Le Borgne , Eric and Lockwood, Ben (2001) Candidate entry, screening, and the political budget cycle. Working Paper. University of Warwick, Department of Economics, Coventry.

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Abstract

We investigate whether relevant private information about citizens’ competence in political office can be credibly revealed by their entry and campaign expenditure decisions, as opposed to choice of policy once in office. We find that this depends on whether voters and candidates have common or conflicting interests; only in the former case can entry be revealing in equilibrium. We apply these results to Rogoff’s (1990) model of the political budget cycle, allowing for candidate entry, as well as elections: as interests are common, low-ability candidates are screened out at the entry stage, and so there is no signaling via fiscal policy (i.e. no “political budget cycle”). In a variant of the Rogoff. model where citizens differ in honesty, rather than ability, interests are conflicting, and so the political budget cycle can persist in equilibrium.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HC Economic History and Conditions J Political Science > JA Political science (General)
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Political campaigns, Campaign funds, Information asymmetry, Representative government and representation
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	August 2001
Number:	No.582
Number of Pages:	41
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Description:	Original version, June 2000; revised August 2001
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URI:	http://wrap.warwick.ac.uk/id/eprint/1596

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