Abstracts of published papers for Jac C. Heckelman

(select papers below available in pdf format)

Economics & Politics forthcoming

Abstract. We investigate whether the impact of institutions depends not just on their current state, but also on how they came to be. In particular, we hypothesize that while economic freedom that emerges spontaneously may be growth promoting, economic freedom that emerges as a result of costly lobbying efforts may be less fruitful. In an extreme case, costly lobbying efforts may even negate the growth-enhancing effect of economic freedom. To the extent that lobbying efforts constitute an opportunity cost of resources diverted away from investment and production, our hypothesis also implies that the opportunity cost of lobbying is greater the more efficient is the institutional environment. Panel data analysis reveals the expected positive relation between economic freedom and growth, and consistent with our hypothesis, the findings indicate that the impact of economic freedom on growth does indeed diminish as lobbying efforts increase. In addition, we find that lobbying is more harmful to growth at greater levels of economic freedom.

Canadian Journal of Economics forthcoming

Abstract. We perform convergence tests on the U.S. states for per capita income from 1930-2009. Cross-sectional tests support overall sigma convergence and beta convergence but may not hold true for the last three decades. Time series tests suggest that about half of the states exhibit stochastic convergence and of these all are also beta converging. Probit regressions reveal that the likelihood a state is converging is a function of changing capital to labor ratios, the size of the agricultural sector, and levels of taxation and tax revenue. Regional disparities in convergence remain among the southern and midwestern states.

Journal of Regional Analysis and Policy forthcoming

Abstract. Previous studies of U.S. political polarization have examined state-level convergence and divergence. Increasingly, scholars have turned from state-level analyses to regional analyses and advanced claims as to whether regions are becoming more similar or dissimilar. Yet, formal testing has remained largely absent. Using panel unit root tests, we determine whether regional political convergence is occurring between 1970 and 2004. Our results suggest the importance of distinguishing between ideological convergence and partisan convergence. We find the four regions and eight subregions are stochastically converging to a national norm in regard to ideology but not with regard to partisanship. Convergence for partisanship is, however, occurring within three of the regions, but not within the Midwest.

Journal of Economic History 73: 407-444, 2013

Abstract. Previous studies of the U.S. Constitutional Convention have relied on votes recorded for the state blocs or a relatively small number of delegate votes. We construct a new dataset covering delegate votes on over 600 substantive roll calls, and use the data in several ways. First, we estimate a single dimensional position for the delegates which reflects their overall voting patterns. Next, we explain these positions using a variety of delegate and constituent variables. Finally, we suggest a method for identifying state and floor medians, which can be used to predict equilibrium outcomes at the Convention.

Journal of Public Economic Theory 15: 108-123, 2013

Abstract. We develop a lottery procedure for selecting multiple winners that is strategy proof. The rule assigns points to each candidate based on any standard scoring rule method, and then uses one draw to select a single winning set of candidates in proportion to their collective score. In addition to being strategy proof, the lottery rule is also shown to have several other attractive normative properties. Violations of some other important normative properties are noted as well.

Historical Methods 45: 135-141, 2012

Abstract. Delegate level analysis of the U.S. Constitutional Convention has been limited because the Convention did not record delegate votes. This paper introduces the Constitutional Convention Research Group Data Set (CCRG dataset), which contains inferred delegate votes on 620 substantive roll calls at the Convention. The CCRG dataset represents a significant improvement over previous datasets such as those compiled by McDonald (1958), Dougherty and Heckelman (2009), and datasets based on votes recorded for state blocs (Jillson 1981, 1988).

Journal of Institutional and Theoretical Economics 168: 636-657, 2012.

Abstract. Foreign aid, especially official development assistance (ODA), has received increasing criticism in past decades. In particular, it has been put into question if and to what extent aid can help foster the aims for which it has been paid. In most cases, it seems that there is no discernable effect or even a negative effect of ODA on economic development. One reason for aid ineffectiveness may be seen in a lack of good governance on the side of the recipients. It has been argued that aid should concentrate more on creating better institutions. In the past 20 years, democracy promotion has become a pillar of USAID's mission and the funding for democracy and governance has steadily increased. The transition economies in particular have received special attention upon the fall of the Soviet Union. We assess the success of this aid by testing whether US aid is enhancing democracy in 26 transition countries. Using Freedom House Nations in Transit data, we find that in simple linear panel regressions aid has generally not been a significant factor in a country's overall democracy score. However, aid has significantly contributed to certain components of the democracy score, namely civil society, electoral process, judicial framework, and media independence. In addition, the impact of aid is found to depend on the number of years of past central planning. Countries having a history of less than 50 years of central planning had a significantly negative association to aid, whereas countries with more than 65 years of central planning benefited from greater aid.

