IDEAS home Printed from https://ideas.repec.org/p/cmf/wpaper/wp1998_9810.html
   My bibliography  Save this paper

Two Roles for Elections: Disciplining the Incumbent and Selecting a Competent Candidate

Author

Listed:
  • Juan Carlos Berganza

Abstract

This paper presents a political economy model in which the voters want to control moral hazard on the part of the incumbent and select a competent candidate to be in office. We focus on elections which take place repeatedly as the basic disciplinary and screening mechanism. It is shown that having the possibility of reelecting a government increases the welfare of the voters with respect to the no reelection benchmark. A second finding is that economic performance strongly influences the reelection of the incumbent. In particular, in (stationary perfect bayesian) equilibrium, if economic performance is bad, the incumbent will not be reelected. A final result compares two mechanisms which link politicians with voters: (i) the election-based incomplete contract; and (ii) an explicit incentive scheme that rewards with a second mandate good economic performance. The paper shows that in our model the second alternative is better for voters' welfare.

Suggested Citation

  • Juan Carlos Berganza, 1998. "Two Roles for Elections: Disciplining the Incumbent and Selecting a Competent Candidate," Working Papers wp1998_9810, CEMFI.
    • Handle: RePEc:cmf:wpaper:wp1998_9810
    as

    Download full text from publisher

    File URL: https://www.cemfi.es/ftp/wp/9810.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Banks, J.S. & Sundaram, R.K., 1990. "Incumbents, Challengers, And Bandits: Bayesian Learning In A Dynamic Choice Model," RCER Working Papers 235, University of Rochester - Center for Economic Research (RCER).
    2. Timothy Besley & Anne Case, 1995. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 769-798.
    3. Kenneth Rogoff & Anne Sibert, 1988. "Elections and Macroeconomic Policy Cycles," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(1), pages 1-16.
    4. Wright, Randall, 1986. "The redistributive roles of unemployment insurance and the dynamics of voting," Journal of Public Economics, Elsevier, vol. 31(3), pages 377-399, December.
    5. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    6. W. Robert Reed, 1994. "A Retrospective Voting Model With Heterogeneous Politicians," Economics and Politics, Wiley Blackwell, vol. 6(1), pages 39-58, March.
    7. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juan Carlos Berganza, 1998. "Relationships Between Politicians and Voters Through Elections: A Review Essay," Working Papers wp1998_9809, CEMFI.
    2. Juan Carlos Berganza, 2000. "Politicians, voters and electoral processes: an overview," Investigaciones Economicas, Fundación SEPI, vol. 24(3), pages 501-543, September.
    3. Dalle Nogare, Chiara & Kauder, Björn, 2017. "Term limits for mayors and intergovernmental grants: Evidence from Italian cities," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 1-11.
    4. César Martinelli & John Duggan, 2014. "The Political Economy of Dynamic Elections: A Survey and Some New Results," Working Papers 1403, Centro de Investigacion Economica, ITAM.
    5. George Ward, 2015. "Is Happiness a Predictor of Election Results?," CEP Discussion Papers dp1343, Centre for Economic Performance, LSE.
    6. Bernardo P. Schettini & Rafael Terra, 2020. "Electoral incentives and Public Employees’ Retirement Systems in Brazilian municipalities," Public Choice, Springer, vol. 184(1), pages 79-103, July.
    7. Kausik Chaudhuri & Sugato Dasgupta, 2005. "The political determinants of central governments' economic policies in India: an empirical investigation," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(7), pages 957-978.
    8. Antoni Castells & Alejandro Esteller & Maite Vilalta, 2004. "Full Characterisation of the Political Economy of Fiscal Adjustment: Evidence from Spanish Municipalities," Working Papers 2004/3, Institut d'Economia de Barcelona (IEB).
    9. le Borgne, E. & Lockwood, B., 2000. "Do Elections Always Motivate Incumbents?," The Warwick Economics Research Paper Series (TWERPS) 580, University of Warwick, Department of Economics.
    10. Ward, George, 2015. "Is happiness a predictor of election results?," LSE Research Online Documents on Economics 61698, London School of Economics and Political Science, LSE Library.
    11. Konishi, Hideki, 2006. "Spending cuts or tax increases? The composition of fiscal adjustments as a signal," European Economic Review, Elsevier, vol. 50(6), pages 1441-1469, August.
    12. Martinez, Leonardo, 2009. "A theory of political cycles," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1166-1186, May.
    13. Panu Poutvaara & Tuomas Takalo & Andreas Wagener, 2017. "The Optimal Duration of Contracts," CESifo Working Paper Series 6808, CESifo.
    14. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    15. Umeno, Luis Gustavo & Bugarin, Maurício Soares, 2008. "Electoral Control in the Presence of Moral Hazard and Adverse Selection," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 28(1), May.
    16. Vergne, Clémence, 2009. "Democracy, elections and allocation of public expenditures in developing countries," European Journal of Political Economy, Elsevier, vol. 25(1), pages 63-77, March.
    17. Alessandra Bonfiglioli & Gino Gancia, 2013. "Uncertainty, Electoral Incentives and Political Myopia," Economic Journal, Royal Economic Society, vol. 0, pages 373-400, May.
    18. Arnaud Dellis, 2009. "The Salient Issue of Issue Salience," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(2), pages 203-231, April.
    19. Henrik Jordahl, 2006. "An economic analysis of voting in Sweden," Public Choice, Springer, vol. 127(3), pages 251-265, June.
    20. Braendle, Thomas, 2013. "Do Institutions Affect Citizens' Selection into Politics?," Working papers 2013/04, Faculty of Business and Economics - University of Basel.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cmf:wpaper:wp1998_9810. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Araceli Requerey (email available below). General contact details of provider: https://edirc.repec.org/data/cemfies.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.