A choice experiment on fuel taxation and earmarking in Norway

Pigouvian taxes are efficient — but unpopular among voters — and hence often politically infeasible. Earmarking of revenues has been widely reported to increase public support for taxes, but earmarking is generally not the most efficient use of the revenues. This trade-off between efficiency and political feasibility is the motivation for our primary research objective: to quantify the effect of earmarking on support for fuel tax rises. Our secondary research objective is to investigate why earmarking increases support. Using data from a representative sample of the Norwegian voter population (N = 1147), we estimate models of voter preferences for fuel taxes using logistic regression models. Our results show that, in the absence of earmarking, the majority of voters would like to reduce fuel taxes, but earmarking the revenues for environmental measures has a substantial effect on voter support for fuel tax increases, garnering a majority for increases of up to 15% above present levels. Further analysis indicates that a prime reason why earmarking for environmental measures is popular is that it increases the perceived environmental effectiveness of the tax, and hence its legitimacy as an environmental rather than a fiscal policy instrument.     

Time Inconsistency in Environmental Policy: Tax Earmarking as a Commitment Solution

Tax earmarking imposes a constraint on government policymaking, and may be desirable if it solves a time-inconsistency problem in tax policy. In a two-period economy, in which the policy decisions regarding taxes, public goods provision, and pollution abatement are taken by a majority-elected individual, we show how the time-inconsistency problem in environmental policy arises. We demonstrate that the commitment equilibrium under no earmarking rules cannot be as fully implemented as a no-commitment equilibrium under earmarking rules. However, the earmarking rules do act as a partial commitment mechanism.     

On the marginal cost of public funds and the optimal provision of public goods

This paper argues that, in models with heterogeneous agents, the concept of the marginal cost of public funds (MCPF) will only be useful if it is compared with an analogous concept for the benefit side. The MCPF does not assume a unique value and is not particularly illuminating in and out of itself. Also gone is the benchmark status of MCPF = 1. Turning to the provision of public goods, using a mechanism design approach, the paper constructs a two-stage proof for Kaplow's [Kaplow, L., 1996. The optimal supply of public goods and the distortionary cost of taxation. National Tax Journal 49, 513–533.] proposition concerning the “irrelevance” of labor supply and distributional concerns in public good provision. This highlights the two fundamental ingredients for his result. First, the provision of public goods per se, when it satisfies the Samuelson's rule, is only potentially Pareto-improving. Second, the actual Pareto improvement will materialize when, or if, one reforms the income tax structure. If the reform is not forthcoming, the decision on public goods provision must rely on redistributional concerns. Finally, the paper generalizes Broadway and Keen's [Boadway, R., Keen, M., 1993. Public goods, self-selection and optimal income taxation. International Economic Review 34, 463–478.] result to a model with many types of agents, many private goods and without making any assumptions regarding which self-selection constraints are or are not binding.     

Sharing the Blame? Local Electoral Accountability and Centralized School Finance in California

Although local electoral accountability should be stronger when responsibilities are clearly assigned to local governments, the involvement of higher tiers of government is often associated with policies specifically designed to improve local accountability. This article investigates the impact of centralization on local electoral accountability in the context of California's school finance system. Results show that voters are responsive to differences in dropout rates and pupil–teacher ratios, at least in some contexts, and that local electoral accountability is affected by a district's degree of centralization. Dropout rate regressions reveal that the No Child Left Behind Act of 2001 appears to have sharpened local electoral accountability.     

Vertical versus horizontal tax externalities: An empirical test

We study taxation externalities in federations of benevolent governments. Where different hierarchical government levels tax the same base, one can observe two types of externalities: a horizontal externality, working among governments of the same level and leading to tax rates that are too low compared to the social optimum; and a vertical externality, working between different levels of government and leading to suboptimally high tax rates. Building on the model of Keen and Kotsogiannis [Keen, Michael J., Kotsogiannis, Christos, 2002. Does federalism lead to excessively high taxes? American Economic Review 92 (1) 363–370], we derive a discriminating hypothesis to distinguish vertical and horizontal tax externalities based on measurable variables. This test is applied to a panel data set on local taxes in a sample of Swiss municipalities that feature direct-democratic fiscal decision making, so as to maximize the correspondence with the “benevolent” governments of the theory. We find that vertical externalities dominate – they are thus an observed empirical phenomenon as well as a notable extension to the theory of tax competition.     

CANDIDATE VALENCE: EVIDENCE FROM CONSECUTIVE PRESIDENTIAL ELECTIONS*

This article develops and estimates a dynamic spatial model of voting. The distribution of voters' policy positions and candidates' valence are recovered using individual‐level data on voting decisions in two consecutive presidential elections. The estimated model is used to provide an equilibrium interpretation of observed individual voting profiles and aggregate electoral outcomes as well as to conduct counterfactual experiments that assess the impact of candidates' policy positions, valence, and voters' information on electoral outcomes.     

