Abstracts of published papers for Jac C. Heckelman
(below in chronological order; alternatively available organized by
subject instead)
(select papers below available in pdf format)
- Aid, Economic Freedom, and Growth
(with Stephen Knack)
Contemporary Economic Policy forthcoming
Abstract. Foreign aid has often been intended by donors to entice recipient nations into policy and institutional reforms favorable to private sector economic development. In this study, we investigate the relationship between aid and changes to economic freedom in recipient nations over the 1990-2000 decade. The evidence is mixed. In general we find that foreign aid has no significant effect on economic freedom overall. However, by utilizing an hedonic approach on the different categories of economic freedom we find that aid has still managed to contribute toward a policy and institutional environment favorable to growth, as the different categories of economic freedom improved by aid more than offset those which are harmed by aid, in terms of their impact on growth.
-
Relationships among Democratic Freedoms in the Former Soviet Republics:
A Causality Analysis
Constitutional Political Economy
forthcoming
Abstract. Empirical studies often use Freedom House ratings for Political Rights and/or Civil Liberties as institutional proxies for the degree of democracy. In this study, Granger-causality tests are used which reveal that Political Rights tend to precede Civil Liberties, but not the reverse, in a panel data set of former Soviet Republics. For transition nations, Freedom House also publishes a separate breakdown of democratic characteristics. Empirical tests suggest Civil Society and Judicial Framework Granger-cause Electoral Process, Governance Granger-causes Civil Society, and all four components Granger-cause Independent Media. Each measure of democracy is related to at least one other but no evidence for dual causation is found.
-
Convergence of Voter Turnout Rates in U.S. Presidential Elections
Review of Regional Studies
forthcoming
Abstract. Convergence tests are performed on state level turnout rates for U.S. presidential elections from 1896 to 2004. The degree of dispersion in turnout has steadily declined since 1940, suggestive of general overall convergence taking place. Individually, it is found that 29 of the 48 continental states are stationary in their relative trend levels, and 42 states either do not significantly differ from the national average or are significantly trending toward the national average. In total, 25 of the 48 states pass tests for both stochastic and ß-convergence, suggesting that national convergence is being achieved by roughly half the states.
-
A Rational Choice Model for the Dakota Effect
PS: Political Science and Politics
41: 677-678, 2008
(pdf)
Abstract. In a recent issue, Young and Sigelman (2008) present evidence of a “Dakota effect,” in which persons born in the Dakotas are disproportionately likely to represent their home state, other states, and also generate government spending directed toward the Dakotas. These authors are unable to explain the causal underpinnings for overrepresentation in Congress or the Dakotan natives' keen ability to direct pork back to these two states.
As is now well established, rational choice modeling can be successfully
employed to explain every political phenomenon under the sun, as well
as some over the sun. As such, a rational choice model will be employed here,
and using ficticious data, empirical analysis will be shown to corroborate the model.
We believe this to be a major breakthrough.
-
Voting on Slavery at the Constitutional Convention
(with Keith Dougherty)
Public Choice
136: 293-313, 2008
(pdf)
Abstract. This paper provides the first empirical study of delegate voting behavior on issues of slavery at the U.S. Constitutional Convention. We analyze two categories of votes: those related to apportionment and those related to the regulation of the slave trade. Although it is widely believed that delegates voted consistent with the interests of their states on issues of slavery, we find that for votes on apportionment, the effect of state interests was enhanced by both the delegate’s personal interest and his religious background. For votes regulating the slave trade, state interests had a significant effect but only within specific regions.
-
Foreign Aid and Market Liberalizing Reform
(with Stephen Knack)
Economica
75: 542-548, 2008
(pdf)
Abstract. Market-oriented economic policies—reflected in limited economic activity by government, protection of private property rights, a sound monetary policy, outward orientation regarding trade and efficient tax and regulatory policy—have been strongly linked to faster rates of economic growth. Foreign aid is often provided in the belief that it encourages liberalizing reforms in these areas. This paper analyses the impact of aid on market-liberalizing policy reform, correcting for the possible endogeneity of aid. Results indicate that higher aid slowed reform over the 1980 to 2000 period, as measured by a broad index of policies. Disaggregating policy into five areas, aid is associated with slower reform in some policy areas but not in others. Disaggregating by decade, aid’s adverse impact on policy reform is much more pronounced for the 1980s than for the 1990s.
