FG VWL, insbesondere Mikroökonomik
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We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-)distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort.
In explaining individual behavior in politics, economists should rely on the same motivational assumptions they use to explain behavior in the market: that is what Political Economy, understood as the application of economics to the study of political processes, is all about. In its standard variant, individuals who play the game of politics should also be considered rational and self-interested, unlike the benevolent despot of traditional welfare economics. History repeats itself with the rise of behavioral economics: Assuming cognitive biases to be present in the market, but not in politics, behavioral economists often call for government to intervene in a “benevolent” way. Recently, however, political economists have started to apply behavioral economics insights to the study of political processes, thereby re-establishing a unified methodology. This paper surveys the current state of the emerging field of “behavioral political economy” and considers the scope for further research.
Using a framework that distinguishes short-term consumer preferences, individual reflective preferences and political preferences, we discuss from a constitutional economics perspective whether individuals find it in their common constitutional interest to endow representatives and bureaucrats with the competence to impose soft paternalist policies. The focus is specifically on soft paternalist policies, because these often work with non-transparent 'nudges' that are considered as manipulative in some contributions to the literature. We show that those soft paternalist policies that are manipulative indeed collide with three criteria of consumer sovereignty, reflective sovereignty and citizen sovereignty that can be argued to represent common constitutional interest of citizens. On the other hand, we argue that the set of paternalist policies that is deemed acceptable on the constitutional level is restricted to non-manipulative instruments, and their application as government policies is limited to cases with stable and very homogenous preferences. However, we also argue that competitive markets are capable of supplying many mechanisms that allow individuals to cope with problems in their decision-making processes on a private level.
Pointing out the remarkable levels of hostile interaction in the air space over contested territory between states like China and Japan or Greece and Turkey we argue that air space incursions can be interpreted as a rational strategy with ultimately political aims. In our interpretation deliberate intrusions of military aircraft into sensitive air space serve as an indirect risk-generating mechanism, as they will trigger scrambles of the opposed government's air force which may escalate into a military crisis. We derive testable hypotheses from a game-theoretic model, which we developed in earlier work to explore the strategic logic behind this risk-generating mechanism more rigorously. In order to test whether the model's predictions regarding the effect of short-term economic developments on the states' interaction hold, we built a database of daily event observations from the Hellenic National Defence General Staff reports of the last 4 years, containing time series data of Turkish intrusions into Greek-claimed air space and the number of dogfights between Greek and Turkish fighter planes. What we find is that not only Greek engagements of Turkish intruders but also massed, provocative Turkish intrusions have become significantly less likely after the onset of the Greek economic crisis. These findings are well in line with the predictions of the model and thus supportive of our theory.
New Political Economy has something very important in common with welfare economics: its focus on static, technical efficiency criteria to judge the rationality of a social, political or economic order. This often leads theorists to perceive their objects of research as well-defined problems to which clear-cut solutions can be found and prescribed as policy proposals, addressed at the policymaker or the democratic sovereign. This perspective frequently excludes important empirical phenomena from the research agenda. Although, for example, certain well-defined informational asymmetries are frequently modeled, fundamental knowledge problems such as ignorance of the true model of the economy are usually ignored. In the present paper, this approach is criticized from a Hayekian point of view, with an emphasis on the problems of "scientism" (i.e., the inappropriate transfer of methods from the natural to the social sciences) and irremediably imperfect knowledge, troubling both the agents in the theoretical model and the theorist. Furthermore, it is argued and illustrated with two examples that an extension of Public Choice's research agenda along Hayekian lines may be fruitful, because it leads to a fresh perception even of such problems that already have been extensively researched within the traditional framework.
In contrast to the contractarian approach to constitutional economics, we follow Voigt (1999) in assuming that constitutional rules are closely connected to informal institutions and that their evolution is a matter of interest group activity and implicit re-interpretation. We add to this the assumption of theoretical uncertainty of individuals regarding the working properties of constitutional rules. Collective learning processes are considered as the third driving force of constitutional evolution, and at the same time as the source of path-dependencies which allow suboptimal constitutions to persist. Finally, it is argued that direct legislation offers more protection than a written fiscal constitution.
The sociologist R. Dahrendorf has recently suggested that there is no and there ought to be no convergence of economic policies towards some common ideal model. On the contrary, he states that ‘diversity is […] at the very heart of a world that has abandoned the need for closed, encompassing systems’. It is shown in this paper that the Dahrendorf hypothesis is difficult to reconcile with orthodox economic approaches to economic policy-making. A perspective on policy-making that introduces either fundamental uncertainty or endogenous policy preferences or both is, however, shown to be consistent with the Dahrendorf hypothesis.
This paper examines the process of economic policy-making under conditions of model uncertainty. A median voter model is introduced in which the electorate is uncertain of the policy measures available as well as their respective outcomes and opinion formation is a social process of communication and contagion. Learning from experience is also considered. It is shown that economic policy-making under uncertainty produces novel policy routines, but that a mechanism of efficiently utilising the generated knowledge is missing.
Döring T. and Schnellenbach J. (2006) What do we know about geographical knowledge spillovers and regional growth?: a survey of the literature, Regional Studies 40, 375–395. Modern (endogenous) growth theory tells us that knowledge is crucial for the sustained growth of high-income economies. Against this background, the paper provides a survey of theoretical and empirical findings highlighting the question of how geographically limited knowledge diffusion can help to explain clusters of regions with persistently different levels of growth. It discusses this topic in two steps. First, the theoretical concept of knowledge spillovers is outlined by discussing the different types of knowledge, the spatial dimension of knowledge spillovers, and the geographical mechanisms and structural conditions of knowledge diffusion. Second, it analyses the empirical evidence concerning the theoretical propositions.
An explanation for tax morale based upon a simple model of psychological costs that depend on the perceived legitimacy of public policies is introduced. It is shown that empirically observed low levels of tax evasion can be explained even for a risk-neutral taxpayer with such a model. In a discussion of aggregate tax revenue, it is argued that tax revenue as a function of tax rates may differ fundamentally from the notorious Laffer curve. It is then necessary to look at the interaction of formal and informal institutions to predict the nominal tax rates chosen by a revenue maximizer.