5 research outputs found

    Herders in the budgetary commons : the fiscal policy consequences of multiparty government in the European Union

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    In contemporary political economy, it is often argued that multiparty government contributes to sustainability problems in the public economy. This is because parties have incentives to offer targeted policies to narrow-based voter groups while neglecting a large share of the costs associated with such policies. The structure of the situation is arguably similar to overconsumption and under-saving problems often encountered in the management of natural resources, which has given rise to the notion of the budgetary or fiscal common-pool problem. In this view, multiparty government is associated with increases in public spending, taxes and debt as well as persistent budget deficits; such phenomena becoming clearer as the number of parties in government grows. This work challenges the view by arguing that such problems are not inherent features of multiparty politics, but rather follow from the combination of multiparty decision making and the breakdown of programmatic linkages between voters and political parties. In particular, when corruption and other forms of favouritism and partiality are prevalent in the public sector, the credibility of programmatic goals and statements that parties make decreases. This creates room for non-programmatic, distributive objectives and hence encourages the exploitation of the tax base, which becomes visible in empirical associations between the number of government parties and fiscal policy aggregates. In contrast, impartial and efficient state institutions make it possible to present and implement programmes with far-reaching and universalistic implications, whereby the programmatic stances rather than the number of government parties explain policy outcomes. This makes it possible to manage the ‘budgetary commons’ in a sustainable way. These arguments are tested on data that covers the current 28 member states (as of 2017) of the European Union from the early 1970s or mid-1990s to 2012. The results are largely in line with the expectations, although the effects of political variables differ somewhat between the post-communist member states and the rest. The number of parties in government explains fiscal policy outcomes mainly in those post-communist countries where favouritism and partiality in the use of state authority are most prevalent. However, in the post-communist area these effects disappear when state institutions are more impartial, whereby the effects of variables capturing programmatic aspects of politics have explanatory power. Outside the post-communist area, political variables generally have little effect on fiscal policy aggregates, especially since the early 1990s. However, in that group of countries, those countries with most impartial state institutions have been most likely to adopt stringent and encompassing fiscal rules.  Nykyisessä poliittisen talouden tutkimuksessa on tavallista väittää, että monipuoluehallinto on omiaan johtamaan julkistalouden kestävyysongelmiin. Tämä johtuu siitä, että puolueilla on kannustimia tarjota kohdennettuja etuja kapeapohjaisille äänestäjäryhmille ja jättää suuri osa toimenpiteiden kustannuksista huomiotta. Rakenteeltaan tilanteen väitetään usein muistuttavan luonnonvarojen hallinnassa usein ilmeneviä ylikulutus- ja alisäästämisongelmia. Siksi budjettiyhteisvaranto-ongelman käsite on tullut suosituksi. Tämän näkemyksen mukaan monipuoluehallinto on yhteydessä julkisten menojen, verotuksen ja velan kasvuun sekä sitkeisiin alijäämiin siten, että nämä ilmiöt käyvät sitä voimakkaammiksi, mitä suurempi määrä puolueita on jakamassa hallitusvaltaa. Tämän tutkimuksen mukaan edellä mainitut ilmiöt eivät ole monipuoluehallinnon välttämättömiä seurauksia. Pikemminkin ne seuraavat siitä, että monipuoluepolitiikkaa tehdään äänestäjien ja puolueiden välisten ohjelmallisten yhteyksien ollessa heikkoja tai puuttuessa kokonaan. Erityisesti korruption ja muiden puolueellisuuden muotojen ollessa julkisella sektorilla yleisiä puolueiden esittämien ohjelmallisten tavoitteiden ja väittämien uskottavuus heikkenee. Tämä luo tilaa ei-ohjelmallisille jakopoliittisille motiiveille ja kannustaa käyttämään veropohjaa jakopoliittisten resurssien lähteenä, mikä ilmenee hallituspuolueiden lukumäärän ja julkistaloudellisten muuttujien välisinä empiirisinä yhteyksinä. Puolueettomat ja tehokkaat valtioinstituutiot sen sijaan mahdollistavat laajojen ja pitkävaikutteisten ohjelmien esittämisen ja toimeenpanemisen, jolloin puolueiden esittämät ohjelmalliset linjat, hallituspuolueiden lukumäärän sijaan, selittävät politiikan lopputuloksia. Näitä väittämiä testataan aineistolla, joka kattaa Euroopan unionin nykyiset 28 jäsenmaata (vuoden 2017 tilanteen mukaan) 1970-luvun alusta tai 1990-luvun puolivälistä vuoteen 2012. Tulokset ovat pitkälti odotusten mukaisia, joskin poliittisten muuttujien vaikutukset poikkeavat toisistaan jälkikommunistisissa ja muissa jäsenmaissa. Hallituspuolueiden lukumäärä selittää julkistaloudellisia lopputuloksia lähinnä niissä jälkikommunistisissa maissa, joissa puolueellisuus julkisen vallan käytössä on kaikkein yleisintä. Jälkikommunistisella alueella nämä ilmiöt kuitenkin häviävät valtioinstituutioiden käydessä puolueettomammiksi, jolloin politiikan ohjelmallisia puolia kuvaavat muuttujat saavat selitysvoimaa. Jälkikommunistisen alueen ulkopuolella poliittisilla muuttujilla on vain vähän vaikutusta julkistaloudellisiin mittareihin erityisesti tarkasteltaessa 1990-luvun alun jälkeistä ajanjaksoa. Kuitenkin jälkikommunistisen alueen ulkopuolisista maista ne, joiden valtioinstituutiot ovat kaikkein puolueettomimmat, ovat todennäköisimmin ottaneet käyttöön vahvoja ja kattavia budjetointisääntöjä

