We suggest an equilibrium concept for a strategic model with a large number of players in which each player observes the actions of only a small number of the other players. The equilibrium concept fits well situations where each player treats his sample as a prediction of the distribution of actions in the entire population, and responds optimally to this prediction. We apply the concept to a ...

The main drawback of the public-policy contest is that the notion of contest success function, a crucial component of the contest model, does not have microfoundations and, therefore, the random behavior of the government seems ad-hoc. In the present paper we propose a partial micro-foundation for the public-policy contest. The possible rationalization of random government behavior is illustrat...

Political parties can be vehicles for economic and social development in poor countries. They can also serve as rent seeking instruments. Uncovering how parties function is therefore key to establishing the preconditions for good governance. The paper discusses when and why clientelism on the basis of party affiliation may arise. Operationally, party-based clientelism is defined as a bias of pu...

In this article we analyze the determinants of the functional distribution of government expenditure using for this purpose the models of the median voter's demand common in public choice literature. First of all, we review the economic literature on the factors affecting each component of government expenditure. Then, secondly, we develop a demand model of expenditure structure and we estimate...

This paper provides preliminary evidence that interest groups reduce both the level and the volatility of returns on a national stock market. These findings are robust to model specifications that include traditional growth regression “policy” variables as well as political, economic, and financial institutions variables. The estimated magnitude of the relationship between interest group activi...

Periodic elections are the main instrument through which voters can hold politicians accountable. From this perspective term limits, which restrict voters’ ability to reward politicians with re-election, appear counterproductive. We show that despite the disciplining effect of elections, term limits can be ex ante welfare improving from the perspective of voters. By reducing the value of holdin...

Who Is the Enemy? We examine who benefits when there is a strong leader in place, and those who benefit when a situation lacks a proper leader. There are fractious terrorist groups who seek to serve the same people in common cause against a common enemy. The groups compete for rents obtained from the public by engaging in actions against the common enemy. We derive a condition under which the c...

We study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program. While governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture, centralized delivery systems are additionally prone to bureaucratic corruption, owing to problems in monitoring bureaucratic performance. Decentral...

I introduce a formal model of campaign strategy to show when candidates will engage in negative campaigning and how it can affect election results. The model separates campaign strategies by target (self or opponent) and dimension (issue or character), and defines negative campaigning as attacking one’s opponent on the character dimension. Whether candidates choose negative campaigning depends ...

This paper uses a large panel data set to examine the relation between elections and fiscal policy. We find evidence of political budget cycles in both developed and developing countries: government spending increases before elections while revenues fall, leading to a larger deficit in election years. We demonstrate that political budget cycles are much larger in developing countries than in de...