Seminar: Dan Bernhardt (Friday, Sept. 20, 2019)

The Lazaridis School of Business and Economics and the MS2Discovery Interdisciplinary Research Institute presents:

• Speaker: Dan Bernhardt
• Title: Demagogues and the Fragility of Democracy
• Date: Friday, Sept. 20, 2019
• Time:  11 a.m.
• Location: LH3098, Lazardis Hall

Speaker Bio

Dan Bernhardt, University of Illinois & University of Warwick

Dan Bernhardt is the IBE Distinguished Professor of Economics and Finance at the University of Illinois and a Professor at the University of Warwick. He has a PhD in Economics from Carnegie Mellon University. Bernhardt's research is focused on industrial organization, finance, and political economy.

Abstract

Our paper investigates the long-run susceptibility of Democracy to demagogues, studying the tension between far-sighted, magnanimous representatives who guard the long-run interests of voters, and officeseeking demagogues who cater to voters' short-run desires. Parties propose how to allocate existing resources between current consumption and investment. Voters with CRRA preferences base electoral choices on the current period utilities derived from policies and a stochastic valence shock. With log utility, the benevolent party's investment converges to zero when the depreciation rate goes to one, regardless of its expected valence advantage, even though, absent the demagogue, the economy would grow forever. For relative risk aversions above one, regardless of other parameters, there is always a positive probability of entering a death spiral in which once capital falls below a critical level, it inevitably falls toward zero.

Further details are at https://researchcentres.wlu.ca/ms2discovery-interdisciplinary-research-institute/events.html