Song, Zheng (2008): Persistent Ideology and the Determination of Public Policies over Time.
Download (422kB) | Preview
This paper investigates how public policy responds to persistent ideological shifts in dynamic politico-economic equilibria. To this end, we develop a tractable model to analyze the dynamic interactions among public policy, individuals' intertemporal choice and the evolution of political constituency. Analytical solutions are obtained to characterize Markov perfect equilibria. Our main finding is that a right-wing ideology may increase the size of government. Data from a panel of 18 OECD countries confirm that after controlling for the partisan effect, there is a positive relationship between the right-wing political constituency and the government size. This is consistent with our theoretical prediction, but hard to explain by existing theories.
|Item Type:||MPRA Paper|
|Original Title:||Persistent Ideology and the Determination of Public Policies over Time|
|Subjects:||E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E62 - Fiscal Policy
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
|Depositing User:||Zheng Song|
|Date Deposited:||09. Sep 2008 06:36|
|Last Modified:||13. Feb 2013 22:54|
Aghion, Philippe and Patrick Bolton, 1990, Government Domestic Debt and the Risk of a Default: A Political-Economic Model of a Strategic Role of Debt, 315-345, in R. Dornbusch and M. Draghi, eds., Public Debt Management: Theory and History, Cambridge: Cambridge University Press.
Alesina, Alberto, 1987, Macroeconomic Policy in a Two-Party System as a Repeated Game, Quarterly Journal of Economics, 102, 651-678.
Alesina, Alberto and Guido Tabellini, 1990, A Positive Theory of Fiscal Deficits and Government Debt, Review of Economic Studies, 57, 403-414.
Alvarez, R. Michael and Jonathan Nagler, 1995, Economics, Issues and the Perot Candidacy: Voter Choice in the 1992 Presidential Election, American Journal of Political Science, 39, 714-744.
Alvarez, R. Michael and Jonathan Nagler, 1998, Economics, Entitlements, and Social Issues: Voter Choice in the 1996 Presidential Election, American Journal of Political Science, 42, 1349-1363.
Amador, Manuel, 2003, A Political Economy Model of Sovereign Debt Repayment, mimeo.
Azzimonti Renzo, Marina, 2005, On the Dynamic Inefficiency of Governments, mimeo.
Besley, Timothy and Stephen Coate, 1997, An Economic Model of Representative Democracy, Quarterly Journal of Economics, 112, 85-114.
Besley, Timothy and Stephen Coate, 1998, Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis, American Economic Review, 88, 139-156.
Blais, Andre, Donald Blake and Stephane Dion, 1993, Do Parties Make a Difference? Parties and the Size of Government in Liberal Domcracies, American Journal of Political Science, 37, 40-62.
Brady, David, Jason Beckfield and John Stephens, 2004, Comparative Welfare States Data Set, mimeo.
Di Tella, Rafael and Robert MacCulloch, 2005, Partisan Social Happiness, Review of Economic Studies, 72, 367-393.
Durr, Robert H., 1993, What Moves Policy Sentiment, American Political Science Review, 87, 158-170.
Hassler, John, Jose V. Rodriguez Mora, Kjetil Storesletten and Fabrizio Zilibotti, 2003, The Survival of the Welfare State, American Economic Review, 93, 87-112.
Hassler, John, Kjetil Storesletten and Fabrizio Zilibotti, 2007, Democratic Public Good Provision, Journal of Economic Theory, 133, 127-151.
Haynes, Stephen E. and David Jacobs, 1994, Macroeconomics, Economic Stratification, and Partisanship: A Longitudinal Analysis of Contingent Shifts in Political Identification, American Journal of Sciology, 100, 70-103.
Herrendorf, Berthold, Akos Valentinyi and Robert Waldmann, 2000, Ruling out Multiplicity and Indeterminacy: The Role of Heterogeneity, Review of Economic Studies, 67, 295-307.
Hobsbawm, Eric, 1996, The Age of Extremes: A History of the World, 1914-1991, Vintage.
Hibbs, Douglas A. Jr., 1977, Political Parties and Macroeconomic Policy, American Political Science Review, 71, 1467-1487.
Hibbs, Douglas A. Jr., 1982, The Dynamics of Political Support for American Presidents among Occupational and Partisan Groups, American Journal of Political Science, 26, 312-323.
Huber, Evelyne, Charles Ragin and John Stephens, 1997, Comparative Welfare States Data Set, mimeo. Inglehart, Ronald, 1990, Culture Shift in Advanced Industrial Society, Princeton University Press.
Jacoby, William, 1991, Ideological Identification and Issue Attitudes, American Journal of Political Science, 1991, 35, 178-205.
Jonsson, Gunnar, 1997, Monetary Politics and Unemployment Persistence, Journal of Monetary Economics, 39, 303-325.
