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A large theoretical and empirical literature explores whether politicians and political parties change their policy positions in response to voters' preferences. This paper asks the opposite question: do political parties affect public attitudes on important policy issues? Problems of reverse causality and omitted variable bias make this a difficult question to answer empirically. We study attitudes towards nuclear energy and immigration in Sweden using panel data from 290 municipal election areas. To identify causal effects, we take advantage of large nonlinearities in the function which assigns council seats, comparing otherwise similar elections where one party either barely wins or loses an additional seat. We estimate that a one seat increase for the anti-nuclear party reduces support for nuclear energy in that municipality by 18%. In contrast, when an anti-immigration politician gets elected, negative attitudes towards immigration decrease by 7%, which is opposite the party's policy position. Consistent with the estimated changes in attitudes, the anti-nuclear party receives more votes in the next election after gaining a seat, while the anti-immigrant party experiences no such incumbency advantage. The rise of the anti-immigration party is recent enough to permit an exploration of possible mechanisms using several ancillary data sources. We find causal evidence that gaining an extra seat draws in lower quality politicians, reduces negotiated refugee quotas, and increases negative newspaper coverage of the anti-immigrant party at the local level. Our finding that politicians can shape public attitudes has important implications for the theory and estimation of how voter preferences enter into electoral and political economy models.

This paper deals with tax-policy responses to quasi-hyperbolic discounting. Earlier research on optimal paternalism typically abstracts from capital mobility. If capital is mobile between countries, it may no longer be possible for national governments to control domestic savings via capital taxation (as in a closed economy). In this paper, we take a broad perspective on public policy responses to self-control problems by showing how these responses vary (i) between closed and open economies, (ii) between small open and large open economies, and (iii) depending on whether or not both source based and residence based capital taxes can be used.

The thesis consists of an introductory part and three self-contained papers. Paper [I] studies the determinants of the differences in expenditure on services for functionally impaired individuals among municipalities in Sweden. A spatial autoregressive model is used in order to test whether the decisions on the expenditure level in a neighboring municipality affect the municipality's own expenditure. The results show of spatial interaction among neighbors, possible due to mimicking. However, when controlling for differences among counties there is no evidence of spatial interaction. Therefore, the positive interaction first found can be interpreted either as a result of differences in the way county councils diagnose individuals or due to interaction among the neighbors in the same county. Paper [II] takes advantage of a new intergovernmental grant in two ways. First, the grant is used to study the effect on municipal spending related to the grant. Second, the grant is used to test a hypothesis of spatial interaction among municipalities due to mimicking behavior. The data used pertains to the periods before and after the introduction of the grant. A fixed-effects spatial lag model is used to study the spatial interactions among municipalities. The results show that before the grant, municipalities interact with their neighbors when setting the expenditure level, while there is no evidence of interaction in the second period. This would support the hypothesis that the grants provide information to the municipalities and the need for mimicking diminishes with the grant. Paper [III] examines whether local public expenditures on services to functionally impaired individuals crowd out other local public expenditures in Sweden. The hypothesis is tested on five different spending areas using a two-stage least squares (2SLS) fixed-effects model. While the results give no support for crowding out in the areas of social assistance, culture & leisure, and childcare & preschool, a negative relationship on spending for elderly & disabled care and on spending for education is found, suggesting that crowding out indeed occurs within the municipal sector. The negative relationships are significant both in a statistical and an economic sense.

The thesis consists of three papers, summarized as follows. "Female Policymakers and Educational Expenditures: Cross-Country Evidence" This paper investigates the influence of women in politics on decision-making using public educational expenditures as the outcome of interest. The results suggest that an increase in the share of female legislators by one percentage point increases the ratio of educational expenditures to GDP by 0.028 percentage points. The effect of female legislators on educational policies is strengthened accounting for forms of government, but not influenced by left-wing government, electoral rules, parliamentary system and non-marriage. Moreover, this study supports the hypothesis that the identity of the legislator matters for policy. "Women in Politics: A New Instrument for Studying the Impact of Education on Growth" This paper tests the growth model of distance to the technological frontier, which states that an economy closer to the technological frontier should invest more in skilled labor since innovation is a skill-intensive activity. In contrast to Vandenbussche, Aghion, and Meghir (henceforth VAM) (2006), I use the proportion of female legislators as an instrument for skilled labor, instead of lagged educational expenditures. The results with the new instrument are consistent with the theoretical prediction and the previous results of VAM (2006). "Do Gender Quotas Influence Women's Representation and Policies?" This paper investigates the effect of applying gender quotas on policy decisions. The results show that an increase in the share of female legislators by one percentage point increases the ratio of government expenditure on health and social welfare to GDP by 0.18 and 0.67 percentage points, respectively. The robustness check supports that the effect of quotas on female legislators is likely to be translated into the influence of female policymakers on social welfare.

