Trade unions,nonneutrality and stagflation

The claim that in policy games nonneutrality and a stagflation bias emerge in equilibrium if the unions care about inflation, per se, is discussed. This assumption is shown to be not necessary to obtain a stagflation bias; the same applies to nonneutrality if a government acts in the economy. The question of whether unions should be envisaged as “institutions” (i.e., interested in variables unrelated to wages and employment) is also addressed. Two model-based alternatives providing “microeconomic” foundations versus “macroeconomic” foundations to unions' behaviour are presented. The conclusion is that the modelling of unions remains an unsettled problem.     

The choice of inflation targeting regimes for inclusive growth: Lessons from southern countries

This study tries to shed light on whether the inflation targeting framework behaves as a growth enhancing strategy in some selected southern countries. The study also investigates the best choice of inflation targeting regimes. Using panel data regression model for a growth regression, we found that this monetary policy framework has a relatively significant positive effect on economic growth. This means that even in terms of economic growth, using inflation as a nominal anchor is a better framework to conduct monetary policy than using exchange rate or money aggregate. The results also revealed that among different types of inflation targeting frameworks, full‐fledged can be the best choice for the selected southern countries.     

Efficient,Adaptable Simulations: A Case Study of a Climate Negotiation Game

Instructors may be reluctant to adopt simulations because of time, labor, or material constraints, or perceived incompatibility with large classes. In fact, simple games can cover multiple key concepts with minimal time and effort by the instructor. Simple games are also adaptable to other topics and classes, including large lectures. This article presents a simulation in which students negotiate a global greenhouse gas reduction agreement. Three scenarios model basic climate change mitigation, follow-on agreements for climate stabilization, and the surprise withdrawal of signatories after a domestic leadership turnover (e.g., the 2016 U.S. presidential election). The simulation teaches key concepts such as anarchy, collective action, preference divergence, and commitment problems. Concepts such as institutions, identity, and levels of analysis arise organically from game play. The exercise has extremely low cost and setup time. It can be run in 15 minutes or extended for a full class period. The game may also be repurposed to simulate other bargaining or collective action issues. This case study shows that simulations can be efficient and adaptable. Instructors can create their own simple games to enhance comprehension of key concepts.     

Policy Entrepreneurship,Policy Opportunism,and EU Conditionality: The AKP and TÜSİAD Experience in Turkey

This article examines the relationship between European Union (EU) conditionality for membership and policy entrepreneurship in a candidate country. In Turkey, EU conditionality opened a window of opportunity for policy reform by lowering the political costs of controversial reforms. The study demonstrates that the Justice and Development Party (AKP) and the Turkish Industrialists' and Businessmen's Association (TÜS?AD) responded to a window of opportunity by advocating a series of reforms that represented a bold challenge to the traditionally reform‐averse and Euro‐skeptic political culture in Turkey. The study finds a difference in the duration of both actors' commitment to reforms. To explain this difference, we distinguish between policy entrepreneurs, who are actors with a long time horizon, and policy opportunists, who are actors with a short time horizon. The policy implication of this finding is that the European Commission's expectations of the AKP government to deliver the necessary reforms may be too optimistic.     

Median Voter Preferences,Central Bank Independence and Conservatism

This paper studies how the independence and theconservatism of a central bank relate to the structureand stability of the median voter preferences. This isdone by means of a model of endogenous delegationwhere an opportunistic policy maker chooses themonetary regime (independence and conservatism) tomaximise the welfare of the median voter. The resultsshow that a high degree of inflation aversion ofmonetary policy is not necessarily associated with ahigh degree of central bank independence. A high andstable degree of inflation aversion of society (i.e.of the median voter) may lead to establish a dependentcentral bank which is highly inflation averse. This suggests that the negativecorrelation between inflation and central bankindependence indices detected by several empiricalstudies may reflect a link between inflation and somedeep features of social preferences.     

