The effects of decentralization on special interest groups

Public Choice - It is well established in the literature that the number of interest group organizations varies across countries and states, with economic freedom and other institutional factors...     

The political economy of food pricing: An extended empirical test of the interest group approach

Several recent studies have documented the magnitude and impact of distortions in food pricing. However, little attention has been paid to the nature of the political agendas that determine the levels of direct and indirect protection granted to producers and consumers. This paper offers evidence that, regardless of the degree of economic development, the level of political pressure wielded by interest groups in food markets, and hence the level of protection they receive, is an inverse function of the relative size of their constituencies. The results recommend the application of collective action concepts to the understanding of agricultural policies in countries which are at different stages of development.     

The causal nexus of interest rate policy and gold market: The case of Turkey

The relevance of gold to the financial market and global economies is responsible for the commodity's (gold) link with financial instruments such as the oil price, currency and gold price, stock index, and other commodities price. In this case, the causal analysis between the interest rate and the gold price has been examined in a novel approach. This study uses the standard Granger causality approach to test the relationship for the economy of Turkey over the period June 1, 2000–June 1, 2017. The results revealed that while gold price depends on daily announcements, demand, and supply, the interest rate depends on some factors such as the monetary policy of the central bank, inflation rate, and different macroeconomic parameters. Thus, the causality between the two financial instruments is observed to be significant. According to the conducted statistical analysis, the interest rate and gold price have interaction between each other. Because there is insufficient evidence in the extant literature that establishes a causality relationship between the two variables, the current study is believed to enhance policy directives and contribute to the financial literature. Considering the peculiar situation of the Turkish financial market, this novel approach presents significant policy directions.     

An auction market for journal articles

We recommend that an auction market replace the current system for submitting academic papers and show a strict Pareto-improvement in equilibrium. Besides the benefit of speed, this mechanism increases the average quality of articles and journals and rewards editors and referees for their effort. The “academic dollar” proceeds from papers sold at auction go to authors, editors and referees of cited articles. This nonpecuniary income indicates the academic impact of an article—facilitating decisions on tenure and promotion. This auction market does not require more work of editors.     

The Albanian approach to municipal borrowing: From centralized control to market discipline

Local governments (LGs) in transitional countries face pressing infrastructure needs, which, given the severe shortcomings of traditional funding, make a strong case for debt financing. This article explores the case study of Albania, using document analysis and interviews with mayors, civil servants, citizens and investors. We go beyond an analysis of technical aspects (macroeconomic conditions and legal constraints on borrowing) to include ‘soft’ elements (political and managerial issues, attitudes of key actors), with the aim of highlighting the approach adopted under current policies and the approach that should be adopted. Favorable macroeconomic conditions and the completeness of the legal framework have motivated policy‐makers to choose the market model. Their aim is to develop the financial market rapidly; however, the development of sound management systems at the local level is largely ignored. We argue that the role of managerial capacities, public accountability and professional mechanisms is not adequately taken into account. Future policies need to make the best use of some early experiences of public participation and build upon the extensive training in accounting and auditing issues provided to local civil servants in order to exploit other models of municipal borrowing control. Copyright © 2010 John Wiley & Sons, Ltd.     

The stability of logrolling: An expectations approach

This essay provides an explanation for the existence of stable logrolling arrangements. The model presented assumes that issues are voted on one at a time, that people are risk averse, and that each person forecasts future issue decisions with a random variable whose mean is linear in the alternatives of the present issue. We show that under this model, the expectation that logrolling will take place stabilizes the logrolling process. For this expectation to be stable, it must be symmetric, which means that revoting of issues must be possible. Since revoting is possible in institutions such as Congress, we conclude that an important set of real world voting bodies satisfies the conditions for stable logrolling.     

Some effects and noneffects of campaign commercials: An experimental study

This paper addresses the question of how TV commercials can be used to build support for a candidate. Employing experimental methods, the authors tested the independent effects of several advertisement variables. Spot advertisements of an actual congressional candidate were produced by the authors and shown to groups of viewers who had no other information about the candidate. Evaluation of the candidate differed little among experimental groups, and the lack of extreme differences suggests that the extent to which voters can be manipulated by manufactured images is severely limited. The implications of these findings for candidates and campaign professionals are discussed.     

Competing bureaus and politicians: A compliance approach to the diversion of public funds

This article analyzes the effects of the compliance relationship between the governing party and two competing bureaus producing differentiated goods. We assume that the three players simultaneously and independently take their decision in terms of production and rents with perfect knowledge of each others strategies. Unlike Niskanen's competitive results, which are invariant with respect to the monopoly solution and only depend on the characteristics of the review process, here the budgetary equilibrium changes depending on the nature of the goods supplied by the competing bureaus and is affected both by their demand and cost conditions and by the resources available to the governing party.     

