Uncertainty, Electoral Incentives and Political Myopia

Bibliographic Data

ID9705340
AuthorsAlessandra Bonfiglioli (0000-0002-2165-0067, Institute for Economic Analysis (CSIC) and Barcelona GSE), Gino Gancia (0000-0002-9375-261X, CREI and Barcelona GSE)
Year2013
Volume123
Issue568
Pages373-400
Publication date2013-05-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12029
OpenAlexW2068109353
LanguageEN
Citations received17
References cited46

We study the determinants of political myopia in a rational model of electoral accountability with informational frictions and uncertainty. When politicians' ability is ex ante unknown and policy choices are unobservable, elections improve political accountability and selection. However, incumbents underinvest in costly policies with future returns to signal high ability and increase re-election probability. Surprisingly, uncertainty reduces political myopia and may increase social welfare. We also address the socially optimal political rewards and the desirability of a one-term limit. Our predictions are consistent with several stylised facts and with a new empirical observation: aggregate uncertainty is positively correlated with fiscal discipline

Accountability · Econometrics · Economics · Ex-ante · Incentive · Macroeconomics · Market economy · Microeconomics · Political science · Politics · Public economics · Unobservable · Welfare · Electoral Systems and Political Participation · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth