Electoral goals and center-state transfers: A Theoretical model and empirical evidence from India

We construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations. These considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not. A testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers. We test this prediction using Indian data for 14 states from 1974-75 to 1996-97. We ?nd that a state which is both aligned and swing in the last state election is estimated to receive 16 higher transfers than a state which is unaligned and non-swing.Redistributive Politics, Alignment, Swing, Electoral Competition

Multiple Equilibria in a Simple Model of Search with Entry

Diamond (1971) analyzed a goods market wherein identical buyers with unitary demand searched sequentially over identical monopolistically competitive firms. The equilibrium market price was shown to be the monopoly price. Suppose, now, that to participate in a "Diamond-market," prospective buyers are charged a small but positive entry fee. Since the market price fully extracts consumer surplus from entering buyers. no one finds it worthwhile to pay this entry fee. To study the non-trivial implications of consumer entry, I modify the Diamond-model slightly. The modified model displays two interesting features: buyers with strictly positive entry fees enter the goods market, and the goods market generates multiple equilibrium prices

Electoral goals and center-state transfers : a theoretical model and empirical evidence from India

We construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations. These considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not. A testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers. We test this prediction using Indian data for 14 states from 1974-75 to 1996-97. We find that a state which is both aligned and swing in the last state election is estimated to receive 16% higher transfers than a state which is unaligned and non-swing

Electoral goals and center-state transfers : a theoretical model and empirical evidence from India

We construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations. These considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not. A testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers. We test this prediction using Indian data for 14 states from 1974–75 to 1996–97. We find that a state which is both aligned and swing in the last state election is estimated to receive 16% higher transfers than a state which is unaligned and non-swing

The disciplining role of repeated elections: some experimental evidence

This paper reports on an experiment that studies the functioning of a political market. The formal model, on which the experiment is based, considers a situation wherein two candidates participate in a series of structurally identical elections. The model also incorporates and emphasizes an important informational asymmetry between voters and candidates: specifically, a candidate's diligence in office (i.e. the amount of effort expended) is unobserved by voters. How do subjects, voters and candidates, behave in the laboratory? My principal findings are twofold. First, given the institutional structure of repeated elections, voters have the ability to extract effort from candidates. However, candidates' effort level choices fall well short of the upper endpoint of the effort choice set. In other words, the electorate's ability to sanction candidates is not sufficient to eliminate the rents of office. Second, candidates' effort level choices are mostly consistent with incentives implicit in the elections set-up.elections, principal-agent, moral hazard, experiments,

Coalition governments and distributive programs: a simple model

Casual empiricism reveals that a government's program implementation policy frequently fails to maximize the representative citizen's welfare. Inthis paper, I construct a model that incorporates political economy considerations and examine the equilibrium policy distortions that a coalition government begets. I show that coalition governments are fiscally profligate when program benefits are divisible and excessively conservative when these benefits are indivisible. In other words, program characteristics (divisible or indivisible) affect even the qualitative nature of coalition-related policy distortions.distributive program, coalition government, inefficiency,

The political determinants of central governments' economic policies in India: an empirical investigation

Using annual data from India, we investigate whether central governments' economic policies are affected by two political considerations-the proximity of an election to the national legislative assembly, and the nature of the central government (single-party versus coalition). We find that economic policies are responsive to election timing. On the other hand, economic policies are largely insensitive to government type. Copyright © 2005 John Wiley & Sons, Ltd.