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Dynamic Government Performance: Honeymoons and Crises of Confidence

Published online by Cambridge University Press:  20 February 2012

London School of Economics and Political Science
London Business School
Torun Dewan is Professor in Political Science, London School of Economics and Political Science, Houghton Street, London WC2A 2AEUnited Kingdom (
David P. Myatt is Professor of Economics, London Business School, Regent's Park, London NW1 4SAUnited Kingdom (


We use a formal theoretical framework to explore the interplay between a government's longevity and its performance. Ministers perform well when their careers are valuable; this is so when the government's duration is expected to be long; the government's survival depends on its popularity; and, finally, that popularity depends on its ministers’ performance. The feedback loop between performance and longevity means that multiple rational-expectations equilibria can arise: Ministers work hard for a popular government, but divert efforts elsewhere if they believe the government is doomed; these alternatives are both self-fulfilling prophecies. However, the presence of (perhaps small) random events that buffet the performance and popularity of a government is sufficient to pin down a unique equilibrium. We explore the dynamics that arise: A crisis of confidence involving the rapid collapse of a government's performance is sparked when a sequence of negative shocks push the popularity of the government below a unique critical threshold.

Research Article
Copyright © American Political Science Association 2012

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