Electoral competition and politician turnover

Article Abstract:

In this paper, we analyze the selection by opportunistic parties of the candidates who run for election. We consider a setting with incomplete but symmetric information about the candidates' abilities, in which electoral campaigns provide voters with additional information about candidates. Parties care about selecting an appropriate candidate to win the election, while voters elect the best candidate conditional on their information. we first argue that in order to defeat an established very good candidate of its rival, a party may favor a new candidate with highly uncertain ability, rather than an established good candidate. Next, we establish that the discrepancy between the objective of parties and the objective of the electorate leads to inefficient conservatism in the selection of candidates, i.e. each party keeps its incumbents too often from the voters' viewpoint. [C] 2001 Elsevier Science B.V. All rights reserved. JEL classification: D72; D81 Keywords: Elections; Candidates; Incentives; Political campaigns

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Asymmetry in the EMS: New evidence based on non-linear forecasts

Article Abstract:

In this paper we provide new evidence on the hypothesis of German leadership and asymmetric performance in the EMS, in the framework of causality tests, using daily data. Given the evidence about non-linearity in financial series, we propose applying non-linear forecasting methods based on the literature on complex dynamic systems. Our analysis covers nine countries, and the sample period runs until 30 April 1998, so including the more recent events in the EMS history. A comparison of our results with those obtained from standard linear econometric techniques leads us to conclude that inference on causality based on our non-linear predictors would be preferable to that based on the standard linear approach. [C] 2001 Elsevier Science B.V. All rights reserved. JEL classification: C53; E43; F33 Keywords: Interest rates; European Monetary System; Non-linear forecasting

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Fixed-term contracts and the dynamics of labour demand

Article Abstract:

We estimate a model of labour demand that accounts for dynamics arising from the relative costs of hiring and firing workers on either indefinite-term contract (TTC) or fixed-term contract (FTC). We use a panel of 1000 French firms, for which we can measure the number of entries and exits for each type of contract between 1988 and 1992. Our estimates suggest that (1) it is much more costly to lay offworkers under ITC than to hire them; (2) it is much less costly to adjust the number of FTC than to adjust the number of FTC; (3) the asymmetry between hiring and lay off costs is more important for non-production than for production workers. [C] 2001 Elsevier Science B.V. All rights reserved. JEL classification: J23; J30; D21 Keywords: Fixed-term contracts; Adjustment costs; Dynamic labour demand

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