PARTISAN ADVOCATES

This paper studies the problem of an uninformed decision maker who acquires expert advice prior to making a decision. I show that it is less costly to hire partisan agents than impartial agents, especially under advocacy, and that the decision maker prefers partisan advocacy to other forms of institutions. I also extend the literature, originating with Dewatripont and Tirole ( 1999 ), to a setting with contracts that condition on information provided and not just the decision made.     

SHORT-RUN MONETARY POLICY AND THE MACROECONOMIC ENVIRONMENT

This study investigates factors influencing monetary policy decisions of the Federal Open Market Committee (FOMC) over the period 1960–1998. Competing perspectives regarding the process of monetary policy making exist, with some researchers contending the FOMC makes short-run policy decisions based solely on "objective" macroeconomic considerations and others arguing that political and other nonmacroeconomic considerations significantly influence monetary policy voting. Empirical studies support both views in varying degrees. This article presents a model of FOMC decision making which posits that (1) the current/prospective macroeconomic environment at the time of FOMC meetings is the most important consideration of monetary policy makers, and (2) nonmacroeconomic variables receive little attention unless macroeconomic conditions are difficult for policy makers to assess. Probit results support the implications of the model.     

Macroeconomics and Politics Revisited: Do central banks Matter?

This paper provides a model encompassing both partisan influences on monetary policy and the issue of central bank independence. In a regime of partial independence, central bank's policy responses are not immune from partisan influences. Still, the latter fail to affect systematically the expected output level in election years. The predictions of the model are consistent with the empirical literature on partisan cycles and account for some of its controversial findings.     

Central bank design with heterogeneous agents

We study alternative institutional arrangements for the determination of monetary policy in a general equilibrium model with heterogeneous agents, where monetary policy has redistributive effects. Inflation is determined by a policy board using either simple-majority voting, supermajority voting, or bargaining. We compare the equilibrium inflation rates to the first-best allocation.     

Central banks' voting records,the financial crisis and future monetary policy

We examine whether central banks' voting records help predict the future course of monetary policy in the Czech Republic, Hungary, Poland, Sweden and the United Kingdom, controlling for financial market expectations. Unlike previous research, we first examine the period of the global financial crisis, characterized by a high level of uncertainty, and second, examine the predictive power of voting records over longer time horizons, i.e., the next monetary policy meeting and beyond. We find that voting records predict the policy rate set at the next meeting in all central banks that are recognized as independent. In some central banks, voting records are found—before, but not during, the financial crisis—to be informative about monetary policy at even more distant time horizons.     

THE PARTISAN MODEL OF MACROECONOMIC CYCLES: MORE THEORY AND EVIDENCE FOR THE UNITED STATES*

The “Partisan Theory” of macroeconomic policy is based on the idea that political parties typically weight nominal and real economic performance differently, with left-party governments being more inclined than right-party ones to pursue expansive policies designed to yield lower unemployment and higher growth, but running the risk of extra inflation. Given suitable assumptions about the structure of the macroeconomy, partisan models imply a political signal in demand management, output and inflation movements originating with shifts in party control of the government. In this paper I develop and test with postwar US data a revised Partisan model that allows for (i) uncertainty among policy authorities about the sustainable output growth rate and therefore about how aggregate demand expansions will be partitioned between extra output and extra inflation, and (ii) ex-post and projective learning and preference adjustment under such uncertainty. Dynamic numerical analysis of a small, stylized political-economic model based on these extensions of Partisan Theory generates within-sample forecasts that correspond remarkably well to the observed pattern of price, output and nominal spending fluctuations under the parties.     

ECONOMIC VOTING AND ELECTORAL BEHAVIOR: HOW DO INDIVIDUAL,LOCAL, AND NATIONAL FACTORS AFFECT THE PARTISAN CHOICE?

