This is undoubtedly recognized that economic performance for each country over time is related to a great extent to its political, institutional and legal environment. In fact, these institutions and policies are that determine the governance quality.   In a panel data study, we applied newly developed indices to examine the effects of good governance on FDI for fifteen middle-income countri...

A political economic framework is used to describe an economy following transition to private ownership. The transition, characterized by massive privatization, is accompanied by a constitutional change, which is influenced by potential shareholders who may be described as the local entrepreneur, the corrupt entrepreneur, or the foreign entrepreneur. The constitutional changes influence the pri...

This paper finds that political freedom has a significant and non-linear effect on domestic terrorism, but this effect is not significant in the case of transnational terrorism. Some of our other novel findings are that while geography and fractionalization may limit a county’s ability to curb terrorism, the presence of strong legal institutions deters it. JEL classification codes: D74, H56

The ‘noise trader’ model of De Long et al. provides a plausible account of the determination of the equity premium. Extension of the model to allow for privatization of publicly-owned assets yields insights into the positive political economy of privatization and into the normative question of how policies should be evaluated in the presence of mistaken beliefs. JEL Classification: E62

We construct a time-series model of investment in Israel that incorporates both traditional economic factors derived from a theoretical model of a profit-maximising representative firm and indicators of political instability and unrest. This is used to estimate the extent to which the Intifada has depressed Israeli investment and the size of the corresponding "peace dividend". JEL Classificatio...

This chapter surveys formal models of endogenous alliance formation in political science and economics. Using a unified model of conflict, we obtain general results on the effect of group sizes on conflict and on the size of stable alliances. We also discuss recent work on endogenous sharing rules and dynamic alliance formation in nested conflicts. JEL Classification Numbers: D74, D72, C72

Political stock markets (PSM) are sometimes seen as substitutes for opinion polls. On the bases of a behavioral model, specific preconditions were drawn out under which manipulation in PSM can weaken this argument. Evidence for manipulation is reported from the data of two separate PSM during the Berlin 99 state elections. JEL Classification: C93, D4, G1

We introduce a path-based measure of convexity to be used in assessing the compactness of legislative districts. Our measure is the probability that a district will contain the shortest path between a randomly selected pair of its’ points. The measure is defined relative to exogenous political boundaries and population distributions. JEL classification: D72, K00, K19

H10, B25, A11 KEy woRdS: JEL Classification: political economy, public choice, constitutional economics, institutions, 1 University of Warwick, UK; CREMA – Center for Research in Economics, Management and the Arts, Switzerland 2 University of Zurich, Switzerland Corespondence concerning to this article should be addressed to: [email protected] Bruno S. Frey1 and Lasse Steiner2