Rui Nuno Baleiras

Behavioral and Institutional Determinants of Political Business Cycles

The link between business cycles and the democratic politicalsystem has long been recognized by economists. However, thedeterminants of political business cycles are not well understood.We discuss several institutional and behavioral determinants ofthose cycles, such as revolving-door appointments, term limits andpreferences of the incumbent politician, electorate and businesscommunity concerning the intertemporal pattern of publicexpenditure. We show how they affect the cycles amplitude in thecontext of a rational-expectations model.

Electoral defeats and local political expenditure cycles

Abstract A new explanation is offered for a political business cycle on local public expenditure with rational, forward-looking voters and an endogenous electoral success probability. The cycle results from the incumbents concern with her welfare in case of electoral defeat.

To Fragment or to Consolidate Jurisdictions: the Optimal Architecture of Government

Fiscal decentralisation is a hot issue worldwide. Within the European Union, there are even opposing tendencies with respect to the assignment of responsibilities between government tiers. This is a textbook paper aiming to provide a pedagogic introduction to the economics of government formation. Government size and district boundaries are endogenously set. Through a unified diagrammatic framework, the paper stresses the impact many politico-economic factors are likely to exert upon those endogenous variables. The list includes heterogeneity in demand for and supply of local public goods, cost sharing, scale economies, interjurisdictional spillovers, mobility of consumer-voters, congestion degrees, governance costs, and second-best finance. The analysis thus provides a foundation for a vertical system of multifunction governments very much in the pioneering spirit of Mancur Olson and Wallace Oates.