[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/p/mal/wpaper/2018-7.html
   My bibliography  Save this paper

Institutional flexibility, political alternation and middle-of-the-road policies

Author

Listed:
  • Ascensión Andina Díaz

    (Department of Economics, University of Málaga)

  • Francesco Feri

    (Department of Economics, Royal Holloway, University of London)

  • Miguel A. Meléndez-Jiménez

    (Department of Economics, University of Málaga)

Abstract
Empirical observation shows that policies are usually gradually introduced in a society. This paper presents a model of repeated elections that captures this phenomenon, and that allows countries to differ in their institutional flexibility, thus in the speed of implementation of new policies. We show that with gradual implementation of policies there is an incentive for the voters to vote, each election, to a different party. Hence, our model produces equilibria with alternation. We further show that there is a tradeoff between efficiency and stability, with efficiency requiring moderate policies and stability pushing towards polarization. Last, we show that except for the partisan equilibria, the most stable ones convey policies that are bounded away from both the median and the extremes, with policies polarizing more when institutions are either too flexible or sufficiently rigid.

Suggested Citation

  • Ascensión Andina Díaz & Francesco Feri & Miguel A. Meléndez-Jiménez, 2018. "Institutional flexibility, political alternation and middle-of-the-road policies," Working Papers 2018-07, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    • Handle: RePEc:mal:wpaper:2018-7
    as

