Hostname: page-component-848d4c4894-wzw2p Total loading time: 0 Render date: 2024-05-22T02:10:41.878Z Has data issue: false hasContentIssue false

Dynamic Government Performance: Honeymoons and Crises of Confidence

Published online by Cambridge University Press:  20 February 2012

TORUN DEWAN*
Affiliation:
London School of Economics and Political Science
DAVID P. MYATT*
Affiliation:
London Business School
*
Torun Dewan is Professor in Political Science, London School of Economics and Political Science, Houghton Street, London WC2A 2AEUnited Kingdom (t.dewan@lse.ac.uk).
David P. Myatt is Professor of Economics, London Business School, Regent's Park, London NW1 4SAUnited Kingdom (dmyatt@london.edu).

Abstract

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.

Type
Research Article
Copyright
Copyright © American Political Science Association 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Achen, C.H., and Bartels, L.M.. 2004. “Blind Retrospection: Electoral Responses to Droughts, Flu and Shark Attacks.” Princeton University. MimeoGoogle Scholar
Alesina, A., and Spear, S.E.. 1988. “An Overlapping Generations Model of Electoral Competition.” Journal of Public Economics 37 (3): 359–79.CrossRefGoogle Scholar
Alt, J., Bueno de Mesquita, E., and Rose, S.. 2011. “Accountability and Competence in Elections: Theory and Evidence from US Term Limits.” Journal of Politics 73 (1): 116.Google Scholar
Ashworth, S. 2005. “Reputational Dynamics and Political Careers.” Journal of Law, Economics, and Organization 21 (2): 441–66.CrossRefGoogle Scholar
Banks, J.S., and Sundaram, R.K.. 1993. “Adverse Selection and Moral Hazard in a Repeated Elections Model.” In Political Economy: Institutions, Competition, and Representation, eds. Barnett, W. A., Hinich, M. J., and Schofield, N. J.. Cambridge: Cambridge University Press, 295312.Google Scholar
Banks, J.S., and Sundaram, R.K.. 1998. “Optimal Retention in Agency Problems.” Journal of Economic Theory 82 (2): 293323.Google Scholar
Barro, R.J. 1973. “The Control of Politicians: An Economic Model.” Public Choice 14 (1): 1942.CrossRefGoogle Scholar
Barro, R.J. 1996. “Democracy and Growth.” Journal of Economic Growth 1 (1): 127.Google Scholar
Bejar, S., Mukherjee, B., and Moore, W.H.. 2011. “Time Horizons Matter: The Hazard Rate of Coalition Governments and the Size of Government.” Economics of Governance 12 (3): 201–35.Google Scholar
Berlinski, S., Dewan, T., and Dowding, K.. 2010. “The Length of Ministerial Tenure in the UK, 1945–97.” Journal of Politics 74 (2): 559–71.CrossRefGoogle Scholar
Besley, T., and Case, A.. 1995. “Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits.” Quarterly Journal of Economics 110 (3): 769–98.Google Scholar
Besley, T., and Case, A.. 2003. “Political Institutions and Policy Choices: Evidence from the United States.” Journal of Economic Literature 41 (1): 773.Google Scholar
Besley, T.J. 2004. “Joseph Schumpeter Lecture: Paying Politicians: Theory and Evidence.” Journal of the European Economic Association 2 (2/3): 193215.Google Scholar
Browne, E.C., Frendreis, J.P., and Gleiber, D.W.. 1984. “An ‘Events’ Approach to the Problem of Cabinet Stability.” Comparative Political Studies 17 (2): 167–97.CrossRefGoogle Scholar
Browne, E.C., Frendreis, J.P., and Gleiber, D.W.. 1986. “The Process of Cabinet Dissolution: An Exponential Model of Duration and Stability in Western Democracies.” American Journal of Political Science 30 (3): 628–50.Google Scholar
Callander, S. 2011. “Searching for Good Policies.” American Political Science Review 105 (4): 643–62.Google Scholar
Carlsson, H., and van Damme, E.. 1993. “Global Games and Equilibrium Selection.” Econometrica 61 (5): 9891018.Google Scholar
Carpenter, D.P. 2002. “Groups, the Media, Agency Waiting Costs, and FDA Drug Approval.” American Journal of Political Science 46 (3): 490505.Google Scholar
Carpenter, D.P. 2004. “Protection without Capture: Product Approval by a Politically Responsive, Learning Regulator.” American Political Science Review 98 (4): 613–31.Google Scholar
Coviello, D., and Gagliarducci, S.. 2010. “Tenure in Office and Public Procurement.” Unpublished paper.CrossRefGoogle Scholar
Cox, G.W., and Thies, M.F.. 2000. “How Much Does Money Matter? ‘Buying Voters’ in Japan, 1967–1990.” Comparative Political Studies 33 (1): 3757.CrossRefGoogle Scholar
Dal Bó, E., and Rossi, M.A.. 2008. Term Length and Political Performance. NBER Working Paper No. 14511.Google Scholar
Dewan, T., and Dowding, K.. 2005. “The Corrective Effect of Ministerial Resignations.” American Journal of Political Science 49 (1): 4656.CrossRefGoogle Scholar