Review of International Organizations 7: 145-176, 2012

Abstract. According to World Bank policy, countries remain eligible to borrow from the IBRD until they are able to sustain long-term development without further recourse to Bank financing. Graduation from IBRD is not an automatic consequence of reaching a particular income level, but rather is supposed to be based on a determination of whether the country has reached a level of institutional development and capital-market access that enables it to sustain its own development process without recourse to Bank funding. This paper takes a positive approach to IBRD graduation policy, investigating what income and non-income factors appear to have influenced graduation status in recent decades, based on panel data for 1982 through 2009. Explanatory variables include the per- capita income of the country, as well as measures of institutional development and market access that are cited as criteria by the graduation policy, and other plausible explanatory variables that capture the levels of economic development and vulnerability of the country. We find that the observed correlates of graduation status are generally consistent with the stated policy. Countries that are wealthier, more creditworthy, more institutionally developed, and are less vulnerable to trade, financial, and other shocks are more likely to be graduates. Predicted probabilities generated by the model conform closely to the actual graduation and de-graduation experiences of Trinidad and Tobago and Korea, and suggest that Hungary and Latvia may have graduated prematurely - a prediction subsequently borne out by the large loans that they later received from the IBRD in the wake of the global financial crisis.

Developing Economies: Innovation, Investment and Sustainability, (Joanne M. Carcillo(ed.)), Nova Science, pp. 175-186, 2012

Abstract. The evidence on the relationship between political freedoms and foreign direct investment (FDI) is mixed. Part of the problem in interpreting results is that past cross-country studies have generally used a large sample of diverse nations and broad measures of political freedoms which do not vary much over time. In this chapter the relationship between political freedoms and FDI in the Central and Eastern European and Former Soviet Union nations is analyzed using recently developed political freedom indexes by Freedom House specific to the transition economies, over the period 1999-2008. By focusing on a specific region of the world which has undergone recent dramatic change in its political institutions, both in terms of positive reforms in certain nations and increased repression in others, a better estimation of the true impact of political freedom can be determined. It is found that greater political freedoms in general discourage FDI. However, not all types of political freedoms significantly hinder FDI. In particular, freedoms related to judicial framework, civil society, and corruption significantly limit FDI, while freedoms related to electoral process and governance do not. Finally, the results for media independence are dependent on specification.

International Journal of Statistics and Economics 8: 1-11, 2012

Abstract. Researchers modeling the behavior of individual people or firms are often unable to utilize micro-level data because such data are unavailable or unreliable. Faced with this dilemma, researchers often resort to using aggregate-level data. When the individual-level variable of interest is dichotomous, however, the aggregate-level model is subject to a special form of aggregation bias. Kelejian [1994] provides a methodology for testing for the presence of this form of bias. This study uses Monte Carlo analysis to evaluate the usefulness of Kelejian’s test. Using 50 units, populated by, 100, 1000 and 10,000 individuals, we find that aggregation bias is almost universally present. Unfortunately, the Kelejian test identifies the bias in fewer than half of the cases.

Abstract. This paper empirically explores the relation between special-interest groups and economic growth. Our analysis exploits newly assembled data on the number of groups observed across countries and time, in order to mitigate the identification problems associated with earlier studies. Also in contrast to earlier work, we examine the impact of groups on two sources of growth - capital accumulation and technological change - in addition to the impact of groups on output growth. The findings are consistent with Mancur Olson's (1982) claim that societies with greater numbers of interest groups grow slower, accumulate less capital, and experience reduced productivity growth relative to others.

Applied Economics Quarterly 56: 121-146, 2010

Abstract. The Freedom House democracy index is often used in regression analysis to estimate the relationship between democratic freedoms and growth. The index is comprised of two broad categories for political rights and civil liberties. However, the relationship between the underlying types of rights and liberties to growth remains unknown. A newer alternative democracy index developed by Freedom House specifically for the transition nations is compared to the original democracy index. The two are highly correlated but the latter entails a greater breakdown across six democracy areas including civil society, judicial framework, media independence, corruption, electoral process, and governance. Except for corruption, each is found to be individually significant in separate growth regressions, but when all are included simultaneously, only greater freedoms in civil society and electoral process are significantly correlated with higher growth, while greater freedom in judicial framework is significantly correlated with lower growth. The remaining areas are not statistically significant.

Kyklos 63: 558-579, 2010

Abstract. Past studies have not been supportive of the ability for foreign aid to create increased development and market liberalization. Less attention has been devoted to investigating the role aid has played in fostering democratic institutions. For a sample of 26 nations in Eastern Europe and former Soviet republics, I find more aid per capita is strongly associated with democratic reforms, but less robust is the relationship for aid as a percentage of gross national income. When analyzing various types of democratic freedoms, it appears both measures of aid improve the categories of judicial framework and governance, and aid per capita is also positively correlated with improvements in civil society and electoral process, but aid does not lead to more media independence.

Public Finance Review 38: 738-761, 2010

Abstract. Buchanan and Tullock (1962) argue that larger supermajority rules reduce tyranny of the majority but should have no effect on the passage of mutually advantageous policies. We test this argument by separately analyzing the effect of supermajority requirements on taxes that are targeted toward narrow groups (more redistributive) and taxes targeted toward a broader base (less redistributive), in a panel of 50 states from 1970 to 2008. Regression analysis reveals an inverse relationship between narrow taxes and the size of the majority rule requirement, and no relationship between broad taxes and the size of the majority requirement -- consistent with Buchanan and Tullock’s claim. We also find that Democratic controlled governments have significantly higher tax rates on narrow taxes than Republican controlled governments. The reverse is found for broad taxes, but the result is not as strong.