    Download full text from publisher

    File URL: https://theeconomics.uma.es/malagawpseries/Papers/METCwp2018-7.pdf
    File Function: First version, 2018
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bowen, T. Renee & Zahran, Zaki, 2012. "On dynamic compromise," Games and Economic Behavior, Elsevier, vol. 76(2), pages 391-419.
    2. Myerson, Roger B., 1993. "Incentives to Cultivate Favored Minorities Under Alternative Electoral Systems," American Political Science Review, Cambridge University Press, vol. 87(4), pages 856-869, December.
    3. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
    4. Lisa Bruttel, 2009. "The critical discount factor as a measure for cartel stability?," Journal of Economics, Springer, vol. 96(2), pages 113-136, March.
    5. Wittman, Donald, 1983. "Candidate Motivation: A Synthesis of Alternative Theories," American Political Science Review, Cambridge University Press, vol. 77(1), pages 142-157, March.
    6. Marco Battaglini & Stephen Coate, 2008. "A Dynamic Theory of Public Spending, Taxation, and Debt," American Economic Review, American Economic Association, vol. 98(1), pages 201-236, March.
    7. Dziuda, Wioletta & Loeper, Antoine, 2018. "Dynamic Pivotal Politics," American Political Science Review, Cambridge University Press, vol. 112(3), pages 580-601, August.
    8. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(1), pages 1-12.
    9. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2018. "Social Mobility and Stability of Democracy: Reevaluating De Tocqueville," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 1041-1105.
    10. Torsten Persson & Lars E. O. Svensson, 1989. "Why a Stubborn Conservative would Run a Deficit: Policy with Time-Inconsistent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 325-345.
    11. Gabriele Gratton & Luigi Guiso & Claudio Michelacci & Massimo Morelli, 2021. "From Weber to Kafka: Political Instability and the Overproduction of Laws," American Economic Review, American Economic Association, vol. 111(9), pages 2964-3003, September.
    12. Forand, Jean Guillaume, 2014. "Two-party competition with persistent policies," Journal of Economic Theory, Elsevier, vol. 152(C), pages 64-91.
    13. Jinhui H. Bai & Roger Lagunoff, 2011. "On the Faustian Dynamics of Policy and Political Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(1), pages 17-48.
    14. Myerson Roger B., 1993. "Effectiveness of Electoral Systems for Reducing Government Corruption: A Game-Theoretic Analysis," Games and Economic Behavior, Elsevier, vol. 5(1), pages 118-132, January.
    15. Alesina, Alberto & Rosenthal, Howard, 1996. "A Theory of Divided Government," Econometrica, Econometric Society, vol. 64(6), pages 1311-1341, November.
    16. Branko Milanovic & Karla Hoff & Shale Horowitz, 2010. "Turnover In Power As A Restraint On Investing In Influence: Evidence From The Postcommunist Transition," Economics and Politics, Wiley Blackwell, vol. 22(3), pages 329-361, November.
    17. Besley, Timothy & Persson, Torsten & Sturm, Daniel, 2010. "Political competition, policy and growth: theory and evidence from the United States," LSE Research Online Documents on Economics 121718, London School of Economics and Political Science, LSE Library.
    18. Alberto Alesina & Guido Tabellini, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(3), pages 403-414.
    19. Chwieroth, Jeffrey & Walter, Andrew, 2017. "Banking crises and politics: a long run perspective," LSE Research Online Documents on Economics 84368, London School of Economics and Political Science, LSE Library.
    20. Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Power fluctuations and political economy," Journal of Economic Theory, Elsevier, vol. 146(3), pages 1009-1041, May.
    21. Matthias Blonski & Peter Ockenfels & Giancarlo Spagnolo, 2011. "Equilibrium Selection in the Repeated Prisoner's Dilemma: Axiomatic Approach and Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 164-192, August.
    22. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
    23. Nunnari, Salvatore & Zápal, Jan, 2017. "Dynamic Elections and Ideological Polarization," Political Analysis, Cambridge University Press, vol. 25(4), pages 505-534, October.
    24. T. Renee Bowen & Ying Chen & H?lya Eraslan, 2014. "Mandatory versus Discretionary Spending: The Status Quo Effect," American Economic Review, American Economic Association, vol. 104(10), pages 2941-2974, October.
    25. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    26. Dan Bernhardt & Odilon Câmara & Francesco Squintani, 2011. "Competence and Ideology," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(2), pages 487-522.
    27. Steven Callander & Patrick Hummel, 2014. "Preemptive Policy Experimentation," Econometrica, Econometric Society, vol. 82(4), pages 1509-1528, July.
    28. Alberto Alesina, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(3), pages 651-678.
    29. Alesina, Alberto & Rosenthal, Howard, 2000. "Polarized platforms and moderate policies with checks and balances," Journal of Public Economics, Elsevier, vol. 75(1), pages 1-20, January.
    30. Wioletta Dziuda & Antoine Loeper, 2016. "Dynamic Collective Choice with Endogenous Status Quo," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1148-1186.
    31. Timothy Besley & Torsten Persson & Daniel M. Sturm, 2010. "Political Competition, Policy and Growth: Theory and Evidence from the US," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1329-1352.
    32. Richard Van Weelden, 2013. "Candidates, Credibility, and Re-election Incentives," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1622-1651.
    33. Per Pettersson-Lidbom, 2008. "Do Parties Matter for Economic Outcomes? A Regression-Discontinuity Approach," Journal of the European Economic Association, MIT Press, vol. 6(5), pages 1037-1056, September.
    34. David P. Baron & Daniel Diermeier, 2001. "Elections, Governments, and Parliaments in Proportional Representation Systems," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 933-967.
    35. Hülya Eraslan & Kirill S. Evdokimov & Jan Zápal, 2022. "Dynamic Legislative Bargaining," Springer Books, in: Emin Karagözoğlu & Kyle B. Hyndman (ed.), Bargaining, chapter 0, pages 151-175, Springer.
    36. HUBER, JOHN D. & McCARTY, NOLAN, 2004. "Bureaucratic Capacity, Delegation, and Political Reform," American Political Science Review, Cambridge University Press, vol. 98(3), pages 481-494, August.
    37. Alesina, Alberto & Rosenthal, Howard, 1989. "Partisan Cycles in Congressional Elections and the Macroeconomy," American Political Science Review, Cambridge University Press, vol. 83(2), pages 373-398, June.
    38. John Duggan, 2000. "Repeated Elections with Asymmetric Information," Economics and Politics, Wiley Blackwell, vol. 12(2), pages 109-135, July.