Dewan, T., and Myatt, D.P.. 2007a. “Leading the Party: Coordination, Direction and Communication.” American Political Science Review 101 (4): 825–43.Google Scholar
Dewan, T., and Myatt, D.P.. 2007b. “Scandal, Protection, and Recovery in the Cabinet.” American Political Science Review 101 (1): 6377.Google Scholar
Dewan, T., and Myatt, D.P.. 2010. “The Declining Talent Pool of Government.” American Journal of Political Science 54 (2): 267–86.Google Scholar
Dewan, T., and Myatt, D.P.. 2011. “Selection, Performance, and Government Longevity: The Good, the Bad, and the Unique.” Presented at the annual meeting of the Midwest Political Science Association, Chicago.Google Scholar
Dick, A.R., and Lott, R.J.. 1993. “Reconciling Voters’ Behavior with Legislative Term Limits.” Journal of Public Economics 50 (1): 114.Google Scholar
Diermeier, D., and Stevenson, R.T.. 2000. “Cabinet Terminations and Critical Events.” American Political Science Review 94 (3): 627–40.Google Scholar
Eggers, A., and Hainmueller, J.. 2009. “MPs for Sale? Returns to Office in Post-War British Politics.” American Political Science Review 103 (4): 513–33.Google Scholar
Fearon, J.D. 1999. “Electoral Accountability and Control of Politicians: Selecting Good Types versus Sanctioning Poor Performance.” in Democracy, Accountability, and Representation, eds. Przeworski, A., Stokes, S. C., and Manin, B.. Cambridge: Cambridge University Press, 5597.Google Scholar
Ferejohn, J. 1986. “Incumbent Performance and Electoral Control.” Public Choice 50 (1): 525.Google Scholar
Ferraz, C., and Finan, F.. 2009. Electoral Accountability and Corruption: Evidence from the Audits of Local Governments. NBER Working Paper No. 14937.Google Scholar
Fisher, S.D., and Myatt, D.P.. 2002. “Tactical Coordination in Plurality Electoral Systems.” Oxford Review of Economic Policy 18 (4): 504–22.Google Scholar
Hallerberg, M., and Marier, P.. 2004. “Executive Authority, the Personal Vote, and Budget Discipline in Latin American and Caribbean Countries.” American Journal of Political Science 48 (3): 571–87.Google Scholar
Huber, J.D., and Martinez-Gallardo, C.. 2008. “Replacing Cabinet Ministers: Patterns of Ministerial Stability in Parliamentary Democracies.” American Political Science Review 102 (2): 169–80.Google Scholar
Indridason, I., and Kam, C.. 2008. “Cabinet Reshuffles and Ministerial Drift.” British Journal of Political Science 38 (4): 621–56.Google Scholar
Johnson, J.M., and Crain, W.M.. 2004. “Effects of Term Limits on Fiscal Performance: Evidence from Democratic Nations.” Public Choice 119 (1/2): 7390.Google Scholar
Kremer, M., and Morcom, C.. 2000. “Elephants.” American Economic Review 90 (1): 212–34.Google Scholar
Laver, M. 2003. “Government Termination.” Annual Review of Political Science 6: 2340.Google Scholar
Lupia, A., and Strøm, K.. 1995. “Coalition Termination and the Strategic Timing of Legislative Elections.” American Political Science Review 89 (3): 648–85.Google Scholar
Morris, S., and Shin, H.S.. 1998. “Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks.” American Economic Review 88 (3): 587–97.Google Scholar
Morris, S., and Shin, H.S.. 2003. “Global Games: Theory and Applications.” In Advances in Economics and Econometrics, the Eighth World Congress, eds. Dewatripont, M., Hansen, L., and Turnovsky, S.. Cambridge: Cambridge University Press, 56114.Google Scholar
Myatt, D.P. 2007. “On the Theory of Strategic Voting.” Review of Economic Studies 74 (1): 255–81.Google Scholar
Myatt, D.P., Shin, H.S., and Wallace, C.. 2002. “The Assessment: Games and Coordination.” Oxford Review of Economic Policy 18 (4): 397417.Google Scholar
Padró i MiquelGerard, G. Gerard, G., and Snyder, J.M.. 2006. “Legislative Effectiveness and Legislative Life.” Legislative Studies Quarterly 31 (1): 347–81.CrossRefGoogle Scholar
Rowat, C., and Dutta, J.. 2007. “The Commons with Capital Markets.” Economic Theory 31 (1): 225–54.Google Scholar
Rowat, C., and Dutta, J.. 2011. “The Road to Extinction: Commons with Capital Markets.” University of Birmingham. Unpublished manuscript.Google Scholar
Spiller, P.T., and Tommasi, M.. 2007. The Institutional Foundations of Public Policy: The Case of Argentina. Cambridge: Cambridge University Press.Google Scholar
Tornell, A., and Velasco, A.. 1992. “The Tragedy of the Commons and Economic Growth: Why does Capital Flow from Poor to Rich Countries.” Journal of Political Economy 100 (6): 1208–31.Google Scholar
Warwick, P. 1992. “Economic Trends and Government Survival in West European Parliamentary Democracies.” American Political Science Review 86 (4): 875–87.Google Scholar
Wolfers, J. 2007. Are Voters Rational? Evidence From Gubernatorial Elections. Stanford GSB Working Paper No.1730.Google Scholar