Comparative Economic Studies 52: 351-378, 2010

Abstract. Several cross-country studies have found that corruption is detrimental to economic growth, but the findings are not universally robust. We utilize the economic freedom index to examine if corruption can facilitate growth by allowing entrepreneurs to avoid inefficient policies and regulations when economic freedom is limited. Using regression analysis, we find that corruption is growth enhancing when economic freedom is most limited but the beneficial impact of corruption decreases as economic freedom increases. Not all areas of economic freedom affect the corruption-growth relationship equally. In particular, we find the beneficial effect of corruption disappears most quickly when the size of government and the extent of regulation decrease.

Social Science Journal 47: 689-698, 2010

Abstract. In view of the ongoing debate about the degree and direction of political polarization in the U.S., we assess whether the 50 states are converging or diverging in their behavior in state and federal elections. We find that states are diverging in their behavior in federal elections but converging in their behavior in state elections. Previous scholars have shown the need to distinguish between the degree of polarization of elites and ordinary citizens; our findings demonstrate the further need to distinguish between trends in partisan polarization at the federal and state level.

Cliometrica 4: 207-228, 2010

Abstract. Charles Beard ([1913] 2004) argued that the U.S. Constitution was created to advance the interests of people who owned personalty, particularly those at the Constitutional Convention. Because delegate votes on individual clauses at the Constitutional Convention were not publicly recorded, prior empirical analyses have been limited to inferred votes on a specific set of unrelated clauses. We extend this inquiry by inferring votes related to currency and debt issues which Beard put forth as the prime issues for those who owned personalty. Our analysis on these votes generates little support for a narrow version of the Beard thesis, which states that all personalty groups voted in a unified coalition at the Convention and supported the Constitution. Our analysis provides some support, however, for a broader interpretation that personalty and realty interests affected delegate voting behavior at the margin.

European Journal of Political Economy 26: 208-221, 2010

Abstract. We investigate the relationship between interest group activity and investment by analyzing an unbalanced panel of observations on 126 countries over three time-periods. We find that the number of interest groups in a nation is negatively related to investment, consistent with a sclerotic effect due to rent-seeking by interest groups. Our findings are robust to the inclusion of a variety of additional common controls in the specification, to potential outlying observations, and to varied sample selection procedures. We do find, however, that the sclerotic impact of groups on investment is stronger across developed OECD countries than for the developing non-OECD countries. Effects also tend to be stronger in democratic nations, but are dependent upon how strict a definition of democracy is used.

Contemporary Economic Policy 27: 46-53, 2009

Abstract. Foreign aid has often been intended by donors to entice recipient nations into policy and institutional reforms favorable to private sector economic development. In this study, we investigate the relationship between aid and changes to economic freedom in recipient nations over the 1990-2000 decade. The evidence is mixed. In general we find that foreign aid has no significant effect on economic freedom overall. However, by utilizing an hedonic approach on the different categories of economic freedom we find that aid has still managed to contribute toward a policy and institutional environment favorable to growth, as the different categories of economic freedom improved by aid more than offset those which are harmed by aid, in terms of their impact on growth.

Review of Regional Studies 38: 251-269, 2008

PS: Political Science and Politics 41: 677-678, 2008

AWARDED GORDON TULLOCK PRIZE FOR BEST ARTICLE IN PUBLIC CHOICE BY YOUNGER SCHOLAR(S)

Public Choice 136: 293-313, 2008

Abstract. This paper provides the first empirical study of delegate voting behavior on issues of slavery at the U.S. Constitutional Convention. We analyze two categories of votes: those related to apportionment and those related to the regulation of the slave trade. Although it is widely believed that delegates voted consistent with the interests of their states on issues of slavery, we find that for votes on apportionment, the effect of state interests was enhanced by both the delegate's personal interest and his religious background. For votes regulating the slave trade, state interests had a significant effect but only within specific regions.

Economica 75: 524-548, 2008

Abstract. Market-oriented economic policies have been strongly linked to faster rates of economic growth. Foreign aid is often provided in part to encourage market-oriented reforms. We analyse the impact of aid on market-liberalizing policy reform, correcting for its potential endogeneity. Results indicate that higher aid slowed reform over the 1980-2000 period, as measured by a broad index of policies. Disaggregating policy into five areas, aid is associated with slower reform in some policy areas but not in others. Disaggregating by decade, the adverse impact of aid on policy reform is much more pronounced for the 1980s than for the 1990s.

Eastern Economic Journal 34: 158-171, 2008

Abstract. We apply the theory of clubs to bank decisions on choosing membership in the national system and being subject to federal regulations, or remaining outside the system and opting instead for state regulation. Although costs to national membership are typically higher, member banks can use their influence to reduce these costs. This is expected to be more prominent for the larger banks, which retain greater influence on the regulators. Thus, the theory predicts membership depends on costs, which in turn depend on membership. We test these relationships in a system of simultaneous equations for the periods 1875-1913, 1914-1934, and 1935-1980. Our results are consistent with the notion of large bank memberships responding to changes in reserve ratios, and reserve ratios responding to membership rates for large banks. In addition, we find bank sensitivity to national reserve ratios to be lowest when the Fed was given additional discretion in setting reserve ratios post 1935, and federal regulator responsiveness to large bank membership was greatest during this time as well.