    Models of Political Economy

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    Models of Political Economy will introduce students to the basic methodology of political economics. It covers all core theories as well as new developments including: decision theory game theory mechanism design games of asymmetric information. Hannu Nurmi's text will prove to be invaluable to all students who wish to understand this increasingly technical field

    Evaluation and Improvement of Laruelle-Widgrén Inverse Banzhaf Approximation

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    Voting is a popular way of reaching decisions in multi-agent systems. Weighted voting in particular allows different agents to have varying levels of influence on the decision taken: each agent’s vote carries a weight, and a proposal is accepted if the sum of the weights of the agents in favor of the proposal is at least equal to a given quota. Unfortunately, there is no clear and unambiguous relation between a player’s weight and the extent of her influence on the outcome of the decision making process. Different measures of ‘power’ have been proposed, such as the Banzhaf and the Shapley-Shubik indices. Here we consider the ‘inverse’ problem: given a vector of desired power indices for the players, how should we set their weights and the quota such that the players’ power in the resulting game comes as close as possible to the target vector? There has been some work on this problem, both heuristic and exact, but little is known about the approximation quality of the heuristics for this problem. The goal of this paper is to empirically evaluate the heuristic algorithm for the Inverse Banzhaf Index problem by Laruelle and Widgrén. We analyze and evaluate the intuition behind this algorithm. We found that the algorithm can not handle general inputs well, and often fails to improve inputs. It is also shown to diverge after only tens of iterations. Based on our analysis, we present three alternative extensions of the algorithm that do not alter the complexity but can result in up to a factor 6.5 improvement in solution quality.Software Computer TechnologyElectrical Engineering, Mathematics and Computer Scienc

    Turkey: Economic Reform and Accession to the European Union

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    A copublication of the World Bank and the Centre for Economic Policy ResearchTurkey first applied for associate membership in the European Union (EU)—then the European Economic Community (EEC)—in 1959. The application resulted in an association agreement in 1963, whereby Turkey and the EU would, in principle, gradually create a customs union by 1995 at the latest. The customs union was seen as a step toward full EU membership at an unspecified future date. The EU unilaterally granted Turkey preferential tariffs and financial assistance, but the process of staged, mutual reductions in tariffs and nontariff barriers was delayed because of the economic and political conditions in Turkey. After pursuing inward-oriented development strategies throughout the 1960s and 1970s, Turkey switched over to a more outward-oriented policy stance in 1980. The opening up of the economy was pursued in part with the aim of integrating the country into the EU. Turkey applied for full membership in the EU in 1987. The response in 1990 was that accession negotiations could not be undertaken at the time because the EU was engaged in major internal changes, and that matters were further complicated by developments in Eastern Europe and the Soviet Union. However, the EU was prepared to extend and deepen economic relations without explicitly rejecting the possibility of full membership at a future date. Thus the plans for a customs union were revived
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