A monetary Minsky model of the Great Moderation and the Great Recession

Steve Keen's model of Minsky's Financial Instability Hypothesis (Keen, 1995) displayed qualitative characteristics that matched the real macroeconomic and income-distributional outcomes of the preceding and subsequent fifteen years: a period of economic volatility followed by a period of moderation, leading to a rise of instability once more and a serious economic crisis. This paper extends that model to build a strictly monetary macroeconomic model which can generate the monetary as well as the real phenomena manifested by both The Great Recession and The Great Moderation.     

Partially Revealing Campaign Promises

Candidates competing for political office give promises to voters. There are no legal restraints preventing incumbents from breaking their electoral promises. This paper models campaign promises as pure cheap talk and asks why is it influential. We propose that a candidate's campaign promises are a partially revealing signal of her policy preference type. The incumbent's policy choice is yet another signal of her type. Policy choice is a costly signal (unlike campaign promises). The incumbent keeps her electoral promises in order to preserve ambiguity about her type, which is necessary to assemble a winning majority for reelection. She keeps her promises regardless of information about the efficiency of different public policies which she receives upon taking office. Therefore, campaign promises generate inefficiencies in public policy.     

Tax instruments as constraints on the disposition of public revenues

This paper examines the possible selection of tax instruments as means of inducing a Leviathan-like government to provide the public goods and services that taxpayer-beneficiaries desire. The analysis is conducted in a constitutional setting, in which potential taxpayers-beneficiaries confront choices among tax instruments, when these are taken to be the primary constraints on the behavior of government in postconstitutional periods. The analysis suggests a particular form of earmarking; each expenditure is allotted a particular tax base that is highly complementary with the public good itself. The complementarity between tax base and the corresponding public good is the central relationship that exerts discipline on government. Arguments for this type of earmarking have not, to our knowledge, been previously developed in tax theory.     

Legislators' behaviour and electoral rules: Evidence from an Italian reform

We explore how electoral rules and the degree of civicness of the voters interact in shaping elected officials' behaviour. We examine the expenditure proposals sponsored by Italian Senators from 1994 to 2013 and exploit the 2005 electoral reform that transformed a mainly majoritarian system into a mainly proportional one. First, we find that legislators elected in first-past-the-post districts are more likely to sponsor pork-barrel bills and to put effort into legislative activity than those elected with a closed-list proportional system. Second, more importantly, we show that the effects of the electoral rules are muted in areas with high civicness.     

Majority cycles in a multi-dimensional setting

Summary. We consider a set of alternatives (electoral platforms, bills, etc. ...) defined as a Cartesian product of k finite discrete sets. We assume that the preferences of the individuals (voters) are marginally single-peaked and separable. The main result of this paper states that the pairwise majority relation satisfies these two properties but that it might exhibit several cycles. This result is important when related to classical problems of multi-dimensional decisions such as logrolling and vote trading. We relate our result with a continuous version of it (McKelvey, 1976). Received: March 21, 2000; revised version: April 12, 2001     

Strategic Transparency and Electoral Pressure

This paper investigates how an office‐motivated incumbent can use transparency enhancement on public spending to signal his budgetary management ability and win re‐election. We show that, when the incumbent faces a popular challenger, transparency policy can be an effective signaling device. It is also shown that electoral pressure can have a nonmonotonic effect on transparency, but a higher electoral pressure always increases the informativeness of signaling and the voter's utility.     

DISENTANGLING THE EFFECTS OF POLITICAL FRAGMENTATION ON VOTER TURNOUT: THE FLEMISH MUNICIPAL ELECTIONS

Political fragmentation has been shown to be an important determinant of electoral turnout. We introduce an empirical approach that allows disentangling the impact of two dimensions of such fragmentation: the number of parties and the size inequalities between those parties. This is important as it allows us to assess the size, significance, and direction of the individual effects of each element – an aspect disregarded in previous research. Our empirical analysis of the 2000 Flemish municipal elections shows that a higher number of parties competing in the election lowers turnout. The size inequalities between the parties exert a positive – though insignificant – influence on voter participation.     

Inequality and Participative Democracy: A Self-Reinforcing Mechanism

During the last three decades, a notable increase in economic inequality is observed, accompanied by a decline in people's engagement in politics and electoral participation. This is an unsatisfactory phenomenon as it undermines the legitimacy of democratic representation. This negative association is produced by a complex salient mechanism. This study aims at investigating this issue. Using data from a panel of 28 OECD and European countries, this paper identifies a two-way causal relationship between inequality and political participation. The results show that greater income inequality alienates and discourages people from engaging with common affairs, thus leading to lower political participation. Yet, lower electoral participation leads towards a less equitable distribution of income. Hence, this study reveals a self-reinforcing mechanism where the unequal distribution of income leads to political exclusion, which in turn leads to more inequality.     

