From Models to Experiments

In this paper we discuss James Buchanan’s contribution in the narrow domain of understanding committee voting under majority rule. We then go on to discuss Charles Plott’s seminal experimental work on the topic that sparked a wave of public choice experimental work. However, given Plott’s claims that Buchanan influenced him significantly, it is puzzling that his work with Morris Fiorina explores a question outside of those which Buchanan and Tullock found interesting. We suggest several ways to resolve this tension. Our chapter concludes by discussing a lacuna in the experimental public choice literature in which Buchanan was particularly interested—logrolling, or vote trading

A quasi-polynomial bound for the diameter of graphs of polyhedra

The diameter of the graph of a $d$-dimensional polyhedron with $n$ facets is at most $n^{\log d+2}$Comment: 2 page

Energy Correlations In Random Transverse Field Ising Spin Chains

The end-to-end energy - energy correlations of random transverse-field quantum Ising spin chains are computed using a generalization of an asymptotically exact real-space renormalization group introduced previously. Away from the critical point, the average energy - energy correlations decay exponentially with a correlation length that is the same as that of the spin - spin correlations. The typical correlations, however, decay exponentially with a characteristic length proportional to the square root of the primary correlation length. At the quantum critical point, the average correlations decay sub-exponentially as $\bar{C_{L}}\sim e^{-const\cdot L^{1/3}}$, whereas the typical correlations decay faster, as $\sim e^{-K\sqrt{L}}$, with $K$ a random variable with a universal distribution. The critical energy-energy correlations behave very similarly to the smallest gap, computed previously; this is explained in terms of the RG flow and the excitation structure of the chain. In order to obtain the energy correlations, an extension of the previously used methods was needed; here this was carried out via RG transformations that involve a sequence of unitary transformations.Comment: Submitted to Phys. Rev.

Transparency, liberalization, and banking crisis

The authors investigate how transparency affects the probability of a financial crisis. They construct a model in which banks cannot distinguish between aggregate shocks and government policy, on the one hand, and firm'quality, on the other. Banks may therefore overestimate firms'returns and increase credit above the level that would be optimal given the firms'returns. Once banks discover their large exposure, they are likely to roll over loans rather than declare their losses. This delays the crisis but increases its magnitude. The empirical evidence, based on data for 56 countries in 1977-97, supports this theoretical model. The authors find that lack of transparency increases the probability of a crisis following financial liberalization. This implies that countries should focus on increasing transparency of economic activity and government policy, as well as increasing transparency n the financial sector, particularly during a period of transition such as financial liberalization.Economic Theory&Research,Payment Systems&Infrastructure,Banks&Banking Reform,Financial Intermediation,International Terrorism&Counterterrorism,Economic Theory&Research,Financial Crisis Management&Restructuring,Insurance&Risk Mitigation,Financial Intermediation,Banks&Banking Reform

Transparency, Liberalization and Financial Crises

We investigate the effect of financial liberalization on the probability of a banking crises in economies with poor transparency We construct a model with imperfect information where banks cannot distinguish between aggregate shocks on the one hand, and government’s policy and firms’ quality, on the other. Thus, a sequence of positive shocks or non- transparent policy causes banks to increase their credit above the optimal level given the underlying value of the firms. Once banks discover their large exposure, they are likely to roll-over bad loans rather than declare their losses. This delays the crisis, but increasing its magnitude. Empirical investigation using data on 56 countries from 1977 to 1997 supports the theoretical model. We find that the probability of a crisis is higher in the period following financial liberalization, significantly so in countries with poor transparency.Financial liberalization, transparency, Financial crisis

Factorization of quadratic polynomials in the ring of formal power series over Z\Z

We establish necessary and sufficient conditions for a quadratic polynomial to be irreducible in the ring $Z[[x]]$ of formal power series with integer coefficients. For $n,m\ge 1$ and $p$ prime, we show that $p^n+p^m\beta x+\alpha x^2$ is reducible in $Z[[x]]$ if and only if it is reducible in $Z_p[x]$, the ring of polynomials over the $p$-adic integers.Comment: 15 page

Nonsmooth Morse-Sard theorems

We prove that every function $f:\mathbb{R}^n\to \mathbb{R}$ satisfies that the image of the set of critical points at which the function $f$ has Taylor expansions of order $n-1$ and non-empty subdifferentials of order $n$ is a Lebesgue-null set. As a by-product of our proof, for the proximal subdifferential $\partial_{P}$, we see that for every lower semicontinuous function $f:\mathbb{R}^2\to\mathbb{R}$ the set $f(\{x\in\mathbb{R}^2 : 0\in\partial_{P}f(x)\})$ is $\mathcal{L}^{1}$-null.Comment: Final version. The main result has been strengthened thanks to the suggestions of a refere

Voice or Public Sector Management? An Empirical Investigation of Determinants of Public Sector Performance based on a Survey of Public Officials

Drawing on an in-depth governance micro-survey of public officials within a country, we address empirically the question of the relative importance of the various determinants of governance. We investigate the causes of poor governance, and show that commonly made inferences about policy based on simple correlation can be highly misleading, because the high correlation between the various governance (and public sector management) determinants, as well as the endogeneity in these variables. We find that undue emphasis may have been given in previous work to a number of conventional public sector management variables (such as civil servant wages, internal enforcement of rules, autonomy of agency by fiat, etc.), while undermining the priority due to more ‘external’ (to public sector management) variables, such as external voice, transparency, and politicization. The latter set of ‘voice’-related variables has larger affect on the quality of service and corruption than the more traditional public sector management type of variables. Further work drawing in depth on country-specific surveys in other settings is warranted to ascertain with more confidence whether a shift towards more prominence to transparency and ‘voice’-type of variables is needed, backstopping the results for Bolivia in this paper.