Elections create incentives for politicians to manipulate policy to improve their re-election chances, and employment conditions are an important consideration for many voters. Politicians may opportunistically design policies that increase employment before elections, or postpone cuts until afterwards. I investigate electoral cycles in public sector employment around US gubernatorial elections. Taking advantage of the staggered nature of gubernatorial elections across states, I use both fixed effects models and a geographic discontinuity design that compares neighboring counties at the borders of states with different election cycles. In the period leading up to November each year, growth in both local and state government employment is higher in counties in states that experience gubernatorial elections compared to counties in states that do not, by up to half a percentage point or more. In the post-electoral period, employment growth is lower by comparable magnitudes in counties that just experienced an election. Both of these findings are consistent with manipulation in government employment. I also study heterogeneity across different institutional and political environments, private sector employment, Senate elections, and show that the results hold up to a range of robustness and placebo tests.

We use Hotelling's spatial model of competition to investigate the position‐taking behavior of political candidates under a class of electoral systems known as scoring rules, though the model also has a natural interpretation in the firm location context. Candidates choose ideological positions so as to maximize their support in society. Convergent Nash equilibria in which all candidates adopt the same policy were characterized by Cox (1987). Here, we investigate nonconvergent equilibria, where candidates adopt divergent policies. We identify a number of classes of scoring rules exhibiting a range of different equilibrium properties. For some of these, nonconvergent equilibria do not exist. For others, nonconvergent equilibria in which candidates cluster at positions spread across the issue space are observed. In particular, we prove that the class of convex rules does not have Nash equilibria (convergent or nonconvergent) with the exception of some derivatives of Borda rule. We also look at “two‐party” equilibria. Implications for the firm location model are discussed.

We examine the extent to which government ideology has influenced monetary policy in OECD countries since the 1970s. In line with important changes in the global economy and differences across countries, regression results yield heterogeneous inferences depending on the time period and the exchange rate regime/central bank dependence of the countries in the sample. Over the 1972-2010 period, Taylor rule specifications do not suggest a relationship between government ideology and monetary policy as measured by the short-term nominal interest rate or the rate of monetary expansion minus GDP trend growth. Monetary policy was, however, associated with government ideology in the 1990s: short-term nominal interest rates were lower under leftwing than rightwing governments when central banks depended on the directives of the government and exchange rates were flexible. Very independent central banks, however, raised interest rates when leftwing governments were in office. We describe the historical evidence for several individual countries. JEL-Codes: D720, E520, E580, C230.

We use Hotelling's spatial model of competition to investigate the position-taking behavior of political candidates under a class of electoral systems known as scoring rules, though the model also has a natural interpretation in the firm location context. Candidates choose ideological positions so as to maximize their support in society. Convergent Nash equilibria in which all candidates adopt the same policy were characterized by Cox (1987). Here, we investigate nonconvergent equilibria, where candidates adopt divergent policies. We identify a number of classes of scoring rules exhibiting a range of different equilibrium properties. For some of these, nonconvergent equilibria do not exist. For others, nonconvergent equilibria in which candidates cluster at positions spread across the issue space are observed. In particular, we prove that the class of convex rules does not have Nash equilibria (convergent or nonconvergent) with the exception of some derivatives of Borda rule. We also look at "two-party" equilibria. Implications for the firm location model are discussed. for helpful discussions and suggestions and also participants of the 1st ATE Symposium held on 12-13 December, 2013, at Massey University, Auckland. We thank John McCabe-Dansted for help with computational experiments. Last but not least we thank the anonymous referees for many useful suggestions.

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