Demand of direct democracy

The growing demand for referendum challenges the traditional model of representative democracy. In this paper we study under which conditions voters prefer a system of representative democracy to direct democracy. In direct democracies voters choose a policy among two alternatives, under uncertainty about which policy better fits the realized state of the world; in representative democracies voters select a candidate who, once elected, chooses a policy having observed which is the realized state of the world. Voters and politicians' payoffs depend on a common component which is positive only if the policy fits the state of the world, and on a private ideological bias towards one of the policies. In direct democracies voters are uncertain about the future state of the world, while in representative democracies they are uncertain about the degree of ideological bias of the candidates, even if they know towards which policy each candidate is biased. We show that representative democracy is preferred if (i) the majority of voters are pragmatic (the common component prevails), and (ii) society is ideologically polarized, meaning that the majority of voters are ideological (the private component prevails), but the median voter is pragmatic. Direct democracy is the preferred instrument for collective choices in societies in which the majority of voters and the median voter are ideological, implying that the majority of voters have the same ideological bias, as, for instance, it occurs when the populist rhetoric of people against the elite succeeds.     

Ethnicity, Politics and Economic Performance

The paper investigates the effects of ethnic diversity on economic performance. Previous studies have found that diversity has various detrimental microeconomic effects, tending to reduce public sector performance, and has large detrimental effects on the overall growth rate. I develop a simple model of the effect of ethnic diversity on a government decision problem in which there is a tradeoff between growth and distribution, in the contexts of democracy and dictatorship. I find that in democracy ethnic diversity has no effect upon the decision, whereas in dictatorship ethnic diversity leads to a government choice which reduces the growth rate. I then test these propositions on two data sets. The first is for 94 countries over the period 1960–1990. I find that whether diversity adversely affects overall economic growth depends upon the political environment. Diversity is highly damaging to growth in the context of limited political rights, but is not damaging in democracies. The second is for World Bank projects in 89 countries. I find that the same relationship between diversity and democracy affects the proportion of projects which are successful.     

Are Democracies Cleaner?

We inquire whether democracies enjoy lower pollution levels than autocracies by investigating the ‘clean democracy hypothesis’, which posits that democracies have a more demand-determined policy formation leading to more stringent environmental policies. We test this hypothesis with a large data set covering 137 countries and the period 1970–2012 using eleven different air pollutants as endogenous variables and a wide range of control variables measuring democracy, development stage, globalization, and factor endowments. We find no consistent evidence that democracies are cleaner, not even the richer ones, which casts doubt on the validity of single pollutants studies. Numerous checks show the robustness of our results.     

Regime types,ideological leanings,and the natural resource curse

While many consider institutional quality as a central explanatory variable when finding what causes the variance in per capita GDP growth performance of resource-abundant countries, this paper attempts to focus on more structural factors: regime type and its ideological approaches to economic policy. Several joint effects of natural resource abundance and regime type on growth are found. The natural resource curse is likely to be more severe in authoritarian regimes than democratic regimes. Among democracies, it is found that the natural resource curse is more salient in presidential regimes than in parliamentary regimes. This paper also suggests that the natural resource curse is more likely when a certain type of democratic regime coincides with a particular ideological orientation of the regime with respect to economic policy. Presidential democracies with left-wing economic policy are found to be least growth enhancing among the combinations between regime type and its economic ideology offered, given similar levels of natural resource abundance.     

Pareto optimality and the decisive power structure with expansion consistency conditions

This paper establishes the implication of Pareto optimality requirement in social choice. It is shown that a Paretian social choice function satisfying certain expansion-consistency conditions, which are based on the rationality of optimization, generates extremely asymmetric power structure, e.g., dictatorship or oligarchic.     

社会主义经济转轨的马克思主义分析方法

中外经济学家研究社会主义经济转轨的方法大体有五种:一是“激进—渐进”的速度分析方法,二是“目标—指标”的定量分析方法,三是“政治—经济”的关联分析方法,四是“成本—效益”的经济分析方法,五是“过程—绩效”的实证分析方法。这些分析方法既有其合理性,同时又存在着缺陷。本文认为,立足于历史唯物主义科学世界观的马克思主义制度分析方法是研究社会主义经济转轨的科学方法。为此,本文运用马克思主义的制度分析方法,即“生产方式—社会结构”分析方法对社会主义经济转轨进行深入而系统的分析。本文的基本观点是:社会主义经济转轨实质上是社会经济结构即生产方式与生产关系的变革,这一变革的根源在于传统社会主义生产方式与社会经济结构的内在矛盾,这一变革的趋势必然是构建与市场经济相适应的现代社会主义模式。     

Social transfers and conditionalities under different regime types

This paper examines the implications of political factors for social policy choices. Specifically, we explore the link between regime type and adoption of unconditional transfers versus transfers conditioned on beneficiaries’ investments in human capital. Due to the direct nature of benefits, unconditional transfers are more likely to be used to buy off opposition and prevent social unrest. As transfers that are conditioned on education and health pay off only in a relatively distant future, they are rarely initiated for political motives and rather defined by interests of long-term development and human capital accumulation. Using the new dataset on Non-Contributory Social Transfer Programs (NSTP) in developing countries, we find that transfers are indeed chosen so as to be unconditional under less democratic regimes. There is some evidence that conditional transfers are more likely to be adopted in democracies. In particular, democracies tend to increase the number of conditional schemes once any social transfer program is introduced.     

