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Dynamic government performance: honeymoons and crises of confidence

Dewan, Torun and Myatt, David P. (2012) Dynamic government performance: honeymoons and crises of confidence. American Political Science Review, 106 (01). pp. 123-145. ISSN 1537-5943

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Abstract

We use a formal theoretical framework to explore the interplay between a government's longevity and its performance. Ministers perform well when their careers are valuable; this is so when the government's duration is expected to be long; the government's survival depends on its popularity; and, finally, that popularity depends on its ministers performance. The feedback loop between performance and longevity means that multiple rational-expectations equilibria can arise: Ministers work hard for a popular government, but divert efforts elsewhere if they believe the government is doomed; these alternatives are both self-fulfilling prophecies. However, the presence of (perhaps small) random events that buffet the performance and popularity of a government is sufficient to pin down a unique equilibrium. We explore the dynamics that arise: A crisis of confidence involving the rapid collapse of a government's performance is sparked when a sequence of negative shocks push the popularity of the government below a unique critical threshold.

Item Type: Article
Official URL: http://journals.cambridge.org/action/displayJourna...
Additional Information: © 2012 Cambridge University Press
Library of Congress subject classification: J Political Science > JC Political theory
Sets: Departments > Government
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 03 Apr 2012 15:14
URL: http://eprints.lse.ac.uk/42945/

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