Kellogg School of Management
2001 Sheridan Rd, MEDS 5th Floor
Evanston, IL 60208-2001, USA
NBER Working Papers and Publications
|May 2015||A Structural Model of Electoral Accountability|
with S. Borağan Aruoba, Allan Drazen: w21151
This paper proposes a structural approach to measuring the effects of electoral accountability. We estimate a political agency model with imperfect information in order to identify and quantify discipline and selection effects, using data on U.S. governors for 1982-2012. We find that the possibility of reelection provides a significant incentive for incumbents to exert effort. We also find a selection effect, although it is weaker in terms of its effect on average governor performance. According to our model, the widely-used two-term regime improves voter welfare by 4.2% compared to a one-term regime, and find that a three-term regime may improve voter welfare even further.