Proceedings of the Institution of Mechanical Engineers, Part D: Journal of Automobile Engineering, Oct 8, 2020
The paper examines how is it possible for an incumbent political party to stay in power for long ... more The paper examines how is it possible for an incumbent political party to stay in power for long periods of time without having to trade-off rents for holding office. It presents a new way of explaining and measuring the real effects of rent-extraction on political re-election in local government. It models local government due to the different and exact way rent-extraction can be measured there; through pork-barrel spending on public goods upon which a political party is able to extract rents. Setting rents as an endogenous variable permits the model to evaluate their effect on political re-election and preservation of power. The paper alters certain typical assumptions of other political agency models in order to test its effects in a more realistic scenario of politics. The incumbent's decision on rents and public good production directly affects the state of the economy upon which the voters decide whether to re-elect the incumbent or not. Incumbents make their decisions based on observing the economic growth shock. In a repeated game setting an incumbent will always chose the optimal strategy with respect to the observed growth shock. This way, for high enough levels of economic growth an incumbent party may stay in office for an infinite amount of periods and keep maximizing rents with respect to the given constraints, without having to trade-off rents for holding office. The paper presents empirical evidence on United States gubernatorial and state legislature elections from 1992 to 2008 to evaluate the underlining theory.
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Papers by V. Mani