DO INSTITUTIONS AFFECT CITIZENS' SELECTION INTO POLITICS?

Political economy has primarily paid attention to the principal‐agent relationship between citizens and politicians and the role of competition and institutions in disciplining political agents. However, as the electoral control of politicians and the credibility of policy commitments are limited, this perspective needs to be complemented with an economics of political selection that takes into account the heterogeneity in the quality of those elected to political office. We review the emerging literature, which investigates the institutional determinants of political selection. We discuss pay in politics, parties, their candidate selection procedures and electoral rules, institutions enhancing transparency in politics, and institutions which govern dual office holding in different branches of government. We argue that further comparative analyses are essential in order to gain an improved understanding of the impact that institutions have on political outcomes, not only via the channel of accountability, but also via the channel of selection.     

HOW DO CONSUMERS MAKE CHOICES? A SURVEY OF EVIDENCE

Abstract In this paper, we review the evidence about the purchase behaviour of consumers. We concentrate on the characteristics of the choice process, choice of the external information source and nature of the information obtained from these sources. The impact of important systematic differences among consumers and products on choice behaviour is also discussed.     

DOES STUDENT WORK REALLY AFFECT EDUCATIONAL OUTCOMES? A REVIEW OF THE LITERATURE

We review the theories put forward, methodological approaches used and empirical conclusions found in the multidisciplinary literature on the relationship between student employment and educational outcomes. A systematic comparison of the empirical work yields new insights that go beyond the overall reported negative effect of more intensive working schemes and that are of high academic and policy relevance. One such insight uncovered by our review is that student employment seems to have a more adverse effect on educational decisions (continuing studies and enrolment in tertiary education) than on educational performance (test and exam scores).     

DOES FDI ACTUALLY AFFECT INCOME INEQUALITY? INSIGHTS FROM 25 YEARS OF RESEARCH

While there are 25 years of empirical research on how FDI may affect income inequality, there is surprisingly no consensus on this issue. In this paper, we conduct a meta-analysis on the effect of FDI on inequality using 543 empirical studies from 1995 to 2019. Among various factors, we find that the development level of the study country has the strongest influence on the direction in which FDI affects income inequality. When the primary studies are sorted into three groups based on the GDP per capita of their sample areas, the within-group estimates on the effect of FDI on income inequality become strongly consistent with each other. Particularly, we find that FDI is associated with higher inequality for the low-income group, has no statistically significant effect for the middle-income group, and is associated with lower inequality for the high-income group. This observation suggests that FDI may increase income inequality as a country initially develops, but reduce inequality as development deepens.     

WHY IS THERE A LACK OF EVIDENCE ON KNOWLEDGE SPILLOVERS FROM FOREIGN DIRECT INVESTMENT?

Empirical analyses of knowledge spillovers from foreign direct investment (FDI) offer mixed results; they find positive, neutral and negative FDI spillover effects. This lack of evidence mainly comes from the results of firm‐level panel data analysis. This is important since this approach seems to be the most appropriate for estimating FDI spillovers. The paper takes a look at recent substantive and methodological developments in FDI spillover analysis, which have brought some more optimistic results with regard to FDI spillovers, and can help in further development in this field. The main substantive development relates to the introduction of a broad variety of sources of firm heterogeneity (foreign affiliates as well as local firms) in the analysis. Others include differentiation between vertical (inter‐industry) and horizontal (intra‐industry) spillovers, and host country absorptive capacity for knowledge spillovers. Methodological developments relate to distinguishing between technological/knowledge and productivity spillovers, improvement of modelling and estimation methods, and an increased amount and quality of data.     

WHAT EXPLAINS THE DIFFERENCE IN THE EFFECT OF RETIREMENT ON HEALTH? EVIDENCE FROM GLOBAL AGING DATA

This paper analyzes the reasons for differences in the estimated effect of retirement on health in previous studies. We investigate these differences by focusing on the analysis methods used by these studies. Using various health indexes, numerous researchers have examined the effects of retirement on health. However, there are no unified views on the impact of retirement on various health indexes. Consequently, we show that the choice of analysis method is one of the key factors in explaining why the estimated results of the effect of retirement on health differ. Moreover, we re‐estimate the effect of retirement on health by using a fixed analysis method controlling for individual heterogeneity and endogeneity of the retirement behavior. We analyze the effect of retirement on health parameters, such as cognitive function, self‐report of health, activities of daily living (ADL), depression, and body mass index in eight countries. We find that the effects of retirement on self‐report of health, depression, and ADL are positive in many of these countries.     

ARE THE CURRENT ACCOUNT IMBALANCES BETWEEN EMU COUNTRIES SUSTAINABLE? EVIDENCE FROM PARAMETRIC AND NON‐PARAMETRIC TESTS

Using parametric and non‐parametric estimation techniques, we analyze the sustainability of the recently growing current account imbalances in the euro area and test whether the European Monetary Union has aggravated these imbalances. Two alternative criteria for the assessment of external debt sustainability are considered: one based on the transversality condition of intertemporal optimization, and the other based on the stationarity properties of the stochastic process of the debt–GDP ratio. Econometric sustainability tests are performed using the pooled mean‐group estimator and panel unit root tests, respectively. Variants of both test procedures with varying coefficients using penalized splines estimation are applied. We find empirical evidence suggesting that the introduction of the euro is associated with a regime shift from sustainability to unsustainability of external debt accumulation for the euro area. Copyright © 2012 John Wiley & Sons, Ltd.     

POLITICAL BUDGET CYCLES: MANIPULATION BY LEADERS VERSUS MANIPULATION BY RESEARCHERS? EVIDENCE FROM A META‐REGRESSION ANALYSIS

Despite a long history of research on political budget cycles, their existence and magnitude are still in question. By conducting a systematic analysis of the existing literature, we intend to clarify the debate. Based on data collected from 1037 regressions in 46 studies, our meta‐analysis suggests that little, if any, systematic evidence can be found in the research record that national leaders do manipulate fiscal tools in order to be reelected. However, it is much more clear that researchers selectively report that national leaders do manipulate fiscal tools in order to be reelected. The publication selection bias highlighted has nonetheless been reduced during the past 25 years of research. We also show that the incumbents' strategies differ depending on which tools they use. Finally, the nature and quality of political institutions appear to be the factors which most affect the political budget cycles.     

DO CRISES INDUCE REFORM? A CRITICAL REVIEW OF CONCEPTION,METHODOLOGY AND EMPIRICAL EVIDENCE OF THE ‘CRISIS HYPOTHESIS’

The notion that economic crises induce the adoption of reform ranks among the most widely accepted concepts in the political economics literature. However, the underlying mechanism of the so‐called ‘crisis hypothesis’ has yet to be fully understood. This paper provides a comprehensive survey of the relevant empirical evidence to date, and scrutinizes the operationalization of the hypothesis’ key concepts: crisis, reform and the political mediation of reform during crises. We argue that the social perception of both crises and the subsequent cost of reform requires consideration of how these concepts are operationalized. As a product of the broader economic and institutional environment, social perceptions largely determine the manner in which the political mediation of reform during crises works. Present‐day methodological approaches fail to adequately reflect social perceptions and consequently compromise the determination of what constitutes both crisis and the cost of reform in the context of the crisis hypothesis. Most notably, the identification of crises by fixed thresholds constructed around macroeconomic variables impedes the interpretation of the hypothesis’ underlying mechanism. A fuller treatment of social perception within the operationalization of the hypothesis’ key concepts can enhance our understanding of how economic crises influence political dynamics in bringing about reform.