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Comments on
“The Political Economy of Corruption in the
Bureaucracy”
By Michele Valsecchi
Klenio Barbosa
Sao Paulo School ...
The Paper
Research Question:
Does Reelection Incentives induce politician to deter corruption in the
bureaucracy?
Data:
Ve...
General Comments
Very interesting paper: I enjoyed reading it!
Reasons
1 Data set: detailed information is used
2 Empirica...
General Comments
Very interesting paper: I enjoyed reading it!
Reasons
1 Data set: detailed information is used
2 Empirica...
General Comments
Very interesting paper: I enjoyed reading it!
Reasons
1 Data set: detailed information is used
2 Empirica...
General Comments
Very interesting paper: I enjoyed reading it!
Reasons
1 Data set: detailed information is used
2 Empirica...
Major Concerns/Questions
1 Interpretation of the results and contribution
2 Estimation: Reelection effect on the probabili...
Major Concern # 1
Interpretation of the results: What is the true story?
Motivation: Reelection provides incentives to the...
Major Concern # 1
Interpretation of the results: What is the true story?
Motivation: Reelection provides incentives to the...
Major Concern # 1
Interpretation of the results: What is the true story?
Motivation: Reelection provides incentives to the...
Major Concern # 1
Interpretation of the results: What is the true story?
Motivation: Reelection provides incentives to the...
Major Concern # 1
Interpretation of the results: What is the true story?
Motivation: Reelection provides incentives to the...
Major Concern # 1 (cont.)
Suggestion: Push that further and explore more your data
1 Explore the information in your data ...
Major Concern # 1 (cont.)
Suggestion: Push that further and explore more your data
1 Explore the information in your data ...
Major Concern # 1 (cont.)
Suggestion: Push that further and explore more your data
1 Explore the information in your data ...
Major Concern # 2
Estimation: Probability of prosecution and reelection
Discrete-time hazard model:
hit =
Pr (prosecution ...
Major Concern # 2
Estimation: Probability of prosecution and reelection
Discrete-time hazard model:
hit =
Pr (prosecution ...
Major Concern # 2
Estimation: Probability of prosecution and reelection
Discrete-time hazard model:
hit =
Pr (prosecution ...
Major Concern # 2
Estimation: Probability of prosecution and reelection
Discrete-time hazard model:
hit =
Pr (prosecution ...
Major Concern # 2
Estimation: Probability of prosecution and reelection
Discrete-time hazard model:
hit =
Pr (prosecution ...
Major Concern # 3
Reelection Incentives and 2nd Mandate
Interpretation of the results relies on assumption that politician...
Major Concern # 3
Reelection Incentives and 2nd Mandate
Interpretation of the results relies on assumption that politician...
Major Concern # 3
Reelection Incentives and 2nd Mandate
Interpretation of the results relies on assumption that politician...
Major Concern # 3
Reelection Incentives and 2nd Mandate
Interpretation of the results relies on assumption that politician...
Major Concern # 3
Reelection Incentives and 2nd Mandate
Interpretation of the results relies on assumption that politician...
Minor Comments and Questions
Outcome variable is the number of corruption events.
Can you say anything about the “value” o...
Minor Comments and Questions (cont.)
I would change the definition of the “Mandate” variable
“Mandate”= 1 if first mandate p...
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Comments on “The Political Economy of Corruption in the Bureaucracy”

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Comments by Klenio Barbosa on paper "The Political Economy of Corruption in the Bureaucracy" presented by Michele Valsecchi at the SITE Corruption Conference, 31 August 2015.