-
Joint Determination of Regulations by the Regulator and the Regulated: Commercial Bank Reserve Requirements, 1875-1979
(with John Wood)
Eastern Economic Journal
34: 158-171, 2008
(pdf)
Abstract. We apply the theory of clubs to bank decisions on choosing membership in the national system and being subject to federal regulations, or remaining outside the system and opting instead for state regulation. Although costs to national membership are typically higher, member banks can use their influence to reduce these costs. This is expected to be more prominent for the larger banks, which retain greater influence on the regulators. Thus, the theory predicts membership depends on costs, which in turn depend on membership. We test these relationships in a system of simultaneous equations for the periods 1875-1913, 1914-1934, and 1935-1980. Our results are consistent with the notion of large bank memberships responding to changes in reserve ratios, and reserve ratios responding to membership rates for large banks. In addition, we find bank sensitivity to national reserve ratios to be lowest when the Fed was given additional discretion in setting reserve ratios post 1935, and federal regulator responsiveness to large bank membership was greatest during this time as well.
-
Senate Elections with Independent Candidates
(with Andrew Yates)
Journal of Theoretical Politics
20: 31-46, 2008
(pdf)
Abstract. Assuming strict two party competition, policy balancing models of the U.S. senate imply that senators from the same state will often be from opposite parties and have great ideological divergence. We analyze the effect of independent candidates on these implications. Our theoretical model implies the two state senators will generally not be from opposite parties and will be closer in ideological space than if they were elected under strict two party competition. Empirical analysis of senate composition from 1991-2002 supports the theory.
- On Voting by Proportional Lottery
Korean Journal of Public Choice 2: 1-11, 2007
Abstract. Lottery rules are rarely used beyond breaking a tie vote. Yet, proportional lotteries have several attractive features which are discussed here. First, lotteries break the tyranny of the majority. Second, any proportional lottery which uses only a single round of voting to determine the lottery weights followed by a single weighted draw will ensure sincere preference revelation by the voters. Third, lotteries respect many of the general axiomatic principals invoked for social choice rules, in a probabilistic sense.
- An Economic Interpretation of the Constitutional Convention of 1787 Revisited
(with Keith Dougherty)
Journal of Economic History 67: 829-848, 2007
(pdf)
Abstract. Empirical studies of delegate voting at the Constitutional Convention have relied on the same 16 roll call votes. This paper re-examines various assumptions used in the collection of these data. We first create a baseline regression. We then consider the effect of dropping delegates not in attendance, re-inferring the votes from primary sources, examining various sub-samples of the roll calls, and reconstructing constituency variables to include state districts. Our findings suggest that for decision making at the Constitutional Convention, personal interests were indeed important but constituent interests were less important than previously claimed.
- Special-Interest Groups and Volatility
(with Dennis Coates and Bonnie Wilson)
Economics Bulletin Vol 15, No. 18: 1-13, 2007
(pdf)
Abstract. This paper explores the relationship between special-interest groups and volatility of GDP growth. In an unbalanced panel of 108 countries,
we find a significant negative relationship between the number of interest groups in a country and the volatility of GDP growth.
- Determinants of Interest Group Formation
(with Dennis Coates and Bonnie Wilson)
Public Choice 133: 377-391, 2007
(pdf)
Abstract. It is widely recognized that interest groups affect both microeconomic and macroeconomic outcomes. However, few researchers have attempted to discern empirically the factors that contribute to interest group activity. This paper provides a test of several theories of group formation in a panel setting. A nation's stability, socioeconomic development, political system, size, and diversity all appear to contribute to interest group formation as predicted by theory.
- Explaining the Rain: The Rise and Decline of Nations after 25 years
Southern Economic Journal 74: 18-33, 2007
(pdf)
Abstract. In the quarter-century since the publication of Rise and Decline of Nations, a large literature has evolved testing the central hypothesis regarding Olson’s thesis on institutional sclerosis. These tests have taken the form of both econometric regression analysis involving a sample of various nations and detailed narrative case studies of specific nations. Tests have appeared in both economics and political science journals, as well as in collected volumes and independent books, performed primarily by authors from America and Europe. A review of over 50 separate works reveals that on the whole the theory of institutional sclerosis is generally, but certainly not universally, supported. No systematic bias in favor or opposition to Olson is found to have arisen based on methodology, publication outlet or authorship location.
- Voting on Voting with the Feet: A Cross-County Analysis of the Tennessee Popular Refernda to Secede from the Union
(with John Dinan)
Constitutional Political Economy 18: 83-97, 2007 (pdf)
Abstract. We analyze a unique case of voting on voting with the feet, when Tennessee twice considered secession from the Union in 1861 by popular referenda. The initial votes to hold a convention, and to send disunion delegates to a convention, failed, but after the Confederate states adopted a new constitution and the bombing of Fort Sumter took place, a second set of votes to separate from the union, and to join the confederacy, passed. Regression results support the importance of both economic interests and political tendencies, along with regional differences, in explaining the variation in votes across counties. Class distinctions were not found to be significant.
