The Political Economy of Constitutional Choice: A Study of the 2005 Kenyan Constitutional Referendum

Recent studies of the linkages between the wealth of nations and the institutions of governance suggest that concentrating political power in a monarchy or a ruling coalition impedes economic growth and, moreover, that while power-diffusing reforms can enhance the wellbeing of society in general, opposition by groups benefitting from the status quo is predictable. In November 2005, Kenyans rejected a proposed constitution that, despite promises made by their new chief executive, would not have lessened the powers of the presidency. Using a unique, constituency-level dataset on the referendum vote, we estimate a model of the demand for power diffusion and find that ethnic groups' voting decisions are influenced by their expected gains and losses from constitutional change. The results also highlights the importance of ethnic divisions in hindering the power-diffusion process, and thus establish a channel through which ethnic fragmentation adversely impacts economic development.

Intergenerational Conflict and the Political Economy of School Spending

In this paper we use survey data to examine support among voters from different age cohorts for public school spending. The survey asked potential voters in California how they intended to vote on two initiatives, one a statewide initiative that would increase spending on public schools throughout the state and the other a local initiative that would increase spending only in the respondent's local school district. We find that older voters without children generally oppose increases in state spending but are much more willing to support local spending. We examine two explanations for this voting pattern, namely the capitalization of local spending into housing values and intergenerational altruism. Our results do not strongly favor one explanation over the other. Consequently, we conclude that both factors (capitalization and intergenerational altruism) probably play important roles in sustaining support among older voters for local school spending.

Costly Revenue-Raising and the Case for Favoring Import-Competing Industries

A standard finding in the political economy of trade policy literature is that we should expect export-oriented industries to attract more assistance than import-competing industries. In reality, however, trade policy is heavily biased toward supporting import industries. This paper shows within a standard protection for sale framework, how the costliness of raising revenue via taxation makes trade subsidies less desirable and trade taxes more desirable. The model is then estimated and its predictions tested using U.S. tariff data. An empirical estimate of the costliness of revenue-raising is also obtained.

A Model of Rights

In this paper, we develop a simple model of the rights a government provides its citizenry. Rights are treated as public goods and taken as primitives in agents utility functions; each agent has preferences over the entire policy vector. We model the interaction among citi-zens and the government as a game in which an exogenous lobbying set makes contributions to the government to in uence policy formu-lation in the matter of rights. When examining contribution schedules comprising truthful Nash strategies, we find that members of the lob-bying set obtain rights closer to their most-preferred bundle, while the rights of non-lobbyers further diverge from their most-preferred bun-dle. Further, if the lobbying set comprises the entire population, the government s allocation of rights does not differ from the allocation achieved in the absence of contributions.

Environmental Policy in Majoritarian Systems

This paper sheds new light on the determination of environmental policies in majoritarian federal electoral systems such as the U.S., and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental policies. In majoritarian systems, where the legislature consists of geographically distinct electoral districts, the majority party (at either the national or the state level) favors its own home districts; depending on the location of polluting industries and the associated pollution damages, the majority party may therefore impose sub-optimally high or low pollution taxes due to a majority bias. We show that majority bias can influence the social-welfare ranking of alternative government policies and, in some cases, may actually bring distortionary policies closer to the first-best solution.

Stagnation and Change in Islamic History

There appear to be two seemingly contradictory images of economic change in the Islamic World and mixed evidence on whether Islamic societies have been open or conservative against modern ideas, technological advancements, and legal developments. Whereas a conservative attitude has been dominant in some societies and time periods, Muslims were at the forefront of scientific, technological, and legal developments in others. Rather than rely on ad hoc assumptions about the attitudes and characteristics of societies or the inherent qualities of new developments, this paper explains attitudes towards change by studying the political economy of the relationship between the rulers and the legal community. I extend recent theories of endogenous institutional change to develop a framework based on how rulers and legal community reacted to new developments immediately and how their strategic interaction unleashed an endogenous process toward change in the long run. Using this framework, I identify conditions under which new ideas, technologies, and legal developments have resulted in immediate change in Islamic societies. I also examine the process of change in the long run, whether and how immediate outcomes could be sustained over time as strategic interaction continued repeatedly.