Human Capital and Political Business Cycles

Akhmed Akhmedov ()
Additional contact information
Akhmed Akhmedov: CEFIR

No w0087, Working Papers from Center for Economic and Financial Research (CEFIR)

Abstract: Classical theory considers political business cycle as a result of either opportunistic behavior of government (opportunistic cycle) or aiming policy on certain constituency (partisan cycle). In this paper, we propose an alternative explanation of the phenomenon of political business cycle — experience of government. We propose an illustration that shows that elections infer cycles without any opportunism or ideology of incumbents. We also build a model with endogenous ego-rent. The model explains a channel to increase incentives, when none has commitment — governors need to develop skills to increase their value for public and increase probability to get re-elected. Using fiscal monthly data of Russian regions from 1996 to 2004, we got evidence both of positive effect of experience on performance and opportunistic component of the cycle. We also got evidence of diminishing return on experience.

Keywords: Elections; opportunistic business cycle; experience; sunk cost; Russian regions. (search for similar items in EconPapers)
JEL-codes: D72 E32 H72 P16 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-10
New Economics Papers: this item is included in nep-hrm, nep-mac, nep-pbe, nep-pol and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.cefir.ru/papers/WP87Akhmedov.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cfr:cefirw:w0087

Access Statistics for this paper

More papers in Working Papers from Center for Economic and Financial Research (CEFIR) Contact information at EDIRC.
Bibliographic data for series maintained by Julia Babich ().