A Structural Model of Electoral Accountability

S. Boragan Aruoba, Allan Drazen, and Razvan Vlaicu, International Economic Review 60(2), May .

Abstract:

This article proposes a structural approach to measuring the effects of electoral accountability. We estimate
a political agency model with imperfect information in order to identify and quantify discipline and selection
effects, using data on U.S. governors. We find that the possibility of reelection provides a significant incentive
for incumbents to exert effort, that is, a disciplining effect. We also find a positive but weaker selection effect.
According to our model, the widely used two-term regime improves voter welfare by 4.2% compared to a
one-term regime, and better voter information about the effort of the governors would further increase voter
welfare by up to 0.5%.

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