The standard approach to policy-making and advice in economics implicitly or explicitly ignores politics and political economy, and maintains that if possible, any market failure should be rapidly removed. This essay explains why this conclusion may be incorrect; because it ignores politics, this approach is oblivious to the impact of the removal of market failures on future political equilibria and economic efficiency, which can be deleterious. We first outline a simple framework for the study of the impact of current economic policies on future political equilibria and indirectly on future economic outcomes. We then illustrate the mechanisms through which such impacts might operate using a series of examples. The main message is that sound economic policy should be based on a careful analysis of political economy and should factor in its influence on future political equilibria.
{"title":"Economics Versus Politics: Pitfalls of Policy Advice","authors":"Daron Acemoglu, James A. Robinson","doi":"10.2139/ssrn.2250529","DOIUrl":"https://doi.org/10.2139/ssrn.2250529","url":null,"abstract":"The standard approach to policy-making and advice in economics implicitly or explicitly ignores politics and political economy, and maintains that if possible, any market failure should be rapidly removed. This essay explains why this conclusion may be incorrect; because it ignores politics, this approach is oblivious to the impact of the removal of market failures on future political equilibria and economic efficiency, which can be deleterious. We first outline a simple framework for the study of the impact of current economic policies on future political equilibria and indirectly on future economic outcomes. We then illustrate the mechanisms through which such impacts might operate using a series of examples. The main message is that sound economic policy should be based on a careful analysis of political economy and should factor in its influence on future political equilibria.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2013-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129418281","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Popular participation in the public services is something that is necessary, but its date of arrival is still far away. There exist some tools of participation called Public Meetings, but they do not work in the case of the public services. They are sporadic and at best attract 1% of the millions of users of the services. Access to information is the first step in progress towards popular participation. In Argentina there is a decree that states “Improvement in quality of Democracy and its Institutions” (1172/2003). It establishes an extensive system of participation for the Regulatory Bodies of the Public Services. But it has a very reduced practical reach because it returns to promoting public meetings, amongst other limited tools. It is not enough. The public services in Argentina suffer from problems of a lack of investment and they are subsidised to maintain their tariffs within the reach of the purchasing power of the populace-users. In some cases such as rail transport the crisis is more serious, in others it is, for the moment, just dangerous. Popular participation of the users directly with the providers (i.e. direct popular participation) can attenuate and share out the effects of the crisis. It can also anticipate and limit the impact of the crisis on the providers and its inevitable reflection on civil society. Lastly, and very importantly, direct popular participation is one of the most effective tools in the fight against corruption. The organization of access to information is not just a question of decrees, laws and rules, but it also a question of management. New and creative management.
{"title":"Direct Popular Participation and Crises in Public Servives in Argentina: The Gordian Knot","authors":"F. Tosi","doi":"10.2139/ssrn.2194383","DOIUrl":"https://doi.org/10.2139/ssrn.2194383","url":null,"abstract":"Popular participation in the public services is something that is necessary, but its date of arrival is still far away. There exist some tools of participation called Public Meetings, but they do not work in the case of the public services. They are sporadic and at best attract 1% of the millions of users of the services. Access to information is the first step in progress towards popular participation. In Argentina there is a decree that states “Improvement in quality of Democracy and its Institutions” (1172/2003). It establishes an extensive system of participation for the Regulatory Bodies of the Public Services. But it has a very reduced practical reach because it returns to promoting public meetings, amongst other limited tools. It is not enough. The public services in Argentina suffer from problems of a lack of investment and they are subsidised to maintain their tariffs within the reach of the purchasing power of the populace-users. In some cases such as rail transport the crisis is more serious, in others it is, for the moment, just dangerous. Popular participation of the users directly with the providers (i.e. direct popular participation) can attenuate and share out the effects of the crisis. It can also anticipate and limit the impact of the crisis on the providers and its inevitable reflection on civil society. Lastly, and very importantly, direct popular participation is one of the most effective tools in the fight against corruption. The organization of access to information is not just a question of decrees, laws and rules, but it also a question of management. New and creative management.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-12-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121662336","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Technological innovations are inherently problematic (risky, uncertain, possess public goods properties (enhances free-riding since it is easy to steal), but once they succeed, they create negative externalities for incumbents in the form of economic resources redistribution. Economic resources are convertible into political power. Therefore, economic redistribution might eventually result in political power redistribution. Those who fear to lose political power have incentives to defend status quo. Innovators will face collective action problems (who will be willing to innovate and risk to fight with incumbents) and commitment problems (who will compensate losers from innovations and why they should believe such promises). My answer is that market is not enough. It is political institutions that solve collective action and commitment problems. Some political institutions e.g. parliamentary government form will deal with political risks better than others e.g. presidential one.
