DOES CENTRALISATION AFFECT THE NUMBER AND SIZE OF LOBBIES?

Previous research has shown that if countries ”merge”, (i.e. move to centralized policy choices) the effect is to reduce lobbying. However empirical evidence suggests that this is not the case. This paper explains the empirical evidence in a two-jurisdiction political economy model of public good provision under policy centralization and policy decentralization, where the policy choice can be affected by the pressure of endogenously formed lobbies. We measure lobbying in three ways:(i) the number of lobbies formed under the two settings, (ii) their impact on policy decisions and (iii) the amount of resources transferred to the policy makers. We show that preference heterogeneity and lobby formation are positively related and that moving from decentralization to centralization can affect both the number and the type of lobbies. We develop some examples; among them: under centralization, compared to decentralization, the size of lobbies can be higher but the impact on policy can be smaller. Moreover we show how the majority groups try to offset lobbying by strategic voting for a candidate of a different group.Lobby Formation ; Pressure Group ; Centralization

Fiscal interactions among European countries : does the EU matter?

This paper provides a simple theoretical model of capital tax competition between countries that di¤er in spatial location, and where cross-border investment costs are proportional to distance (a gravity model). We model EU membership as a reduction in ‘distance’ between countries. Precise predictions about reaction functions’ intercepts and slopes are derived. In particular we …nd that joining the Union lowers tax reaction function’s intercept and that all countries react more to member countries than they do to non-members. These predictions are largely con… rmed using a panel data set of statutory corporate tax rates on Western European countries

FISCAL INTERACTIONS AMONG EUROPEAN COUNTRIES

In this paper we investigate whether there is empical evidence that EU Countries set their public expenditure and their taxes interdependently. We use a panel of data across european countries, years and fiscal variables to estimated countries’ reactions functions. We find evidence of intedependences consistent with the literature on tax and yardistick competitionSpatial Correlation ; Yardstick Competition ; Tax Competition

Fiscal Interactions Among European Countries. Does the EU Matter?

We use a panel of European countries to investigate whether or not governments interact with their neighbors when they decide their fiscal policy; we consider both taxes and expenditures, at aggregate and at separate aspects of policy. We analyse possible different competitive behaviours and find evidence of fiscal interdependencies consistently with the literature on tax and yardstick competition. For corporate taxes, the regression results suggest that European countries follow large countries in order to attract capital; for income taxes and public expenditures, instead, fiscal interactions exist but they are mainly due to yardstick competition. Finally, we have found the countries are interdependent with each others before joining the EU, and than, once they are in, they become more independent.yardstick competition, tax competition, intergovernmental relations, international fiscal issues, regionalisation

Does Centralization Affect the Number and Size of Lobbies?

Previous research has shown that if countries “merge”, (i.e. move to centralized policy choices) the effect is to reduce lobbying. However empirical evidence suggests that this is not always the case. This paper attempts to explain the empirical evidence in a two-jurisdiction political economy model of endogenous lobby formation and policy determination. We measure lobbying in two ways: (i) the number of lobbies formed under the two settings and, (ii) their impact on policy decisions. We show that preference heterogeneity and lobby formation are positively related and that moving from decentralization to centralization can affect both the number and the type of lobbies. Under decentralization, if lobbies form they will always have an effect on policy decision. Under centralization, if lobbies form, lobby competition may completely offset their influence on policy; however it is possible that the threat of lobbying may affect policy even when no lobby forms in equilibrium. Finally, when lobbying affects policy (even if no lobby forms in equilibrium), the political equilibrium is always more moderate than the one where lobbying is not taken into account.lobby formation, common agency, pressure groups, centralization

Does centralisation affect the number and size of lobbies?

Previous research has shown that if countries "merge", (i.e. move to centralized policy choices) the effect is to reduce lobbying. However empirical evidence suggests that this is not the case. This paper explains the empirical evidence in a two-jurisdiction political economy model of public good provision under policy centralization and policy decentralization, where the policy choice can be affected by the pressure of endogenously formed lobbies. We measure lobbying in three ways:(i) the number of lobbies formed under the two settings, (ii) their impact on policy decisions and (iii) the amount of resources transferred to the policy makers. We show that preference heterogeneity and lobby formation are positively related and that moving from decentralization to centralization can a.ect both the number and the type of lobbies. We develop some examples; among them: under centralization, compared to decentralization, the size of lobbies can be higher but the impact on policy can be smaller. Moreover we show how the majority groups try to o.set lobbying by strategic voting for a candidate of a different group

Fiscal interactions among European countries

In this paper we investigate whether there is empirical evidence that EU Countries set their public expenditure and their taxes interdependently. We use a panel of data across European countries, years and fiscal variables to estimated countries’ reactions functions. We find evidence of intedependences consistent with the literature on tax and yardistick competition

Happy voters

In this paper we investigate whether or not recent initiatives taken by governments and international organizations to come up with indicators of Subjective Well Being (SWB) to inform policy makers go in the same direction as citizens expectations on what policy makers should do. We test retrospective voting hypotheses by using standard measures of SWB as a proxy for utility instead of the commonly used indicators of economic and financial circumstances. Using the British Household Panel Survey Data we find that citizens who are satisfied with their life are more likely to cast their vote in favour of the ruling party, even taking into account ideological preferences. We show that SWB influences voting decision even when the event affecting the SWB is beyond the government’s control, like the spouse death

The Political Economy of Policy Centralization: Direct Versus Representative Democracy

This paper examines policy centralization outcomes in a two-jurisdiction, political economy model of public good provision choices with heterogeneous policy preferences and interjurisdictional policy spillovers, under alternative democratic choice procedures, namely, direct democracy and representative democracy. We show that policy centralization is more likely to occur if the choice to centralize is made by elected policymakers rather than by referendum. The reason for this result is that delegation of the harmonization choice to elected policymakers can effectively act as a policy commitment device by a pro-centralization jurisdiction and induce a reluctant partner to cooperate. In these situations, policy centralization will result in policies converging towards the choice preferred by the reluctant partner, rather than in a dilution of policy preferences.international cooperation, trade and environmental policy negotiations

Incumbent effects and partisan alignment in local elections : a regression discontinuity analysis using Italian data

This paper provides a simple model to explain effect of political alignment between different tiers of government on policy choices and election outcomes. We derive precise predictions that, as long as voters attribute most of the credit for providing public goods to the local government: (i) aligned municipalities receive more grants, set lower taxes and provide more public goods, (ii) that the probability that the local incumbent is re-elected is higher in aligned municipalities compared to not aligned ones. Our empirical strategy to identify the alignment effects is built upon the fact that being or not aligned changes discontinuously at 50% of the vote share of local parties. This allows us to use sharp regression discontinuity design. Our theoretical predictions are largely confirmed using a new dataset on Italian public finance and electoral data at the central and local level