- A Pivotal Voter from a Pivotal State:
Roger Sherman at the Constitutional Convention (pdf)
(with Keith Dougherty)
American Political Science Review 100: 297-302, 2006
Abstract. Robertson (2005) argues that Roger Sherman was surprisingly influential at the
constitutional convention. Using empirically estimated ideal points, we show that Sherman was
indeed a pivotal voter from a pivotal state. However, we also demonstrate that if the votes were
tallied by delegates individually, rather than grouping them by home state, then Sherman would
have been less pivotal. This suggests that the voting procedures adopted at the constitutional
convention may have affected Sherman’s ability to get his interests enacted. Such institutions
might have been more responsible for making Sherman influential than his legislative abilities.
- Another Look at the Evidence for Rational Partisan Cycles
(pdf)
Public Choice 126: 257-274, 2006
Abstract. In presenting evidence in favor of rational partisan cycles,
where electoral victories by leftist parties are expected to create temporary expansions
and electoral victories by rightist parties are expected to create temporary recessions,
Alesina, Cohen and Roubini (1999) rely upon autoregressive time series intervention regressions.
Theses regressions, however, are not consistent with their model. In this paper, a model is
derived which is consistent with the intervention approach in its reduced-form.
The differences between the models are highlighted and new empirical estimates are presented
on a panel of seven OECD nations, which generally does not support the rational partisan cycle
implications.
- Do Economists Differ from Political Scientists on Public Choice? Evidence from a Survey
(with Robert Whaples)
Korean Journal of Public Choice 1: 35-41, 2006
Abstract. Economists and political scientists are thought to disagree on many topics, including those in the field of public choice which overlap the two disciplines. To better determine if this is true, and on which public choice topics in particular there is disagreement or consensus, we circulated a survey of public choice questions to random members of the American Economics Association and American Political Science Association. Analysis of the returned questionnaires suggests normative differences appear to be more systematic than are differences in the beliefs of basic modeling assumptions, which may influence the conclusions drawn regarding the outcomes.
- Proxies for Economic Freedom: A Critique of the Hanson Critique (pdf)
Southern Economic Journal 72: 492-501, 2005
Abstract. Economic freedom indicators have become quite popular recently as a useful tool to quantify the relationship between a country's institutions and its prosperity. Hanson (2003) criticizes these types of studies for: (1) failing to adequately distinguish between different proxies for economic freedom, (2) not considering the potential for endogeneity, and (3) for accepting significance of economic freedom's ability to promote prosperity even though regression analysis generates "nonsensical" results. Closer inspection reveals that most of his arguments are questionable, do not apply to much of the literature, or are not original, and that he is guilty of misinterpreting his own econometric evidence relating freedom to the level of GDP.
- Political Monetary Cycles under Alternative Institutions: The Indepedent Treasury and the Federal Reserve (pdf)
(with John Wood)
Economics and Politics 17: 331-350, 2005
Abstract. The theory of opportunistic political business cycles predicts incumbent politicians will alter their economic policies to spur short-run growth to attract additional votes for the upcoming election. There has not been much emphasis on the possibility of historical political business cycles prior to the Keynesian Revolution. No study has yet undertaken a systematic approach to testing for policy cycles during this period. Our study will bridge this gap by considering cycles in monetary policy for the periods of 1879-1914 until the start of Fed operations, and 1914-1932 until abandonment of the gold standard. To properly test for political cycles, it is necessary to develop reaction functions for the Treasury and compare against the reaction function later held by the Fed. This also reveals that creation of an independent monetary authority to be insulated from political pressures changed the manner in which policy was directed, aside from political issues. The evidence is not consistent, however, with monetary cycles closely tied to electoral concerns.
- The Anti-Tobacco Movement during the Progressive Era: A Case Study of Direct Democracy in Oregon (pdf)
(with John Dinan)
Explorations in Economic History 42: 529-546, 2005
Abstract. Little attention has been given to the cigarette bans that were enacted by many states in the late-19 th and early-20 th century. The recent study by Alston et al. (2002) represents the only empirical analysis of this issue. Alston et al., as typical for many other studies of historical regulatory movements, rely on legislative vote outcomes. In this article we examine the only occasion when a cigarette ban was put to a popular vote, in Oregon in 1930, and highlight the benefits of studying direct democratic votes to assess support for regulatory movements. To study the relationship between the anti-cigarette movement and other reform movements of the era, we compare the determinants of support for the cigarette ban with support for an Oregon alcohol prohibition referendum in 1933. Our results suggest that supporters of both reform movements were more likely to be found in counties with higher percentages of women, evangelical Protestants, and rural residents, which contrasts with Alston et al.’s study of state legislative behavior. In addition, greater support for alcohol prohibition in particular was found in counties with a larger percentage of immigrants and, to a lesser extent, more registered Republicans.
