PERSISTENT IDEOLOGY AND THE DETERMINATION OF PUBLIC POLICY OVER TIME

Authors

  • Zheng Song

    1. Chinese University of Hong Kong, Hong Kong and Fudan University, China
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    • 1 This article is based on Chapter 2 of my dissertation at IIES, Stockholm University. I am deeply indebted to my advisor, Fabrizio Zilibotti, for his guidance and encouragement. I also thank anonymous referees, John Hassler, Giovanni Favara, Jose V. Rodriguez Mora, Kjetil Storesletten, and seminar participants at IIES, Oslo, and WISE for helpful comments. Financial supports from the China National Social Science Foundation (Grant 06CJL004) and from the 985 research platform at Fudan University are gratefully acknowledged. Please address correspondence to the author at his present address: Zheng Song, Booth School of Business, University of Chicago, 5807 S. Woodlawn Ave., Chicago, IL 60637. E-mail: zhengsong@chicagobooth.edu.


  • Manuscript received March 2008; revised June 2009.

Abstract

This article investigates how public policy responds to persistent ideological shifts in dynamic politico-economic equilibria. To this end, I develop a tractable model to analyze the dynamic interactions among public policy, individuals’ intertemporal choice, and the evolution of political constituency. My main finding is that a right-wing ideology may increase the size of government. Data from a panel of 18 OECD countries confirm that after controlling for the partisan effect, there is a positive relationship between the right-wing political constituency and government size. This is consistent with my theoretical prediction, but hard to explain by existing theories.

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