What impact do income and other demographic factors have on a voter's partisan choice? Using post‐election surveys of 14,000 voters in 10 Australian elections between 1966 and 2001, I explore the impact that individual, local, and national factors have on voters' decisions. In these 10 elections, the poor, foreign‐born, younger voters, voters born since 1950, men, and those who are unmarried are more likely to be left‐wing. Over the past 35 years, the partisan gap between men and women has closed, but the partisan gap has widened on three dimensions: between young and old; between rich and poor; and between native‐born and foreign‐born. At a neighborhood level, I find that, controlling for a respondent's own characteristics, and instrumenting for neighborhood characteristics, voters who live in richer neighborhoods are more likely to be right‐wing, while those in more ethnically diverse or unequal neighborhoods are more likely to be left‐wing. Controlling for incumbency, macroeconomic factors do not seem to affect partisan preferences – Australian voters apparently regard both major parties as equally capable of governing in booms and busts.     

EVALUATING RATIONAL PARTISAN BUSINESS CYCLE THEORY*

This paper provides new tests of the recently developed theory of rational partisan business cycles. According to the theory, resolution of uncertainty about electoral consequences and partisan differences in economic behavior produce downturns following victories of conservative parties and booms following victories of liberal parties. The first tests utilize the behavior of financial markets to reassess the evidence for the United States. We provide evidence that the stock market does have predictive power for output and estimate an econometric relationship which is then used to gauge the extent to which the recessions are anticipated after elections. The second test uses an international sample of democracies in the postwar era to examine the theory outside the United States using time series models and political variables. The results of the tests provide little support for a strict interpretation of the theory.     

Who Wants an Independent Central Bank? Monetary Policy‐making and Politics

The costs and benefits of cooperative monetary and fiscal policy are analysed in the framework of a partisan business-cycles model. It is shown that political parties with different ideologies prefer to choose different arrangements for macroeconomic policy-making. More specifically, right-wing parties favour independent central banks more than left-wing parties. An independent central bank is also the generally preferred option from a social welfare point of view. In addition, the form of policy-making arrangements between the fiscal and monetary authorities is shown to influence the extent of partisan cycles.
JEL classification : E 32; E 58; E 63; C 72     

How opportunistic are partisan German central bankers: Evidence on the Vaubel hypothesis

Recent research has found inconclusive evidence regarding the presence of opportunistic political business cycles in German data. Inferring from Vaubel, 1993 and Vaubel, 1997one could argue, however, that at least in the case of monetary policy the results are seriously flawed from the onset, because an independent central bank such as the German Bundesbank will support the government only when it shares its partisan views. Vaubel has not presented parametric empirical evidence in support of his hypothesis. We show that the application of time series analysis yields results that clearly run counter to the hypothesis. Evidence on voting behaviour from the central bank council minutes points in the same direction. It appears perhaps paradoxically that an opportunistic government is better off facing an ideologically opposing Bundesbank council majority than a supportive one before elections.     

What does IT Take for Congress to Enact Good Policies? an Analysis of Roll Call Voting in the US Congress

We study the conditions under which members of Congress incorporate policy‐specific considerations in their decisions. To do this, we estimate a model that accounts for the influence of private information about legislation quality on voting patterns in the House and Senate. We find that minority party members are more likely to evaluate proposals on their merits than majority members, but institutional and electoral considerations significantly attenuate these partisan differences. In particular, seniority, electoral safety, and constituents' political knowledge have a balancing effect on partisan predispositions to rely on policy‐relevant information, making minority (majority) members less (more) likely to vote informatively.     

A Coalition-Form Analysis Of The “One Country - One Vote” Rule In The Governing Council Of The European Central Bank *

This paper analyses the “one country—one vote” rule for monetary policy decision

making of the Governing Council of the European Central Bank in a framework of cooperative game theory. The Shapley value is used as a solution concept. In contrast to former papers analysing the allocation of abstract "voting power" in committees of international organisations, preferences for monetary policy are modelled to obtain a prediction about potential transfers implied by an equal allocation of voting rights when countries are of different size. It is shown that if the number of countries participating to a currency union grows and the weight of the largest country within the currency union becomes small, the allocation of voting rights becomes irrelevant in the sense that transfers per country tend in any case to zero. [C71, E5, F02]     

