Ideological polarization, sticky information, and policy reforms

Arbeitspapier

We develop a dynamic two-party political economy framework, in which parties seek to maximize vote share and face the trade-off between catering to their respective core constituencies on the one hand and ?middle of the road? voters with no partisan affiliation on the other hand. In contrast to ideology-driven individuals, ?middle of the road? voters care about the state of the economy in the sense that a policy reform is desirable for them when the fundamentals of the economy change. However, information is 'sticky? in the sense that the process of information diffusion about the state of the economy, which is determined by some exogenous stochastic process, is imperfect. Contrary to conventional wisdom, we show that an increase in ideological polarization may enhance social welfare by mitigating the friction in information flow.

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• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 1274

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Information, Knowledge, and Uncertainty: General ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Fiscal Policies and Behavior of Economic Agents: General
• Thema: ideological polarization ; sticky information ; partisanship ; policy reform ; Wirtschaftsreform ; Unvollkommene Information ; Ökonomische Theorie der Demokratie ; Ideologie ; Theorie

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Blumkin, Tomer ; Grossmann, Volker
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and ifo Institute (CESifo)
• (wo): Munich
• (wann): 2004

Weitere Informationen

• Handle: http://hdl.handle.net/10419/18912