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This paper contributes to the research on the macroeconomic origins of conflict. Based on a sample of 133 low- and middle-income countries over a 30-year period, it analyses to what extent changes in a country’s commodity terms-of-trade (ToT) can explain an increase in the incidence and intensity of conflicts through their effect on aggregate income. While the evidence from previous studies on the link between macroeconomic conditions and conflict is rather inconclusive, we find a significant relationship. Our baseline model finds that a negative commodity ToT shock leads to an increase in the number of conflict events and fatalities. Moreover, the effect plays out over several years albeit with decreasing strength after the second year; and its magnitude is twice as large for Low-Income Countries and Fragile and Conflict-affected States when compared with the sample average. In addition, our results show that macroeconomic shocks are creating more violence in countries with higher inequality and in cases where fiscal policy faces relatively stronger constraints on financing a response to the initial shock to incomes. Our results are robust to a number of plausible variations in model specification. The paper’s results, in conjunction with previous studies that emphasize the economic cost of conflicts, suggest the presence of a fragility trap—a vicious cycle of worsening economic conditions and deteriorating conflicts. Effective policies and well-tailored external financial support could be expected to help countries address this challenge.

Macroeconomics --- Economics: General --- Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior --- Conflict --- Conflict Resolution --- Alliances --- Macroeconomic Analyses of Economic Development --- Economic & financial crises & disasters --- Economics of specific sectors --- Currency crises --- Informal sector --- Economics

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This paper presents evidence on the political and economic determinants of social sector spending from a panel dataset. The principal finding is that democratization in countries, as measured by within-country variation in subjective indices of democracy, is a significant predictor of government spending on education and health. The relationship is robust to controlling for a variety of factors and the estimated magnitudes suggest that an increase from the lowest to the highest rating for democracy for a country is associated with approximately 1 percent more central government spending and 3 percent more general government spending in social sectors, as a percent of GDP.

Public Finance --- Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior --- Publicly Provided Goods: General --- National Government Expenditures and Related Policies: General --- National Government Expenditures and Education --- National Government Expenditures and Health --- Education: General --- Public finance & taxation --- Education --- Total expenditures --- Education spending --- Expenditure --- Health care spending --- Expenditures, Public --- Gambia, The

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Why do firms lobby? This paper exploits the unanticipated sequestration of federal budget accounts in March 2013 that reduced the availability of government funds disbursed through procurement contracts to shed light on this question. Following this event, firms with little or no prior exposure to the federal accounts that experienced cuts reduced their lobbying spending. In contrast, firms with a high degree of exposure to the cuts maintained and even increased their lobbying spending. This suggests that, when the same number of contractors competed for a piece of a reduced pie, the more affected firms likely intensified their lobbying efforts to distinguish themselves from the others and improve their chances of procuring a larger share of the smaller overall. These findings are stronger in government-dependent sectors and when there is intense competition. The evidence is more consistent with a rent-seeking explanation for lobbying.

Finance: General --- Financial Risk Management --- Public Finance --- Political Economy --- Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior --- General Financial Markets: General (includes Measurement and Data) --- International Financial Markets --- National Government Expenditures and Related Policies: General --- Finance --- Public finance & taxation --- Competition --- Asset valuation --- Expenditure --- Financial markets --- Asset and liability management --- Asset-liability management --- Expenditures, Public --- United States

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This paper studies a principal-agent model of the relationship between an incumbent officeholder and the electorate, where the officeholder is initially uninformed about her ability. If officeholder effort and ability interact in the "production function" that determines performance in office, then an officeholder has an incentive to experiment-that is, raise effort so that performance becomes a more accurate signal of her ability. Elections reduce the experimentation effect, and the reduction in this effect may more than offset the positive "career-concerns" effect of elections on effort. Moreover, when this occurs, appointment of officeholders may Pareto-dominate elections.

Finance: General --- Public Finance --- Taxation --- Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior --- Positive Analysis of Policy-Making and Implementation --- Public Goods --- Professional Labor Markets --- Occupational Licensing --- Public Sector Labor Markets --- Innovation --- Research and Development --- Technological Change --- Intellectual Property Rights: General --- Taxation, Subsidies, and Revenue: General --- General Financial Markets: Government Policy and Regulation --- Technology --- general issues --- Public finance & taxation --- Finance --- Moral hazard --- Tax incentives --- Revenue administration --- Financial risk management --- Revenue

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We study vote buying by competing interest groups in a variety of electoral and contractual settings. While increasing the size of a voting body reduces its buyability in the absence of competition, we show that larger voting bodies may be more buyable than smaller voting bodies when interest groups compete. In contrast, imposing the secret ballot---which we model as forcing interest groups to contract on outcomes rather than votes---is an effective way to fight vote buying in the presence of competition, but much less so in its absence. We also study more sophisticated vote buying contracts. We show that, regardless of competition, the option to contract on both votes and outcomes is worthless, as it does not affect buyability as compared to contracting only on votes. In contrast, when interest groups can contract on votes and vote shares, we show that voting bodies are uniquely at risk of being bought.

Finance: General --- Taxation --- Criminology --- Social Choice --- Clubs --- Committees --- Associations --- Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior --- Positive Analysis of Policy-Making and Implementation --- General Financial Markets: General (includes Measurement and Data) --- Bureaucracy --- Administrative Processes in Public Organizations --- Corruption --- Taxation, Subsidies, and Revenue: General --- Finance --- Corporate crime --- white-collar crime --- Public finance & taxation --- Competition --- Tax incentives --- Financial markets --- Crime --- Taiwan Province of China --- Voting research. --- Elections --- Lobbying. --- Pressure groups. --- Corrupt practices.