- A Comparison of Aggregation Methods for Measures of Economic Freedom (pdf)
(with Michael Stroup)
European Journal of Political Economy 21: 953-966, 2005
Abstract. Empiricists have used various editions of an economic freedom index (EFI) initially developed by Gwartney, Lawson and Block (1996) to examine the relationship between economic freedom and other socio-economic variables, such as growth or investment. The EFI quantifies the level of particular institutional characteristics thought to promote economic freedom and aggregates them into a single index value. The aggregation procedures utilized by Gwartney and Lawson in developing their index have changed over time and other scholars have promoted alternative methods. We examine several index aggregation procedures and show that each design may have potential methodological flaws which can greatly affect the empirical findings.
- Public Choice Economics: Where Is There Consensus? (pdf)
(with Robert Whaples)
American Economist 49: 66-78, 2005
Abstract. Are Public Choice scholars' conclusions accepted by rank-and-file economists and political scientists? If not, why not? To answer these questions we use survey results to compare the conclusions of self-identified public choice scholars with those in the adjacent disciplines of economics and political science. We examine thirty-five propositions in seven areas: (1) assumptions about political actors; (2) normative beliefs about government and voting; (3) elections and economic performance; (4) parties, platforms, voting and preferences; (5) government's purposes and growth; (6) individual behavior--voting-with-feet and free riding; and (7) government and the market. We conclude that, although there is a consensus on many of the issues, there is substantial remaining disagreement on many questions that appears to be tied to the competing presuppositions of scholars in economics and political science.
- Fractionalization Effect and Government Financing (pdf)
(with Hakan Berument)
International Journal of Applied Economics 2: 37-49, 2005
Abstract. The weak government argument claims that fractionalized
governments (coalition or minority governments) have more difficulty increasing their tax revenues or
decreasing their spending than majority governments. This implies that weaker governments are associated
with higher government deficits. In this paper, we test the implication of a fractionalization effect
within the optimum financing model that suggests governments raise both their tax and seigniorage revenues
to finance additional spending. We test the hypothesis for a sample of ten OECD countries for the period
1975-1997 and extend the period for the non-EU nations in the sample to cover 1975-2003. The empirical
evidence presented here supports a positive relationship between the degree of fractionalization and
seigniorage revenue. Our results also suggest that creation of seigniorage revenue is lower under
right-wing governments and an independent central bank.
- Winning Probabilities in a Pairwise Lottery System with Three Alternatives (pdf)
(with Fred Chen)
Economic Theory 26: 607-617, 2005
Abstract. The pairwise lottery system is a multiple round voting procedure which chooses by lot a winner from a pair of alternatives to advance to the next round where in each round the odds of selection are based on each alternative's majority rule votes. We develop a framework for determining the asymptotic relative likelihood of the lottery selecting in the final round the Borda winner, Condorcet winner, and Condorcet loser for the three alternative case. We also show the procedure is equivalent to a Borda lottery when only a single round of voting is conducted. Finally, we present an alternative voting rule which yields the same winning probabilities as the pairwise lottery in the limiting case as the number of rounds of the pairwise lottery becomes large.
- A Spatial Model of U.S. Senate Elections
(pdf)
WINNER OF FIRST GORDON TULLOCK PRIZE FOR BEST ARTICLE IN PUBLIC CHOICE BY YOUNGER SCHOLAR
Public Choice 118: 87-103, 2004
Abstract. The importance of primary elections is considered
within the context of U.S. Senate elections where senators serve overlapping
terms and voters are assumed to balance their two senators against each other.
Voters behave strategically in the primaries but convergence to the median position
is not achieved except as a knife-edge result. More generally, constraints in
the party space prevent the party of the sitting senator from obtaining the
median’s preference allowing the opposition party to nominate a candidate further
away from the median while still capturing the median voter. Empirical evidence
supports the notion that senate divergence is a function of the state primary
system.
- The Secret Ballot Protects the Incumbency
Advantage
(pdf)
The Independent Review 8: 419-425, 2004
Abstract. This paper outlines a theory in which incumbent
candidates are shown to benefit from secret ballot laws. The role of private
information is central to this result which can be explained as follows. First,
bribery is expected to occur under an open ballot system but not under secret
ballots since voters need not reveal their underlying preferences. Second, since
vote-buying efficiency differs between candidates when voter distributions are
unequal, candidates possessing an incumbency advantage are shown to be relatively
inefficient and thus benefit from eliminating the vote market.
- Are Public Choice Scholars Different?
(pdf)
(with Robert Whaples)
PS: Political Science and Politics 36: 797-799, 2003
Abstract. Critics of public choice analysis argue that
these scholars are different. They are self-selected into the field, their arguments
and conclusions are dominated by their personal ideological positions, and therefore
other scholars do not accept their results. A survey of members of the Public
Choice Society, American Economic Association, and American Political Science
Association shows that most of the public choice propositions accepted by public
choice scholars are also accepted by general economists, but less so by general
political scientists.
