The historical roots of the Catalan crisis: how we got to where we are

The Spanish government has indicated it is ready to suspend Catalonia's autonomy after a deadline passed for the Catalan authorities to drop their push for independence. Gerard Padró i Miquel writes on the role of Spanish nationalism in the crisis. He argues that moving towards independence using extralegal means is not only illegitimate but unrepresentative, but that it is also clear the status quo is unacceptable for a large majority of Catalans. A small window of opportunity might still be open for a solution to be reached through dialogue

The Political Economy of Indirect Control

This paper characterizes the efficient sequential equilibrium when a government uses indirect control to exert its authority. We develop a dynamic principal-agent model in which a principal (a government) delegates the prevention of a disturbance—such as riots, protests, terrorism, crime, or tax evasion—to an agent who has an advantage in accomplishing this task. Our setting is a standard dynamic principal-agent model with two additional features. First, the principal is allowed to exert direct control by intervening with an endogenously determined intensity of force which is costly to both players. Second, the principal suffers from limited commitment. Using recursive methods, we derive a fully analytical characterization of the likelihood, intensity, and duration of intervention. The first main insight from our model is that repeated and costly interventions are a feature of the efficient equilibrium. This is because they serve as a punishment to induce the agent into desired behavior. The second main insight is a detailed analysis of a fundamental tradeoff between the intensity and duration of intervention which is driven by the principal’s inability to commit. Finally, we derive sharp predictions regarding the impact of various factors on likelihood, intensity, and duration of intervention. We discuss these results in the context of some historical episodes.

Foreign Influence and Welfare

How do foreign interests influence the policy determination process? What are the welfare implications of such foreign influence? In this paper we develop a model of foreign influence and apply it to the study of optimal tariffs. We develop a two-country voting model of electoral competition, where we allow the incumbent party in each country to take costly actions that probabilistically affect the electoral outcome in the other country. We show that policies end up maximizing a weighted sum of domestic and foreign welfare, and we study the determinants of this weight. We show that foreign influence may be welfare-enhancing from the point of view of aggregate world welfare because it helps alleviate externalities arising from cross-border effects of policies. Foreign influence can however prove harmful in the presence of large imbalances in influence power across countries. We apply our model of foreign influence to the study of optimal trade policy. We derive a modified formula for the optimal import tariff and show that a country's import tariff is more distorted whenever the influenced country is small relative to the influencing country and whenever natural trade barriers between the two countries are small.

Essays in political accountability

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2005."June 2005."Includes bibliographical references.This thesis is composed by three independent essays on the limits of political accountability. In the first essay I analyze an extremely stylized model of political agency with two dimensional outcomes. I show that the non-contractible nature of rewards to the agent (the politician) is especially taxing when the voters want to control outcomes in more than one dimension. I compare and contrast this environment with traditional multitasking analyses in the context of the theory of the firm. The second essay examines why political accountability has failed so miserably in post- colonial, sub-saharan Africa. I provide a theory based on the exploitation of ethnic divisions by self-interested but weak rulers. This cleavages allow the leaders to expropriate resources from the citizenry, included their own ethnic supporters and still remain in power. The model predicts ethnic bias, patronage, inefficient policies and absence of public investment. The third essay is an empirical analysis of legislative performance in the North Carolina General Assembly. Using a new dataset I am able to show that legislators find their good performance rewarded both within the state legislature and in their electoral careers. These findings have relevance for the discussion on term limits and the theoretical modeling of political agency.by Gerard Padró i Miquel.Ph.D

Selective Trials: A Principal-Agent Approach to Randomized Controlled Experiments

We study the design of randomized controlled experiments when outcomes are significantly affected by experimental subjects’ unobserved effort expenditure. While standard randomized controlled trials (RCTs) are internally consistent, the unobservability of effort compromises external validity. We approach trial design as a principal-agent problem and show that natural extensions of RCTs—which we call selective trials—can help improve external validity. In particular, selective trials can disentangle the effects of treatment, effort, and the interaction of treatment and effort. Moreover, they can help identify when treatment effects are affected by erroneous beliefs and inappropriate effort expenditure

Social fragmentation, public goods, and local elections: evidence from China

This study examines how the economic effects of local elections in rural China depend on voter heterogeneity, as captured by religious fractionalisation. We first document religious composition and the introduction of village-level elections for a nearly nationally representative sample of over 200 villages. Then, we examine the interaction effect of heterogeneity and the introduction of elections on village government provision of public goods. The interaction effect is robustly negative. We interpret this as evidence that voter heterogeneity constrains the potential benefits of local elections for public goods provision

The value of democracy: evidence from road building in Kenya

Ethnic favoritism is seen as antithetical to development. This paper provides credible quantification of the extent of ethnic favoritism using data on road building in Kenyan districts across the 1963–2011 period. Guided by a model it then examines whether the transition in and out of democracy under the same president constrains or exacerbates ethnic favoritism. Across the post-independence period, we find strong evidence of ethnic favoritism: districts that share the ethnicity of the president receive twice as much expenditure on roads and have five times the length of paved roads built. This favoritism disappears during periods of democracy

Do Local Elections in Non-Democracies Increase Accountability? Evidence from Rural China

We use unique survey data to study whether the introduction of local elections in China made local leaders more accountable towards local constituents. We develop a simple model to predict the effects on different policies of increasing local leader accountability, taking into account that there is an autocratic upper government. We exploit variation in the timing of the top-down introduction of elections across villages to estimate the causal effects of elections and find that elections affected policy outcomes in a way that is consistent with the predicted effects of increased local leader accountability.