Kollintzas, T., "Electable and Stable Insiders’ Coalition Governments"

Title: "Electable and Stable Insiders’ Coalition Governments"

Speaker: Tryphon Kollintzas, Athens University of Economics and Business

Host: Assistant Professor Kospentaris Ioannis, Department of Economics, Athens University of Economics and Business

Venue: 2 Troias, Kimolou and Spetson Street, Room T101

Attachments:  PDF of Relevant Paper

Abstact: In this paper, we formulate a general equilibrium theory that explains the existence and stability of democratically elected governments that support certain groups of individuals in society (insiders) to the detriment of everybody else (outsiders), even if the latter constitute a majority. The vehicle is a dynamic general equilibrium model, where insiders get monopoly rents and outsiders get less than what they would have gotten under a common good regime. We construct such political economy equilibria and we identify the conditions under which such political regimes (coalitions of insiders): (a) can safeguard against opportunistic behavior (i.e., do not fall from within) and (b) may come to power in the first place (i.e., manage to get elected). To that end, we highlight the role of ideology or self-serving bias as a gluing device to garner an electable coalition.