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Comments on “The Political Economy of Corruption in the Bureaucracy”

  1. 1. Comments on “The Political Economy of Corruption in the Bureaucracy” By Michele Valsecchi Klenio Barbosa Sao Paulo School of Economics - FGV SITE’s Corruption Conference Stockholm/SE - September 1, 2015 Klenio Barbosa (FGV) Comments May 2015 1 / 10
  2. 2. The Paper Research Question: Does Reelection Incentives induce politician to deter corruption in the bureaucracy? Data: Very detailed data (99-04) for Indonesian districts about: corruption events per district: reported in the prosecution’s files reelection incentive: district election and politicians’ career (tenure in office joint with term limit for each district’s head) Results: Reelection incentive does reduce corruption Effect comes from a reduction in corruption among district’s low staff ⇒ Interpretation: long-horizon politicians monitor more intensively their staff in order to deter bureaucracy’s corruption Klenio Barbosa (FGV) Comments May 2015 2 / 10
  3. 3. General Comments Very interesting paper: I enjoyed reading it! Reasons 1 Data set: detailed information is used 2 Empirical Strategy: very convincing it seems to deal with the main potential endogeneity problems 3 Results: main effects are pretty much robust low district’s bureaucracy effect (in particular) Klenio Barbosa (FGV) Comments May 2015 3 / 10
  4. 4. General Comments Very interesting paper: I enjoyed reading it! Reasons 1 Data set: detailed information is used 2 Empirical Strategy: very convincing it seems to deal with the main potential endogeneity problems 3 Results: main effects are pretty much robust low district’s bureaucracy effect (in particular) Klenio Barbosa (FGV) Comments May 2015 3 / 10
  5. 5. General Comments Very interesting paper: I enjoyed reading it! Reasons 1 Data set: detailed information is used 2 Empirical Strategy: very convincing it seems to deal with the main potential endogeneity problems 3 Results: main effects are pretty much robust low district’s bureaucracy effect (in particular) Klenio Barbosa (FGV) Comments May 2015 3 / 10
  6. 6. General Comments Very interesting paper: I enjoyed reading it! Reasons 1 Data set: detailed information is used 2 Empirical Strategy: very convincing it seems to deal with the main potential endogeneity problems 3 Results: main effects are pretty much robust low district’s bureaucracy effect (in particular) Klenio Barbosa (FGV) Comments May 2015 3 / 10
  7. 7. Major Concerns/Questions 1 Interpretation of the results and contribution 2 Estimation: Reelection effect on the probability of prosecution 3 Reelection Incentives and 2nd Mandate Klenio Barbosa (FGV) Comments May 2015 4 / 10
  8. 8. Major Concern # 1 Interpretation of the results: What is the true story? Motivation: Reelection provides incentives to the politicians deter/monitor corruption among the bureaucracy However: the results are also compatible with Ferraz and Finan (2011) Reelection motivation reduces own politician’s corruption Bureaucracy may act as corrupter to rise benefits for politician Potential competing stories: “Politicians monitoring story” versus “Stopping corruption story” Some results in your favor: district’s staff: low rank (sign.) and high rank (non sign.) - more is need !!! Klenio Barbosa (FGV) Comments May 2015 5 / 10
  9. 9. Major Concern # 1 Interpretation of the results: What is the true story? Motivation: Reelection provides incentives to the politicians deter/monitor corruption among the bureaucracy However: the results are also compatible with Ferraz and Finan (2011) Reelection motivation reduces own politician’s corruption Bureaucracy may act as corrupter to rise benefits for politician Potential competing stories: “Politicians monitoring story” versus “Stopping corruption story” Some results in your favor: district’s staff: low rank (sign.) and high rank (non sign.) - more is need !!! Klenio Barbosa (FGV) Comments May 2015 5 / 10
  10. 10. Major Concern # 1 Interpretation of the results: What is the true story? Motivation: Reelection provides incentives to the politicians deter/monitor corruption among the bureaucracy However: the results are also compatible with Ferraz and Finan (2011) Reelection motivation reduces own politician’s corruption Bureaucracy may act as corrupter to rise benefits for politician Potential competing stories: “Politicians monitoring story” versus “Stopping corruption story” Some results in your favor: district’s staff: low rank (sign.) and high rank (non sign.) - more is need !!! Klenio Barbosa (FGV) Comments May 2015 5 / 10
  11. 11. Major Concern # 1 Interpretation of the results: What is the true story? Motivation: Reelection provides incentives to the politicians deter/monitor corruption among the bureaucracy However: the results are also compatible with Ferraz and Finan (2011) Reelection motivation reduces own politician’s corruption Bureaucracy may act as corrupter to rise benefits for politician Potential competing stories: “Politicians monitoring story” versus “Stopping corruption story” Some results in your favor: district’s staff: low rank (sign.) and high rank (non sign.) - more is need !!! Klenio Barbosa (FGV) Comments May 2015 5 / 10