Journal of Theoretical Politics 20: 31-46, 2008

Abstract. Assuming strict two party competition, policy balancing models of the U.S. senate imply that senators from the same state will often be from opposite parties and have great ideological divergence. We analyze the effect of independent candidates on these implications. Our theoretical model implies the two state senators will generally not be from opposite parties and will be closer in ideological space than if they were elected under strict two party competition. Empirical analysis of senate composition from 1991-2002 supports the theory.

Korean Journal of Public Choice 2: 1-11, 2007

Abstract. Lottery rules are rarely used beyond breaking a tie vote. Yet, proportional lotteries have several attractive features which are discussed here. First, lotteries break the tyranny of the majority. Second, any proportional lottery which uses only a single round of voting to determine the lottery weights followed by a single weighted draw will ensure sincere preference revelation by the voters. Third, lotteries respect many of the general axiomatic principals invoked for social choice rules, in a probabilistic sense.

Journal of Economic History 67: 829-848, 2007

Abstract. Empirical studies of delegate voting at the Constitutional Convention have relied on the same 16 roll call votes. This paper re-examines various assumptions used in the collection of these data. We first create a baseline regression. We then consider the effect of dropping delegates not in attendance, re-inferring the votes from primary sources, examining various sub-samples of the roll calls, and reconstructing constituency variables to include state districts. Our findings suggest that for decision making at the Constitutional Convention, personal interests were indeed important but constituent interests were less important than previously claimed.

Economics Bulletin Vol 15, No. 18: 1-13, 2007

Abstract. This paper explores the relationship between special-interest groups and volatility of GDP growth. In an unbalanced panel of 108 countries, we find a significant negative relationship between the number of interest groups in a country and the volatility of GDP growth.

Public Choice 133: 377-391, 2007

Abstract. It is widely recognized that interest groups affect both microeconomic and macroeconomic outcomes. However, few researchers have attempted to discern empirically the factors that contribute to interest group activity. This paper provides a test of several theories of group formation in a panel setting. A nation's stability, socioeconomic development, political system, size, and diversity all appear to contribute to interest group formation as predicted by theory.

Southern Economic Journal 74: 18-33, 2007

Abstract. In the quarter-century since the publication of Rise and Decline of Nations, a large literature has evolved testing the central hypothesis regarding Olson's thesis on institutional sclerosis. These tests have taken the form of both econometric regression analysis involving a sample of various nations and detailed narrative case studies of specific nations. Tests have appeared in both economics and political science journals, as well as in collected volumes and independent books, performed primarily by authors from America and Europe. A review of over 50 separate works reveals that on the whole the theory of institutional sclerosis is generally, but certainly not universally, supported. No systematic bias in favor or opposition to Olson is found to have arisen based on methodology, publication outlet or authorship location.

Constitutional Political Economy 18: 83-97, 2007

Abstract. We analyze a unique case of voting on voting with the feet, when Tennessee twice considered secession from the Union in 1861 by popular referenda. The initial votes to hold a convention, and to send disunion delegates to a convention, failed, but after the Confederate states adopted a new constitution and the bombing of Fort Sumter took place, a second set of votes to separate from the union, and to join the confederacy, passed. Regression results support the importance of both economic interests and political tendencies, along with regional differences, in explaining the variation in votes across counties. Class distinctions were not found to be significant.

American Political Science Review 100: 297-302, 2006

Abstract. Robertson (2005) argues that Roger Sherman was surprisingly influential at the constitutional convention. Using empirically estimated ideal points, we show that Sherman was indeed a pivotal voter from a pivotal state. However, we also demonstrate that if the votes were tallied by delegates individually, rather than grouping them by home state, then Sherman would have been less pivotal. This suggests that the voting procedures adopted at the constitutional convention may have affected Sherman’s ability to get his interests enacted. Such institutions might have been more responsible for making Sherman influential than his legislative abilities.

Public Choice 126: 257-274, 2006

Abstract. In presenting evidence in favor of rational partisan cycles, where electoral victories by leftist parties are expected to create temporary expansions and electoral victories by rightist parties are expected to create temporary recessions, Alesina, Cohen and Roubini (1999) rely upon autoregressive time series intervention regressions. Theses regressions, however, are not consistent with their model. In this paper, a model is derived which is consistent with the intervention approach in its reduced-form. The differences between the models are highlighted and new empirical estimates are presented on a panel of seven OECD nations, which generally does not support the rational partisan cycle implications.

Korean Journal of Public Choice 1: 35-41, 2006

Abstract. Economists and political scientists are thought to disagree on many topics, including those in the field of public choice which overlap the two disciplines. To better determine if this is true, and on which public choice topics in particular there is disagreement or consensus, we circulated a survey of public choice questions to random members of the American Economics Association and American Political Science Association. Analysis of the returned questionnaires suggests normative differences appear to be more systematic than are differences in the beliefs of basic modeling assumptions, which may influence the conclusions drawn regarding the outcomes.

