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Do political leaders pursue their own parochial interests? Does the economic background of those in power affect the economy? Estimating the impact of leaders' interests without bias is difficult given the nonrandom nature of transitions between leaders in most regimes. This article exploits a selection mechanism in the Florentine Republic that combines features of election and lottery to evaluate the causal impact of leaders' economic interests. Coupling high-frequency data on the trading value of the Florentine currency with data on the guild association of each leader, I show that the export orientation of the Florentine executive, the standard-bearer of justice, had a large effect on the value of the city's currency, the florin. [ABSTRACT FROM AUTHOR]

Why has US commercial policy become increasingly politicized in the twenty-first century? We argue that this politicization reflects an interaction between elite rhetoric on unfair trade practices and American meritocratic values. As the twenty-first century progressed, elites increasingly argued that economic malaise was a result of predatory practices by US trading partners. This "trade is unfair" rhetoric resonated most strongly with meritocratic Americans: individuals who believed in principles of market fairness but also worried about future economic prospects. To evaluate the argument that trade policy frames resonate differently among Americans, we draw on data from several survey experiments as well as a large, original panel data set with repeat observations of the same individuals. Individuals who are most tied to the myth of the classic American Dream are the most likely to respond to a frame blaming unfair trade for America's economic problems, and this contributes to rising antiglobalization sentiment. [ABSTRACT FROM AUTHOR]

Agencies use notice-and-comment rulemaking to issue countless regulations with substantial economic stakes. The empirical literature on rulemaking has produced a complex set of descriptive findings yet has struggled with informal concerns about selection bias. This article characterizes notice and comment as a persuasion game played between regulators and outside interests. Analysis of this stakeholder-balancing model yields three key theoretical payoffs: an informational rationale for regulators to write rules with higher private and social costs, an explanation for strategic positioning by regulators even without oversight, and clarification that adverse priors are a more powerful mobilizing force than adverse policies. The model's two-sided selection dynamics reveal that well-established empirical regularities are inconsistent with extreme public-interest zealotry and strong capture but fit a range of intermediate outcomes. To obtain deeper insights about bias in rulemaking, the model suggests focusing on the cost of rule revision, rule movement following abstention, and variation in stakeholder preferences. [ABSTRACT FROM AUTHOR]

What explains the sharp divide in European public attitudes toward Grexit? We explore this question using original surveys from four of the largest European economies. We contend that differences in economic self-interest, and the often-mentioned chasm between supporters of mainstream and extremist parties, provide little insight into the public divide over Grexit. Instead, we show that the key factor is the split between the left and the right. We then develop and test a set of theoretical explanations for the prominence of this cleavage. We find that the left-right divide over Grexit is not driven by differences in attitudes on redistribution, levels of empathy, or general European Union support. Instead, left and right voters seem to have different expectations about how a default and exit of a currency-union member would affect the European economy. These expectations likely reflect differences in core beliefs about the consequences of a free-market approach. [ABSTRACT FROM AUTHOR]

In a recent Journal of Politics article, Daniela Campello and Cesar Zucco argue that Latin American voters credit and blame presidents for economic outcomes unambiguously exogenous to their policy choices, a claim that undermines broadly held understandings of how voters hold politicians accountable. While we concur on the importance of the global economy to politics in the region, we challenge their study on two grounds. First, we question their designation of economies as fitting a low-savings commodity-exporting profile as the key factor shaping the influence of world markets on presidential success. Second, we contend that the impact of the world economy on domestic politics depends instead on the degree of control exercised by national policy makers. In particular, the region's unprecedented experiment with economic policy regimes informs voters' assignment of responsibility to policy makers. A series of analyses provides support for our argument. [ABSTRACT FROM AUTHOR]

McCarty, Poole, and Rosenthal write about the century-long relationship between national income inequality and congressional partisan polarization: rising income inequality corresponds to more polarization. I question this relationship. First, income inequality correlates more strongly with Republican positioning than with polarization, even before Republicans moved asymmetrically rightward. Second, holding the Republican position fixed, leftward movement of congressional Democrats corresponds to decreasing inequality. Consistent with these empirical facts, I explore substantive evidence that (1) suggests that a Republican-centered explanation plausibly runs in either causal direction but (2) casts doubt on whether polarization driven by Democratic extremism contributes to or is fostered by rising income inequality. Given the prominence of McCarty et al.'s argument in scholarship and the commentary on American politics it informs, this observation is central for understanding how politics shapes and responds to income inequality. [ABSTRACT FROM AUTHOR]