  12. 12. Major Concern # 1 Interpretation of the results: What is the true story? Motivation: Reelection provides incentives to the politicians deter/monitor corruption among the bureaucracy However: the results are also compatible with Ferraz and Finan (2011) Reelection motivation reduces own politician’s corruption Bureaucracy may act as corrupter to rise benefits for politician Potential competing stories: “Politicians monitoring story” versus “Stopping corruption story” Some results in your favor: district’s staff: low rank (sign.) and high rank (non sign.) - more is need !!! Klenio Barbosa (FGV) Comments May 2015 5 / 10
  13. 13. Major Concern # 1 (cont.) Suggestion: Push that further and explore more your data 1 Explore the information in your data on the staff members (profile and career path) that were accused of corruption Appointed staff Ferraz and Finan versus Regular public official your story (independent bureaucracy) 2 Explore village’s political structure: Urban villages: heads are appointed by head’s district Rural villages: elected 3 Remark: I do not see any strong effect on corruption among village heads (3 out 8 estimated coefficients are significant) Klenio Barbosa (FGV) Comments May 2015 6 / 10
  14. 14. Major Concern # 1 (cont.) Suggestion: Push that further and explore more your data 1 Explore the information in your data on the staff members (profile and career path) that were accused of corruption Appointed staff Ferraz and Finan versus Regular public official your story (independent bureaucracy) 2 Explore village’s political structure: Urban villages: heads are appointed by head’s district Rural villages: elected 3 Remark: I do not see any strong effect on corruption among village heads (3 out 8 estimated coefficients are significant) Klenio Barbosa (FGV) Comments May 2015 6 / 10
  15. 15. Major Concern # 1 (cont.) Suggestion: Push that further and explore more your data 1 Explore the information in your data on the staff members (profile and career path) that were accused of corruption Appointed staff Ferraz and Finan versus Regular public official your story (independent bureaucracy) 2 Explore village’s political structure: Urban villages: heads are appointed by head’s district Rural villages: elected 3 Remark: I do not see any strong effect on corruption among village heads (3 out 8 estimated coefficients are significant) Klenio Barbosa (FGV) Comments May 2015 6 / 10
  16. 16. Major Concern # 2 Estimation: Probability of prosecution and reelection Discrete-time hazard model: hit = Pr (prosecution in i at t) Pr( non prosecution in i ∀t < t) = β0 + β12ndMandateit + βjDummy J Yearsit + εit Figure 3 suggests that Reelection affects the time of the prosecution Table 5 may suffer from “omitted variable”: biasing reelection’s effect Alternative specification: hit = β0+β12ndMandateit+ βjDummy J Yearsit+ γk2ndMandateit × Dummy J Yearsit+εit Question: What is the baseline year effect the dummy? Klenio Barbosa (FGV) Comments May 2015 7 / 10
  17. 17. Major Concern # 2 Estimation: Probability of prosecution and reelection Discrete-time hazard model: hit = Pr (prosecution in i at t) Pr( non prosecution in i ∀t < t) = β0 + β12ndMandateit + βjDummy J Yearsit + εit Figure 3 suggests that Reelection affects the time of the prosecution Table 5 may suffer from “omitted variable”: biasing reelection’s effect Alternative specification: hit = β0+β12ndMandateit+ βjDummy J Yearsit+ γk2ndMandateit × Dummy J Yearsit+εit Question: What is the baseline year effect the dummy? Klenio Barbosa (FGV) Comments May 2015 7 / 10
  18. 18. Major Concern # 2 Estimation: Probability of prosecution and reelection Discrete-time hazard model: hit = Pr (prosecution in i at t) Pr( non prosecution in i ∀t < t) = β0 + β12ndMandateit + βjDummy J Yearsit + εit Figure 3 suggests that Reelection affects the time of the prosecution Table 5 may suffer from “omitted variable”: biasing reelection’s effect Alternative specification: hit = β0+β12ndMandateit+ βjDummy J Yearsit+ γk2ndMandateit × Dummy J Yearsit+εit Question: What is the baseline year effect the dummy? Klenio Barbosa (FGV) Comments May 2015 7 / 10
  19. 19. Major Concern # 2 Estimation: Probability of prosecution and reelection Discrete-time hazard model: hit = Pr (prosecution in i at t) Pr( non prosecution in i ∀t < t) = β0 + β12ndMandateit + βjDummy J Yearsit + εit Figure 3 suggests that Reelection affects the time of the prosecution Table 5 may suffer from “omitted variable”: biasing reelection’s effect Alternative specification: hit = β0+β12ndMandateit+ βjDummy J Yearsit+ γk2ndMandateit × Dummy J Yearsit+εit Question: What is the baseline year effect the dummy? Klenio Barbosa (FGV) Comments May 2015 7 / 10
  20. 20. Major Concern # 2 Estimation: Probability of prosecution and reelection Discrete-time hazard model: hit = Pr (prosecution in i at t) Pr( non prosecution in i ∀t < t) = β0 + β12ndMandateit + βjDummy J Yearsit + εit Figure 3 suggests that Reelection affects the time of the prosecution Table 5 may suffer from “omitted variable”: biasing reelection’s effect Alternative specification: hit = β0+β12ndMandateit+ βjDummy J Yearsit+ γk2ndMandateit × Dummy J Yearsit+εit Question: What is the baseline year effect the dummy? Klenio Barbosa (FGV) Comments May 2015 7 / 10
