Empirical evidence suggests that a Prime Minister can benefit from firing ministers who are involved in political scandals. We explore a model in which a minister`s exposure to scandals is positvely related to his policy activism, so that a Prime Minister may wish to protect him from resignation calls. We find that protection can sometimes work against the objective of encouraging activism: it makes a minister`s position more valuable to him and hence can encourage him to "sit tight" by moderating his activities. On the other hand, an exogenous increase in exposure to scandals may lead a minister to "live for today" by pursuing controversial policy innovations. The Prime Minister`s ability to protect ministers from resignation calls is limited by her short-term incentive to fire. She may, however, enhance her credibility by building a collective reputation with the wider membership of her cabinet; we show that heterogeneity of cabinet membership can play an important role.
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number
237.
Find related papers by JEL classification: C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General D20 - Microeconomics - - Production and Organizations - - - General H10 - Public Economics - - Structure and Scope of Government - - - General
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Francesco Caselli & Massimo Morelli, 2001.
"Bad Politicians,"
NBER Working Papers
8532, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Ernesto Dal Bo & Rafael Di Tella, 2003.
"Capture by Threat,"
Journal of Political Economy,
University of Chicago Press, vol. 111(5), pages 1123-1152, October.
[Downloadable!] (restricted)