Kalt, Joseph H. and Mark A. Zupan, 1984, Capture and Ideology in Economic Theory of Politics, American Economic Review, 74, 279-300.
Kim, Heemin and Richard C. Fording, 1998, Voter Ideology in Western Democracies, 1946-1989, European Journal of Political Research, 33, 73-97.
Kim, Heemin and Richard C. Fording, 2003, Voter Ideology in Western Democracies: An Update, European Journal of Political Research, 42, 95-105.
Knight, Kathleen K., 1985, Ideology in the 1980 Election: Ideology Sophistication Does Matter, Journal of Politics, 47, 828-853.
Krusell, Per, Vincenzo Quadrini and Jose Victor Rios-Rull, 1997, Politico-Economic Equilibrium and Economic Growth, Journal of Economic Dynamic and Controls, 21, 243-272.
Krusell, Per and Jose-Victor Rios-Rull, 1999, On the Size of US Government: Political Economy in the Neoclassical Growth Model, American Economic Review, 89, 1156-1181.
Levitin, Teresa E. and Warren E. Miller, 1979, Ideological Interpretations of Presidential Elections, American Political Science Review, 73, 751-771.
Lindbeck, Assar and Jorgen W. Weibull, 1987, Balanced-Budget Redistribution as the Outcome of Political Competition, Public Choice, 52, 273-297.
Osborne, Martin J. and Al Slivinski, 1996, A Model of Political Competition with Citizen-Candidates, Quarterly Journal of Economics, 111, 65-96.
MacKuen, Michael B., Rober Erikson and James A. Stimson, 1989, Macropartisanship, American Political Science Review, 83, 1125-1142.
Morris, Stephen and Hyun Song Shin, 1998, Unique Equilibrium in a Model of Self-fulfilling Currency Attacks, American Economic Review, 88, 587-597.
Morris, Stephen and Hyun Song Shin, 2000, Rethinking Multiple Equilibria in Macroeconomic Modelling, NBER Macroeconomics Annual, 139-161, MIT Press.
Mueller, John E., 1970, Presidential Popularity from Truman to Johnson, American Political Science Review, 64, 18-34.
Mulligan, Casey B. and Xavier Sala-i-Martin, 1999, Gerontocracy, Retirement, and Social Security, NBER Working Paper, No. 7117.
Norporth, Helmut and Thom Yantek, 1983, Macroeconomic Conditions and Fluctuation of Presidential Popularity: The Question of Lagged Effects, American Journal of Political Science, 27, 785-807.
Perotti, Roberto and Yianos Kontopoulos, 2002, Fragmented Fiscal Policy, Journal of Public Economics, 86, 191-222.
Persson, Torsten, 2002, Do Political Institutions Shape Economic Policy, Econometrica, 70, 883-905.
Persson, Torsten and Lars E. O. Svensson, 1989, Why a Stubborn Conservative Would Run a Deficit: Policy with Time-Inconsistent Preference, Quarterly Journal of Economics, 104, 325-345.
Persson, Torsten and Guido Tabellini, 2005, The Economic Effects of Constitution, Cambridge: The MIT Press.
Razin, Assaf, Efraim Sadka and Phillip Swagel, 2002, The Aging Population and the Size of the Welfare State, Journal of Political Economy, 110, 900-918.
Robinson, John P., 1984, The Ups and Downs, and Ins and Outs of Ideology, Public Opinion, 7, 12-15.
Robinson, John P. and John A. Fleishman, 1984, Ideological Trends in American Public Opinion, Annals of the American Academy of Political and Social Science, 742, 50-60.
Sears, David O., Richard R. Lau, Tom R. Tyler, H. M. Allen, Jr., 1980, Self-Interest Versus Symbolic Politics in Policy Attitudes and Presidential Voting, American Political Science Review, 74, 670-684.
Song, Zheng, 2005, Essays on Dynamic Political Economy, PhD Dissertation, IIES, Stockholm University.
Song, Zheng, Kjetil Storesletten and Fabrizio Zilibotti, 2007, Rotten Parents and Disciplined Children: A Politico-Economic Theory of Debt and Public Expenditure, mimeo.
Stokey, Nancy L. and Robert E. Lucas, Jr., 1989, Recursive Methods in Economic Dynamics, Harvard University Press.
Weisberg, Herbert F. and Charles E. Smith Jr., 1991, The Influence of the Economy on Party Identification in the Reagan Years, Journal of Politics, 53, 1077-1092.
Woldendorp, Jaap, Hans Keman and Ian Budge, 1993, Party Government in 20 Democracies, European Journal of Political Research, 24, 1-119.
Woldendorp, Jaap, Hans Keman and Ian Budge, 1998, Party Government in 20 Democracies: An Update (1990-1995), European Journal of Political Research, 33, 125-164.
Wolfinger, Raymond E. and Steven J. Rosenstone, 1980, Who votes?, Yale University Press, 1980.