Immigration,Conflict, and Redistribution

In this paper, we analyze how the possibility of conflict between natives and immigrants shapes income redistribution in developed democracies. This possibility can generate income redistribution towards immigrants even if they have no voting rights. We show that the threat of conflict between natives and immigrants lowers vertical income redistribution (from the rich to the poor) as the level of immigration increases. The opposite holds for horizontal income redistribution (from natives to immigrants), which increases with the level of immigration. Income inequality weakens the negative effect of immigration on vertical redistribution, but it also reduces horizontal redistribution. These theoretical predictions are consistent with the results of our empirical analysis on data from 29 European countries: larger immigrant populations are associated with more redistribution towards immigrants and lower vertical redistribution.     

Political Regimes and Currency Crises

This paper examines the relationship between political regime type and currency crises. Some theories suggest that democratic regimes, owing to their greater political transparency and larger number of veto players, should have a lower risk of currency crisis than dictatorships. Alternative arguments emphasize the advantages of political insulation and rulers with long time horizons, and imply that crises should be most likely in democracies and least common in monarchic dictatorships. We evaluate these competing arguments across four types of political regimes using a time‐series cross‐sectional dataset that covers 178 countries between 1973 and 2009. Our findings suggest that the risk of currency crisis is substantially lower in monarchies than in democracies and other types of dictatorship. Further analyses indicate that the adoption of prudent financial policies largely account for this robust negative association between monarchies and the probability of currency crises. This suggests that political regimes strongly influence financial stability, and perverse political incentives help explain why currency crises are so common.     

Rationality, path independence, and the power structure

The justification of the requirement of consistency in aggregating individual preferences is to make the choice rational and path independent. This paper shows that a Paretian social choice mechanism that satisfies even the weakest rationality requirement which is related to the principle of some sort of maximization or path independence alone generates an extremely asymmetric power structure, e.g., almost dictatorship. Consequently, some well-known and interesting impossibility results are generalized.     

二战后西方福利国家制度确立的战略背景与外部因素——以英国为例

自《贝弗里奇报告》（The Beveridge Report）问世以来,以英国为首的一大批西方资本主义国家相继步入了福利国家的行列。针对实施这一政策原因的评估从未停止,然而学术界的讨论或有意或无意地忽视了冷战这一时代大背景,从而对前苏联在这一过程中扮演的角色考虑不够。本文将从领土逻辑和资本逻辑出发,从政治经济学的视角探讨前苏联对英国福利国家制度发展的影响,并揭示这种影响发生作用的具体机制。本文认为一个处于敌对状态的完整的社会主义阵营的存在加速了英国福利国家制度的确立。     

Fundamentals, information, and international capital flows: A welfare analysis

In the recent discussion surrounding the design of a new international financial architecture, enhancing transparency has widely been proposed as a policy essential for increasing the efficiency of international capital markets. This paper uses a simple two-country (two-agent) general equilibrium model with incomplete markets and production to explore the welfare consequences of an increase in public information about country-specific fundamentals (increase in transparency). An improvement in the quality of information has two effects on the ex ante welfare of individual countries: A direct effect that increases the efficiency of global capital allocation and welfare, and an indirect general equilibrium effect that increases asset price volatility and may decrease welfare. When the degree of risk-aversion is low, at least one country will gain from an increase in information quality. If the degree of risk-aversion is high, then there are robust examples of economies for which an increase in information hurts all countries. The paper also discusses how certain institutional arrangements (international derivative markets, international agency) could ensure that all countries gain from better information by providing insurance against information-induced asset price risk.     

Aggregation of binary evaluations with abstentions

A general model of aggregation of binary evaluations over interrelated issues, introduced by Wilson and further studied by Rubinstein and Fishburn and by the authors, is extended here to allow for abstentions on some of the issues. It is shown that the same structural conditions on the set of feasible evaluations that lead to dictatorship in the model without abstentions, lead to oligarchy in the presence of abstentions. Arrow's impossibility theorem for social welfare functions, Gibbard's oligarchy theorem for quasi-transitive social decision functions, as well as some apparently new theorems on preference aggregation, are obtained as corollaries.     

Short Changing the Value of Democracy for Economic Development in Africa

Official donor policy towards Africa seems to be informed by the twin requirements of alleviating poverty on the one hand and ensuring respect for human rights and democratization on the other. In practice, when these interests conflict, as they usually do in Africa, donors tend to choose to continue supporting dictatorships, arguing that economic development will eventually lead to democratization. This paper argues that this faulty reasoning is a product of modernization theory that has had undue influence in western policy circles. Based on a broad survey of the literature, the paper shows that there is no theoretical or empirical basis for the claim that authoritarian regimes would provide better economic performance than democracies in general and particularly in Africa. Furthermore, available evidence suggests that the lack of democratization (defined broadly to include the substance of democracy such as government accountability and basic freedoms in addition to meaningful democratic elections) is a key constraint on economic and social development in Africa. Finally, the paper argues that even when the empirical case to establish a definite causal relationship between democratization and development cannot be ascertained, a very strong case can be made for prioritizing democratization for the long term societal transformation of the continent.     