Policy persistence,risk estimation and policy underreaction

In recent years, there has been remarkable progress in our understanding of policy persistence, on the one hand, and of the psychological phenomenon of underreaction, on the other. Surprisingly, there has been no attempt to use robust findings, derived from these efforts, in order to understand the nuances of policy underreaction. Policy underreaction refers to systematically slow and/or insufficient response by policymakers to increased risk or opportunity, or no response at all. This article tries to give the concept of policy underreaction a robust analytical identity by integrating cognitive, social, psychological and emotional variables in the explanation of policy underreaction and by introducing a variation across different types of contextual sources of policy persistence as explanatory variables of this phenomenon. It develops an analytical framework that revolves around two key elements of decision making in situations of risk unfolding over time: (1) policymakers’ underestimation and accurate estimation of increased risks and (2) intra- and extra-organizational sources of policy persistence. Based on these dimensions, the article identifies and illustrates four distinct modes of policy underreaction which reflect differences in the nature of implemented policy.     

Incomes Policy in Finland: Economic and Social Effects in a Comparative Perspective

This paper examines the performance of the Finnish economy during the so-called incomes policy period, 1969-80. For this purpose Finland is compared with the other OECD countries both before and during the incomes policy period. The results suggest that in terms of economic growth, inflation and unemployment, Finnish economy has improved its performance, particularly before the economic recession of the mid-seventies. Cross-national comparisons point out that the recession has been met in various ways: some countries have restrained inflation, some unemployment. Secondly, the paper examines the effects of incomes policy agreements on the growth of social expenditure, the result being that incomes policy cannot be regarded as responsible for the growth of social expenditure in Finland. Thirdly, effects on income distribution are analyzed. Here incomes policy has played a role: income inequalities diminished during the first five years of incomes policy. Since then, they have not changed. The paper ends by discussing the impact and nature of incomes policy.     

Partisan Differences in Swedish Macroeconomic Policy

The purpose of this paper is to trace partisan differencesamong Swedish governments during the period 1958-2000. According tothe Partisan Theory of macroeconomic policy left-wing governmentsare relatively more concerned with the performance of the realside of the economy (real output and unemployment) as compared toright-wing governments, that place a higher weight on the nominalvariables (inflation). Left-wing governments would therefore pursue moreexpansionary aggregate demand policy, and thereby be willingto risk a higher inflation, in order to improve real economicperformance. In this paper we apply the model developed in Hibbs (1994) onSwedish data. Our empirical results support the partisan theory,showing that, ceteris paribus, aggregate demand policy under left-winggovernments is relatively more expansionary than under right-wing governments, even if the expansionary policysometimes leads to higher inflation.     

Domestic political determinants of inflation

Abstract. Political economists have advanced a variety of diverse and competing hypotheses to explain the domestic political dimension of inflation. With few exceptions, however, these hypotheses have been tested individually without regard to competing explanations. This study uses pooled time-series data on fifteen industrial democracies to examine five prominent political hypotheses that purport to explain either political pressures that cause inflation or institutional arrangements that insulate governments from these pressures. The results indicate that: (1) Central Bank independence provides an effective counterweight to inflation by insulating monetary policy making from inflationary (particularly, partisan) impulses; (2) Government spending increases caused by distributive and redistributive politics intensify inflationary pressures even in countries with independent Central Banks and neocorporatist arrangements; (3) Inflation is determined partially by the ideology of the party controlling government. Leftist governments in pursuit of income redistribution produce higher inflation than conservative governments; (4) Elections do not have significant effects on inflation under any structural circumstances; and (5) Neocorporatism does not consistently reduce inflation or contain the inflationary effects of partisan manipulation and fiscal expansion. However, neocorporatism may stop inflation if wage moderation by labour is accompanied by the government's commitment to pursue restrictive monetary policy.     

The Origins of Conflict in Polycentric Governance Systems

Natural resources are governed by polycentric systems, which can be conceptualized as an “ecology of games” in which policy actors participate in multiple policy forums governing interdependent issues. This article analyzes why actors perceive different payoffs across the forums in which they participate, ranging from mutually beneficial games of cooperation to conflictual zero-sum games in which one actor's gain means another actor's loss. The authors develop hypotheses at the level of the individual, the forum, and the overall polycentric system and test them using survey data collected in three research sites: Tampa Bay, Florida; the Paraná River delta, Argentina; and the Sacramento–San Joaquin River delta, California. The empirical findings suggest that levels of conflict in policy forums are higher when the actors who participate in them are concerned with hot-button issues, when the forums have large and diverse memberships, and in systems with a long history of conflict. The results shed new light on the drivers of conflict and cooperation in complex governance systems and suggest ways to manage conflict.     

