Working Paper: CEPR ID: DP4272
Authors: Michael Smart; Daniel Sturm
Abstract: This Paper analyses the impact of term limits in a political agency model. We find that term limits reduce the value of holding office. This reduction in the re-election incentive can induce politicians to implement policies that are closer to their own private preferences. Such ?truthful? behaviour by incumbents will in turn result in better screening of incumbents whose preferences do not correspond to voters? preferences. We show that these effects can make a two-term limit, which is the empirically most frequent restriction on tenure, ex ante welfare-improving from the perspective of voters. We present evidence from gubernatorial elections that the model?s main empirical implication is supported by the data.
Keywords: accountability; political agency; term limits
JEL Codes: D72; H11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| reelection rates (D72) | policy alignment with private preferences (D72) |
| policy alignment with private preferences (D72) | truthfulness effect (G41) |
| truthfulness effect (G41) | better screening of incumbents (K16) |
| better screening of incumbents (K16) | improved voter welfare (K16) |
| term limits (K16) | reelection rates (D72) |