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Polarization and political negociations in a a changing world

Public economics

Senior Researcher : Antoine Loeper

Research Centre or Institution : Universidad Carlos III de Madrid.

Abstract

Policy makers must face a continuously changing environment. As time goes by, economic expansions turn into economic crises, demographic trends change … Public policies need to adapt to these shocks, but individual and firms need a stable and predictable policy environment to organize their activities. Therefore, public policies need to find the right trade-off between the need to react to a changing world and the need to provide a stable social and economic environment. The goal of this project is to analyze the political economy of this trade off.

The two most important papers that I have been working on during this project are the following.

The paper “Gridlock and Inefficient Policy Instruments” (published in the academic journal “Theoretical Economics” in 2019) analyzes the following question: what drives the ability of a political system to react in a satisfactory way to social and economic changes? We consider a situation in which a country must implement a policy intervention to address a crisis. The different political parties that have a say in the decision process must choose between two distinct interventions, one being more efficient than the other. For instance, a tax increase or a spending cut in the case of a fiscal crisis. The main question of this paper is the following: under which condition will the political parties agree to implement the most efficient and adequate intervention?

The paper “Voters and the Policy Stability versus Responsiveness Trade-off” considers the trade-off between policy flexibility and stability from a political economy perspective. The analysis shows that voters have a natural bias to elect the party ideologically aligned with the status quo, and that this bias tends to polarize parties on the ideological spectrum. 

 

Scientific Production
 
Magazine Articles 1
Communications at national conferences 1
Communications at international conferences 7

 

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