The discursive micro-politics of blame avoidance: unpacking the language of government blame games

Policymakers often engage in blame avoidance behaviour that affects the ways in which they structure their organisations, adopt policies and operating routines, and present their work to the public. The linguistic aspects of such behaviour have received relatively little academic attention. In this paper, I seek to advance blame avoidance scholarship by introducing to its analytical toolbox useful conceptual instruments from linguistically informed discourse studies. Based on a multidisciplinary literature review, I show how the discursive study of policy-related blame games is situated within the wider scholarship dealing with a variety of blame phenomena. I provide an inventory of the micro-level building blocks of blame games: discursive strategies of persuasion, and narratives of cause, failure, and scandal. I suggest that by treating government blame games as mediated ‘language games’, policy scholars can complement the analysis of various political variables traditionally discussed in policy literature with detailed understanding of the micro-politics of presentational blame avoidance.     

Russian Voting and the Initial Economic Shock of Hyperinflation

This paper addresses the issue of economicvoting in transitional democracies using data from the Russianfederal elections. It argues that the shock of inflation thatfollowed the fundamental economic reform has a lastinginfluence on voters. Specifically, it shows that in Russia,where inflationary policy led to hyperinflation and thewidespread loss of personal savings, the magnitude of savingslost at that time continues to explain a significant portionof the variation in the regional support for the Communistparty in parliamentary and presidential elections.     

The Rising Tide Economy: Lessons from the Squeezed Middle for Progressive Economic Policy

For all its rhetorical potency, the policy implications of the ‘squeezed middle’ are yet to be fully explored. This article looks at what the phenomenon means for the design and prosecution of progressive economic policy. It argues that any progressive government today needs to adopt a new first order goal of economic policy: ensuring that the material wellbeing of ordinary working people rises when the economy grows, a project referred to as ‘building a rising tide economy’. This objective would sit in addition to the traditional goals of sustained GDP growth, high employment, low inflation and poverty reduction. It would have real implications across a range of important policy areas.     

Wire-Walking: Risk Management and Policy Experiments in China from a Comparative Perspective

Abstract

Policy scientists have long examined how policy innovation has emerged and diffused by focusing on the interaction between agents and policy programs. In contrast, this article focuses on how uncertainty in policy environments has affected the fate of policy innovation in an authoritarian state. Using original data from China’s official newspaper, the People’s Daily,it is found that the central government’s decision to promote sensitive policy experiments is a function of the perceived risks in the policy environment. The U-shaped relationship between the promotion of sensitive policy innovation and inflation reflects the wire-walking behavior of China’s central government. The central authority in China tends to promote fewer sensitive political experiments when inflation increases and resumes promoting experiments when the inflation rate passes a certain tipping point. It is also found that the central authority intentionally regulates the promotion of political experiments during important political events.     

Time inconsistency of monetary policy: Empirical evidence from polls

While the basic model of time inconsistency, put forward by Barro and Gordon (Barro, R. J., & Gordon, D. B. (1983). Journal of Political Economy, 91, 589–610) is widely accepted now, several authors have expressed serious doubts about the empirical relevance of the model in explaining inflation. Interestingly enough, few attempts have been made so far to test for the existence of inflationary biases empirically. Theory predicts a positive correlation between a monetary authority's relative preference for the high employment goal and inflation. Using polling data from six countries as a proxy for public preferences we provide empirical evidence in favor of the Barro-Gordon-model.     

Collaborative Institutions in an Ecology of Games

This article seeks to improve our understanding of policy institutions and cooperation by adapting Long's (1958) analysis of the ecology of games to the context of collaborative land use and transportation planning in California. The traditional institutional rational choice analysis argues that collaborative institutions reduce the transaction costs of cooperation among multiple policy actors. The ecology of games framework extends IRC by emphasizing the consequences of multiple institutions and identifies several reasons why collaborative institutions may actually reduce the amount of cooperation in existing policy venues. Analyses of survey data from policy actors in five California regions demonstrate that higher levels of cooperation in collaborative institutions are associated with lower levels of cooperation in other land‐use and transportation planning institutions.     

