1. Eryüruk G., and Walden M., "Economic and Political Determinants for Local Highway Spending in North Carolina," Growth and Change, (2011).
Public spending, because it is influenced by elected officials, can be swayed by political considerations as well as socioeconomic factors. Previous studies have confirmed the importance of political measures in the allocation of general public spending as well in spending for infrastructure and highway projects. This study examines the determinants of the allocation of state highway funds in North Carolina to counties during the period 1990-2005. Determinants were divided between socioeconomic measures capturing population, job market, property, and road conditions, and political factors related to the party affiliation and county support of the governor and a power ranking of local legislators. Only socioeconomic measures were found to be related to the allocation of new road construction funds. However, both socioeconomic and political factors were statistically linked to the distribution of highway maintenance funds. Still, state decision-makers appear to primarily use highway funds to narrow income disparities between counties.
2. Athey, S., J. Levin., and E. Seira, "Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions, " Quarterly Journal of Economics, 126 ( (2011): 207-257.
We study entry and bidding patterns in sealed bid and open auctions with heterogeneous bidders. Using data from U.S. Forest Service timber auctions, we document a set of systematic effects of auction format: sealed bid auctions attract more small bidders, shift the allocation towards these bidders, and can also generate higher revenue. We show that a private value auction model with endogenous participation can account for these qualititive effects of auction format. We estimate the model's parameters and show that it can explain the quantitative effects as well. Finally, we use the model to provide an assessment of bidder competitiveness, which has important consequences for auction choice.
3. Duggan, J., and C. Martinelli, " A Spatial Theory of Media Slant and Voter Choice," Review of Economic Studies, 78 (2011): 640-666.
We develop a theory of media slant as a systematic filtering of political news that reduces multidimensional politics to the one-dimensional space perceived by voters. Economic and political choices are interdependent in our theory: expected electoral results influence economic choices, and economic choices in turn influence voting behavior. In a two-candidate election, we show that media favoring the frontrunner will focus on issues unlikely to deliver a surprise, while media favoring the underdog will gamble for resurrection. We characterize the socially optimal slant and show it coincides with the one favored by the underdog under a variety of circumstances.
4. Elbittar, A., A. Gomberg, and L. Sour, "Group Decision-Making in Ultimatum Bargaining: An Experimental Study," The B.E. Journal of Economic Analysis & Policy (Contributions), 11-1 (2011):1-33.
Many rent-sharing decisions in a society are result from a bargaining process between groups of individuals (such as between the executive and the legislative branches of government, between legislative factions, between corporate management and shareholders, etc.). The purpose of this work is to conduct a laboratory study of the effect of different voting procedures on groupdecision-making in the context of ultimatum bargaining. An earlier study (Bornstein and Yaniv, ) has suggested that when the bargaining game is played by unstructured groups of agents, rather than by individuals, the division of the payoff is substantially affected in favor of the ultimatum-proposers. Our theoretical arguments suggest that one explanation for this could be implicit voting rules within groups. We propose to explicitly structure the group decision-making as voting and study the impact of different voting rules on the bargaining outcome.
5. Kaplan, D., E. Piedra and E. Seira, "Entry Regulation and Business Start-ups: Evidence from Mexico," Journal of Public Economics, 95-11 (2011): 150-151.
We estimate the effect on business start-ups of a program that significantly speeds up firm registration procedures. The program was implemented in Mexico in different municipalities at different dates. Our estimates suggest that new start-ups increased by about 5% per month in eligible industries, and we present evidence supporting robustness and a causal effect interpretation. Most of the effect is temporary, concentrated in the first 15 months after implementation. The estimated effect is much smaller than World Bank and Mexican authorities claim it is, which suggests attention in business deregulation may be over emphasized.
6. Kehoe, T., and Meza, F., "Catch-Up Growth followed by Stagnation: Mexico, 1950-2010," Latin American Journals of Economics, 48-2 (2011): 227-268.
In 1950 Mexico entered an economic takeoff and grew rapidly for more than 30 years. Growth stopped during the crises of 1982-1995, despite major reforms, including liberalization of foreign trade and investment. Since then growth has been modest. We analyze the economic history of Mexico 1877-2010. We conclude that the growth 1950-1981 was driven by urbanization, industrialization, and education and that Mexico would have grown even more rapidly if trade and investment had been liberalized sooner. If Mexico is to resume rapid growth—so that it can approach U.S. levels of income—it needs further reforms.
7. Meza, F., and C. Urrutia, " Financial Liberalization, Structural Change and Real Exchange Rate Appreciations," Journal of International Economics, 85-2 (2011): 317-328.
We account for the appreciation of the real exchange rate in Mexico between 1988 and 2002 using a two sector dynamic general equilibrium model of a small open economy with two driving forces: (i) differential productivity growth across sectors and (ii) a decline in the cost of borrowing in foreign markets. These two mechanisms account for 60 percent of the decline in the relative price of tradable goods and explain a large fraction of the reallocation of labor across sectors. We do not find a significant role for migration remittances, foreign reserves accumulation, government spending, terms of trade, or import tariffs.
8. Schnedler, W. and R. Vadovic, "Legitimacy of Control," Journal of Economics & Management Strategy, 20-4 (2011): 985-1009.
Control sometimes triggers negative responses. While there is empirical evidence for such negative reactions and theories that can explain them, it remains to be examined when they occur. We conjecture that these negative responses disappear if control is legitimate, i.e., if it averts anti-social behavior. Specifically, we predict that fewer individuals respond negatively to control if control prevents selfishness or theft. We confirm these predictions in an experiment.
9. Servátka, M., S. Tucker, and R.Vadovic, "Words Speak Louder Than Money," Journal of Economic Psychology,32-5 (2011): 700-709.
Should one use words or money to foster trust of the other party if no means of enforcing trustworthiness are available? This paper reports an experiment studying the effectiveness of two types of mechanisms for promoting trust: a costly gift and a costless message as well as their mutual interaction. We nest our findings in the standard version of the investment game. Our data provide evidence that while both stand-alone mechanisms enhance trust, a gift performs significantly worse than a message. Moreover, when a gift is combined with sending a message, it can be counterproductive.
10. Servátka, M., S. Tucker, and R.Vadovic, "Building Trust One Gift at a Time," Special Issue on Fairness in Games, 2-4 (2011): 412-433.
This paper reports an experiment evaluating the effect of gift giving on building trust. We have nested our explorations in the standard version of the investment game. Our gift treatment includes a dictator stage in which the trustee decides whether to give a gift to the trustor before both of them proceed to play the investment game. We observe that in such case the majority of trustees offer their endowment to trustors. Consequently, receiving a gift significantly increases the amounts sent by trustors when controlling for the differences in payoffs created by it. Trustees are, however, not better off by giving a gift as the increase in the amount sent by trustors is not large enough to offset the trustees’ loss associated with the cost of giving a gift.