Southern Economic Journal 72: 492-501, 2005

Abstract. Economic freedom indicators have become quite popular recently as a useful tool to quantify the relationship between a country's institutions and its prosperity. Hanson (2003) criticizes these types of studies for: (1) failing to adequately distinguish between different proxies for economic freedom, (2) not considering the potential for endogeneity, and (3) for accepting significance of economic freedom's ability to promote prosperity even though regression analysis generates "nonsensical" results. Closer inspection reveals that most of his arguments are questionable, do not apply to much of the literature, or are not original, and that he is guilty of misinterpreting his own econometric evidence relating freedom to the level of GDP.

Economics and Politics 17: 331-350, 2005

Abstract. The theory of opportunistic political business cycles predicts incumbent politicians will alter their economic policies to spur short-run growth to attract additional votes for the upcoming election. There has not been much emphasis on the possibility of historical political business cycles prior to the Keynesian Revolution. No study has yet undertaken a systematic approach to testing for policy cycles during this period. Our study will bridge this gap by considering cycles in monetary policy for the periods of 1879-1914 until the start of Fed operations, and 1914-1932 until abandonment of the gold standard. To properly test for political cycles, it is necessary to develop reaction functions for the Treasury and compare against the reaction function later held by the Fed. This also reveals that creation of an independent monetary authority to be insulated from political pressures changed the manner in which policy was directed, aside from political issues. The evidence is not consistent, however, with monetary cycles closely tied to electoral concerns.

Explorations in Economic History 42: 529-546, 2005

Abstract. Little attention has been given to the cigarette bans that were enacted by many states in the late-19th and early-20th century. The recent study by Alston et al. (2002) represents the only empirical analysis of this issue. Alston et al., as typical for many other studies of historical regulatory movements, rely on legislative vote outcomes. In this article we examine the only occasion when a cigarette ban was put to a popular vote, in Oregon in 1930, and highlight the benefits of studying direct democratic votes to assess support for regulatory movements. To study the relationship between the anti-cigarette movement and other reform movements of the era, we compare the determinants of support for the cigarette ban with support for an Oregon alcohol prohibition referendum in 1933. Our results suggest that supporters of both reform movements were more likely to be found in counties with higher percentages of women, evangelical Protestants, and rural residents, which contrasts with Alston et al.’s study of state legislative behavior. In addition, greater support for alcohol prohibition in particular was found in counties with a larger percentage of immigrants and, to a lesser extent, more registered Republicans.

European Journal of Political Economy 21: 953-966, 2005

Abstract. Empiricists have used various editions of an economic freedom index (EFI) initially developed by Gwartney, Lawson and Block (1996) to examine the relationship between economic freedom and other socio-economic variables, such as growth or investment. The EFI quantifies the level of particular institutional characteristics thought to promote economic freedom and aggregates them into a single index value. The aggregation procedures utilized by Gwartney and Lawson in developing their index have changed over time and other scholars have promoted alternative methods. We examine several index aggregation procedures and show that each design may have potential methodological flaws which can greatly affect the empirical findings.

American Economist 49: 66-78, 2005

Abstract. Are Public Choice scholars' conclusions accepted by rank-and-file economists and political scientists? If not, why not? To answer these questions we use survey results to compare the conclusions of self-identified public choice scholars with those in the adjacent disciplines of economics and political science. We examine thirty-five propositions in seven areas: (1) assumptions about political actors; (2) normative beliefs about government and voting; (3) elections and economic performance; (4) parties, platforms, voting and preferences; (5) government's purposes and growth; (6) individual behavior--voting-with-feet and free riding; and (7) government and the market. We conclude that, although there is a consensus on many of the issues, there is substantial remaining disagreement on many questions that appears to be tied to the competing presuppositions of scholars in economics and political science.

Abstract. The weak government argument claims that fractionalized governments (coalition or minority governments) have more difficulty increasing their tax revenues or decreasing their spending than majority governments. This implies that weaker governments are associated with higher government deficits. In this paper, we test the implication of a fractionalization effect within the optimum financing model that suggests governments raise both their tax and seigniorage revenues to finance additional spending. We test the hypothesis for a sample of ten OECD countries for the period 1975-1997 and extend the period for the non-EU nations in the sample to cover 1975-2003. The empirical evidence presented here supports a positive relationship between the degree of fractionalization and seigniorage revenue. Our results also suggest that creation of seigniorage revenue is lower under right-wing governments and an independent central bank.

Economic Theory 26: 607-617, 2005

Abstract. The pairwise lottery system is a multiple round voting procedure which chooses by lot a winner from a pair of alternatives to advance to the next round where in each round the odds of selection are based on each alternative's majority rule votes. We develop a framework for determining the asymptotic relative likelihood of the lottery selecting in the final round the Borda winner, Condorcet winner, and Condorcet loser for the three alternative case. We also show the procedure is equivalent to a Borda lottery when only a single round of voting is conducted. Finally, we present an alternative voting rule which yields the same winning probabilities as the pairwise lottery in the limiting case as the number of rounds of the pairwise lottery becomes large.