How do elections and the economy affect authoritarian survival? Distinguishing among (a) nonelection periods in autocracies that do not hold competitive elections, (b) election periods in autocracies that hold regular elections, and (c) nonelection periods in such autocracies, I argue that bad economic performance makes authoritarian regimes especially likely to break down in election years, but the anticipation of competitive elections should dissuade citizens and elites from engaging in antiregime behavior in nonelection periods, bolstering short-term survival. Thus, compared to regimes that do not hold competitive elections, electoral autocracies should be more vulnerable to bad economic performance in election periods but more resilient to it in nonelection years. A study of 258 authoritarian regimes between 1948 and 2011 confirms these expectations. I also find that the effect is driven by competitive elections for the executive office, and elections-related breakdowns are more likely to result in democratization. [ABSTRACT FROM AUTHOR]

Does decentralization affect how voters attribute blame for poor economic performance? This question is particularly important in authoritarian regimes, where economic performance legitimacy is a key source of regime stability. Using political and economic data from large Russian cities for 2003–12, we investigate how replacing direct mayoral elections with appointments affects the way voters attribute blame for economic outcomes. We find that the ruling party is more likely to be punished for poor economic performance in cities with centrally appointed mayors than it is in cities with elected mayors. This research suggests that having locally elected officials may help electoral authoritarian regimes deflect responsibility for some unfavorable outcomes. [ABSTRACT FROM AUTHOR]

Understanding when individuals support government action is central to government responsiveness and democratic policy making. While previous research on political behavior has explored the influence of collective economic conditions, self-interested explanations have heavily swayed work on policy preferences. We bridge these two previously distinct literatures to articulate a theory of public policy preferences that highlights when both common and pocketbook factors influence preferences for social insurance. Using a cross-national sample of developed democracies from 1996 and 2006, we conclude that when personal economic conditions are dire, the pull of self-interest trumps both collective and policy concerns. [ABSTRACT FROM AUTHOR]

Why are the fastest growing countries predominantly autocracies? One possible reason is that growth "tigers" are poor countries that begin growing when their distance to the most advanced economies is large, and poor countries tend to be autocracies. All that is needed to reproduce the observed historical patterns is income convergence and a positive association of income with incidence of democracy, with no assumptions about the effect of regimes on growth. We take Robert Lucas's macroeconomic model and augment it with regime dynamics identified by Adam Przeworski and colleagues and Torsten Persson and Guido Tabellini, calibrate the model, and show that these dynamics account for the data well. [ABSTRACT FROM AUTHOR]

Understanding the drivers of party issue emphasis and the specific role of public opinion is important to shed light on the mechanisms of contemporary party competition and to assess the quality of representation in liberal democracies. Previous research has produced conflicting results between issue ownership and issue dialogue perspectives and has ignored the role of time in party communication strategy. We present a theory focused on the economy in which proximity to election day increases the incumbent's cost of not responding to opponent attacks and subsequently decreases the incumbent's attention to public opinion. We validate the main empirical implications of the model via content analysis of party discourse in Spanish parliamentary speeches (1996–2011) and time series analyses. Our results have pessimistic implications for an ideal conception of bottom-up representation. As electoral accountability pressures increase over the electoral cycle, endogenous party competition overshadows public opinion as a driver of representatives' agenda. [ABSTRACT FROM AUTHOR]

While there exists a large literature characterizing the political determination of the size of the government, much less attention has been paid to the political determination of the scope of government (i.e., what activities are undertaken by public rather than private entities). While there are economic costs and benefits to privatization, there is also a political benefit to incumbents: by privatizing today, politicians transfer future revenues (when they might not be in office) to the present. This political benefit leads to overprivatization. We show that this political benefit persists even if politicians are able to borrow against public assets. We analyze the relationship between privatization and the political environment, as well as complete a normative analysis of the costs and benefits to society of allowing politicians to privatize assets. [ABSTRACT FROM AUTHOR]

Using an original database of legislative and presidential electoral results from the democratic transitions of the 1970s and 1980s to the present day, we provide a new assessment of electoral volatility in Latin America. Following a model established in studies of other regions, we decompose volatility into two subtypes: party replacement and stable party volatility. We demonstrate the relevance of this approach to Latin America and, further, document that volatility has persisted rather than waned in Latin America’s posttransition period largely because of party replacement. We then examine the contested link between economic performance and volatility and document temporal instability in this relationship: our analysis affirms previous conclusions regarding a connection in the 1980s in Latin America but uncovers scant evidence of a relationship between the economy and volatility for the 1990s to present day. [ABSTRACT FROM AUTHOR]