  21. 21. Major Concern # 3 Reelection Incentives and 2nd Mandate Interpretation of the results relies on assumption that politicians in their second mandate have lower reelection incentive Questions: Do 2nd mandate politicians retire afterwards? Don’t they aim to run for higher admin layers: president, province governor? Districts are important. So, those politicians in 2nd mandate should be competitive ones that aim to be head of higher administrative layers Politician career concern (Mattozzi and Merlo, 2008) If it is the case, how to interpret your results? Hint: Restrict the sample to politicians that did not run for higher administrative layers Klenio Barbosa (FGV) Comments May 2015 8 / 10
  22. 22. Major Concern # 3 Reelection Incentives and 2nd Mandate Interpretation of the results relies on assumption that politicians in their second mandate have lower reelection incentive Questions: Do 2nd mandate politicians retire afterwards? Don’t they aim to run for higher admin layers: president, province governor? Districts are important. So, those politicians in 2nd mandate should be competitive ones that aim to be head of higher administrative layers Politician career concern (Mattozzi and Merlo, 2008) If it is the case, how to interpret your results? Hint: Restrict the sample to politicians that did not run for higher administrative layers Klenio Barbosa (FGV) Comments May 2015 8 / 10
  23. 23. Major Concern # 3 Reelection Incentives and 2nd Mandate Interpretation of the results relies on assumption that politicians in their second mandate have lower reelection incentive Questions: Do 2nd mandate politicians retire afterwards? Don’t they aim to run for higher admin layers: president, province governor? Districts are important. So, those politicians in 2nd mandate should be competitive ones that aim to be head of higher administrative layers Politician career concern (Mattozzi and Merlo, 2008) If it is the case, how to interpret your results? Hint: Restrict the sample to politicians that did not run for higher administrative layers Klenio Barbosa (FGV) Comments May 2015 8 / 10
  24. 24. Major Concern # 3 Reelection Incentives and 2nd Mandate Interpretation of the results relies on assumption that politicians in their second mandate have lower reelection incentive Questions: Do 2nd mandate politicians retire afterwards? Don’t they aim to run for higher admin layers: president, province governor? Districts are important. So, those politicians in 2nd mandate should be competitive ones that aim to be head of higher administrative layers Politician career concern (Mattozzi and Merlo, 2008) If it is the case, how to interpret your results? Hint: Restrict the sample to politicians that did not run for higher administrative layers Klenio Barbosa (FGV) Comments May 2015 8 / 10
  25. 25. Major Concern # 3 Reelection Incentives and 2nd Mandate Interpretation of the results relies on assumption that politicians in their second mandate have lower reelection incentive Questions: Do 2nd mandate politicians retire afterwards? Don’t they aim to run for higher admin layers: president, province governor? Districts are important. So, those politicians in 2nd mandate should be competitive ones that aim to be head of higher administrative layers Politician career concern (Mattozzi and Merlo, 2008) If it is the case, how to interpret your results? Hint: Restrict the sample to politicians that did not run for higher administrative layers Klenio Barbosa (FGV) Comments May 2015 8 / 10
  26. 26. Minor Comments and Questions Outcome variable is the number of corruption events. Can you say anything about the “value” of those corruption events, and the reelection incentive’s effect on that? The value of the corruption events captures the relevance of bureaucracy corruption, and their impact on the welfare loss. What would be the result if you use only the data on corruption prosecutions that have reached the final verdict and the public officials were considered guilty? Information on politician’s experience: matched CV-other data by name how do you do when different people have the same name? have you tried to do a matching in all observable characteristics? Klenio Barbosa (FGV) Comments May 2015 9 / 10
  27. 27. Minor Comments and Questions (cont.) I would change the definition of the “Mandate” variable “Mandate”= 1 if first mandate politician (and 0, otherwise) Quicker for the reader to interpret the estimated coefficient: reelection incentive’s effect (as it is motivated in the introduction) Define from the very beginning in the paper and be more concrete about the meaning of reelection incentive (e.g., long-horizon politicians?) I would be more cautions when talking about the correlation between government audit corruption data and prosecution corruption data it is not so strong: only half of the estimations is statistically significant the other half is significant at 10% References: Coviello and Gagliarducci (2014): exogenous change in term length (Italy) Missing references: XX (2014), Valsecchi (2013)? Klenio Barbosa (FGV) Comments May 2015 10 / 10

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