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We present a theoretical model of a parliamentary democracy, where party structures, government coalitions and fiscal policies are endogenously determined. The model predicts that, relative to proportional elections, ma-joritarian... more
We present a theoretical model of a parliamentary democracy, where party structures, government coalitions and fiscal policies are endogenously determined. The model predicts that, relative to proportional elections, ma-joritarian elections reduce government spending because they reduce party fragmentation and, therefore, the incidence of coalition governments. Party fragmentation can persist under majoritarian rule if party supporters are unevenly distributed across electoral districts. Economic and political data, from up to 50 postwar parliamentary democracies, strongly support our joint predictions from the electoral rule, to the party system, to the type of government, and to government spending. JEL classifications: H00, D72, D78.
This paper surveys some recent literature on fiscal policy and comparative politics. Economic policy is viewed as the outcome of a game with multiple-principals and multiple-agents. Opportunistic politicians bargain over policy. Rational... more
This paper surveys some recent literature on fiscal policy and comparative politics. Economic policy is viewed as the outcome of a game with multiple-principals and multiple-agents. Opportunistic politicians bargain over policy. Rational voters hold them accountable through retrospective voting. Political institutions determine the rules for legislative bargaining and for electing politicians to office. The questions asked are: how do alternative electoral rules and alternative regime types shape the size of government, the composition of spending, the performance of politicians in terms of effort or corruption, the features of electoral cycles. The paper discusses both theory and evidence, and concludes with some speculations about directions for future research.
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This Appendix provides additional materials that are also discussed in the paper. In particular, in Section A1, we detail the criminal offenses included in the two types of criminal prosecution of members of Parliament analyzed in the... more
This Appendix provides additional materials that are also discussed in the paper. In particular, in Section A1, we detail the criminal offenses included in the two types of criminal prosecution of members of Parliament analyzed in the paper (RAP and serious RAP). In Section A2, we provide robustness checks, in order to show that the baseline estimates are not sensitive to regression specifications or measurement choices in both social capital and criminal prosecution. In Section A3, we formally discuss the possible sources of self-selection bias and the conditions under which the baseline estimates can be interpreted as a lower bound of the true causal effects. JEL codes: D72, D73, Z10.
This paper studies microeconomic data on corruption at the public agency level in eight developing countries, trying to understand which features of the agency influence corruption, and how to curb corruption inside each agency. The... more
This paper studies microeconomic data on corruption at the public agency level in eight developing countries, trying to understand which features of the agency influence corruption, and how to curb corruption inside each agency. The sources of the data are surveys of the employees working inside each public agency, as well as customers of the agency (households or firms). We find that corruption is influenced by two kinds of variables. On the demand side, corruption is more prevalent among agencies that provide services to firms (rather than households), and that provide an exclusive service for which there is no alternative. On the supply side, the internal organization of the agency is a major determinant of corruption. Three features of the organization are systematically associated with less corruption: having decisions regularly audited by external or internal auditors; maintaining open and transparent procedures; and basing personnel decisions on criteria of merit and professi...
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We investigate the effect of electoral rules and political regimes on fiscal policy outcomes in a sample of democracies, exploiting both cross country and time series variation in the data. Presidential regimes lead to smaller... more
We investigate the effect of electoral rules and political regimes on fiscal policy outcomes in a sample of democracies, exploiting both cross country and time series variation in the data. Presidential regimes lead to smaller governments, while majoritarian elections lead to smaller governments and smaller welfare programs. Different constitutions are also associated with different spending patterns over time and different cyclical response to income shocks. Some of these empirical regularities are in line with recent theoretical work; others still await a theoretical explanation.
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Do banks with low capital extend excessive credit to weak firms, and does this matter for aggregate efficiency? Using a unique data set that covers almost all bank-firm relationships in Italy in the period 2008-2013, we find that, during... more
Do banks with low capital extend excessive credit to weak firms, and does this matter for aggregate efficiency? Using a unique data set that covers almost all bank-firm relationships in Italy in the period 2008-2013, we find that, during the Eurozone financial crisis: (i) Under-capitalized banks cut credit to healthy firms (but not to zombie firms) and are more likely to prolong a credit relationship with a zombie firm, compared to stronger banks. (ii) In areas-sectors with more low-capital banks, zombie firms are more likely to survive and non-zombies are more likely to go bankrupt; (iii) Nevertheless, bank under-capitalization does not hurt the growth rate of healthy firms, while it allows zombie firms to grow faster. This goes against previous influential findings that, we argue, face a serious identification problem. Thus, while banks with low capital can be an important source of aggregate inefficiency in the long run, their contribution to the severity of the great recession v...
