The Political Economy of Privatization: Why Do Governments Want Reforms?

International organizations promote privatization as precondition for economic development. But is there really too little privatization? This political economy model asks for the incentives of governments to privatize or restructure a state-owned firm. Different government types are compared to identify the political and institutional determinants of privatization. Under privatization, governments commit not to in influence the profit-maximizing employment choice by private investors. With respect to the social optimum, both voter-oriented and egoistic governments can have inefficiently high incentives to privatize. When this is the case, outside pressure to privatize is detrimental. An improving institutional environment reduces these inefficiencies.Political incentives, Privatization, Restructuring, Employment

The Political Economy of Corruption and the Role of Financial Institutions

In many developing countries, we observe rather high levels of corruption. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. We explain why citizens do not exert enough political pressure to reduce corruption if financial institutions are missing. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. The mode of financing this entry fee determines the distribution of the rents from corruption. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters are part of the corrupt system. Thus, the economic system has an effect on political outcomes. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures

The Political Economy of Corruption & the Role of Financial Institutions

In many developing and transition countries, we observe rather high levels of corruption. This is surprising from a political economy perspective, as the majority of people in a corrupt country suffer from high corruption levels. Our model is based on the fact that corrupt offcials have to pay entry fees to get lucrative positions. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters are part of the corrupt system and, more importantly, as the rents from corruption are distributed differently. Thus, the economic system has an effect on political outcomes. Well-functioning financial institutions, in turn, increase the political support for anti-corruption measures.http://deepblue.lib.umich.edu/bitstream/2027.42/64363/1/wp892.pd

The Scaling of the Redshift Power Spectrum: Observations from the Las Campanas Redshift Survey

In a recent paper we have studied the redshift power spectrum $P^S(k,\mu)$ in three CDM models with the help of high resolution simulations. Here we apply the method to the largest available redshift survey, the Las Campanas Redshift Survey (LCRS). The basic model is to express $P^S(k,\mu)$ as a product of three factors P^S(k,\mu)=P^R(k)(1+\beta\mu^2)^2 D(k,\mu). Here $\mu$ is the cosine of the angle between the wave vector and the line of sight. The damping function $D$ for the range of scales accessible to an accurate analysis of the LCRS is well approximated by the Lorentz factor D=[1+{1\over 2}(k\mu\sigma_{12})^2]^{-1}. We have investigated different values for $\beta$ ($\beta=0.4$, 0.5, 0.6), and measured $P^R(k)$ and $\sigma_{12}(k)$ from $P^S(k,\mu)$ for different values of $\mu$. The velocity dispersion $\sigma_{12}(k)$ is nearly a constant from $k=0.5$ to 3 \mpci. The average value for this range is 510\pm 70 \kms. The power spectrum $P^R(k)$ decreases with $k$ approximately with $k^{-1.7}$ for $k$ between 0.1 and 4 \mpci. The statistical significance of the results, and the error bars, are found with the help of mock samples constructed from a large set of high resolution simulations. A flat, low-density ($\Omega_0=0.2$) CDM model can give a good fit to the data, if a scale-dependent special bias scheme is used which we have called the cluster-under-weighted bias (Jing et al.).Comment: accepted for publication in MNRAS, 20 pages with 7 figure

Migration and the Welfare State: The Economic Power of the Non-Voter?

This paper investigates the impact of emigration on the political choice regarding the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the political influence of the less mobile part of the population. The new political majority has to take into account that emigration reduces tax revenues and thereby affects the feasible set of redistribution policies. The interaction of the two e¤ects has so far not been analyzed in isolation. We find that the direction of the total e¤ect of migration depends on the initial income distribution in the economy. Our results also contribute to the empirical debate on the validity of the median-voter approach for explaining the relation between income inequality and redistribution levels.migration; redistribution; voting

Communal Responsibility and the Coexistence of Money and Credit Under Anonymous Matching

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps to overcome enforcement problems in anonymous buyer/seller transactions. In a village economy version of the Lagos and Wright (2005) model, agents trading anonymously in decentralized markets can be identified by their citizenship and thus be held liable for each other. Enforceability within each village's centralized afternoon market ensures collateralization of credit in decentralized markets. In the resulting equilibrium, money and credit coexist in decentralized markets if the use of credit is costly. Our analysis easily extends itself to other payment systems like credit cards that provide a group identity to otherwise anonymous agents.Communal responsibility, anonymous matching, money demand, credit, bills of exchange

Having Everyone in the Boat May Sink it - Interest Group Involvement and Policy Reforms

In many countries, governments involve interest groups at early stages of political decisionmaking. The idea of this is to enhance the legitimacy of the policy decision and to curb later opposition to the implementation of the policy. We show that the way and timing of interest groups involvement can be crucial for the scope and success of policy reforms. When interest groups influence both the policy choice, or legislation, and the subsequent decision on the implementation of the policy, their early involvement may lead them to oppose the reform more than if they had been excluded from the legislation stage

Communal Responsibility and the Coexistence of Money and Credit under Anonymous Matching

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps to overcome enforcement problems in anonymous buyer/seller transactions. In a village economy version of the Lagos and Wright (2005) model, agents trading anonymously in decentralized markets can be identified by their citizenship and thus be held liable for each other. Enforceability within each village's centralized afternoon market ensures collateralization of credit in decentralized markets. In the resulting equilibrium, money and credit coexist in decentralized markets if the use of credit is costly. Our analysis easily extends itself to other payment systems like credit cards that provide a group identity to otherwise anonymous agents.Communal responsibility, anonymous matching, money demand, credit, bills of exchange

Effect of damping on the time variation of fields produced by a small pole tip with a soft under layer

The time variation of magnetostatic fields generated by space and time varying magnetization configurations in small perpendicular pole tips is studied. The magnetization configurations are a response to external fields driving the pole tip and soft under layer (SUL). When the system damping is sufficiently small the magnetization excitations persist for a long time after reversal. The effects of damping parameter, position in the media, and discretization cell size on the magnitude of the time varying magnetostatic fields will be given. Decreasing the damping parameter increases the magnitude of the magnetostatic field variation

Communal Responsibility and the Coexistence of Money and Credit Under Anonymous Matching

Communal responsibility, a medieval institution studied by Greif (2006), supported the use of credit among European merchants in the absence of modern enforcement technologies. This paper shows how this mechanism helps to overcome enforcement problems in anonymous buyer/seller transactions. In a village economy version of the Lagos and Wright (2005) model, agents trading anonymously in decentralized markets can be identified by their citizenship and thus be held liable for each other. Enforceability within each village's centralized afternoon market ensures collateralization of credit in decentralized markets. In the resulting equilibrium, money and credit coexist in decentralized markets if the use of credit is costly. Our analysis easily extends itself to other payment systems like credit cards that provide a group identity to otherwise anonymous agents.Communal responsibility, anonymous matching, money demand, credit, bills of exchange