- Interest Groups and Investment: A Further Test of
the Olson Hypothesis
(pdf)
(with Dennis Coates)
Public Choice 117: 333-340, 2003
Abstract. Mancur Olson's institutional sclerosis hypothesis may be evident in the effects of
interest groups on investment in physical capital. To test this proposition, we use cross sectional data on 42
countries for which information on the number of interest groups is available to estimate the
effect of those groups on the share of GDP that goes into physical investment. The results indicate that interest groups
have a different effect on physical investment in OECD and non-OECD countries. In the OECD countries, we find support
for the hypothesis that interest groups harm investment in physical capital. In developing countries, interest groups
either have no effect on physical investment or they have a slight beneficial impact.
- Absolute and Relative Effects of Interest Groups on
the Economy
(with Dennis Coates)
Collective Choice: Essays in Honor of Mancur Olson,
(Jac C. Heckelman and Dennis Coates(eds.)), Springer-Verlag, pp. 129-142, 2003
Abstract. We test for the impact of interest groups on
economic growth among the OECD nations. We find more evidence of an absolute
effect from the number of groups than a relative effect of the number of groups
compared to the size of government. The effects are non-linear, as additional
group formation is less harmful the more groups that already exist, although
total growth would still be hampered by their presence. When controlling for
the absolute number of groups, the relative measure has no additional impact,
but controlling for the relative measure increases the estimated average effect
of the absolute number of groups. In addition, the negative influence of a given
number of interest groups on growth is lessened over time.
- Probabilistic Borda Rule Voting
(pdf)
Social Choice and Welfare 21: 455-468, 2003
Abstract. An alternative voting system, referred
to as probabilistic Borda rule, is developed and analyzed. The winning alternative
under this system is chosen by lottery where the weights are determined from
each alternative's Borda score relative to all Borda points possible. Advantages
of the lottery include the elimination of strategic voting on the set of alternatives
under consideration and breaking the tyranny of majority coalitions. Disadvantages
include an increased incentive for strategic introduction of new alternatives
to alter the lottery weights, and the possible selection of a Condorect loser.
Normative axiomatic properties of the system are also considered. It is shown
this system satisfies the axiomatic properties of the standard Borda procedure
in a probabilistic fashion.
- And a Hockey Game Broke Out: Crime and Punishment
in the NHL (pdf)
(with Andrew Yates)
Economic Inquiry 41: 705-712, 2003
Abstract. We apply the economic theory of crime to the
National Hockey League. We analyze a natural experiment in which games during
the 1999-2000 season had either one or two referees. We determine the effect
of the number of referees on both the number of penalties called and the number
of rules infractions committed by players. The results indicate that increasing
the number of referees leads to greater enforcement of the rules but does not
significantly deter players from committing infractions.
- On the Measurement of Comparative Economic Freedom
Across Nations (pdf)
International Journal of Business
and Economics 1: 251-261, 2002
Abstract. The measurement of economic freedom is discussed.
One particular set of freedom indices, developed by Heritage Foundation, is
detailed including how the indices are constructed and potential problems in
the methodological design. Comparisons are made for the different levels of
freedom individual nations and regions achieve.
- Electoral Uncertainty and the Macroeconomy: The Evidence
from Canada (pdf)
Public Choice 113: 179-189, 2002
Abstract. The partisan advantage and incumbency advantage
versions of the rational partisan business cycle model are tested. Both models
assume agents form weighted averages of partisan inflation rates during an election
period, and differ only in how the weights are formed which alters the form
of business cycles. The partisan advantage assumes fixed weights designated
for both major parties in each election, whereas the incumbency advantage model
assumes fixed weights for whichever is the incumbent and opposition party in
each election. The symmetric representation assumes each election is a toss-up.
Strongest support is found for a temporary symmetric effect on the level of
output, but none of the models are supported for temporary electoral changes
in growth or unemployment rates.
- Variable Rational Partisan Business Cycles: Theory
and Some Evidence (pdf)
Canadian Journal of Economics 35, 568-585,
2002
Abstract. The Variable Rational Partisan Business Cycle
model is developed, where agents face uncertainty regarding the timing and outcome
of the next election. The model predicts that partisan influences on the economy
persist throughout the government's rule, and are further influenced, in the
opposite direction, by which party ruled in the previous period. Party popularity
also has a causal effect on the business cycle. Finally, the effects from changes
in election timing expectations are dependent on which party ruled in the previous
period. Empirical results for output and unemployment in Canada, Germany and
United Kingdom yield mixed support for the model.
