Policy Reform Under Electoral Uncertainty

How does uncertainty affect the process of policy reform? Our investigation identifies two types of uncertainties, one at the electoral level and another at the implementation level. When voters abstain from the electoral process, electoral uncertainty emerges. Implementation uncertainty arises whenever the politician is unable to guarantee a positive outcome from a policy implementation. Using a political agency model where two groups of voters delegate to a politician the decision to implement reform or maintain the status quo of the economy, we show that both implementation uncertainty and electoral uncertainty affect policy implementation in different ways. Implementation uncertainty might introduce disagreement between voters about the (ex-ante) convenience of implementing the project. On the other hand, with electoral uncertainty in the political system, political power may be detached from the group’s relative size, thus linking it to the citizens’ probability of being the decisive vote. In short, a highly disciplined minority group could gather enough political power to impose their preferred policies over a less disciplined majority group.

Institutional Bias Towards The Status Quo

Some societies appear to be better equipped than others to implement efficiency enhancing policy reforms and to deliver positive results out of their implementation. Our model presents an under-examined element of policy reform and institutional quality, showing how the characteristics of the political system may render citizens unable to properly reward politicians who implement new projects, thus favoring politicians who secure the status quo, albeit mediocre, of the economy. In such an environment, new policy projects are sidelined and political institutional quality remains inert. Political institutions matter because they affect the value for the politicians of staying in office. We show that societies with a suboptimal political system may present institutional bias towards the status quo. This bias arises due to the inability of the citizens to design an effective voting rule that induces politicians to implement new projects successfully.

Give and Take: Political Competition, Participation and Public Finance in 20th Century Latin America

Rational choice models predict that political competition and political participation have opposite effects on the size of government. We investigate these theories using data from a panel of 18 Latin American countries during the 20th century. Our research builds evidence for the prediction that reforms enhancing political competition tend to limit the size of government. Furthermore, we find that reforms which remove literacy requirements from franchise laws are associated with government expansion, while changes in women's suffrage laws have no impact on the size of government. Our findings demonstrate the empirical relevance of the distinction between political competition and participation

Institutional Bias Towards The Status Quo

Algunas sociedades parecen estar mejor equipadas para implementar reformas económicas eficientes y entregar resultados positivos de su implementación. Nuestro modelo presenta una relación novedosa entre reforma económica y calidad institucional, mostrando que las características del sistema político pueden dejar a los ciudadanos sin la posibilidad de recompensar apropiadamente a los políticos que implementan proyectos nuevos y, por lo tanto, favoreciendo a aquellos que aseguran el status quo, aunque mediocre, de la economía. En este ambiente, se dejan de lado nuevos proyectos de política económica y la calidad de las instituciones políticas se vuelve inerte. Las instituciones políticas son importantes porque afectan el valor para el político de mantenerse en el poder. Mostramos que las sociedades con sistemas políticos de calidad media pueden presentar sesgo institucional hacia el status quo. Este sesgo surge debido a la incapacidad de los ciudadanos para diseñar reglas de votación efectivas que induzcan al político a implementar nuevos proyectos exitosamente

Policy Reform Under Electoral Uncertainty

¿Cómo afecta la incertidumbre el proceso de reforma de políticas? Nuestra investigación identifica dos tipos de incertidumbre, una a nivel electoral y otra en la implementación de políticas. Cuando los votantes se abstienen del proceso electoral, emerge la incertidumbre electoral. Por otro lado, la incertidumbre de implementación surge cuando el político no es capaz de garantizar que la implementación de la política económica tendrá un resultado positivo. Utilizando un modelo de agencia política donde dos grupos de votantes delegan a un político la decisión de implementar una reforma o mantener el status quo de la economía, mostramos que la incertidumbre de implementación y la incertidumbre electoral afectan la implementación de políticas de manera distinta. La incertidumbre de implementación puede introducir desacuerdo acerca de la conveniencia (ex ante) de implementar el proyecto. Por otra parte, con incertidumbre electoral en el sistema político, el poder político puede disociarse del tamaño relativo de cada grupo, asociándose a la probabilidad del ciudadano de ser el voto decisivo. En resumen, un grupo minoritario pero bien disciplinado podría reunir suficiente poder político como para imponer sus preferencias sobre un grupo mayoritario pero menos disciplinado

Political competition, electoral participation and public finance in 20th century Latin America

Rational choice models predict that political competition and political participation have opposite effects on the size of government. We investigate these theories using data from a panel of 18 Latin American countries during the 20th century. Our research builds evidence for the prediction that reforms enhancing political competition tend to limit the size of government, while reforms increasing political participation tend to increase the size of government. Furthermore, we find that reforms which remove literacy requirements from franchise laws are associated with governmental expansion, while changes in women's suffrage laws have no impact on the size of government. Our findings demonstrate the empirical relevance of the distinction between political competition and participation.Political competition Political participation The extension of the franchise Women' s suffrage Literacy requirements Size of government