ELECTORAL MOTIVES, PARTISAN MOTIVES AND DYNAMIC OPTIMALITY WITH MANY TAXES: AN INTERNATIONAL INVESTIGATION

In this paper, we argue that tax-smoothing results based on total tax revenues may be of limited importance if in fact governments are concerned with the inter-temporal distortionary effects of many kinds of taxes, when electoral and partisan motives also have to be taken into account. We develop an inter-temporal model that predicts that tax revenue mix should follow random walks. The model is tested with international data using both time series and panel-based unit root tests. We find that during the examined period, 1973–2003, governments are not optimizing tax components in the sense of Barro.     

A MODEL OF AN OPPORTUNISTIC-PARTISAN POLITICAL BUSINESS CYCLE

According to political business cycle theory, separate opportunistic and partisan approaches exist. It is obvious, as seen from theoretical and empirical points of view, that politicians aim for both opportunistic as well as partisan goals. This paper presents a model of a pre‐election political business cycle that manifests an indication of competence and a post‐election political business cycle that occurs because of the uncertainty of an election's winner monetary policy. In the pre‐election period competent governments expand the economy. The post‐election cycle depends on whether a leftist or a conservative government is in power in the pre‐election period, and if they are re‐elected or not.     

Is the MPC's Voting Record Informative about Future UK Monetary Policy?

It is shown that the voting record of the Monetary Policy Committee of the Bank of England helps predict future policy rate changes. This result is robust to the inclusion of market participants’ expectations as measured by the slope of the term structure of money market rates and interest rate futures. Moreover, expectations seem to adjust to the information contained in the voting record, which suggests that publishing the minutes of MPC meetings increases the transparency of monetary policy.     

RACIAL REDISTRICTING FOR MINORITY REPRESENTATION WITHOUT PARTISAN BIAS: A THEORETICAL APPROACH

Scholars of American politics have expressed the concern that concentration of minority voters into limited districts in order to promote minority representation induces the partisan “perverse effect” of reducing the number of seats won by Democrats. Our theory explains how the perverse effect can occur and demonstrates that racial redistricting generates a tradeoff between the number of minority legislators and the number of Democratic legislators. Our theory suggests that in light of this tradeoff, the diversification of districts as well as the concentration of minorities (“second‐order diversity”) may be essential for the proportional representation of minorities without partisan electoral bias.     

2011-2012年中国货币政策分析与展望

本文回顾了2011年中国货币政策操作的主要措施和金融运行情况,分析了2012年货币政策运行环境,提出了货币政策建议。本文认为,2011年,面对不断上升的通货膨胀压力,中国人民银行实行了稳健的货币政策,货币信贷条件向常态水平回归,有效遏制了物价过快上涨的势头。2012年,在经济增长下行压力和物价上涨压力并存的局面下,中国人民银行需要继续实施稳健的货币政策,进一步增强货币政策的针对性、灵活性和前瞻性,根据经济形势的变化,适时适度进行预调微调,保持货币信贷总量和社会融资规模的合理适度增长,更好地服务于实体经济发展。     

COMMITTEES AS SUBSTITUTES FOR COMMITMENT*

In this article, policies are negotiated in a committee by playing a dynamic voting game with an endogenous default (or status quo) policy. I show that joining a committee by maintaining a strong agenda setting power is a way for a decision maker to commit to a policy that in absence of committees is not time consistent. The disciplinary role of the endogenous status quo and the heterogeneity of preferences within the committee are two crucial ingredients to obtain this result. As a motivating example, this article focuses on the time consistency of monetary policy.     

Monetary policy committees and interest rate setting

This paper shows that it is preferable for monetary policy to be conducted by a committee instead of a single policy maker if there is uncertainty about potential output. We examine three decision procedures - an optimal procedure, averaging and voting - and find that the latter is the appropriate way to reach decisions if policy makers are not equally skilled. Finally, we demonstrate that efficient decision procedures reduce the persistence of shocks.