    39. Banks, Jeffrey S. & Duggan, John, 2008. "A Dynamic Model of Democratic Elections in Multidimensional Policy Spaces," Quarterly Journal of Political Science, now publishers, vol. 3(3), pages 269-299, October.
    40. Torsten Persson & Guido Tabellini, 2005. "The Economic Effects of Constitutions," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661926, April.
    41. Roger Lagunoff, 2001. "A Theory of Constitutional Standards and Civil Liberty," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(1), pages 109-132.
    42. Timothy Besley & Torsten Persson & Marta Reynal-Querol, 2016. "Resilient Leaders and Institutional Reform: Theory and Evidence," Economica, London School of Economics and Political Science, vol. 83(332), pages 584-623, October.
    43. Kramer, Gerald H., 1977. "A dynamical model of political equilibrium," Journal of Economic Theory, Elsevier, vol. 16(2), pages 310-334, December.
    44. Avinash Dixit & Gene M. Grossman & Faruk Gul, 2000. "The Dynamics of Political Compromise," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 531-568, June.
    45. Bernhardt, Dan & Campuzano, Larissa & Squintani, Francesco & Câmara, Odilon, 2009. "On the benefits of party competition," Games and Economic Behavior, Elsevier, vol. 66(2), pages 685-707, July.
    46. Austen-Smith, David & Banks, Jeffrey, 1988. "Elections, Coalitions, and Legislative Outcomes," American Political Science Review, Cambridge University Press, vol. 82(2), pages 405-422, June.
    47. Callander, Steven & Raiha, Davin, 2017. "Durable Policy, Political Accountability, and Active Waste," Quarterly Journal of Political Science, now publishers, vol. 12(1), pages 59-97, May.
    48. Bendor, Jonathan & Mookherjee, Dilip & Ray, Debraj, 2006. "Satisficing and Selection in Electoral Competition," Quarterly Journal of Political Science, now publishers, vol. 1(2), pages 171-200, March.
    49. Alesina, Alberto, 1988. "Credibility and Policy Convergence in a Two-Party System with Rational Voters," American Economic Review, American Economic Association, vol. 78(4), pages 796-805, September.
    50. Baron, David P., 1996. "A Dynamic Theory of Collective Goods Programs," American Political Science Review, Cambridge University Press, vol. 90(2), pages 316-330, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andina-Díaz, Ascensión & Feri, Francesco & Meléndez-Jiménez, Miguel A., 2023. "The bureaucracy trap," Economics Letters, Elsevier, vol. 228(C).
      • Ascensión Andina-Díaz & Francesco Feri & Miguel A. Meléndez-Jiménez, 2022. "The Bureaucracy Trap," Working Papers 2022-03, Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center.
    2. Loeper, Antoine & Dziuda, Wioletta, 2024. "Voters and the trade-off between policy stability and responsiveness," Journal of Public Economics, Elsevier, vol. 232(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gersbach, Hans & Jackson, Matthew O. & Muller, Philippe & Tejada, Oriol, 2023. "Electoral competition with costly policy changes: A dynamic perspective," Journal of Economic Theory, Elsevier, vol. 214(C).
    2. César Martinelli & John Duggan, 2014. "The Political Economy of Dynamic Elections: A Survey and Some New Results," Working Papers 1403, Centro de Investigacion Economica, ITAM.
    3. Forand, Jean Guillaume, 2014. "Two-party competition with persistent policies," Journal of Economic Theory, Elsevier, vol. 152(C), pages 64-91.
    4. Hülya Eraslan & Kirill S. Evdokimov & Jan Zápal, 2022. "Dynamic Legislative Bargaining," Springer Books, in: Emin Karagözoğlu & Kyle B. Hyndman (ed.), Bargaining, chapter 0, pages 151-175, Springer.
    5. Bowen, T. Renee & Chen, Ying & Eraslan, Hülya & Zápal, Jan, 2017. "Efficiency of flexible budgetary institutions," Journal of Economic Theory, Elsevier, vol. 167(C), pages 148-176.
    6. Zapal, Jan, 2020. "Simple Markovian equilibria in dynamic spatial legislative bargaining," European Journal of Political Economy, Elsevier, vol. 63(C).
    7. Nunnari, Salvatore & Zápal, Jan, 2017. "Dynamic Elections and Ideological Polarization," Political Analysis, Cambridge University Press, vol. 25(4), pages 505-534, October.
    8. Marina Azzimonti & Gabriel P. Mihalache & Laura Karpuska, 2020. "Bargaining over Taxes and Entitlements," NBER Working Papers 27595, National Bureau of Economic Research, Inc.
    9. T. Renee Bowen & Ying Chen & H?lya Eraslan, 2014. "Mandatory versus Discretionary Spending: The Status Quo Effect," American Economic Review, American Economic Association, vol. 104(10), pages 2941-2974, October.
    10. Gersbach, Hans & Muller, Philippe & Tejada, Oriol, 2019. "Costs of change and political polarization," European Journal of Political Economy, Elsevier, vol. 60(C).
    11. Timothy Besley & Torsten Persson, 2011. "Pillars of Prosperity: The Political Economics of Development Clusters," Economics Books, Princeton University Press, edition 1, number 9624.
    12. Lockwood, Ben & Le, Minh & Rockey, James, 2024. "Dynamic electoral competition with voter loss-aversion and imperfect recall," Journal of Public Economics, Elsevier, vol. 232(C).
    13. Delgado-Vega, Álvaro, 2024. "Persistence in power of long-lived parties," European Economic Review, Elsevier, vol. 163(C).
    14. Loeper, Antoine & Dziuda, Wioletta, 2024. "Voters and the trade-off between policy stability and responsiveness," Journal of Public Economics, Elsevier, vol. 232(C).
    15. Jean Guillaume Forand & John Duggan, 2013. "Markovian Elections," Working Papers 1305, University of Waterloo, Department of Economics, revised Oct 2013.
    16. David P Baron, 2018. "Elections and durable governments in parliamentary governments," Journal of Theoretical Politics, , vol. 30(1), pages 74-118, January.
    17. Hans Gersbach & Philippe Muller & Oriol Tejada, 2017. "A Dynamic Model of Electoral Competition with Costly Policy Changes," CER-ETH Economics working paper series 17/270, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    18. Nunnari, Salvatore, 2021. "Dynamic legislative bargaining with veto power: Theory and experiments," Games and Economic Behavior, Elsevier, vol. 126(C), pages 186-230.
    19. Antonio Merlo, 2005. "Whither Political Economy? Theories, Facts and Issues," PIER Working Paper Archive 05-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005.
    20. Tasos Kalandrakis, 2016. "Pareto efficiency in the dynamic one-dimensional bargaining model," Journal of Theoretical Politics, , vol. 28(4), pages 525-536, October.

    More about this item

    Keywords

    gradual implementation of policies; political alternation; polarization and moderation; efficiency; robustness;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mal:wpaper:2018-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ascension Andina (email available below). General contact details of provider: https://edirc.repec.org/data/dtmales.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.