{"title":"Innovations as Public Goods Provision with Negative Externalities: Role of Parliamentarism","authors":"Dina Balalaeva","doi":"10.2139/ssrn.2192027","DOIUrl":"https://doi.org/10.2139/ssrn.2192027","url":null,"abstract":"Technological innovations are inherently problematic (risky, uncertain, possess public goods properties (enhances free-riding since it is easy to steal), but once they succeed, they create negative externalities for incumbents in the form of economic resources redistribution. Economic resources are convertible into political power. Therefore, economic redistribution might eventually result in political power redistribution. Those who fear to lose political power have incentives to defend status quo. Innovators will face collective action problems (who will be willing to innovate and risk to fight with incumbents) and commitment problems (who will compensate losers from innovations and why they should believe such promises). My answer is that market is not enough. It is political institutions that solve collective action and commitment problems. Some political institutions e.g. parliamentary government form will deal with political risks better than others e.g. presidential one.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-12-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115901943","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Event studies represent an increasingly popular method to evaluate (future) welfare effects of economic policy decisions. The basic idea is to hire the stock market as a referee, i.e. that stock market reactions to the announcement of policy decision are interpreted to contain superior information about the (future) welfare effects of these decisions. This paper investigates the degree of reliability of event studies as a policy programs evaluation method by critically reflecting upon two underlying assumptions. Since both the information superiority and efficiency of financial markets and, in particular, the conclusion from abnormal returns to (future) economic welfare effects consist of considerable interpretation problems, we issue a note of caution: scientists and policymakers should be very reluctant to rely on stock market reactions as a referee on economic policy decisions. Event studies cannot replace thorough theory-driven economic analysis.
{"title":"On the Use of Event Studies to Evaluate Economic Policy Decisions: A Note of Caution","authors":"M. Beigi, Oliver Budzinski","doi":"10.2139/ssrn.2261735","DOIUrl":"https://doi.org/10.2139/ssrn.2261735","url":null,"abstract":"Event studies represent an increasingly popular method to evaluate (future) welfare effects of economic policy decisions. The basic idea is to hire the stock market as a referee, i.e. that stock market reactions to the announcement of policy decision are interpreted to contain superior information about the (future) welfare effects of these decisions. This paper investigates the degree of reliability of event studies as a policy programs evaluation method by critically reflecting upon two underlying assumptions. Since both the information superiority and efficiency of financial markets and, in particular, the conclusion from abnormal returns to (future) economic welfare effects consist of considerable interpretation problems, we issue a note of caution: scientists and policymakers should be very reluctant to rely on stock market reactions as a referee on economic policy decisions. Event studies cannot replace thorough theory-driven economic analysis.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129639105","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this study, we find some evidence in favor of systematic risk being priced in the cross-section of stock returns when the effects of presidential cycles and political environments are taken into account. During Democratic presidencies or harmonious political environments, beta has a positive relation to stock returns, but is negatively related to returns during Republican presidencies or in gridlock periods. We find that both the presidential puzzle and the harmony premium can be rationalized when the effects of politics on the beta-return relation are taken into account.
{"title":"Politics and Stock Returns: A Rationalization","authors":"Ashraf Al Zaman, Oumar Sy","doi":"10.2139/ssrn.2116610","DOIUrl":"https://doi.org/10.2139/ssrn.2116610","url":null,"abstract":"In this study, we find some evidence in favor of systematic risk being priced in the cross-section of stock returns when the effects of presidential cycles and political environments are taken into account. During Democratic presidencies or harmonious political environments, beta has a positive relation to stock returns, but is negatively related to returns during Republican presidencies or in gridlock periods. We find that both the presidential puzzle and the harmony premium can be rationalized when the effects of politics on the beta-return relation are taken into account.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131421638","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It especially builds on work published in the following articles: Calliess/Mertens, Transnational Corporations, Global Competition Policy, and the Shortcomings of Private International Law, Indiana Journal of Global Legal Studies 18 (2011) 2, p. 843; Calliess/Renner, The Public and the Private Dimensions of Transnational Commercial Law, German Law Journal 10 (2009) 10, p. 1341; Renner, Towards a Hierarchy of Norms in Transnational Law?, Journal of International Arbitration 26 (2009) 4, p. 533.
