Political uncertainty, public expenditure and growth

Darby, Julia; Li, Chol‐Won; Muscatelli, V. Anton

doi:10.1016/j.ejpoleco.2003.01.001

Cited by 86 publications

(63 citation statements)

References 39 publications

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“…A related study to ours is Darby, Li, and Muscatelli (2004). They document a negative association between political instability and public investment in a panel of European countries.…”

Section: The Effects Of Changes In Re-election Probabilitiesmentioning

confidence: 99%

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Do re-election probabilities influence public investment?

Fiva

Natvik²

2012

Public Choice

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We identify exogenous variation in incumbent policymakers' re-election probabilities and explore empirically how this variation affects their investments in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital.JEL Codes: E62, H40, H72

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“…A related study to ours is Darby, Li, and Muscatelli (2004). They document a negative association between political instability and public investment in a panel of European countries.…”

Section: The Effects Of Changes In Re-election Probabilitiesmentioning

confidence: 99%

“…4 Similarly, Darby, Li, and Muscatelli (2004), rely on electoral volatility at the previous election in their study of political uncertainty and public investments in a panel of European countries. The validity of these identification strategies hinges on the assumption that (historically) instable units are similar…”

Section: Introductionmentioning

confidence: 99%

Do re-election probabilities influence public investment?

Fiva

Natvik²

2012

Public Choice

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“…charakteru režimu či vlivu politické stability na ekonomický rozvoj; viz Aisen a Veiga (2013), Alesina, Özler a Roubini (1996), Darby, Li a Muscatelli (2004), Fosu (1992), Jong-A-Pin (2009), Jütting (2003, Olson (2000), Przeworski a Limogni (1993), Rode a Coll (2012).…”

Section: Literární Přehledunclassified

The Impact of Institutional Environment on Inflows of Foreign Direct Investment in European Transition Economies and Latin American Countries

Mádr¹,

Kouba²

2015

AOP

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THE IMPACT OF INSTITUTIONAL ENVIRONMENT ON INFLOWS OF FOREIGN DIRECT INVESTMENT IN EUROPEAN TRANSITION ECONOMIES AND LATIN AMERICAN COUNTRIESThe main objective of the paper is to identify and quantify the infl uence of institutional environment on infl ows of foreign direct investment in European post-socialist countries and countries of Latin America. The reference period is the period 1996-2012 due to data availability. The World Bank Governance Matters concept is used as the basic indicator of institutional environment. Panel data regression analysis is used for the identifi cation and quantifi cation purposes. According to the results, the infl uence of institutional environment on FDI is not entirely unequivocal in the European transition economies, but it is statistically signifi cant in the Latin American countries. Furthermore, there are statistically signifi cant areas -quality of democracy and government eff ectiveness -in the post-socialist countries, and all the institutional areas except the level of democracy in Latin America, mainly regulatory quality and rule of law.Keywords: institutional environment, foreign direct investment, transition economies, Latin America, Governance Matters JEL Classifi cation: F21, P16, P26 ÚvodPřímé zahraniční investice (PZI) mají v dnešním globalizovaném světě stále významnější vliv na ekonomický rozvoj. O to více to platí v případě tzv. rozvíjejících se trhů, mezi něž bývá řazena velká část evropských tranzitivních ekonomik střední a východní Evropy, Balkánu a Kavkazu a většina států Latinské Ameriky. V roce 2012 tvořil příliv PZI v tranzitivních ekonomikách okolo 3 až 5 % HDP, v případě Maďarska 10 % HDP. Mezi zeměmi Latinské Ameriky jsou výraznější rozdíly v přílivu PZI, od necelého 1 % (Ekvádor, Venezuela) po 10 % HDP (Chile) a až 40 % v případě Guyany. Na dopady přílivu PZI v tranzitivních ekonomikách se zaměřují např.

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“…As a consequence, individuals cannot infer how much was invested in this good until later when they observe the provision levels generated by past investments. 7 Speci…cally, we assume that it takes one period for the investment to mature, and the provision of y 2 at time t is then determined by the investment made at time t 1. 8…”

Section: The Modelmentioning

confidence: 99%

“…A …nal source of policy myopia is political uncertainty or instability. Darby et al (2004), for example, show how this may induce incumbent governments to bias the portfolio of spending away from investments towards current consumption because they realize that they may not be in o¢ ce when the investments yield fruits.…”

Section: Introductionmentioning

confidence: 99%

Policy myopia and economic growth

Aidt

Dutta

2007

European Journal of Political Economy

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We develop a theory of second best policy myopia. Policy myopia arises when rational voters allow politicians to bias public investments towards short-term investments. We demonstrate that policy myopia is not an inevitable implication of the fact that voters cannot observe immediately how much their politicians invest in certain types of public goods; rather it is the interaction between observation lags, economic growth and binding revenue constraints that forces rational voters to accept a short-term bias. We argue that growth in government and policy myopia are related social phenomena. The analysis is motivated by stylized facts about public spending patterns.Keywords: Myopia; growth; public goods; electoral accountability. JEL Classi…cation: D72; D82.We would like to thank the ESRC for research support under the "Understanding the Evolving Macroeconomy" research program (grant no. L138251006). We have bene…ted from comments from Stephen Morris, Nicola Persico, Roger Backhouse, Vania Sena, Laura Marsiliani, John Hardman Moore, Timothy Guinnane, Jozsef Sakovics, and numerous seminar participants. We also thank Karlygash Kuralbayeva for research assistance and Elena Loukoianova for assistance with related research. Policy Myopia and Economic Growth AbstractWe develop a theory of second best policy myopia. Policy myopia arises when rational voters allow politicians to bias public investments towards short-term investments. We demonstrate that policy myopia is not an inevitable implication of the fact that voters cannot observe immediately how much their politicians invest in certain types of public goods; rather it is the interaction between observation lags, economic growth and binding revenue constraints that forces rational voters to accept a short-term bias. We argue that growth in government and policy myopia are related social phenomena. The analysis is motivated by stylized facts about public spending patterns.

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Political uncertainty, public expenditure and growth

Cited by 86 publications

References 39 publications

Do re-election probabilities influence public investment?

Do re-election probabilities influence public investment?

The Impact of Institutional Environment on Inflows of Foreign Direct Investment in European Transition Economies and Latin American Countries

Policy myopia and economic growth

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