Political theorists are increasingly interested in understanding how firms are analogous to, or extensions of, government and the kinds of normative standards this implies. This is a welcome development. These theorists, however, have not appreciated how indispensable “transaction cost economics” is for understanding the firm. While transaction cost economics helps us see how a political theory of the firm can still be consistent with a concern for allocative efficiency, it also suggests that efficiency cannot be ignored when articulating a political theory of the firm. For firms to be viable they must facilitate economic activity more efficiently than the market can; efficiency is therefore a constitutional value of firms, which implies a significant discontinuity and disanalogy between firms and government. In light of this, I specify the kinds of questions political theories of the firm ought to address and the realm within which such theorists ought to stake their claims. [ABSTRACT FROM AUTHOR]

In this article we revisit the often disregarded pocketbook voting thesis that suggests that people evaluate governments based on the state of their own finances. Using data from the British Household Panel Survey over the last 20 years, we measure changes in personal financial circumstances and show that the pocketbook voting model works. Crucially, we also argue that the ability to attribute responsibility for these changes to the government matters. People respond much more strongly to changes in their own finances that are linked to government spending, such as welfare transfers, than to similar changes that are less clearly the responsibility of elected officials, such as lower personal earnings. We conclude that pocketbook voting is a real phenomenon, but that more attention should be paid to how people assign credit and blame for changes in their own economic circumstances. [ABSTRACT FROM AUTHOR]

How can voters make sense of economic outcomes they observe when deciding whether to reelect the incumbent? I propose a reference point theory of economic voting that emphasizes voters' need for reference points when evaluating incumbents' performance. Consideration of economic outcomes during the incumbent's term relative to recent past outcomes in the country and in a cross-national perspective provides two such reference points, enabling a better assessment of incumbent competence. Analyses of 475 elections in 62 countries over 40 years provide evidence for my theory. Incumbents who preside over relatively better (worse) economic outcomes in domestic and international contexts are rewarded (punished) at the polls, regardless of election-year performance. I also show that cross-national benchmarking is not a universal phenomenon and identify the conditions that are positively associated with the electoral salience of relative international performance. My theory and accompanying evidence highlight that economic voting is driven by incumbents' relative performance. [ABSTRACT FROM AUTHOR]

Some government policies can systematically influence citizens' acquisition of economic information. Since voters evaluate policy platforms in light of this information, politicians might exploit these policy feedback effects to shape voter's future policy preferences to their advantage. We illustrate this logic in the context of government subsidies to property ownership. Using an extension of the Romer-Meltzer-Richard model with imperfect information about the economy, we show how subsidies to ownership of real estate--such as mortgage interest deductions or discounted sales of public housing--produce an electorate that is systematically less favorable to redistributive taxation. The resulting political complementarity between home subsidies and fiscal conservatism is consistent with several empirical regularities. [ABSTRACT FROM AUTHOR]

This article examines the effects of natural resource extraction on authoritarian governments' provision of public services, using subnational data from China. Facing no electoral constraint that would reflect the policy preferences of citizens, Chinese local leaders instead allocate public funds differentially based on their need for quality labor in local economic development, a critical criterion for their political success. When the local economy benefits from natural resources, the need for skilled local labor dissipates, and leaders invest less in social services that enhance labor productivity. Using panel data across all prefecture-level cities (1992-2010), I find evidence that mineral resource abundance leads local governments to provide fewer public services for education and health care. Meanwhile, services unrelated to labor quality remain unaffected. The results are robust to the inclusion of key confounding factors such as FDI inflows and state-owned enterprises' output contributions. Additional analyses reject alternative mechanisms including political turnover. [ABSTRACT FROM AUTHOR]

Political economy theory expects politicians to use budget deficits to engineer an election-timed boom, known as the political business cycle. We challenge and contextualize this view by incorporating the financial constraints faced by governments into an electoral framework. We argue theoretically that the extent of ownership dispersion among creditors has important effects for governments’ policy autonomy. Specifically, we contend that when highly indebted governments become more reliant on international bond markets—as opposed to traditional bank lending—politicians alter the way they respond to domestic constituents. In an econometric test of 16 Latin American countries, from 1961 to 2011, we show that financial decentralization breeds austerity. More specifically, we find that politicians exhibit more fiscal discipline when they fund a greater share of their spending through decentralized bond markets. Furthermore, we find this disciplining effect to be particularly strong during election periods. [ABSTRACT FROM AUTHOR]