The Congress and fiscal policy

Although the common belief is that the Congress has paid little attention to fiscal policy, the same kinds of political-economic models which have been used to explain presidential budgetary policy may be used equally well to explain congressional budgetary behavior. The Congress' fiscal policy appears to be systematically sensitive to both economic and political factors. Changes in the unemployment rate have a major impact on congressional budgetary policy. As for political factors, the President's lead is followed most closely on revenue proposals and not at all on the expenditure side. The electoral cycle, in particular the off-year congressional election year, is also important; inducing larger deficits and smaller increases in revenues. When the influences on congressional fiscal behavior are compared with those on presidential behavior, the sources of the generally more expansionary congressional fiscal policy are identified. Congressional budget deficits increase in response to increased rates of unemployment but are insensitive to increases in inflation. In contrast, presidential budgets are heavily influenced by inflation and the growth in personal income — increases in each resulting in smaller proposed deficits — as well as by unemployment rates. In years in which both unemployment and inflation are increasing, the combination of the two (assuming a one percentage point change in each) implies an increase in the congressional deficit of $6.7 billion but a decrease in the president's proposed deficit of $2.5 billion. The implications of this study are a challenge to the literature which makes the President the central actor in macro-economic policy.     

Inflationary effects of oil price shocks in Indian economy

Stabilising inflation around certain preconceived level remains the predominant objective of monetary authorities all over the world as its variability has crucial ramifications on the real economy. However, the effective operation of monetary policy to this end largely hinges on the nature and dynamics of inflation both in the short‐run and long‐run. In this context, the present study focuses on theoretical investigation of how crude oil price fluctuations affect inflation in a real economy. Moreover, the study examines the nature of relationship between crude oil price fluctuations and inflation and its impact with reference to Indian economy. The study suggest that, in India, although the price of petroleum products are insulated against international crude oil price fluctuations by way of subsidies in order to curb inflation, in the long run, inflation manifest itself in the form of worsening fiscal deficit and undermine the sustainability of public debt. Copyright © 2016 John Wiley & Sons, Ltd.     

Inflation,recession and the federal budget deficit (or,blaming economic problems on a statistical mirage)

Policy proposals to balance the budget and to limit government spending assume that budget deficits cause substantial harm, either increasing inflation or crowding out private borrowing from credit markets. These assertions have the support of policymakers across the breadth of the political spectrum, and dominate current political debate on macroeconomic policy. However, macroeconomic theory fails to provide a clearcut causal connection between budget deficits and larger economic problems such as inflation and recession. Thus, policies could be enacted that attack the symptoms instead of the causes of the deficit.We use the Granger causality test to find the causal relationships between budget deficits and inflation, GNP, and private investment respectively, for seventeen OECD countries for the period 1949–1981. Deficits do not cause changes in these variables; rather there is weak evidence that inflation and recession cause deficits. This implies that deficits are a symptom rather than a cause of inflation and reduced national output. So, if our goal is to reduce inflation and increase output, we should look to more direct policies than reducing deficits.An earlier version of this article was presented at the Annual Meeting of the American Society for Public Administration, New York, April 16–19, 1983.     

Multilevel blame games: Blame‐shifting in the European Union

Who blames whom in multilevel blame games? Existing research focuses either on policymakers' preferences or their opportunities offered by the institutional structures in which policymakers operate. As these two strands of literature barely refer to each other, in this article we develop an integrated theoretical model of blame‐shifting in multilevel governance systems and assess it empirically. In line with the first strand, we assume that policymakers have a preference for shifting blame onto actors on a different level from themselves. In line with the second, we suppose that opportunities for doing so depend on institutional responsibility for policymaking and policy implementation. We check the plausibility of our integrated model by examining policymakers' blame attributions in three cases where European Union migration policies have been contested: border control, asylum, and welfare entitlements. We find that our integrated model does better in explaining blame‐shifting in these cases than the isolated models.