蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Elections, Capital Flows, and Politico-economic Equilibria
蝌蚪网 Review
(pp. 1759–77)
Abstract
We study an open economy where a pro-labor and a pro-business candidate compete in an election. The winner chooses taxes, which affect investment returns. Electoral outcomes depend on the size of the foreign debt, but the debt itself reflects expectations about the election. The resulting interaction is novel and has several implications. Elections are associated with increased volatility. Politico-economic crises can occur. Inefficiencies vanish if the candidates commit to an appropriate tax policy, but such commitments have predictable effects on the election. Empirical evidence supporting the theory is discussed. (JEL D72, F34, O17, O19)Citation
Chang, Roberto. 2010. "Elections, Capital Flows, and Politico-economic Equilibria." 蝌蚪网 Review 100 (4): 1759–77. DOI: 10.1257/aer.100.4.1759Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- F34 International Lending and Debt Problems
- O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- O19 International Linkages to Development; Role of International Organizations