From occupational involvement to political participation: An exploratory analysis

Since Mill and Tocqueville, theorists have speculated that local participation, particularly involvement in workplace decision making, contributes to participation in wider politics. Theory suggests there should be two types of relationships between work and politics. First, there should be a correspondence between similarly formal or authoritative occupational and political involvements. Second, occupational participation should generate political participation. Thus, both authority patterns and actual participation connect work to politics.This paper hypothesizes that, other things being equal, occupational involvement, such as authority and participation at work, generates wider political participation, and that this influence occurs most strongly across levels of similar formality between the occupational and political spheres. The study finds that work participation, in fact, generates political participation, and that the connection is strongest along a hierarchy of formality connecting participation from the workplace to politics.An earlier version of this paper was presented at the Panel on Innovations in the 1985 National Election Study Pilot Survey, American Political Science Association, Washington, DC, August 1986.     

Demands for public spending: An attitudinal approach

This paper develops a conceptual model of public spending demands applicable to attitudinal data on public spending demands and demonstrates its usefulness by estimating qualitative demand equations for six public spending categories: education, welfare, housing, health, highways, and defense. The estimation, based on a data set constructed by merging the 1973 Survey of Consumer Attitudes and Behavior with relevant government data, reveals that tax-prices, private benefit measures and socio-demographic characteristics are instrumental in explaining differences in the public spending demands among individuals.     

The states' scramble for federal funds: Who wins,who loses?

Interstate differences between federal expenditures and receipts are very large, generally favoring the southern and western states. The more slowly growing states of the northeast and midwest point to these imbalances as one source of their economic difficulties. The major source of disparity lies in revenue patterns, not in expenditure allocations. Reallocating federal expenditures on an equal per capita basis would reduce regional disparities in flows of federal funds by only about 25 percent. The principal regional beneficiary of equalized expenditures would be the midwest states of the Great Lakes region. However, contrary to the expectations of proponents of such redistribution, the southeastern states would also be major beneficiaries while the larger states of the mideast and New England would be hurt. Selective expenditure changes might be targeted more effectively to individual regions or states; but finding consistent, generally acceptable principles upon which to base such changes is a formidable problem.     

Industry characteristics and interest group formation: An empirical study

The role of interest groups in the political process has been the subject of much analysis in both political science and economics. However, few studies have examined directly the factors which influence the variation in interest group formation across industrial sectors and between countries. Using data on 75 industrial sectors in 10 countries, we examine the way in which variations in interest group formation are explained by variations in industrial and political characteristics. In cross-sectional empirical relationships we test for the significance of a variety of industry and political variables. Our results indicate that industry characteristics such as the proportion of total demand purchased by households and the concentration ratio are related to variations in interest group formation. We discuss the implications that our results have for recent theoretical work on the effect of interest groups on economic policy.For helpful comments, we would like to thank Antonio Estache, Bruce Gardner, Dennis Mueller, Mancur Olson, and participants at the meetings of the Public Choice Society and the Southern Economic Association. The International Institute of Management of Berlin, Paul Geroski, Neal Kennedy, Alexis Jacquemin, Kenneth Platto, Joachim Schwalbach, and Hideki Yamawaki helped in providing data. The Computer Science Center of the University of Maryland is acknowledged for provision of computational resources.     

Thalidomide, BSE and the single market: An historical-institutionalist approach to regulatory regimes in the European Union

Abstract.  The success of the European Union in regulating the safety of products in the single market differs widely. In the last decade, the regulatory regime for pharmaceuticals has functioned without raising public concerns. The establishment of a European agency for pharmaceuticals in the early 1990s has been evaluated positively by both producers and consumers, and there have been no large scandals so far. At the same time, the food sector was subject to a whole range of crises, of which the BSE scandal was certainly the most significant one. In reaction to this, the regulatory regime for foodstuffs was reformed by setting up the European Food Safety Agency in 2002. This article adopts an historical-institutionalist approach, and thus tries to give an explanation for the striking differences between the two regulatory regimes. Accordingly, the development of supranational regulatory regimes is distinguished by two critical junctures: a crisis of consumer confidence and the establishment of a single market. It is crucial which of these occurred first. If a crisis of consumer confidence leads to the establishment of national regulatory authorities, these authorities act as stakeholders, which could be an obstacle for harmonization, but also ensures a necessary commitment to health and consumer protection once a single market is set up. If national regulatory authorities are missing, it might be easier to set up a single market, but a regulatory deficit is more likely to occur and, in case of a crisis, the whole regulatory regime has to be established at the supranational level.     

The interest cost savings from municipal bond insurance: The implications for privatization

Previous studies of privatization have considered the cost-effectiveness of privatizing more labor-intensive services. This study examines the effectiveness of public and private delivery of a more capital-intensive service: insuring municipal bonds against default. Credit enhancement for local government bonds is available from private insurance companies and from some state governments. Because of their reduced default risk, bonds backed by a third party should incur lower interest rates. This research considers two questions. Does a third party guarantee lower interest rates? Is private bond insurance more cost-effective than the credit enhancement programs of state governments in lowering interest rates?