The focus of my research is dynamic macroeconomics and how the economy responds to changes in government policy. During the last 30 years, the sovereign bond market in emerging economies has grown considerably and many large scale defaults were observed. Existing models of sovereign debt are unable to jointly explain the debt to output ratios and the default frequency in these countries. In the first chapter, to address this puzzle, I propose a standard small open economy model with the addition that the government transits through different political states and these transitions cannot be directly observed by lenders. Moreover, after a default, the government chooses when to renegotiate and it bargains with the lenders over the recovery rate. I show that government reputation and endogenous periods of exclusion and recovery rates play a crucial role in explaining this phenomenon. In the second chapter, I use a dynamic political economy model to evaluate whether the observed rise in wage inequality and decrease in median to mean wages can explain the increase in transfers to low earnings quintiles and increase in effective tax rates for high earnings quintiles in the U.S. over the past several decades. I conduct a welfare analysis by contrasting the solution from the political mechanism with those from a sequential utilitarian mechanism, as well as mechanisms with commitment. Finally, the third chapter focuses on explaining the dynamics of firms. I ask whether an entry/exit model like that pioneered by Hopenhayn (1992, Econometrica) with a capital accumulation decision and non-convex costs of adjustment can generate size and age dependence like that found in the data. In particular, conditional on age, growth, employment creation and destruction and volatility are decreasing in size. Moreover, conditional on size, growth, employment creation and destruction and volatility are decreasing in age. The main point of this chapter is to demonstrate that a model with no financial frictions parameterized to match the investment regularities of U.S. establishments is able to account for the simultaneous dependence of industry dynamics on size (once we condition on age) and on age (once we condition on size). To explain how the economy responds and conduct welfare analysis either one has to find natural experiments or one has to build computational models and run counterfactual experiments. My research follows the latter strategy. / text

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This thesis argues that much of the political historiography is mistaken in portraying the post-1960s United States as a nation moving inexorably to the right. It also argues that historians should not understand the Democratic Party as being in terminal decline between 1972 and 1984, marginalised by a coalescing conservative Republican majority. Indeed, taking as its focus the U.S. Congress, this thesis asks why the remarkable resilience of the congressional Democratic Party has been overlooked by historians. It further asks why that resilience did so little to help the party in subsequent years. The Democratic revival in the elections of 1974 and 1976, so often dismissed as a post-Watergate aberration, was in fact an authentic political opportunity that the party failed to exploit. Exploring various Democratic factions within Congress that competed to shape their party's public philosophy, this thesis seeks to show how grander liberal ambitions were often subordinated to the logic of legislative politics and policymaking. The underlying theme is the unsuitability of Congress as an arena for the discussion and refinement of post-Great Society liberalism. Again and again, the legislature displayed a remarkable facility for undermining iconoclasm and stalling policy experimentation. Institutional reforms in the early 1970s, supposed to reinvigorate the Congress and the congressional Democratic Party, actually succeeded only in intensifying the fragmentation of both. Congressional politics became more entrepreneurial and less party-oriented, leaving legislators with few incentives to look beyond their own political fortunes to the party's future prospects. Enduring Democratic strength in Congress meant that Capitol Hill remained at the centre of the party's efforts to reclaim its preeminent position in American politics. The fact that the Democrats never experienced a protracted period of minority status, as the Republicans did during much of the mid-twentieth century, left them ill-equipped and without a powerful incentive to think in broader terms about their party's mission.

Call number: LD2668 .T4 1966 F559 / Master of Science

This study has investigated the use of political authority by Congressman Charles A. Halleck, Indiana Second District Republican, and his activities as House Republican Minority Leader during the administration of President John F. Kennedy. Halleck exemplified the Madisonian Model, the checks-and-balances structure of American government designed in large part by James Madison and created by the United States Constitution. This system is characterized by a division of political responsibility, a primary example of which is the United States Congress, consisting of regional representation, political factions and fluid and constantly changing alliances. As a member of Congress for over thirty years, Charles Halleck strongly supported the structure and political authority of Congress.The antithesis to the Madisonian Model is the Jeffersonian Model with the centralized, national office of the President as the representative of the consensus of the American people. John F. Kennedy represented a major example of the Jeffersonian Model. A dialectic struggle between these two political models has resulted to determine the course of American society. The primary goal of this study has been to evaluate the Madisonian Model: has this checks-and-balances system of divided political authority successfully met the challenges of modern American life?The research focused on Charles Halleck's responses to five economic legislative goals of the Kennedy program, known as the New Frontiers an increase in the minimum wage, aid to depressed areas, a housing omnibus bill, medical care for the aged through the Social Security system, and federal aid to education. Halleck opposed all of these Kennedy programs because he believed they violated his two basic principles: fiscal responsibility by the national government and limited federal authority and the preservation of state and local government independence.The evidence has demonstrated that Halleck exploited the Madisonian Model as his weapon to oppose the New Frontier legislation. He expertly exploited congressional committees, parliamentary tactics, political factions, and regional divisions to resurrect the conservative coalition, an alliance of Republicans and Southern Democrats. Using his two basic principles as a rallying theme, Halleck was frequently able to attract substantial numbers of Southern Democrats to his cause, and his exercise of his Republican leadership position assured a large majority of support from within his own party.As Part One illustrates, Halleck and his conservative coalition forces were unable to overcome the economic and regional appeals of three of Kennedy's proposals, minimum wage, redevelopment, and housing, and Kennedy was able to win legislative approval. These bills passed through Congress because they catered to the economic, regional needs of localized areas. Halleck and the Madisonian Model, as demonstrated by Part Two, were victorious in defeating medicare and education legislation that was essentially national in scope. The controversial nature of these proposals prevented the factionalized House from voting for their passage.The research of this study suggests that the Madisonian Model failed to respond to the needs of the American people or to protect their rights of life, liberty, and the pursuit of happiness. Charles Halleck's role in this failure by the Madisonian Model was crucial; no other congressional leader was in his position to form the forces of opposition to Kennedy and his New Frontier. Halleck believed that his political efforts would result in a new Republican majority elected by the American people. His failure to lead his party to majority status, the loss of his leadership position after 1964, and the eventual passage of medicare and federal aid to education demonstrated a clear rejection of the Halleck position by the American people.

The unifying theme of this dissertation is the empirical analysis of American politics. In particular, I use economic models to provide theoretically sound and empirically valid answers to political questions that are dynamic in nature. The first chapter focuses on the role of the seniority system in the pork barrel politics and the subsequent effect on the quality of Representatives in the U.S. House. The second chapter analyzes candidate positioning in a dynamic environment where there are electoral costs to changing position. The third and final chapter is a test of the role of political parties in time consistency problems when candidates cannot commit to future policies. Collectively, these chapters extend the research of empirical political economy in an important direction, one that accounts for the inherent dynamics of politics. / text

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