This paper studies the effects of asymmetries in re-election probabilities across parties on public policy and its subsequent propagation to the economy. The struggle between opposing groups–that disagree on the composition of public consumption–results in governments being endogenously short-sighted: Systematic under investment in infrastructure and overspending on public goods arise, as resou...

We propose a simple mechanism capable of achieving international agreement on the reduction of harmful emissions to their efficient level. It employs a contest creating incentives among participating nations to simultaneously exert efficient productive and efficient abatement efforts. Participation in the simplest, most stylised formulation of the scheme is voluntary and individually rational. ...

This paper assesses the effect of political institutions on stock market performance in 14 African countries for which stock market data is available for the period 1990-2010. The estimation technique used is a Two-Stage-Least Squares Instrumental Variable methodology. Political regime channels of democracy, polity and autocracy are instrumented with legal-origins, religious-legacies, income-le...

Hobbes to Rousseau: Inequality, Institutions, and Development This paper studies the endogenous evolution of economic and political institutions and the interdependencies with the process of economic development. Favorable economic institutions in form of a social contract that ensures a state of law and the absence of societal conflict are not assumed exogenously under certain political system...

An Empirical Analysis of Trade-Related Redistribution and the Political Viability of Free Trade Even if free trade creates net welfare gains for a country as a whole, the associated distributional implications can undermine the political viability of free trade. We show that trade-related redistribution increases the political viability of free trade in the US. We do so by assessing the causal ...

Path-Breakers: How Does Women’s Political Participation Respond to Electoral Success? This paper analyzes the effect of a woman’s electoral victory on women’s subsequent political participation. Using the regression discontinuity afforded by close elections between women and men in India’s state elections, we find that a woman winning office leads to a large and significant increase in the shar...

This paper is the first study that analyzes the drivers of political protest using longitudinal data from a critical revolution that changed –at least temporarily– the political landscape in a transition country. We make use of a rich dataset consisting of panel data collected before and after the so called “Orange” revolution in Ukraine. Our empirical approach tackles two different –and equall...

This paper examines how ownership structure and institutional development influence the liquidity management and investment policies of firms, in response to the threat of political extraction in China. First, we document evidence that firms controlled by private entrepreneurs hold less cash reserves than their state-owned counterparts. In addition, cash holdings (investments) is positively (ne...

This paper proposes a model of two-party representative democracy on a singledimensional political space, in which voters choose their parties in order to influence the parties’ choices of representative. After two candidates are selected as the median of each party’s support group, Nature determines the candidates’ competence levels. Based on the candidates’ political positions and competence ...

To investigate how political tastes influence portfolio decisions, we exploit the mandatory disclosure of equity holdings made by U.S. Congress members and a continuous measure of ideology based on their voting records. By doing so, we address methodological issues facing the literature on political tastes and investment decisions. We find that politicians with similar beliefs hold similar equi...