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The Intergovernmental Conference offers a historic opportunity to rethink and improve the governance and organization of the European Union. At stake is Europe’s political architecture: the form that government takes and the allo-cation... more
The Intergovernmental Conference offers a historic opportunity to rethink and improve the governance and organization of the European Union. At stake is Europe’s political architecture: the form that government takes and the allo-cation of responsibilities between member states and supranational bodies. Many reform proposals have already been offered to the European Constitu-tional Convention. This paper provides a method for evaluating the options, de-veloping an analytical framework derived from recent advances in the theory of positive political economy and fiscal federalism. Assessment of the current EU situation suggests the expediency of reallocating tasks. These reallocations raise specific problems of institution design, which are discussed together with the possible compromises.
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... Il finanziamento di regioni ed enti locali. Titolo Rivista: ECONOMIA PUBBLICA. Autori/Curatori: Paolo Bosi, Guido Tabellini. Anno di pubblicazione: 1996 Fascicolo: 2 Lingua: Numero pagine: 0 Dimensione file: 0 KB. ...
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Allocating Responsibilities in the European Union: an Economic Analysis - The Intergovernmental Conference offers a historic opportunity to rethink and improve the governance and organization of the European Union. At stake is Europe’s... more
Allocating Responsibilities in the European Union: an Economic Analysis - The Intergovernmental Conference offers a historic opportunity to rethink and improve the governance and organization of the European Union. At stake is Europe’s political architecture: the form that government takes and the allo-cation of responsibilities between member states and supranational bodies. Many reform proposals have already been offered to the European Constitu-tional Convention. This paper provides a method for evaluating the options, de-veloping an analytical framework derived from recent advances in the theory of positive political economy and fiscal federalism. Assessment of the current EU situation suggests the expediency of reallocating tasks. These reallocations raise specific problems of institution design, which are discussed together with the possible compromises.
Paul Krugman has written a very timely paper. It discusses an old issue, that has become very relevant again. My comments address two questions. First, should inflation targeting be reconsidered? Here my answer is a clear and resounding... more
Paul Krugman has written a very timely paper. It discusses an old issue, that has become very relevant again. My comments address two questions. First, should inflation targeting be reconsidered? Here my answer is a clear and resounding yes. Inflation targeting performed very well in the fight against inflation and in stabilizing inflation expectations. But now, even leaving issues of financial stability aside, monetary policy is faced with different challenges. Second, which features of the inflation targeting framework should be changed? Here I argue that other aspects of the framework are more important than the numerical value of the target. In addressing these questions, I review Paul Krugman’s arguments, agreeing with many but not all of them.
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We compare single ballot vs dual ballot elections under plurality rule, assuming sincere voting and allowing for partly endogenous party formation. Under the dual ballot, the number of parties is larger but the influence of extremists... more
We compare single ballot vs dual ballot elections under plurality rule, assuming sincere voting and allowing for partly endogenous party formation. Under the dual ballot, the number of parties is larger but the influence of extremists voters on equilibrium policy is smaller, because their bargaining power is reduced compared to a single ballot election. The predictions on the number of
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ABSTRACT
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This paper illustrates some of the most important insights of the literature on international fiscal and monetary policy coordination. It notes that the analysis of international policy interactions is enriched by taking the incentives in... more
This paper illustrates some of the most important insights of the literature on international fiscal and monetary policy coordination. It notes that the analysis of international policy interactions is enriched by taking the incentives in the domestic policy process into account. These incentives can either be tied to credibility issues or to political institutions. The paper also focuses on the role of institutions that can enforce and support international cooperation. We discuss alternative task assignments between member countries and the central policy-making level, and alternative processes for collective decision making.
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ABSTRACT
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In a world of free trade and capital mobility, monetary policy is strongly interdependent across countries via international spillover effects on inflation and employment. These interdependencies create strategic interactions in... more
In a world of free trade and capital mobility, monetary policy is strongly interdependent across countries via international spillover effects on inflation and employment. These interdependencies create strategic interactions in policymaking. This chapter introduces some of the main ideas from the large literature on international monetary policy coordination which deals precisely with the strategic aspects of policymaking. This literature is extensively surveyed also in Canzoneri and Henderson (1991), Currie and Levine (1993), Ghosh and Masson (1994) and Persson and Tabellini (1995).