How do approaching elections affect the security policy states conduct? We build on classic political economy arguments and theorize that one problem likely faced by democratic policy makers near elections is that of time inconsistency. The time-inconsistency problem arises when the costs and benefits of policy are not realized at the same time. We develop an application of the argument to the case of allied troop contributions to Operation Enduring Freedom and the International Security Assistance Force mission in Afghanistan. In that case, we argue that the expectation should be one of fewer troops committed close to elections. The exogenous timing of elections allows us to identify the effects of approaching elections on troop levels. Our finding of significantly lower troop contributions near elections is arguably the first identified effect of electoral proximity on security policy. [ABSTRACT FROM AUTHOR]

Do electoral campaigns affect the strength of the economic vote? Against the conventional expectation that candidates have little influence over when and to what extent economic voting occurs, I argue that political communications systematically condition voters’ willingness to hold candidates responsible for past economic performance. I test this priming-based approach against extant economic voting theory using data from Mexico’s 2000 and 2006 presidential elections, in which economic messages were absent and dominant respectively. The results show that candidates, by choosing to emphasize or deemphasize economic issues in their televised campaign ads, can activate and even deactivate economic considerations in the minds of voters. By bringing the priming approach to economic voting theory, I highlight the importance of communication strategy and demonstrate the power of campaigns to overcome structural conditions thought to hamstring electoral candidates [ABSTRACT FROM PUBLISHER]

While there are many studies on the impact of the economy on elections, there is little evidence on the full mechanism of economic voting implied by performance-based theories of elections. Addressing the scarcity of evidence on the mechanism, this study provides the first estimates of the linkage between macroeconomic performance, individual economic evaluations, and vote choice. Building on recent advances in the statistical analysis of causal mechanisms, we conduct a causal mediation analysis in a data set covering 151 surveys in 18 countries. We find that the effect of economic performance on the incumbent vote is largely accounted for by voters’ retrospective evaluations of the national economy. The effect is stronger in contexts where policymaking power is concentrated rather than dispersed. Altogether, the results imply that the performance-based channel of voting is more relevant in accounting for election outcomes than suggested by recent individual-level studies. [ABSTRACT FROM PUBLISHER]

The political economy literature finds that stock markets drop after left-wing and increase after right-wing electoral victories. This study shows that the size of this reaction strongly depends on the political constraints that the incoming government faces. When constraints are high, the discretion of governments to implement their preferred policies is low, which implies that election outcomes are less relevant for financial investors. The analysis of an original dataset of stock market reactions to 205 elections since the 1950s confirms this conjecture. Stocks drop considerably after the election of a left government and increase after the election of a right government, but only in low-constraints countries. These partisan effects on stocks are highly persistent and even become stronger over time when additional information about the composition of the incoming government becomes available. However, the effects of elections on stocks fully disappear when political constraints are high. [ABSTRACT FROM PUBLISHER]

We propose that major powers give foreign aid to developing countries to facilitate politically costly economic reforms that preferential trading agreements prescribe. Democratic developing countries (1) need adjustment assistance more than autocracies and (2) can credibly commit to using fungible revenue to compensate the domestic losers, so a side payment for deeper reforms should only be available for democracies. A quantitative test lends support to the theory. Fully democratic developing countries that form a preferential trading agreement with the European Union or the United States obtain a large increase in foreign aid in the short run. These results imply that donors have used foreign aid to strengthen the effect of preferential trading agreements on economic reforms. [ABSTRACT FROM PUBLISHER]

What accounts for differences in the extent of nationalist sentiments across countries and over time? One prominent argument is that greater economic inequality prompts states to generate more nationalism as a diversion that discourages their citizens from recognizing economic inequality and mobilizing against it. Several other theories, however, propose different relationships between economic inequality and nationalism. This article provides a first empirical test of whether and how economic inequality is related to nationalism. Multilevel analyses using survey data on nationalist sentiments in countries around the world over a quarter century and data on economic inequality from the Standardized World Income Inequality Database provide powerful support for the diversionary theory of nationalism. This finding is an important contribution to our understanding of nationalism as well as of the political consequences of economic inequality. [ABSTRACT FROM PUBLISHER]