Exit Polls and Voter Turnout

We set up a model of elections or referendums with two alternatives to study how voter turnout and election outcomes are affected by the publication of exit polls on election day. We find that the introduction of an exit poll influences the incentive to vote both before and after the poll is published, but the signs of the effects are generally ambiguous. The fact that exit polls influence the incentive to vote before they are even published is sometimes overlooked in the debate on their desirability. We show that this can lead to premature conclusions about the impact of exit polls on election outcomes.elections; exit polls; voter turnout

Fiscal Transparency and Procyclical Fiscal Policy

This paper examines why fiscal policy is procyclical in developing as well as developed countries. We introduce the concept of fiscal transparency into a model of retrospective voting, in which a political agency problem between voters and politicians generates a procyclical bias in government spending. The introduction of fiscal transparency generates two new predictions: 1) the procyclical bias in fiscal policy arises only in good times; and 2) a higher degree of fiscal transparency reduces the bias in good times. We find solid empirical support for both predictions using data on both OECD countries and a broader set of countries.fiscal transparency; fiscal policy; procyclicality; business cycle; political economy

Exit Polls and Voter Turnout

We set up a model of elections or referendums with two alternatives to study how voter turnout and election outcomes are a¤ected by the publication of exit polls on election day. We \u85nd that the introduction of an exit poll inuences the incentive to vote both before and after the poll is published, but the sign of the e¤ect is generally ambiguous. The fact that exit polls inuence the incentive to vote before they are even published is sometimes overlooked in the debate on their desirability. We show that this can lead to premature conclusions about the impact of exit polls on election outcomes.

The Impact of Fiscal Governance on Bond Markets: Evidence from Late Budgets and State Government Borrowing Costs

Does fiscal governance affect government borrowing costs? We operationalize fiscal governance as the ability of governments to pass a budget on time and, using a unique data set on budget enactment dates, analyze the effect of such late budgets on government bond yield spreads. Based on a sample of 36 US states in the period 1988-1997, we estimate that a budget delay of 30 days has a long run impact on the yield spread between 2 and 10 basis points. States with sufficient liquidity in the form of large reserves face small or no costs from late budgets.fiscal governance; political deadlock; late budgets; fiscal stalemate; Chubb relative value survey; debt cost; bond spreads

Late Budgets

The budget forms the legal basis of government spending. If a budget is not in place at the beginning of the fiscal year, planning as well as current spending are jeopardized and government shutdown may result. This paper develops a continuous-time war-of-attrition model of budgeting in a presidential style-democracy to explain the duration of budget negotiations. We build our model around budget baselines as reference points for loss averse negotiators. We derive three testable hypotheses: there are more late budgets, and they are more late, when fiscal circumstances change; when such changes are negative rather than positive; and when there is divided government. We test the hypotheses of the model using a unique data set of late budgets for US state governments, based on dates of budget approval collected from news reports and a survey of state budget o¢ cers for the period 1988-2007. For this period, we find 23 % of budgets to be late. The results provide strong support for the hypotheses of the model.government budgeting; state government; presidential democracies; political economy; late budgets; fiscal stalemate; war of attrition