Economic performance and U.S. Senate elections: A comment

This paper investigates the issue of economic performance and U.S. Senate elections analyzed by Bennett and Wiseman (1991) in a work published in this journal. Our study analyzes the electoral margins and election outcomes of U.S. Senate elections using state-level data involving only incumbents up for reelection in the 1976–1990 period (212 elections). The ordinary least squares and logit estimation results suggest that the effects of economic performance variables on incumbent senatorial elections are in general overshadowed by other factors known to be important in determining electoral margins and outcomes. In addition, the empirical results of the entire model are in general consistent with prior findings noted in the public choice and political science literature concerning the analysis of U.S. Senate elections. Therefore, we suggest that the findings raised in our study provide enough theoretical and empirical evidence to raise sufficient doubt regarding the robustness of the results suggested by Bennett and Wiseman (1991), and thus call upon other researchers to study further the relationship between economic performance and voting behavior in U.S. Senate elections.     

Variation in state education policies and effects on student performance

There have been few systematic studies of the effects that education policies adopted at the state level have on the quality of schooling within the state. This article, building on a framework developed by Eric Hanushek and Lori Taylor, measures the effects of state policies—in particular, the effects of state teacher certification requirements on SAT performance across states. In an examination of SAT data from 1972 to 1990, the results suggest that students in states with a master's degree requirement for teacher certification had lower SAT scores than students in states without a master's requirement. The empirical model accounts for inputs such as family background and other school factors typically used in education production functions.     

Inter-Party Competition,Intra-Party Competition,and Distributive Policy: A Model and Test Using New Deal Data

This paper presents a theoreticalmodel examining the influence of two stylized types ofvoters: ``loyal voters'' and ``swing voters''. The model showswhy both types of voters will influence thedistribution of benefits by a reelection-seekingincumbent, and it predicts how their influence willvary with the importance of the general electionrelative to that of the primary: closer competitionbetween parties in the general election, ceterisparibus, increases the influence of swing votersrelative to that of loyal voters. County-level dataon the allocation of money and jobs by New Deal reliefprograms confirm the model's predictions.     

More on measuring budget-related rent-seeking: A comment

We wish to thank the Israel Center for Social and Economic Progress, Jerusalem, for supporting our work on this topic.     

Moral hazard in work organizations: A comment on Gaynor,Eswaran and Kotwal,and Holmström

A key question in the economics of organization is whether it is possible to induce a group of employees to produce some quota of labor desired by the director of their organization. Holmström (1982) argued that it is possible to achieve the desired result via a simple incentive scheme. The essence of the scheme is to pay the employees only if they reach the quota; if they fail, the director is allowed to take what they have produced and use it for his own compensation. In response, Eswaran and Kotwal (1984) pointed out that because the director's compensation is smaller if the employees succeed in reaching the quota than if they fail, he has an incentive to bribe an employee to shirk, thus guaranteeing that the quota is not reached. The director, in other words, is subject to moral hazard. In a recent issue of Public Choice, Gaynor (1989) criticized the Eswaran-Kotwal argument by suggesting that it is possible to design incentive schemes which eliminate the director's moral hazard problem. In this note, we defend the Eswaran-Kotwal argument, and raise further questions about the assumptions upon which Holmström's incentive scheme is based.     

The dual illusion of grants-in-aid on central and local expenditures: A reply

In this Journal, Chu [Chu, H. Y. (2003). Public Choice, 114: 349–359] offered corrections for “inconsistencies” in the Logan model of dual fiscal illusion.] Logan, R. R. (1986). Journal of Political Economy,94: 1304–1318]. This paper shows that Logan (1986) introduced two prevailing models of fiscal illusion and chose to follow one of them for generalization. Chu has not corrected any “inconsistencies”. He has instead offered a generalization of the other type of illusion. This paper demonstrates that the Chu generalization suffers from multiple irrational and unachievable results, which is why Logan (1986) chose the original version in the first place.     

Tax and direct expenditures: Perspectives on prepayment proposals

Abstract

If the government were committed to replenishing the inventory of project‐based assisted housing units when losses occurred, owners’ prepayment rights, with prepayment penalties, would be a desirable feature of the program. Additional unsub‐sidized housing units would be created every time a prepayment occurred, the freed‐up subsidies and insurance commitments would support a replacement low‐income unit, and prepayment penalty income could be used to offset mortgage insurance losses and thereby reduce the cost of mortgage insurance.

Under the much less than ideal conditions now prevailing, with no replacement project‐based housing available and no buy out arrangements in place, federal policy must attempt to limit prepayment by the owners of subsidized projects over the next few years.

An approach to establishing a “maximum price” that the government should be prepared to pay to induce each prepayment‐eligible building owner not to prepay is presented.