On the Structure of the Political Party System in Indian States, 1957-2013

What accounts for the large and ever-changing number of political parties that contest Indian state elections? In this paper we examine this question by testing an equilibrium model of political party numbers where the number of parties depend on the average size of state constituencies, voter turnout, the heterogeneity of the state’s electorate, constitutional and legislative rules that directly affect party numbers and per capita state incomes while controlling for a series of discrete political events that have influenced political parties. The analysis compares this model with one explaining the effective number of parties (ENP) and extends the analysis to consider the effect of political factors such as the openness and competitiveness of the upcoming election on the timing of the decision of political parties to enter and exit (and thus the rate of political party turnover). The analysis is further extended by allowing the level of development to interact with their party structures

Competitive Bank Monies: Reconsidering Hayek and Klein from a Transactions Perspective

In this paper the case made by Klein (1975) and Hayek (1976) for competitive bank monies is reconsidered. To do so we build a model of the demand for bank money that derives from money’s ability to separate commodity purchases from sales across time and so avoid the trading costs implied by barter and the double coincidence of wants. Such a model allows us to view the bank cheating or time inconsistency problem alleged to undermine the case for free banking as part of a larger concern with the creation and maintenance of bank quality in a competitive banking environment. As such it helps to further refine the circumstances under which competition is and is not consistent with optimal money provision and stable money prices

What Happens When Voting Rules Change? The Case of New Zealand

This paper examines the impact of New Zealand’s 1996 adoption of a mixed member proportional (MMP) voting scheme on representation in the legislature, voter turnout, vote volatility and the likelihood of an incumbent party winning re-election. I then consider whether MMP has had any negative consequences for the effectiveness of government policy in relation to fiscal accountability and countercyclical intervention. The data used in the analysis begins from the formation of the party system in New Zealand (in 1890) and extends through the adoption of MMP to the present (2017). The data set covers 42 elections: 34 before 1996 and 8 after

Elections, Economic Outcomes and Policy in Canada: 1870 - 2015

In this paper we examine the relationship between economic and electoral outcomes in Canada since Confederation (1867) and the role that economic policy has played in influencing this relationship. The results are consistent with voter concern for the overall performance of the economy in the incumbent’s governing term—the average growth rate of per capita GDP and average unemployment rate—while rejecting the presence of a political business/budget cycle response in the period leading into an upcoming election. Ev

Fixed versus Flexible Electoral Cycles with application to the recent change by Canada’s Federal Government

Why would the governing party in a Westminster parliamentary system ever surrender the right to choose the timing of the next election in favour of a fixed electoral cycle that precisely dates future elections? This analysis suggests an answer relation to Canada’s recent (2007) adoption of a four year fixed governing term by arguing that the institutional combination of a fixed maximum (rather than minimum) term and the right to choose the next election date allows opportunism to generate an externality that can result in election calls arising too soon. Evidence from Canada is introduced consistent with the cost of that externality rising through time. In such circumstances a change in institutional rules that sets a higher minimum term would realize net social advantage. The approach also suggests that as the efficiency potential of a fixed term comes to dominate the status quo, it will be the political party with relatively little success in using election timing for electoral advantage that will initiate change. The true test of the efficiency hypothesis will come only with the election of an opposition party. While the current elimination of discretion may seem desirable when in opposition, the desirability of may well change when in power

Optimal Simple Monetary Policy Rules in a Small Open Economy with Exchange Rate Imperfections

The paper addresses whether or not the exchange rate or some other dimension of the external side of the economy should form an integral part of the monetary rule for a small open economy (SOE) in which the central bank faces data deficiencies. Under a number of information scenarios, the model’s simulations suggest that some reflection of the external environment facing the SOE—either the real exchange rate gap and/or the law of one price gap—is needed to improve monetary policy performance. When the money rule includes both interest rate smoothing and the real exchange rate (or law of one price gap), the relative welfare gain from their inclusion increases as the monetary authorities loses access to more current and reliable information

An Oil-Driven Endogenous Growth Model

In this paper we show that the abundance of a natural resource such as oil need not present a curse for the domestic economy, dooming the non-oil sector to secondary status and a long period of stagnation and decline. Rather oil revenues can themselves be source of economy wide growth. What is required is the judicious use of oil revenues, in our case the channelling oil revenues into government capital/infrastructure that will complement private capital. We show that in such cases economy wide growth need not arise at the expense of other government services. In the steady state government consumption can grow in line with private consumption, in our case at the rate dictated by household preferences