- Incumbency Preservation through Electoral Legislation:
The Case of the Secret Ballot (pdf )
(with Andrew Yates)
Economics of Governance 3, 47-57, 2002
Abstract. The secret ballot
was designed to eliminate the incentive for candidates to purchase votes through
direct vote buying. When voters have private information on their candidate
preferences, incumbent candidates will generally be less efficient in purchasing
votes than their challengers. Incumbent candidates may therefore benefit from
the elimination of direct vote purchasing. Viewed in this vein, passage of secret
ballot laws by state legislatures can be seen as an institutional mechanism
to protect their incumbency advantage, rather than as an act of necessary electoral
reform to create fair elections and protect democracy.
- Size of the Military Sector and Economic Growth: A
Panel Data Analysis of Africa and Latin America (pdf)
(with Michael Stroup)
Journal of Applied Economics 4, 329-360,
2001
Abstract. We estimate the influence of defense spending
and military labor use on economic growth in African and Latin American countries.
Our model integrates disparate implications from the defense economics literature
into a Barro-style model of economic growth that controls for political and
economic institutional variation across countries. Our panel data analysis of
44 countries in Africa and Latin America from 1975 to 1989 also controls for
cross-country variation in lost human capital and public sector production inefficiencies.
We find empirical evidence that the defense burden on economic growth is non-linear,
with low levels of military spending increasing economic growth but higher levels
of military spending decreasing growth. We also find evidence that the influence
of military labor use on growth is non-linear, and exhibits a greater drag on
economic growth in those countries with relatively higher levels of adult male
education attainment.
- Rent-Setting in Multiple Winner Rent-Seeking Contests
(pdf)
(with Andrew Yates)
European Journal of Political Economy
17, 835-852, 2001
Abstract. In this paper we analyze a multiple winner
rent-seeking contest where the number of winners is set by a self-interested
regulator. The winners receive a license to compete in a market. The structure
of competition in the market influences the number of winners through the preferences
of the regulator. The model implies that Cournot competitors are often better
off than firms that are able to collude on output determination.
- Partisan Business Cycles under Variable Election Dates
(pdf)
Journal of Macroeconomics 23, 261-275,
2001
Abstract. This paper develops a model where rational
economic agents face uncertainty regarding the timing of elections and which
party will emerge victorious should an election occur. This electoral uncertainty
affects the macroeconomy, where the size and direction of the impacts are dependent
on the party in power in the current and previous period, time elapsed since
the last election, and party popularity. Leftist governments are expected to
sustain higher output levels throughout their electoral term compared to rightwing
governments, and the partisan differences will continue to increase until the
next election.
- The Econometrics of Rational Partisan Theory
(pdf)
Applied Economics 33, 417-426, 2001
Abstract. This paper develops an econometric intervention
model representing the standard empirical approach to testing Alesina's (1987)
Rational Partisan Theory implication that elections lead to short-term changes
in output growth and unemployment. This intervention approach may be subject
to two econometric difficulties. First, the cyclical nature of the autoregressive
variables suggest the regression residuals may be serially correlated. Second,
the election intervention variable may be endogenous to the cyclical variables.
Empirical support for the model is mixed. Ordinary Least Squares estimates for
both series produce a coefficient for the intervention variable which is of
the predicted sign but not significant. The output growth regression results
are robust to serial correlation and endogeneity concerns. For unemployment,
controlling for serial correlation generates a significant coefficient, but
adjusting for endogeneity does not.
- Which Economic Freedoms Contribute to Growth?
(pdf)
(with Michael Stroup)
Kyklos 53, 527-544, 2000
Abstract. The literature on economic freedom and growth
has utilized summary measures of freedom to determine its general significance
for economic growth. We believe the summary measures lead to misspecification
problems. We utilize Heston-Summers growth data to determine which of the disaggregated
categories of economic freedom lead to growth and find that only a few of the
indexes significantly affect growth. These growth regressions generate new weights
for aggregating the indexes into an overall summary measure. This new measure
can be interpreted as deriving a relative ranking of nations that have a relatively
higher presence of growth promoting economic freedoms and more restrictions
on those economic freedoms that inhibit growth.
- Consistent Estimates of the Impact of Special Interest
Groups on Economic Growth (pdf)
Public Choice 104, 319-327, 2000
Abstract. Empirical studies designed to test Olson's
(1982) theory of institutional sclerosis are typically forced to rely upon proxies
to measure the ability of special interest groups to engage in redistributive
activities, which in turn are expected to hinder economic growth. This note
shows that reliance on proxies biases the estimates toward zero. Here, instrumental
variable routines are utilized which increase the estimated impact of special
interests on the economy.
