Date of Award

11-12-2009

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Dr. Sally Wallace - Committee Chair

Second Advisor

Dr. Charles R. Hankla - Committee Member

Third Advisor

Dr. Jorge L. Martinez-Vazquez - Committee Member

Fourth Advisor

Dr. Roy W. Bahl - Committee Member

Abstract

This dissertation analyzes voting behavior and presence of political cycles in India. While such exercises have been carried out extensively in the context of developed countries and established democracies, there have been few studies on similar behavior in developing countries and new economies. The focus on India in this study may provide valuable insight into this literature in an area that has been largely ignored. Our findings suggest that political manipulation of taxes, grants and expenditures are prevalent at both the national and sub-national levels; though they are tempered by the nature of partisanship. However, while these manipulations may be economically inefficient, they are politically very strategic as incumbents seem to focus on manipulating those items for which they can claim sole responsibility. Indian voters seem to be fiscal conservatives, as they penalize increases in most items of expenditures and generally reward reductions in taxes. Evidence of yardstick effects in taxes is also presented. We find that a higher degree of ‘clarity of responsibility’ also fosters stronger economic voting effects. Voters seem to be cognizant of the division of functional responsibility between the two levels of government (the center and the state) and they evaluate their performance independently. Also, we find results consistent with the notion that the central government is responsible for the overall health of the economy as voters seem to penalize the central incumbent for increases in inflation and reward them for steady growth while being indifferent to such outcome variables while voting for the state level incumbent. The policy implications of such findings are also briefly discussed. It is a matter of grave concern if incumbents tailored policies to provide them with the biggest political payoff. This may lead to differences in economic development across states and the incidence of expenditure and tax changes may fall unfairly on the most vulnerable people of the society. There are also important insights on assignment of responsibility and the ‘how’ of political interference which would aid us in building more comprehensive political economy models that are closer to reflecting reality than purely economic models commonly used today.

Included in

Economics Commons

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