{"title":"Privatizing the Economic Constitution- Can the World Market Reproduce its Own Institutional Prerequisites?","authors":"Gralf-Peter Calliess, J. Mertens, Moritz Renner","doi":"10.2139/ssrn.2056625","DOIUrl":"https://doi.org/10.2139/ssrn.2056625","url":null,"abstract":"It especially builds on work published in the following articles: Calliess/Mertens, Transnational Corporations, Global Competition Policy, and the Shortcomings of Private International Law, Indiana Journal of Global Legal Studies 18 (2011) 2, p. 843; Calliess/Renner, The Public and the Private Dimensions of Transnational Commercial Law, German Law Journal 10 (2009) 10, p. 1341; Renner, Towards a Hierarchy of Norms in Transnational Law?, Journal of International Arbitration 26 (2009) 4, p. 533.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129893627","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We present a theory to explain government procrastination as a consequence of its present-bias resulting from the political uncertainty in a two-party political system. We show that under a two-party political system the party in office tends to be present-biased. This may lead to inefficient procrastination of socially beneficial policies that carry upfront costs but yield long-term benefits. However, procrastination is often not indefinite even as we consider an infinite-horizon game. There exist equilibria in which the policy is implemented, and in many cases carried out to completion in finite time. When the net social benefit is large, there is no procrastination problem. When the net social benefit is small, the policy can be procrastinated indefinitely, though there may co-exist some gradual implementation equilibria. When the net social benefit is intermediate in magnitude, there are all sorts of procrastination equilibria, including gradual implementation. The theory predicts that a government with a more strongly predominant party tends to procrastinate less.
{"title":"A Theory of Government Procrastination","authors":"T. Furusawa, E. Lai","doi":"10.2139/ssrn.1975750","DOIUrl":"https://doi.org/10.2139/ssrn.1975750","url":null,"abstract":"We present a theory to explain government procrastination as a consequence of its present-bias resulting from the political uncertainty in a two-party political system. We show that under a two-party political system the party in office tends to be present-biased. This may lead to inefficient procrastination of socially beneficial policies that carry upfront costs but yield long-term benefits. However, procrastination is often not indefinite even as we consider an infinite-horizon game. There exist equilibria in which the policy is implemented, and in many cases carried out to completion in finite time. When the net social benefit is large, there is no procrastination problem. When the net social benefit is small, the policy can be procrastinated indefinitely, though there may co-exist some gradual implementation equilibria. When the net social benefit is intermediate in magnitude, there are all sorts of procrastination equilibria, including gradual implementation. The theory predicts that a government with a more strongly predominant party tends to procrastinate less.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"332 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-12-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114964289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We use New Zealand school board of trustees data to examine whether schools where parents have high rates of homeownership experience high parental voting turnout in elections. We also investigate whether homeownership influences the probability that a school board proceeds to election, indicating parental willingness to serve as a school trustee. Similarly, we examine whether state-owned social housing rates affect these outcomes. We compile results initially without controlling for other factors, and then controlling for a wide range of other characteristics, to test the robustness of simple observed associations between homeownership and state-ownership rates and outcome variables. Our findings show no discernible effect of homeownership on parental voting turnout in school elections after controls are added (contrary to the simple positive association), but a (robust) positive impact of both homeownership and state-ownership rates on the probability that a school holds an election.
{"title":"Homeownership, Social Capital and Parental Voice in Schooling","authors":"A. Grimes, S. Stillman, C. Young","doi":"10.29310/WP.2011.11","DOIUrl":"https://doi.org/10.29310/WP.2011.11","url":null,"abstract":"We use New Zealand school board of trustees data to examine whether schools where parents have high rates of homeownership experience high parental voting turnout in elections. We also investigate whether homeownership influences the probability that a school board proceeds to election, indicating parental willingness to serve as a school trustee. Similarly, we examine whether state-owned social housing rates affect these outcomes. We compile results initially without controlling for other factors, and then controlling for a wide range of other characteristics, to test the robustness of simple observed associations between homeownership and state-ownership rates and outcome variables. Our findings show no discernible effect of homeownership on parental voting turnout in school elections after controls are added (contrary to the simple positive association), but a (robust) positive impact of both homeownership and state-ownership rates on the probability that a school holds an election.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134629754","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The global financial crisis has increased pressures on governments to pursue wide-ranging banking reform, highlighting the importance of domestic responses to globalization. In this paper, we study mass policy preferences on banking reform as well as the change of those preferences in response to elite cues. Our paper makes two contributions. First, rather than focusing on the effect of partisan cues on mass policy preferences - a well-studied question in public opinion research - we explore the influence of non-partisan expert cues on mass policy preferences. Second, our study specifically focuses on the global dimension of banking regulation by eliciting opinions about global solutions (concerted reform efforts across countries) as well as domestic solutions (local reform efforts independent of those in other countries) to the banking crisis. We empirically address these questions by way of a survey experiment conducted in the United States in 2010. Based on our empirical findings, we can draw three conclusions. First, in the absence of cues, preferences on banking reform are almost exclusively driven by respondents' partisanship. Second, responsiveness to non-partisan expert cues is independent of partisanship. Finally, we find that the effect of non-partisan expert cues is conditional on political knowledge: while high knowledge individuals are less likely than low knowledge individuals to change their opinions on banking reform in response to ambiguous non-partisan expert cues, political knowledge does increase the likelihood of opinion change when the expert cue is unambiguous.