This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures. Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods. Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation. Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base. In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.

The thesis consists of three self-contained essays on public policy in the macroeconomy. "Government Policy in the Formal and Informal Sectors" quantitatively investigates the interaction between the firms' choice to operate in the formal or the informal sector and government policy on taxation and enforcement. Taxes, enforcement, and regulation are incorporated in a general equilibrium model of firms differing in their productivities. The model quantitatively accounts for the keys aspects in the data and allows me to back out country-specific enforcement levels. Some policy reforms are analyzed and the welfare gains can be fairly large. "Determinants of Capital Intensive and R&D Intensive Foreign Direct Investment" studies the determinants of capital intensity and technology content of FDI. Using industry data on U.S. FDI abroad and data on many different host countries' institutional characteristics, we show that there is a differential response of FDI flows to investment climate according to the capital intensity of the industries receiving the investments. We find that better protection of property rights has a significant positive effect on R&D intensive capital flows. We find evidence that an increase in workers' bargaining power results in a reduction of both kinds of FDI. "Ambiguity Aversion, the Equity Premium, and the Welfare Costs of Business Cycles" examines the relevance of consumers' ambiguity aversion for asset prices and how consumption fluctuations influence consumer welfare. First, in a Mehra-Prescott-style endowment economy, we calibrate ambiguity aversion so that asset prices are consistent with data: a high return on equity and a low return on risk-free bonds. We then use this calibration to investigate how much consumers would be willing to pay to reduce endowment fluctuations to zero, thus delivering a Lucas-style welfare cost of fluctuations. These costs turn out to be very large: consumers are willing to pay over 10% of consumption in permanent terms.

Syftet med denna avhandling är att öka kunskapen om varför villkorade tillstånd inte leder till att en lag fullt ut implementeras. Den lagstiftning som reglerar industriella verksamheter innehåller ofta generella principer. Dessa ska vägleda myndigheten i att balansera verksamhetens nytta mot eventuella negativa effekter. Tillstånd att bedriva en viss verksamhet är en värdefull rättighet för verksamhetsutövaren, men samtidigt är tillstånd villkorade och förenade med kostnader för denne, t.ex. för att begränsa utsläpp. Studier av exempelvis miljölagstiftning visar att villkorade tillstånd har bidragit till att uppfylla lagstiftningens huvudsakliga intention, men att genomförandet ofta kännetecknas av att lagstiftningens krav modifieras. I praktiken är villkorade tillstånd ett resultat av förhandlingar mellan myndigheten och verksamheten. Ett skäl till att myndigheten inleder förhandlingar är att tillämpning av lagen kräver kompletterande information om verksamheten. Ett annat skäl är att det är kostsamt för myndigheten att kontrollera tillstånds efterlevnad samt att beivra deras överträdelser. Den analytiska ansatsen är analogin mellan ett villkorat tillstånd och ett kontrakt i principal-agent teorin. Ett huvudresultat är att denna teori är lämplig för att studera villkorade tillstånd. I avhandlingen studeras olika svårigheter för myndigheten att genomföra lagstiftningen. Fokus riktas mot asymmetrisk information, men dessutom behandlas förhandlingsstyrka, politiska påtryckningar samt möjligheten att överträda tillståndsvillkor. Studierna visar att dessa förhållanden kan förklara brister vid lagstiftningens genomförande. Myndigheten kan dock begränsa konsekvenserna av dessa genom att jämka på tillståndet, dvs. att inte helt följa lagens bokstav. Anpassning till asymmetrisk information gör att myndigheten får tillgång till verksamhetsspecifik information. Anpassning till villkorsöverträdelser gör att nyttan med regleringar kan vägas mot kostnader för kontrollåtgärder. Villkorade tillstånd har även andra fördelar. Utvägen att neka ett tillstånd ger myndigheten en viss förhandlingsstyrka. Möjligheten att bestraffa verksamheten genom att dra in dess tillstånd medför att myndigheten kan spara kontrollresurser alternativt skärpa villkoren.

