New Economics Papers
on Collective Decision-Making
Issue of 2009‒06‒17
eight papers chosen by

  1. Higher Vote Thresholds for Incumbents, Effort and Selection By Gersbach, Hans
  2. Government Transfers and Political Support By Marco Manacorda; Edward Miguel; Andrea Vigorito
  3. Is a Federal European Constitution for an Enlarged European Union Necessary? Some Preliminary Suggestions using Public Choice Analysis By Friedrich Schneider
  4. Large powerful shareholders and cash holding By Ron Anderson; Malika Hamadi
  5. Does democracy reduce terrorism in developing nations? By Subhayu Bandyopadhyay; Javed Younas
  6. Centralization of Decentralized Governance - Evidence from West Bengal Panchayat By Misra, Jaydev
  7. Does legislative turnover adversely affect state expenditure policy? Evidence from Indian state elections By Uppal, Yogesh
  8. The design of electoral rules and their impact on economic growth: the Italian case By M.Rosaria Alfano; A. Laura Baraldi

  1. By: Gersbach, Hans
    Abstract: The election mechanism has difficulties in selecting the most able candidates and deselecting less able ones. In a simple model we show that the power of elections as a selection and incentive device can be improved by requiring higher vote thresholds than 50% for incumbents. A higher vote threshold makes it impossible for office-holders of low ability to pool with more able office-holders in order to be reelected. As a consequence, the average ability of reelected politicians and the average effort level tends to increase. The socially optimal threshold can be set by the public. Alternatively, one could allow candidates to compete with individual vote thresholds.
    Keywords: effort; elections; incumbents; political contracts; selection; vote-share thresholds
    JEL: D7 D82 H4
    Date: 2009–06
  2. By: Marco Manacorda; Edward Miguel; Andrea Vigorito
    Abstract: We estimate the impact of a large anti-poverty program - the Uruguayan PANES - on political support for thegovernment that implemented it. The program mainly consisted of a monthly cash transfer for a period ofroughly two and half years. Using the discontinuity in program assignment based on a pre-treatment score, wefind that beneficiary households are 21 to 28 percentage points more likely to favor the current government(relative to the previous government). Impacts on political support are larger among poorer households and forthose near the center of the political spectrum, consistent with the probabilistic voting model in politicaleconomy. Effects persist after the cash transfer program ends. We estimate that the annual cost of increasinggovernment political support by 1 percentage point is roughly 0.9% of annual government social expenditures.
    Keywords: Conditional cash transfers, redistributive politics, voting, regression discontinuity
    JEL: I38 D72
    Date: 2009–03
  3. By: Friedrich Schneider
    Abstract: In order to guarantee a further successful functioning of the enlarged European Union a Federal European Constitution is proposed. Six basic elements of a future European federal constitution are developed: the European commission should be turned into an European government and the European legislation should consist of a two chamber system with full responsibility over all federal items. Three further key elements are the subsidiarity principle, federalism and the secession right, which are best suited to limiting the domain of the central European authority to which certain tasks are given, such as defense, foreign and environmental policy. Another important feature is direct democracy, which provides the possibility for European voters to participate actively in the political decision making, to break political and interest group cartels, and to prevent an unwanted shifting of responsibilities from EU member states to the European federal level.
    JEL: D72 D78 H7 H11
    Date: 2009–05–28
  4. By: Ron Anderson; Malika Hamadi
    Abstract: We study the relationship between liquid asset holding and the pattern of share ownership and control structures within the firm. We explore these issues using a data set of Belgian firms that is particularly well suited to studying the institutions of control oriented finance. The data include information on ownership concentration, voting alliances, managerial ownership, membership in family groups, institutional cross-share holdings, and coordination centers which under Belgian law permit consolidation of earnings and cash flow for a group of firms. We show that financial structures in Belgiumare strongly control oriented as evidenced by the very high levels of observed ownership concentration and the prevalence of pyramids, voting alliances, and participation in family groups. We find that the level of liquid asset holding is positively associated with ownership concentration and that this effect is particularly marked for family firms. Given the difficulties of family firms in achieving effective wealth diversificationwe interpret these results as indicating liquid asset holding is largely motivated by risk aversion. Cash holding is negatively associated with institutional cross share holdings, suggesting that these cross holdings facilitate an effective internal capital market. We find little evidence that managers have an independent influence on cash holdings.
    Date: 2009–05
  5. By: Subhayu Bandyopadhyay; Javed Younas
    Abstract: Understanding the causes of terrorism is important in predicting it and in developing an effective counterterrorism strategy. Data on the incidence of terrorist attacks and casualties suggest that domestic terrorism poses a substantially larger threat than transnational terrorism in developing countries. In spite of this fact, research has focused mostly on the latter. In analyzing both types, we find that political freedom and civil liberties affect domestic terrorism in a non monotonic way. Countries with either authoritarian regimes or with mature democratic systems experience less terrorism. This result has important policy implications: It suggests that one needs to be patient in the path to democracy, because the transition is likely to be associated with more violence. Interestingly, more religious fractionalization is associated with less terrorism in most of our specifications, while ethnic fractionalization raises domestic terrorism. On the other hand, poverty and lack of education do not appear to directly influence either domestic or transnational terrorism. All specifications show that “rule of law” reduces terrorism.
    Keywords: Terrorism
    Date: 2009
  6. By: Misra, Jaydev
    Abstract: Democratic decentralization in the state of West Bengal, of its own, are not producing systems that are more effective or more accountable to local needs and interests. The formal mechanisms matter less than the informal institutions that underpin local political economies. And the understanding of it by the poor may have been reflected in the ballot box of last Panchayat election held in 2008. If 'only alternative of the left is better left', then the left strategy of democratic decentralization must have to be replaced by alternative model with more accountability, less corruption and abolition of those clientilsm.
    Keywords: Democratic decentralization; participation; access; control; sustainable development; clientelism
    JEL: R58 R0
    Date: 2008–06
  7. By: Uppal, Yogesh
    Abstract: I examine the effect of legislative turnover on the size and composition of government expenditures in Indian state elections during 1980-2000. The paper finds that excessive turnover in Indian state elections results in an inefficient government expenditure policy. First, the higher the turnover, the larger is the size of government. Second, excessive turnover affects the allocative efficiency of the government expenditure by skewing the composition of government spending towards pure consumption expenditure and away from more productive investment expenditure. The findings imply that a lack of a proper commitment mechanism in political markets could be a source of inefficiency in government policy.
    Keywords: Legislative turnover; Indian elections; government spending
    JEL: E62 H11 H7 H5
    Date: 2009–06–02
  8. By: M.Rosaria Alfano; A. Laura Baraldi (Dipartimento di Diritto ed Economia, Seconda Università di Napoli)
    Keywords: Economic Growth, Electoral System, Corruption, Public expenditure, Education
    Date: 2008–03

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