{"title":"Depoliticizing Policy Reform: Non-Partisan Expert Cues and Public Opinion Change on Financial Regulation","authors":"Nathan M. Jensen, Rene Lindstaedt","doi":"10.2139/ssrn.1933799","DOIUrl":"https://doi.org/10.2139/ssrn.1933799","url":null,"abstract":"The global financial crisis has increased pressures on governments to pursue wide-ranging banking reform, highlighting the importance of domestic responses to globalization. In this paper, we study mass policy preferences on banking reform as well as the change of those preferences in response to elite cues. Our paper makes two contributions. First, rather than focusing on the effect of partisan cues on mass policy preferences - a well-studied question in public opinion research - we explore the influence of non-partisan expert cues on mass policy preferences. Second, our study specifically focuses on the global dimension of banking regulation by eliciting opinions about global solutions (concerted reform efforts across countries) as well as domestic solutions (local reform efforts independent of those in other countries) to the banking crisis. We empirically address these questions by way of a survey experiment conducted in the United States in 2010. Based on our empirical findings, we can draw three conclusions. First, in the absence of cues, preferences on banking reform are almost exclusively driven by respondents' partisanship. Second, responsiveness to non-partisan expert cues is independent of partisanship. Finally, we find that the effect of non-partisan expert cues is conditional on political knowledge: while high knowledge individuals are less likely than low knowledge individuals to change their opinions on banking reform in response to ambiguous non-partisan expert cues, political knowledge does increase the likelihood of opinion change when the expert cue is unambiguous.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"08 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-09-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127307486","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper focuses on some economic aspects of environmentalism, both challenges and possible solutions that the study of economics may provide. These issues include externality and free-loader challenges, exacerbated by difficulties in achieving global cooperation. The Stern Review on the Economics of Climate Change makes some of the same points and is thus discussed. The paper will also list some criticisms and weaknesses of Stern’s approach, but will focus on the bottom-line issues that are raised therein. Numerous charts, graphs and game-theoretical models are used throughout the paper to illustrate such phenomena as the free-loader situation and negative externalities. As is explained, while policy decisions are capable of solving the environmental challenge on a national level, achieving international cooperation is likely the greatest difficulty. With this knowledge, environmentalists and interest groups can devise the most efficient strategy for ensuring that environmental threats are given the appropriate weight and cost.
{"title":"Externalities, Freeloaders, and Cooperation: Economics Aspects of the Environmentalism Challenge","authors":"S. Aiello","doi":"10.2139/ssrn.1930614","DOIUrl":"https://doi.org/10.2139/ssrn.1930614","url":null,"abstract":"This paper focuses on some economic aspects of environmentalism, both challenges and possible solutions that the study of economics may provide. These issues include externality and free-loader challenges, exacerbated by difficulties in achieving global cooperation. The Stern Review on the Economics of Climate Change makes some of the same points and is thus discussed. The paper will also list some criticisms and weaknesses of Stern’s approach, but will focus on the bottom-line issues that are raised therein. Numerous charts, graphs and game-theoretical models are used throughout the paper to illustrate such phenomena as the free-loader situation and negative externalities. As is explained, while policy decisions are capable of solving the environmental challenge on a national level, achieving international cooperation is likely the greatest difficulty. With this knowledge, environmentalists and interest groups can devise the most efficient strategy for ensuring that environmental threats are given the appropriate weight and cost.","PeriodicalId":365118,"journal":{"name":"ERN: Other Public Choice: Analysis of Collective Decision-Making (Topic)","volume":"33 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124937401","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：