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Dynamic Legislative Policy Making

We prove existence of stationary Markov perfect equilibria in an infinite-horizon model of legislative policy making in which the policy outcome in one period determines the status quo in the next. We allow for a multidimensional policy space and arbitrary smooth stage utilities. We prove that all such equilibria are essentially in pure strategies and that proposal strategies are differentiable almost everywhere. We establish upper hemicontinuity of the equilibrium correspondence, and we derive conditions under which each equilibrium of our model determines a unique invariant distribution characterizing long run policy outcomes. We illustrate the equilibria of the model in a numerical example of policy making in a single dimension, and we discuss extensions of our approach to accommodate much of the institutional structure observed in real-world politics.

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Paper provided by University of Rochester - Wallis Institute of Political Economy in its series Wallis Working Papers with number WP45.

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Length: 45 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:roc:wallis:wp45
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University of Rochester, Wallis Institute, Harkness 109B Rochester, New York 14627 U.S.A.

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