AWARDED INAUGURAL GORDON TULLOCK PRIZE FOR BEST ARTICLE IN PUBLIC CHOICE BY YOUNGER SCHOLAR

Public Choice 118: 87-103, 2004

Abstract. The importance of primary elections is considered within the context of U.S. Senate elections where senators serve overlapping terms and voters are assumed to balance their two senators against each other. Voters behave strategically in the primaries but convergence to the median position is not achieved except as a knife-edge result. More generally, constraints in the party space prevent the party of the sitting senator from obtaining the median's preference allowing the opposition party to nominate a candidate further away from the median while still capturing the median voter. Empirical evidence supports the notion that senate divergence is a function of the state primary system.

The Independent Review 8: 419-425, 2004

Abstract. This paper outlines a theory in which incumbent candidates are shown to benefit from secret ballot laws. The role of private information is central to this result which can be explained as follows. First, bribery is expected to occur under an open ballot system but not under secret ballots since voters need not reveal their underlying preferences. Second, since vote-buying efficiency differs between candidates when voter distributions are unequal, candidates possessing an incumbency advantage are shown to be relatively inefficient and thus benefit from eliminating the vote market.

PS: Political Science and Politics 36: 797-799, 2003

Abstract. Critics of public choice analysis argue that these scholars are different. They are self-selected into the field, their arguments and conclusions are dominated by their personal ideological positions, and therefore other scholars do not accept their results. A survey of members of the Public Choice Society, American Economic Association, and American Political Science Association shows that most of the public choice propositions accepted by public choice scholars are also accepted by general economists, but less so by general political scientists.

Public Choice 117: 333-340, 2003

Abstract. Mancur Olson's institutional sclerosis hypothesis may be evident in the effects of interest groups on investment in physical capital. To test this proposition, we use cross sectional data on 42 countries for which information on the number of interest groups is available to estimate the effect of those groups on the share of GDP that goes into physical investment. The results indicate that interest groups have a different effect on physical investment in OECD and non-OECD countries. In the OECD countries, we find support for the hypothesis that interest groups harm investment in physical capital. In developing countries, interest groups either have no effect on physical investment or they have a slight beneficial impact.

Collective Choice: Essays in Honor of Mancur Olson, (Jac C. Heckelman and Dennis Coates(eds.)), Springer-Verlag, pp. 129-142, 2003

Abstract. We test for the impact of interest groups on economic growth among the OECD nations. We find more evidence of an absolute effect from the number of groups than a relative effect of the number of groups compared to the size of government. The effects are non-linear, as additional group formation is less harmful the more groups that already exist, although total growth would still be hampered by their presence. When controlling for the absolute number of groups, the relative measure has no additional impact, but controlling for the relative measure increases the estimated average effect of the absolute number of groups. In addition, the negative influence of a given number of interest groups on growth is lessened over time.

Social Choice and Welfare 21: 455-468, 2003

Abstract. An alternative voting system, referred to as probabilistic Borda rule, is developed and analyzed. The winning alternative under this system is chosen by lottery where the weights are determined from each alternative's Borda score relative to all Borda points possible. Advantages of the lottery include the elimination of strategic voting on the set of alternatives under consideration and breaking the tyranny of majority coalitions. Disadvantages include an increased incentive for strategic introduction of new alternatives to alter the lottery weights, and the possible selection of a Condorect loser. Normative axiomatic properties of the system are also considered. It is shown this system satisfies the axiomatic properties of the standard Borda procedure in a probabilistic fashion.

Economic Inquiry 41: 705-712, 2003

Abstract. We apply the economic theory of crime to the National Hockey League. We analyze a natural experiment in which games during the 1999-2000 season had either one or two referees. We determine the effect of the number of referees on both the number of penalties called and the number of rules infractions committed by players. The results indicate that increasing the number of referees leads to greater enforcement of the rules but does not significantly deter players from committing infractions.

International Journal of Business and Economics 1: 251-261, 2002

Abstract. The measurement of economic freedom is discussed. One particular set of freedom indices, developed by Heritage Foundation, is detailed including how the indices are constructed and potential problems in the methodological design. Comparisons are made for the different levels of freedom individual nations and regions achieve.

Public Choice 113: 179-189, 2002

Abstract. The partisan advantage and incumbency advantage versions of the rational partisan business cycle model are tested. Both models assume agents form weighted averages of partisan inflation rates during an election period, and differ only in how the weights are formed which alters the form of business cycles. The partisan advantage assumes fixed weights designated for both major parties in each election, whereas the incumbency advantage model assumes fixed weights for whichever is the incumbent and opposition party in each election. The symmetric representation assumes each election is a toss-up. Strongest support is found for a temporary symmetric effect on the level of output, but none of the models are supported for temporary electoral changes in growth or unemployment rates.

Canadian Journal of Economics 35, 568-585, 2002

Abstract. The Variable Rational Partisan Business Cycle model is developed, where agents face uncertainty regarding the timing and outcome of the next election. The model predicts that partisan influences on the economy persist throughout the government's rule, and are further influenced, in the opposite direction, by which party ruled in the previous period. Party popularity also has a causal effect on the business cycle. Finally, the effects from changes in election timing expectations are dependent on which party ruled in the previous period. Empirical results for output and unemployment in Canada, Germany and United Kingdom yield mixed support for the model.

