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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. It has been presented in numerous places both in Europe and in the US, and is currently under review in an academic journal. 

 

Scientific Production
 
Magazine Articles 1
Communications at national conferences 4
Communications at international conferences 6

 

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