical, empirical, and historical bent to assess the presence of a two-way causal effect between culture and institutions
Voting on budget deficit
No full textThis paper analyzes a model in which a group of rational individuals votes over the composition and time profile of public spending. All voters agree that a balanced budget is ex ante optimaL However, if there is disagreement between current and future majorities, a balanced budget is not a political equilibrium under majority rule. Under certain conditions a majority of the voters favors a budget deficit, and the equilibrium deficit is larger the greater is the polarization among voters. (JEL 320,025
Loss Aversion in Politics
Full text linkWe study loss aversion in majority voting. First, we show a status quo bias. Second, loss aversion implies a moderating effect. Third, in a dynamic setting, the effect of loss aversion diminishes with the length of the planning horizon of voters; however, in the presence of a projection bias, majorities are partially unable to understand how fast they will adapt. Fourth, in a stochastic environment, loss aversion yields a significant distaste for risk, but also a smaller attachment to the status quo. The application of these results to a model of redistribution leads to empirically plausible implications
Organized crime, violence, and politics
Full text linkWe develop a model explaining how criminal organizations strategically use pre-electoral violence as a way of influencing electoral results and politicians’ behaviour. We then characterize the incentives to use such violence under different levels of electoral competition and different electoral rules. Our theory is consistent with the empirical evidence within Sicily and across Italian regions. Specifically, the presence of organized crime is associated with abnormal spikes in violence against politicians before elections—particularly when the electoral outcome is more uncertain—which in turn reduces voting for parties opposed by criminal organizations. Using a very large data set of parliamentary debates, we also show that violence by the Sicilian Mafia reduces anti-Mafia efforts by members of parliament appointed in Sicily, particularly from the parties that traditionally oppose the Mafia
Loss aversion in politics
Full text linkWe study loss aversion in elections by investigating a median voter model (full convergence in a two-candidate election) and a model of partial divergence of policy proposals. First, we show a status quo bias, an endowment effect, and a moderating effect of policies. Second, we show the occurrence of “long-term cycles” in policies with self-supporting movements to the right or the left. Finally, we prove that younger societies should be more prone to change and less affected by the status quo bias than older ones
Effects of austerity: expenditure- and tax-based approaches
No full textWe review the debate surrounding the macroeconomic effects of deficit reduction policies (austerity). The discussion about "austerity" in general has distracted commentators and policymakers from a very important result, namely the enormous difference, on average, between expenditure- and tax-based austerity plans. Spending-based austerity plans are remarkably less costly than tax-based plans. The former have on average a close to zero effect on output and lead to a reduction of the debt over GDP ratio. Tax-based plans have the opposite effect and cause large and long lasting recessions. These results also apply to the recent episodes of European austerity which in this respect were not especially different from previous cases
International Unions
Full text linkWe model an international union as a group of countries deciding together on the provision of public goods or policies that generate spillovers across members. The trade-off between benefits of coordination and loss of independent policymaking endogenously determines size, composition and scope of the union. Policy uniformity reduces the union’s size, may block enlargement processes and induce excessive centralization. We study flexible rules with non-uniform policies that reduce these ine?- ciencies focusing on arrangements relevant in the context of existing unions or federal states, like enhanced cooperation, subsidiarity, federal mandates and earmarked grants.
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