The interaction between economics and politics: modelling cycles

Abstract. In this article simulation results are used to analyze the capacity of a general politico-economic model, developed by one of the authors, to generate cycles of various lengths. The model describes behaviour of individuals and organizations in the economic as well as the political sphere. The interaction between both spheres gives rise to short term (business) cycles as well as long term (Kondratieff) cycles. The analyses concentrate on the effect variations in the political sector (regarding, e.g., party identification on non-economic grounds, the sensitivity of voters, and the discount parameter for past economic results) have on the cycles found.     

Katrinanomics: The politics and economics of disaster relief

Hurricane Katrina revealed massive governmental failure at the local, state and federal levels. This commentary brings the modern theory of property rights and public choice reasoning to bear in explaining why officials failed to strengthen New Orleans's levee system despite forewarning of its weaknesses, failed to pre-deploy adequate emergency supplies as the storm approached landfall and failed to respond promptly afterwards. Its main lesson is that no one should have expected government to be any more effective when confronted with natural disaster than it is in more mundane circumstances.     

Varieties of Limited Access Orders: The nexus between politics and economics in hybrid regimes

This article advances our understanding of differences in hybrid stability by going beyond existing regime typologies that separate the study of political institutions from the study of economic institutions. It combines the work of Douglass North, John Wallis, and Barry Weingast (NWW) on varieties of social orders with the literature on political and economic regime typologies and dynamics to understand hybrid regimes as Limited Access Orders (LAOs) that differ in the way dominant elites limit access to political and economic resources. Based on a measurement of political and economic access applied to seven post‐Soviet states, the article identifies four types of LAOs. Challenging NWW's claim, it shows that hybrid regimes can combine different degrees of political and economic access to sustain stability. Our typology allows to form theoretical expectations about the kinds of political and/or economic changes that will move different types of LAOs toward more openness or closure.     

The politics and economics of revenue growth: A cross-national analysis

Abstract Despite considerable interest in comparative fiscal policy in general, and the high salience of tax policy and tax reform in the industrialized democracies, there are relatively few cross–national studies of the economic and political correlates of revenues over time. We undertake a cross–national time series study of revenue growth in fourteen OECD countries between 1958 and 1990.We test a number of political and economic hypotheses about revenue change, including political business cycle, 'fiscal illusion', elasticity, and ideological theories. For the 1958—1990 period, we find that all countries, regardless of revenue structure, experience higher real revenue growth as a result of inflation, but that revenue growth is more responsive to unemployment in countries that rely more on direct taxes compared to countries with less direct–tax reliance. We find that this effect is most pronounced in the post–1972 period. We also find that revenue tends to increase in the years following elections, consistent with the idea that governments try to minimize the political fallout from tax increases by separating them as much as possible from election campaign periods; this effect, too, is most pronounced in the post–1972 period. We find no support for 'fiscal illusion' and ideological theories of revenue growth.     

Passions and interests revisited: the psychological foundations of economics and politics

Homo Politicus, Homo Oeconomicus. Can these two abstract human types meaningfully be distinguished? Is there a characteristic set of motivations that drive human beings in so far as they are political actors and a different set that drive their economic lives? What are the psychological foundations of economics and politics? The answers to these questions have significant implications both for the study and the practice of economics and politics. If homo politicus is essentially identical to homo oeconomicus, it is safe to generalize from the study of economic behavior to political phenomena. If not, such a procedure will distort our understanding of politics. Similarly, if we design political institutions and public policies assuming that people will behave as they do when they confront economic choices, we may find our intentions thwarted if we have neglected the distinctive motivations characteristic of political action.     

Reversal of fortune: the politics and economics of the superconducting supercollider

Congress approved the superconducting supercollider (SSC), but later cut all funding after construction for the project had begun. We claim that this reversal was due, in part, to a problem of time inconsistency. Representatives from states in contention to receive the project had an incentive to support it early in the process. Once Texas was chosen as the SSC site, the other contender states had a greatly diminished incentive to continue to support it. Our empirical results show that the probability of switching from ‘for’ to ‘against’ the project is significantly higher for representatives from the former contender states.     

Robert D. Tollison and the economics of politics

This paper tracks economists’ rising, yet elusive and unstable interest in collective decision mechanism after World War II. We replace their examination of voting procedures and social welfare functions in the 1940s and 1950s in the context of their growing involvement with policy-making. Confronted with natural scientists’ and McCathythes’ accusations of ideological bias, positive studies emphasizing that collective decisions mechanisms were unstable and inefficient, and normative impossibilities, economists largely relied on the idea the policy ends they worked with reflected a “social consensus.” As the latter crumbled in the 1960s, growing disagreement erupted on how to identify and aggregate those individual values which economists believed should guide applied work, in particular in cost-benefit analysis. The 1970s and 1980s brought new approaches to collective decision: Arrow’s impossibility was solved by expanding the informational basis, it was showed that true preferences could be revealed by making decision costly, and experimentalists and market designers enabled these mechanisms to be tested in the lab before being sold to those public bodies looking for decision procedures that emulated markets. In this new regime, the focus paradoxically shifted to coordination, revelation and efficiency, and those economists studying collective decision processes were marginalized.     

The politics and economics of pork barrel spending: The case of federal financing of water resources development

This paper empirically investigates the economic and political factors that have influenced annual Corps of Engineers water resource spending. Despite the common view that “pork barrel” spending is economically unjustified and purely politically motivated, economic factors have been important in determining water resource spending. From 1865–1920, economic development and industrialization increase spending, and from 1921–1988, spending appears to be counter-cyclical. There is also evidence that majority parties control spending levels in the post-Civil war period, while in recent times, legislators act under a norm of “constrained universalism” and are influenced by the costs to their constituents of increased spending.     

The politics and economics of auction design in the market for sulfur dioxide pollution

The Clean Air Act Amendments of 1990 aim to create a market in emissions of sulfur dioxide from power plants by distributing a fixed number of tradable pollution permits called “allowances,” and by providing for the auction of a small fraction of the total number of allowances. This article describes potential inefficiencies in this market and how an auction could enhance the market. It shows that the method by which allowances are “bundled together” for auction is an important efficiency-related element of auction design. The article also examines the politics of auction design and how equity goals strongly shaped the design ultimately adopted by Congress. Finally, some implications are suggested for the role of policy analysis in the legislative process.     

Discourses of popular politics,war and authenticity in Turkish pop music

Turkey and the United States (US) have had a close mutually beneficial political and military relationship since the end of World War Two. However, this relationship came under pressure when the US government and Turkey's ruling Justice and Development Party (AKP) tried to cooperate closely in the 2003 military invasion of Iraq. AKP's leadership failed to persuade Turkey's parliament to accept the deployment of US troops and equipment in Turkey partially due to public opinion. Despite Turkish media and its government being intertwined to the extent where subversive discourses are all but silenced, some popular music videos were able to articulate discourses which questioned AKP's military policies. This paper analyses lyrics, visuals and sounds of one of these songs to look at the way war and political issues become articulated through a form of simplified popular politics, despite being presented as serious and authentic by a number of key signifiers across the different modes. A number of scholars have addressed the issue of subversion in music both as actual political challenge and as popular counter culture. This case study is used to assess subversion in music in these terms in order to consider its likely place in political debate in Turkey.