- Economic Freedom and Economic Growth: A Short-run
Causal Investigation (pdf)
Journal of Applied Economics 3, 71-91,
2000
Abstract: The freedom and growth literature has consistently
shown that nations which have fewer restrictions on private agents and transactions
tend to higher levels of economic growth. It is less clear, however, whether
freedom causes growth, growth causes freedom, or the two are jointly determined.
To assess these possibilities, Granger-causality tests are performed on annual
freedom indicators developed by the Heritage Foundation and national growth
rates. The underlying component indexes, which include Trade Policy, Taxation,
Government Intervention, Monetary Policy, Capital Flows and Foreign Investment,
Banking, Wage and Price Controls, Property Rights, Regulation, and Black Markets,
are also tested in addition to the summary freedom rating. The tests suggest
the average level of freedom in a nation, as well as many of the specific underlying
components of freedom, precedes growth. However, growth may precede one of the
component indexes (Government Intervention), and no relationship is found to
exist between growth and two of the indexes (Trade Policy and Taxation).
- Sequential Elections and Overlapping Terms: Voting
for U.S. Senate (pdf)
Journal of Economic Behavior and Organization
42, 97-108, 2000
Abstract. This paper presents a model in which voters
attempt to balance the ideological positions of their senate representatives.
Candidate positions are determined endogenously through a primary system. The
median voter theorem is applied in each election to determine winning platforms
based on voter preferences which may differ from their individual bliss points.
Contrary to the original median voter theorem, the main implications of this
model are that: (i) convergence on platform positions is not achieved in the
general election, and (ii) extremist candidates defeat moderates in the stable
long-run equilibrium.
- Revisiting the Relationship Between Secret Ballots
and Turnout: A New Test of Two Legal-institutional Theories (pdf)
American Politics Quarterly 28, 194-215,
2000
Abstract. Two theories within the legal-institutional
framework concerning the Australian Ballot System's effect on voter turnout
are analyzed. The vote market hypothesis assumes secret ballots were designed
to end the buying and selling of votes. The secrecy the new ballot provided
discouraged candidates from buying votes they could no longer verify, disproportionately
affecting poor voters who would respond to this loss of payments by voluntarily
abstaining. Alternatively, the theory of strategic disfranchisement predicts
blacks and illiterates were specifically targeted for disfranchisement. The
new ballots were expected to be more difficult for these voters to use and they
would then be effectively prevented from participating in the active electorate.
Although turnout decreases under either theory, the normative implications are
very different. Controlling for race and illiteracy, regression analysis suggests
poor voters were less likely to vote a secret ballot. A similar effect is not
found for black and illiterate voters when controlling for income. The evidence
is thus more consistent with the vote market hypothesis than a pure disfranchisement
effect.
- Testing Rational Partisan Theory when Elections are
Endogenous Events: Some Empirical Evidence from the United Kingdom
(pdf)
Quarterly Journal of Business and Economics
38, 45-56, 1999
Abstract. Rational partisan theory predicts macroeconomic
fluctuations are triggered by possible changes in government policies due to
elections. Empirical testing may fall prey to an endogeneity problem when incumbent
governments determine the timing of an election and voters respond to current
economic conditions in their choice of party support. Hausman tests suggest
elections in Britain are endogenous to growth and stronger support is found
for rational partisan theory using an instrumental variable routine.
- Adaptive Partisan Theory
Journal of Public Finance and Public Choice
17, 11-18, 1999
Abstract. Previous empirical studies designed to test
the rational expectations partisan model of Alesina [1987] have generally looked
for changes in real macroeconomic variables following a change in party power
(incumbent party loss), whereas the model predicts these variables should fluctuate
in a predictable manner even when the incumbent party is reelected. It is shown
in this paper that the previous evidence is supportive of a partisan policy
model where agents employ adaptive expectations, in which case only changes
in party power lead to partisan economic fluctuations of real variables.
- Federal Reserve Membership and the Banking Act of
1935: An Application to the Theory of Clubs
(with John Wood)
Public Choice Interpretations of American Economic
History (Jac C. Heckelman, John C. Moorhouse, and Robert Whaples
(eds.)), Kluwer Academic Press 147-161, 1999
Abstract. Between 1914 and 1980 state-chartered banks
were free to accept or forgo the costs and benefits of Federal Reserve membership.
Their decisions were sensitive to changes in the burden of the Fed's reserve
requirements caused by fluctuations in interest rates. But large banks were
less likely than small banks to change their membership status, especially after
the Fed acquired discretion over its reserve requirements in 1935. These choices
fall within the theory of clubs and illustrate rent seeking, voting with the
feet, and the exploitation of the great by the small. We develop a model of
the Fed's determination of the conditions of membership subject to expected
bank responses and then formalize the membership decisions of profit-seeking
banks taking account of their possible influences on the Fed. In essence, all
banks are likely to vote with their feet depending on membership costs, but
small banks may free ride on large bank lobbying of the Fed for reduced reserve
ratios. This effect should be stronger after the New Deal enhancements of Fed
discretionary powers.
