A THEORY OF THE CORRUPT KEYNESIAN

AbstractWe evaluate the impact of real business cycle shocks on corruption and economic policy in a model of entry regulation in a representative democracy. We find that corruption is pro-cyclical and regulation policy is counter-cyclical. Corrupt politicians engage in excessive stabilization of aggregate fluctuations and behave as if they were Keynesian. We also find that business cycle shocks can induce political instability with politicians losing office in recessions

Rent seeking and the economics of corruption

The paper studies the influence of Tullock (West Econ J 5:224–232, 1967) and the rent-seeking literature more generally on the study of corruption. The theoretical corruption literature with its emphasis on principal-agent relationships within government and rent creation by corruption politicians has largely, but not entirely, overlooked that contestable rents encourage unproductive use of real resources in seeking these rents. As a consequence, the literature underestimates the value of corruption control and the cost of corruption itself.This is the final version of the article. It first appeared from Springer via https://doi.org/10.1007/s10602-016-9215-

Corruption and Sustainable Development

This paper studies the relationship between corruption and sustainable development in a sample of 110 countries between 1996 and 2007. Sustainability is measured by growth in genuine wealth per capita. The empirical analysis consistently finds that cross-national measures of perceived and experienced corruption reduce growth in genuine wealth per capita. In contrast to the evidence on the relationship between corruption and growth in GDP per capita, the negative correlation between a wide range of different corruption indices and growth in genuine wealth per capita is very robust and is of economic as well as of statistical significance. We relate the finding to the literature on the resource curse and demonstrate that rampant corruption can put an economy on an unsustainable path along which its capital base is being eroded

Election results and opportunistic policies: A new test of the rational political business cycle model

The literature on the rational political business cycle suggests that politicians systematically manipulate economic and fiscal conditions before elections to increase their chance of gaining reelection. Most tests of this theory look for evidence of pre- election distortions in fiscal policy. We propose a new test that, instead, explores the implied two-way interaction between the magnitude of the opportunistic distortion and the margin of victory. The test is implemented using a panel of 278 Portuguese municipalities (from 1979 to 2005). The results show that (1) opportunism pays off, leading to a larger win-margin for the incumbent; (2) incumbents behave more opportunistically when their win-margin is small. These results are consistent with the theoretical model

What motivates an oligarchic elite to democratize? Evidence from the roll call vote on the great reform act of 1832

AbstractThe Great Reform Act of 1832 was a watershed for democracy in Great Britain. We study the vote on 22 March 1831 in the House of Commons to test three competing theories of democratization: public opinion, political expedience, and threat of revolution. Peaceful agitation and mass-support for reform played an important role. Political expedience also motivated some members of Parliament to support the reform, especially if they were elected in constituencies located in counties that would gain seats. Violent unrest in urban but not in rural areas had some influence on the members of Parliament. Counterfactual scenarios suggest that the reform bill would not have obtained a majority in the House of Commons in the absence of these factors.British Academy/Leverhulme Small Research Grant (SG121870

From Open to Secret Ballot: Vote Buying and Modernization

The secret ballot is one of the cornerstones of democracy. We contend that the historical process of modernization caused the switch from open to secret ballot with the underlying mechanism being that income growth, urbanization, and rising education standards undermined vote markets. We undertake event history studies of ballot reform in Western Europe and the U.S. states during the 19th and 20th centuries to establish that modernization was systematically related to ballot reform. We study electoral turnout before and after ballot reform among the U.S. states and British parliamentary constituencies to substantiate the hypothesis that modernization reduced the volume of trade in the vote market.This paper was partly written while Toke Aidt was visiting the Institute for Quantitative Social Science at Harvard University and, subsequently, the CESifo in Munich. The hospitality of these institutes is much appreciated. The paper was presented at the 2nd World Congress of the Public Choice Society and European Public Choice Society in Miami in March 2012. The usual qualifier applies.This is the author accepted manuscript. The final version is available from Sage via http://dx.doi.org/10.1177/001041401662826

The Democratic Window of Opportunity: Evidence from Riots in Sub-Saharan Africa

We show that drought-induced changes in the intensity of riots lead to moves toward democracy in sub-Saharan Africa and that these changes are often a result of concessions made as a result of the riots. This provides evidence that low-intensity conflict can have a substantial short-run impact on democratic change and supports the “window of opportunity” hypothesis: droughts lead to an increase in the threat of conflict, and incumbents often respond by making democratic concessions. This is the author accepted manuscript. The final version his available from SAGE at http://dx.doi.org/10.1177/002200271456401