Economics of Governance 3, 47-57, 2002

Abstract. The secret ballot was designed to eliminate the incentive for candidates to purchase votes through direct vote buying. When voters have private information on their candidate preferences, incumbent candidates will generally be less efficient in purchasing votes than their challengers. Incumbent candidates may therefore benefit from the elimination of direct vote purchasing. Viewed in this vein, passage of secret ballot laws by state legislatures can be seen as an institutional mechanism to protect their incumbency advantage, rather than as an act of necessary electoral reform to create fair elections and protect democracy.

Journal of Applied Economics 4, 329-360, 2001

Abstract. We estimate the influence of defense spending and military labor use on economic growth in African and Latin American countries. Our model integrates disparate implications from the defense economics literature into a Barro-style model of economic growth that controls for political and economic institutional variation across countries. Our panel data analysis of 44 countries in Africa and Latin America from 1975 to 1989 also controls for cross-country variation in lost human capital and public sector production inefficiencies. We find empirical evidence that the defense burden on economic growth is non-linear, with low levels of military spending increasing economic growth but higher levels of military spending decreasing growth. We also find evidence that the influence of military labor use on growth is non-linear, and exhibits a greater drag on economic growth in those countries with relatively higher levels of adult male education attainment.

European Journal of Political Economy 17, 835-852, 2001

Abstract. In this paper we analyze a multiple winner rent-seeking contest where the number of winners is set by a self-interested regulator. The winners receive a license to compete in a market. The structure of competition in the market influences the number of winners through the preferences of the regulator. The model implies that Cournot competitors are often better off than firms that are able to collude on output determination.

Journal of Macroeconomics 23, 261-275, 2001

Abstract. This paper develops a model where rational economic agents face uncertainty regarding the timing of elections and which party will emerge victorious should an election occur. This electoral uncertainty affects the macroeconomy, where the size and direction of the impacts are dependent on the party in power in the current and previous period, time elapsed since the last election, and party popularity. Leftist governments are expected to sustain higher output levels throughout their electoral term compared to rightwing governments, and the partisan differences will continue to increase until the next election.

Applied Economics 33, 417-426, 2001

Abstract. This paper develops an econometric intervention model representing the standard empirical approach to testing Alesina's (1987) Rational Partisan Theory implication that elections lead to short-term changes in output growth and unemployment. This intervention approach may be subject to two econometric difficulties. First, the cyclical nature of the autoregressive variables suggest the regression residuals may be serially correlated. Second, the election intervention variable may be endogenous to the cyclical variables. Empirical support for the model is mixed. Ordinary Least Squares estimates for both series produce a coefficient for the intervention variable which is of the predicted sign but not significant. The output growth regression results are robust to serial correlation and endogeneity concerns. For unemployment, controlling for serial correlation generates a significant coefficient, but adjusting for endogeneity does not.

Kyklos 53, 527-544, 2000

Abstract. The literature on economic freedom and growth has utilized summary measures of freedom to determine its general significance for economic growth. We believe the summary measures lead to misspecification problems. We utilize Heston-Summers growth data to determine which of the disaggregated categories of economic freedom lead to growth and find that only a few of the indexes significantly affect growth. These growth regressions generate new weights for aggregating the indexes into an overall summary measure. This new measure can be interpreted as deriving a relative ranking of nations that have a relatively higher presence of growth promoting economic freedoms and more restrictions on those economic freedoms that inhibit growth.

Public Choice 104, 319-327, 2000

Abstract. Empirical studies designed to test Olson's (1982) theory of institutional sclerosis are typically forced to rely upon proxies to measure the ability of special interest groups to engage in redistributive activities, which in turn are expected to hinder economic growth. This note shows that reliance on proxies biases the estimates toward zero. Here, instrumental variable routines are utilized which increase the estimated impact of special interests on the economy.

Journal of Applied Economics 3, 71-91, 2000

Abstract: The freedom and growth literature has consistently shown that nations which have fewer restrictions on private agents and transactions tend to higher levels of economic growth. It is less clear, however, whether freedom causes growth, growth causes freedom, or the two are jointly determined. To assess these possibilities, Granger-causality tests are performed on annual freedom indicators developed by the Heritage Foundation and national growth rates. The underlying component indexes, which include Trade Policy, Taxation, Government Intervention, Monetary Policy, Capital Flows and Foreign Investment, Banking, Wage and Price Controls, Property Rights, Regulation, and Black Markets, are also tested in addition to the summary freedom rating. The tests suggest the average level of freedom in a nation, as well as many of the specific underlying components of freedom, precedes growth. However, growth may precede one of the component indexes (Government Intervention), and no relationship is found to exist between growth and two of the indexes (Trade Policy and Taxation).

Journal of Economic Behavior and Organization 42, 97-108, 2000

Abstract. This paper presents a model in which voters attempt to balance the ideological positions of their senate representatives. Candidate positions are determined endogenously through a primary system. The median voter theorem is applied in each election to determine winning platforms based on voter preferences which may differ from their individual bliss points. Contrary to the original median voter theorem, the main implications of this model are that: (i) convergence on platform positions is not achieved in the general election, and (ii) extremist candidates defeat moderates in the stable long-run equilibrium.