- Financing Divided and Unified Partisan Governments
(pdf)
Applied Economics Letters 5, 789-791,
1998
Abstract. By modifying Berument's divided government-optimum
financing model to include partisan interests, it is found that when the Democratic
party controls both the Congress and Presidency, real monetary base grows at
a higher rate than when the Republican party controls both branches. In addition,
it is found that monetary base grows at the slowest rate when neither party
controls both branches, supporting a gridlock version of divided government.
- Employment and Gubernatorial Elections during the
Gilded Age (pdf)
Economics & Politics 10, 297-309, 1998
Abstract. The theory of political business cycles predicts
economies will experience a short-run expansion during an election period. Cross-sectional
evidence from 1870, 1880, 1890, 1900, and 1910, does not reveal statistically
significant differences in gainful employment rates between states with and
without a gubernatorial election in that year. Pooled regression analysis suggests
gubernatorial elections are positively correlated with the state employment
rate, but an annual fixed effect model designed to account for differences in
the measurement of gainful employment mitigates this conclusion.
- Bribing Voters without Verification (pdf)
The Social Science Journal 35, 435-443,
1998
Abstract. This article distinguishes between two types
of vote buying mechanisms. If vote choices can be monitored, vote buyers will
not discriminate amongst prospective voters, regardless of how they are expected
to vote. If voting is secret, a vote buyer will pay opposition voters not to
vote which forces the opposition to pay its own voters to ensure they do vote.
This implies the secret ballot may be less effective in curbing bribery than
originally thought.
- Political Business Cycles and Endogenous Elections
(pdf)
(with Hakan Berument)
Southern Economic Journal 64, 987-1000,
1998
Abstract. Empirical research of political business cycles
(PBCs) may suffer from endogeneity bias when incumbent governments have discretion
to call for an early election. Using an instrumental variable (IV) routine on
data from Japan and the U.K., we find strong evidence to support the notion
that election timing is a function of the economy rather than the macroeconomy
being driven by elections as assumed in PBC. In single-equation regressions,
no evidence of political cycles are found, but Hausman tests suggest elections
are endogenous in our regressions. A monetary cycle in Japan and an inflation
cycle in the U.K. are uncovered through IV estimation.
- Determining who Voted in Historical Elections: An
Aggregated Logit Approach (pdf)
Social Science Research 26, 121-134, 1997
Abstract. The ecological fallacy literature suggests
aggregate data cannot be used for microlevel inference. Building upon an aggregated
logit model developed by Kelejian (1995), I am able to show that the estimated
coefficients from aggregate data regressions are directly related to the true
underlying microcoefficients, so meaningful interpretations can still be made.
It is also suggested that in the cases where aggregation bias can be rejected,
the microcoefficients can be directly estimated. An application of the model
is shown using state-level data for historical elections in which survey data
are unavailable.
- Railroads and Property Taxes (pdf)
(with John J. Wallis)
Explorations in Economic History 34, 77-99,
1997
Abstract. Nineteenth century state and local governments
continued to invest in railroads and other internal improvement projects long
after it was clear that these projects were financially very risky. This paper
provides a motivation for public involvement in internal improvements by estimating
the effect of railroad construction on property values from 1850 to 1910. Using
Census data on true and assessed valuations, we find that the increase in property
values associated with railroad construction, would, at typical levels of taxation,
pay for a substantial share, if not all, of the construction costs solely on
the basis of property tax revenues. The effect of construction on property values
declined with mileage up to several thousand miles, which may explain why state
governments typically were involved in construction of the initial systems.
The effect, however, was nonlinear and increased at higher mileages, consistent
withe the persistent participation of county and municipal governments.
- Political Business Cycles before the Great Depression
(pdf)
(with Robert Whaples)
Economics Letters 51, 247-251, 1996
Abstract. We test for the existence of political business
cycles using annual data for the period from 1869 to 1929, finding only weak
supportive evidence.
- The Effect of the Secret Ballot on Voter Turnout Rates
(pdf)
Public Choice 82, 107-124, 1995
Abstract. Secrecy in the voting process eliminated an
important motivation for voting. No longer able to verify the voters' choices,
political parties stopped offering payments in return for votes. Within the
rational voter framework, it will be shown that these payments were a prime
impetus for people to vote. Without a vote market to cover their voting costs,
many voters were rational to stay away from the polls. This hypothesis is supported
through a series of empirical tests culminating in a multivariate legislative
regression. When other electoral laws are controlled for, the secret ballot
accounts for 7 percentage points lower Gubernatorial turnout.