Abstract:

There has been a large body of work addressing the complex interaction of politicians and voters in policy choice. The goal of each chapter here is to further this understanding with applications to trade policy and the Indian political economy. Using empirical and applied theoretical techniques, I provide evidence that policy choice is significantly affected by the opportunistic motivations of politicians, and that voters systematically respond to certain policies in ways that can differentially distort these opportunistic motivations. Taken together, policy outcomes are likely the product of complex interactions between the two groups, where the final outcome depends on the crude tools given to politicians and voters.

In addition to addressing political economy issues in general, these results have implications for the implementation of large economic reforms. The first two chapters combine to suggest that parties less supportive of market-oriented policies might be more likely to implement these sorts of reforms. These parties have a comparative advantage at retaining voters most hurt and might sacrifice their ideological stance given that politicians are generally willing to manipulate policies to retain office. Additionally, the second chapter demonstrates that political decentralization can lead to large regional differences in the strength of national reforms.

Lastly these chapters also help to understand issues specific to both parliamentary and state elections in India. The country has a high amount of political decentralization and many studies have cited the increasing importance of regional issues in both national and state elections. However, in the first two chapters, a national issue had a very consistent effect across nearly all states in India. Furthermore, although there was heterogeneity in the ant-incumbency effect across the country, there was a very strong average effect as well. The uniformity of these issues across very different state governments and regions with very strong differences surprisingly demonstrates that large national issues can still be very important to Indian elections.