American Politics Quarterly 28, 194-215, 2000

Abstract. Two theories within the legal-institutional framework concerning the Australian Ballot System's effect on voter turnout are analyzed. The vote market hypothesis assumes secret ballots were designed to end the buying and selling of votes. The secrecy the new ballot provided discouraged candidates from buying votes they could no longer verify, disproportionately affecting poor voters who would respond to this loss of payments by voluntarily abstaining. Alternatively, the theory of strategic disfranchisement predicts blacks and illiterates were specifically targeted for disfranchisement. The new ballots were expected to be more difficult for these voters to use and they would then be effectively prevented from participating in the active electorate. Although turnout decreases under either theory, the normative implications are very different. Controlling for race and illiteracy, regression analysis suggests poor voters were less likely to vote a secret ballot. A similar effect is not found for black and illiterate voters when controlling for income. The evidence is thus more consistent with the vote market hypothesis than a pure disfranchisement effect.

Quarterly Journal of Business and Economics 38, 45-56, 1999

Abstract. Rational partisan theory predicts macroeconomic fluctuations are triggered by possible changes in government policies due to elections. Empirical testing may fall prey to an endogeneity problem when incumbent governments determine the timing of an election and voters respond to current economic conditions in their choice of party support. Hausman tests suggest elections in Britain are endogenous to growth and stronger support is found for rational partisan theory using an instrumental variable routine.

Journal of Public Finance and Public Choice 17, 11-18, 1999

Abstract. Previous empirical studies designed to test the rational expectations partisan model of Alesina [1987] have generally looked for changes in real macroeconomic variables following a change in party power (incumbent party loss), whereas the model predicts these variables should fluctuate in a predictable manner even when the incumbent party is reelected. It is shown in this paper that the previous evidence is supportive of a partisan policy model where agents employ adaptive expectations, in which case only changes in party power lead to partisan economic fluctuations of real variables.

Public Choice Interpretations of American Economic History (Jac C. Heckelman, John C. Moorhouse, and Robert Whaples (eds.)), Kluwer Academic Press 147-161, 1999

Abstract. Between 1914 and 1980 state-chartered banks were free to accept or forgo the costs and benefits of Federal Reserve membership. Their decisions were sensitive to changes in the burden of the Fed's reserve requirements caused by fluctuations in interest rates. But large banks were less likely than small banks to change their membership status, especially after the Fed acquired discretion over its reserve requirements in 1935. These choices fall within the theory of clubs and illustrate rent seeking, voting with the feet, and the exploitation of the great by the small. We develop a model of the Fed's determination of the conditions of membership subject to expected bank responses and then formalize the membership decisions of profit-seeking banks taking account of their possible influences on the Fed. In essence, all banks are likely to vote with their feet depending on membership costs, but small banks may free ride on large bank lobbying of the Fed for reduced reserve ratios. This effect should be stronger after the New Deal enhancements of Fed discretionary powers.

Applied Economics Letters 5, 789-791, 1998

Abstract. By modifying Berument's divided government-optimum financing model to include partisan interests, it is found that when the Democratic party controls both the Congress and Presidency, real monetary base grows at a higher rate than when the Republican party controls both branches. In addition, it is found that monetary base grows at the slowest rate when neither party controls both branches, supporting a gridlock version of divided government.

Economics & Politics 10, 297-309, 1998

Abstract. The theory of political business cycles predicts economies will experience a short-run expansion during an election period. Cross-sectional evidence from 1870, 1880, 1890, 1900, and 1910, does not reveal statistically significant differences in gainful employment rates between states with and without a gubernatorial election in that year. Pooled regression analysis suggests gubernatorial elections are positively correlated with the state employment rate, but an annual fixed effect model designed to account for differences in the measurement of gainful employment mitigates this conclusion.

The Social Science Journal 35, 435-443, 1998

Abstract. This article distinguishes between two types of vote buying mechanisms. If vote choices can be monitored, vote buyers will not discriminate amongst prospective voters, regardless of how they are expected to vote. If voting is secret, a vote buyer will pay opposition voters not to vote which forces the opposition to pay its own voters to ensure they do vote. This implies the secret ballot may be less effective in curbing bribery than originally thought.

Social Science Research 26, 121-134, 1997

Abstract. The ecological fallacy literature suggests aggregate data cannot be used for microlevel inference. Building upon an aggregated logit model developed by Kelejian (1995), I am able to show that the estimated coefficients from aggregate data regressions are directly related to the true underlying microcoefficients, so meaningful interpretations can still be made. It is also suggested that in the cases where aggregation bias can be rejected, the microcoefficients can be directly estimated. An application of the model is shown using state-level data for historical elections in which survey data are unavailable.

Public Choice 82, 107-124, 1995

Abstract. Secrecy in the voting process eliminated an important motivation for voting. No longer able to verify the voters' choices, political parties stopped offering payments in return for votes. Within the rational voter framework, it will be shown that these payments were a prime impetus for people to vote. Without a vote market to cover their voting costs, many voters were rational to stay away from the polls. This hypothesis is supported through a series of empirical tests culminating in a multivariate legislative regression. When other electoral laws are controlled for, the secret ballot accounts for 7 percentage points lower Gubernatorial turnout.