This paper analyzes the sustainability of intergenerational transfers in politico-economic equililbrium. We argue that these transfers arise naturally in a Markov perfect equilibrium in the fundamental state variables. In contrast to earlier literature, our explanation does not resort to altruism, commitment, or trigger strategies but rests on the incentive for young households to monopolize capital accumulation, as pointed out by Kotlikoff and Rosenthal (1990). Since transfers to the old are instrumental in that respect, the vote-maximizing platform under electoral competition sustains a large social security system. Introducing fully rational voters and probabilistic voting in the standard Diamond (1965) OLG model, we find that transfers in politico-economic equilibrium are too high relative to the social optimum. Standard functional form assumptions yield analytical solutions for both the Ramsey and the probabilistic voting case. Under realistic parameter values, the model predicts a social security tax rate of 12 percent, as compared to a Ramsey tax rate of 3.5 percent. Other predictions of the model are also consistent with the data. Analytical solutions for the case with endogenous labor supply and tax distortions show the results of the model to be robust.

Essay I: Does increased government transparency make bureaucracies more meritocratic? I study the impact of politician disclosure requirements on the assignment of bureaucrats to public posts. I collect detailed information on bureaucrats' qualifications and construct a novel measure of bureaucratic mismatch—an index measuring the extent to which a bureaucrat is under- or overqualified to perform a specific task. Using the staggered implementation of Indian state elections for identification, I find that information disclosure is associated with a mismatch reduction of 2.5% of a standard deviation. This effect is substantially larger (15–45% of a standard deviation) in posts that are more important for policy implementation and tasks that bureaucrats perceive to be more prestigious. In addition, I find that information disclosure increases returns to bureaucrat skill. Bureaucrats with greater skill are more likely to reach prestigious positions in more transparent states. Taken together, the results show that government transparency promotes meritocracy within public organizations. Essay II (with Roza Khoban): Political distortions are prevalent in many developing countries and can imply substantial productivity losses. Theory is ambiguous as to whether greater openness to trade amplifies or reduces the effects of such distortions. This paper shows that trade liberalization in India decreased the value of firms' political connections, suggesting a reduction in political distortions. First, using variation in firm connections stemming from political turnover, we identify that political connections increase firm performance by 10–20%. Second, we evaluate how the value of political connections changed after India's externally imposed tariff reductions, using a triple-difference and difference-in-discontinuities design. We find that political connections became substantially less valuable when tariffs on input goods were reduced. Our findings imply that access to international markets reduces firms' dependence on political connections to source input goods, thus reducing the distortionary effect of such connections. Our results suggest a new margin for gains from trade in the presence of political distortions through a direct effect of trade liberalization on the prevalence of such distortions. Essay III: Social unrest is a pervasive problem in the developing world. Yet, the causes of social unrest are not fully understood. This paper studies the impact of electing dominant party representatives on social unrest in South Africa. Since the end of apartheid, the African National Congress (ANC) party has held a hegemonic position in South African politics. At the same time, the party has been criticized for poor implementation of basic service delivery and accused of corruption and government malpractice. Combining geo-referenced data on riots and protests with a regression discontinuity design, I find that the prevalence of violent social unrest is substantially lower in ANC-controlled areas. The findings provide a nuanced perspective on the political determinants of social unrest in a dominant party setting.

Highlights: Some of the greatest potential of the UGAs (urban-growth agreements) is found in their regional ambition. Ability differences between municipalities help explaining implementation barriers. UGA can be an intervening stage preventing meta-policy from being toothless locally. It is important that UGAs create governance arenas with internal accountability.

