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How to Classify a Government? Can a Neural Network do it?

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  • António Caleiro

    () (Department of Economics, University of Évora)

Abstract

An electoral cycle created by governments is a phenomenon that seems to characterise, at least in some particular occasions and/or circumstances, the democratic economies. As it is generally accepted, the short-run electorally-induced fluctuations prejudice the long-run welfare. Since the very first studies on the matter, some authors offered suggestions as to what should be done against this electorally-induced instability. A good alternative to the obvious proposal to increase the electoral period length is to consider that voters abandon a passive and naive behaviour and, instead, are willing to learn about government?s intentions. The electoral cycle literature has developed in two clearly distinct phases. The first one considered the existence of non-rational (naive) voters whereas the second one considered fully rational voters. It is our view that an intermediate approach is more appropriate, i.e. one that considers learning voters, which are boundedly rational. In this sense, one may consider neural networks as learning mechanisms used by voters to perform a classification of the incumbent in order to distinguish opportunistic (electorally motivated) from benevolent (non-electorally motivated) behaviour of the government. The paper explores precisely the problem of how to classify a government showing in which, if so, circumstances a neural network, namely a perceptron, can resolve that problem.

Suggested Citation

  • António Caleiro, 2005. "How to Classify a Government? Can a Neural Network do it?," Economics Working Papers 9_2005, University of Évora, Department of Economics (Portugal).
  • Handle: RePEc:evo:wpecon:9_2005
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    File URL: http://hdl.handle.net/10174/8428
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    References listed on IDEAS

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    1. Peter Westaway, 1992. "A Forward-Looking Approach to Learning in Macroeconomic Models," National Institute Economic Review, National Institute of Economic and Social Research, vol. 140(1), pages 86-97, May.
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    Cited by:

    1. Caleiro, António, 2007. "What Does Economics Assume About People’s Knowledge? Who knows?," EconStor Preprints 142776, ZBW - German National Library of Economics.

    More about this item

    Keywords

    Classification; Elections; Government; Neural Networks; Output Persistence; Perceptions;

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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