Democracy and Education in twentieth‐century Latin America

Do democratic electoral systems strengthen a country's outcomes in education? Does the degree of inclusiveness of a democratic system matter? This article offers evidence that political competition and the inclusion of marginalized populations in electoral systems transformed education over an 80‐year period in Latin America. It finds that democracy has a positive effect on education enrollment and illustrates how current work on democracy and development has overlooked important democratic subcomponents, specifically, who votes and how. Our results deepen current work on democracy, operationalizing the impact of electoral expansion in comparative analysis and showing how democracies respond to specific education demands.     

Does economic openness affect liberal and electoral democracy in a different way? Empirical evidence from developing countries

The focus of this paper was to empirically analyze the impacts of economic liberalization on the liberal and electoral democracy in a sample of 106 less developed and developing countries over the period 1970–2016. The economic relationship between these countries and the global trade and the financial system generates a crucial question of to what extent political conditions are affected by this changing relation. To test these relationships, this paper uses V‐Dem's liberal democracy and electoral democracy indices and nine economic liberalization variables. Utilizing two‐step system dynamic panel GMM estimation indicates that trade openness and economic globalization, de facto strongly affects electoral democracy.     

The Impact of Gender Quotas on Votes for Women Candidates: Evidence from Italy

To explore the impact of quotas on women's political representation, this study estimates a conditional multinomial logit for the probability of voting for men and women, utilizing data that includes all regional candidates in four Italian regions in 1995 and 2000. This regional electoral system allows voters to choose both the party and the specific candidate (open-list proportional system). The results show that the introduction of a 50 percent gender quota in candidate lists leads to a substantial increase in the probability that voters will choose women candidates, from 12 to 36 percent. Nevertheless, the probability of voting for women (36 percent) is lower than the probability for men (64 percent). Voters have a male bias in Italy. Both the district size and the political party have an effect on the probability of voting for women versus men. The more liberal the party is, the higher the probability that women receive votes.     

Political budget cycles: Do they differ across countries and why?

This paper uses a large panel data set to examine the relation between elections and fiscal policy. We find evidence of political budget cycles: on average, government fiscal deficit increases by almost 1% of GDP in election years. Moreover, these political budget cycles are significantly larger, and statistically more robust, in developing than in developed countries. We propose a moral hazard model of electoral competition to explain this difference. In the model, the size of the electoral budget cycles depends on politicians' rents of remaining in power and the share of informed voters in the electorate. Using suitable proxies, we show that these institutional features explain a large part of the difference in electoral budget cycles between developed and developing countries.     

Party governance and ideological bias

Informed opinions are essential to a good functioning of democratic institutions. Political intermediaries, such as parties, make up the free-riding voters' informational deficit. Public opinion and voting outcomes are shaped by those parties whom the voters trust.The credibility of parties is fashioned by their internal organization. The paper investigates one aspect of party governance, namely the allocation of control rights over platform design. The party's leadership either selects a platform, or simply recommends a platform for adoption by the rank-and-file. Under the latter (democratic) institution, the leadership has no formal authority, but for informational and procedural reasons may still have substantial real control over the final platform, depending on the congruence between leadership and rank-and-file. In particular, the rank-and-file is generally more concerned with the ideological content of the platform than the leadership, who is motivated by the benefits from electoral office. The paper argues that in centrist parties, the high congruence of interest between the rank-and-file and office seekers leads to systematic rubberstamping of the leadership's electoral platforms; the resulting weak internal control mechanism hurts party credibility.     

Electoral fraud and voter turnout: An experimental study

In this paper we experimentally investigate the consequences of electoral fraud on voter turnout. The experiment is based on a strategic binary voting model where voters decide whether to cast a costly vote in favour of their preferred candidate or to abstain. The electoral process is illicitly influenced by applying ballot-box stuffing. In the experiment we implement two different framings: we compare voter turnout in a neutral environment and with framed instructions to explicitly replicate elections. This approach enables us to both test the model's predictions and to estimate the framing effects of voting and fraud. Comparison of experimental results with theoretical predictions reveals over-voting, which is exacerbated when fraud occurs. Turnout increases as predicted with a moderate level of fraud while, with higher levels of electoral fraud, voters fail to recognize that the existence of a relatively larger number of “agents” voting with certainty considerably decreases the benefits of voting. Importantly, framing matters, as revealed by the higher turnout of those in the majority group, against which the fraud is applied.