So far, there has been mixed evidence in the literature regarding the relationship between environmental attitudes and actual `green' actions, something known as the attitude-behavior gap. This raises the question of when attitudes can actually work as a lever to promote environmental objectives, such as climate change mitigation, and, conversely, when other factors would be more effective. This paper presents an online experiment with real money at stake and real-world consequences designed to test the effect of environmental attitudes on behavior under various conditions. We found that environmental attitudes affected behavior only in low-cost situations. This finding is consistent with the low-cost hypothesis of environmental behavior postulating that concerned individuals will undertake low-cost actions in order to reduce the cognitive dissonance between their attitudes and rational realization of the environmental impact of their behavior but avoid higher-cost actions despite their greater potential as far as environmental protection. This finding has important consequences for the design of more effective climate policies in a democratic context as it puts limits on what can be achieved by raising environmental concern alone.

In recent years, we have witnessed an intensive scholarly discussion about the limitations of traditional inward looking regional innovation strategies. New policy approaches put more emphasis on promoting the external connectedness of regions. However, the institutional preconditions for collaboration across borders have received little attention so far. The aim of this paper is to investigate both conceptually and empirically how policy network organizations can target the institutional underpinnings and challenges of cross-border integration processes and knowledge flows. The empirical part of the paper consists of an analysis of activities performed by four cross-border policy network organizations in the Öresund region (made up of Zealand in Denmark and Scania in Sweden) and how they relate to the creation of institutional preconditions and the removal of institutional barriers. Our findings suggest that cross-border policy network organizations have limited power to change or facilitate the adaptation of formal institutions directly. They mainly rely on mobilizing actors at other territorial levels for improving the formal institutional conditions for knowledge flows. Informal institutions, on the other hand, can be targeted by an array of different tools available to policy network organizations. We conclude that institutional preconditions in cross-border regions are influenced by collective activities of multiple actors on different territorial levels, and that regional actors mainly adapt to the existing institutional framework rather than change it. For innovation policy, this implies that possibilities for institutional change and adaptation need to be considered in regional innovation policy strategies.

Frey (Homo Oeconomicus 34(1):1–9, 2017) makes several proposals to reform and extend democracy. In this contribution, we first consider the desirability of these proposals from the point of view of a rational self-interested individual. We then conduct a questionnaire to quantify the actual support among voters. It turns out that many proposals lack support in both cases. We conclude that in making such proposals, one has to take into account not only pre-existing democratic institutions but also the support such proposals can expect from rational self-interestedindividuals.

We trace the reasons for the negative development of Greek government debt from 1980 to 2014 by studying the deficits of the Greek state under the same period. We also see the Greek debt under the different political regimes. We briefly describe the two bailout programs for Greece and finally we name the amount and Euro states that own the Greek loans. The negative effects of austerity are about 22% less GDP and total household and government consumption and monthly wages; finally, the unemployment rate grew 21%. ; Working paper

This thesis consists of four essays in resource and behavioral economics. Resource Extraction, Capital Accumulation and Time Horizon The paper shows that relaxing the standard infinite horizon assumption can explain the patterns of exhaustible resource extraction and prices for the last century. An empirical test proposes a time horizon of roughly 28 years to be most likely. Model calibration yields an oil price which fits the falling price after WWII and suggests that the sharply increasing price after 1998 is due to scarcity. Optimal Forest Rotation under Climate Change The scenario of forests growing faster over time, due to climate change, is analyzed. It is shown numerically that ignoring future changes is highly likely to be accurate in terms of harvesting and will cause insignificant profit losses. Tragedy of the Commons versus the Love of Variety The opposing effects of overharvesting of renewable resources when property rights are missing and increased consumption variety, both due to trade, are analyzed. Trade increases welfare if the resource has strong regenerative power. If, instead, the resource regenerates slowly, then sufficient increases in the number of trade partners harms welfare and the stock may even collapse. Correcting policies may be very harsh and still improve upon laissez faire. The Distribution of Revealed Preferences under Social Pressure Stated preferences, such as declared political opinions, are studied when individuals make the trade off between being true to their real opinions and conforming to a social norm. In orthodox societies, individuals will tend to either conform fully or ignore the social norm while individuals in liberal societies will tend to compromise between the two extremes. The model sheds light on phenomena such as polarization, alienation and hypocrisy. Furthermore, it suggests that orthodoxy cannot be maintained under pluralism.