Short Changing the Value of Democracy for Economic Development in Africa

Official donor policy towards Africa seems to be informed by the twin requirements of alleviating poverty on the one hand and ensuring respect for human rights and democratization on the other. In practice, when these interests conflict, as they usually do in Africa, donors tend to choose to continue supporting dictatorships, arguing that economic development will eventually lead to democratization. This paper argues that this faulty reasoning is a product of modernization theory that has had undue influence in western policy circles. Based on a broad survey of the literature, the paper shows that there is no theoretical or empirical basis for the claim that authoritarian regimes would provide better economic performance than democracies in general and particularly in Africa. Furthermore, available evidence suggests that the lack of democratization (defined broadly to include the substance of democracy such as government accountability and basic freedoms in addition to meaningful democratic elections) is a key constraint on economic and social development in Africa. Finally, the paper argues that even when the empirical case to establish a definite causal relationship between democratization and development cannot be ascertained, a very strong case can be made for prioritizing democratization for the long term societal transformation of the continent.     

Sustainability,Optimality, and Development Policy

Considering sustainability a matter of intergenerational welfare equity, this paper examines whether an optimal development path can also be sustainable. It argues that the general “zero‐net‐aggregate‐investment” condition for an optimal development path to be sustainable in the sense of the maximin criterion of intergenerational justice is too demanding to be practical, especially in the context of developing countries. It further argues that while the maximin criterion of sustainability may be appealing to the rich advanced industrial countries, for the poor developing countries it implies equalization of poverty across generations, and as such is too costly a moral obligation to be acceptable. The paper suggests that a compromise development policy that follows the optimal growth approach but adopts certain measures to mitigate both the intergenerational and intragenerational welfare inequalities may be more appropriate for these countries. Some of the principal elements of such a policy are highlighted.     

EQUIVALENT OPTION PRICE WITH SUPPLY UNCERTAINTY

This paper compares two ex ante measures of the benefits of a project with supply uncertainty: compensating option price, the willingness to pay for a project, and equivalent option price, the willingness to accept to forego a project. The paper shows that compensating option price does not generally rank three or more projects correctly, even when the projects only impose a change in a single good. Equivalent option price, like equivalent variation with certain outcomes, always ranks three or more projects correctly. This paper also presents a method to empirically estimate equivalent option price using estimates of the benefits of certain changes. This approach is practically important so that the same study results can be used to estimate equivalent option price even as new projects are developed or as changes occur in the scientific information regarding the probabilities of various project outcomes. An application of the empirical method estimates the benefits of a policy to improve air and water quality when there is uncertainty about the effectiveness of the policy.     

社会转型：发展社会学的新议题

在传统的发展社会学中,学术传统主要有两个,一个是以发达国家的现代化为研究对象的现代化理论,一个是以拉丁美洲、非洲和东亚模式为研究对象的发展理论。这两个学术传统构成了发展社会学的主要论题,同时也限制了发展社会学的视野。本文认为,中国、前苏联、东欧等社会主义国家的转型过程为发展社会学提出了一系列新的议题,包括如何看待不同国家和地区的发展道路,如何看待发展和转型过程中国家与社会的关系,如何看待发展过程中社会不平等的问题等。这些议题扩展着发展社会学的视野,也为建构新的发展社会学理论提供了可能。在此基础上,作者提出发展社会学应当面对转型国家的社会转型实践过程,形成现代化理论、发展理论、转型理论三足鼎立的发展理论新格局。     

Industrial targeting in free trade areas with policy independence

Abstract.  We investigate the limits of a mechanism for free trade area (FTA) formation that simultaneously satisfies internal industrialization targets. For arbitrary targets, we find necessary and sufficient conditions that guarantee that the mechanism is efficient for member countries individually, even if other members do not implement the efficient policy. When the objective is conservative – designed to protect the level of industrialization previously achieved by the target industry – member countries are guaranteed gains from the efficient policy and their FTA participation. The analysis covers cases with transportation costs and explains why minimally restrictive rules of origin support efficiency and policy independence.     

政策性负担、道德风险与预算软约束

本文在一个动态博弈的框架下 ,考察了政策性负担与转轨经济中企业的预算软约束问题。在信息不对称情况下 ,政策性负担将导致国有企业经理的道德风险 ,从而导致国有企业的低效率 ;当市场竞争达到一定程度时 ,政策性负担必然带来国有企业的预算软约束。而且 ,预算软约束同企业的公有制性质无关 ,在同样承担政策性负担的条件下 ,私有企业比国有企业更容易产生预算软约束 ,并且要求政府提供更多的补贴。当国有企业承担政策性负担时 ,政府剥夺企业的生产自主权往往是一种次优的制度安排