New Economics Papers
on Collective Decision-Making
Issue of 2011‒03‒26
nine papers chosen by

  1. Policymakers' Votes and Predictability of Monetary Policy By Andrei Sirchenko
  2. What Drives U.S. Immigration Policy? Evidence from Congressional Roll Call Votes By Facchini, Giovanni; Steinhardt, Max
  3. Central Banks' Voting Records and Future Policy By Roman Horvath; Katerina Smidkova; Jan Zapal
  4. The Politicians' Wage Gap: Insights from German Members of Parliament By Andreas Peichl; Nico Pestel; Sebastian Siegloch
  5. Campaign Contributions and Political Polarization By Tarhan, Simge
  6. Endogenous Elites: Power Structure and Patron-Client Relationships By Petros G. Sekeris
  7. An algebraic approach to general aggregation theory: Propositional-attitude aggregators as MV-homomorphisms By Frederik Herzberg
  8. Independent Candidates in a Parliamentary Election in India: A Poisson Regression Model By Bhattacharya, Kaushik
  9. Can regional transfers buy public support? Evidence from EU structural policy By Osterloh, Steffen

  1. By: Andrei Sirchenko
    Abstract: The National Bank of Poland does not publish the Monetary Policy Council's voting records before the subsequent policy meeting. Using real-time data, this paper shows that a prompter release of the voting records could improve the predictability of policy decisions. The voting patterns reveal strong and robust predictive content even after controlling for policy bias and responses to in.ation, real activity, exchange rates and financial market information. They contain information not embedded in the spreads and moves in the market interest rates, nor in the explicit forecasts of the next policy decision made by market analysts in Reuters surveys. Moreover, the direction of policymakers' dissent explains the direction of analysts.forecast bias. These findings are based on the voting patterns only, without the knowledge of policymakers' names.
    Keywords: monetary policy; predictability; policy interest rate; voting records; real-time data
    JEL: D70 E52 E58
    Date: 2011
  2. By: Facchini, Giovanni (Erasmus University Rotterdam); Steinhardt, Max (Hamburg Institute of International Economics (HWWI))
    Abstract: Immigration is one of the most hotly debated policy issues in the United States today. Despite marked divergence of opinions within political parties, several important immigration reforms were introduced in the post 1965 era. The purpose of this paper is to systematically analyze the drivers of congressional voting behavior on immigration policy during the period 1970-2006, and in particular, to assess the role of economic factors at the district level. Our findings provide robust evidence that representatives of more skilled labor abundant constituencies are more likely to support an open immigration policy concerning unskilled labor. Thus, a simple factor-proportions-analysis model provides useful insights regarding the policy making process on one of the most controversial facets of globalization.
    Keywords: immigration policy, voting, political economy
    JEL: F22 J61
    Date: 2011–03
  3. By: Roman Horvath; Katerina Smidkova; Jan Zapal
    Abstract: We assess whether the voting records of central bank boards are informative about future monetary policy. First, we specify a theoretical model of central bank board decision-making and simulate the voting outcomes. Three different versions of model are estimated with simulated data: 1) democratic, 2) consensual and 3) opportunistic. These versions differ in the extent to which the chairman and other board members exchange information prior to the voting. The model shows that the voting pattern is informative about future monetary policy provided that the signals about the optimal policy rate are noisy and that there is sufficient independence in voting across the board members, which is in line with the democratic version. Next, the model predictions are tested on real data on six countries (the Czech Republic, Hungary, Poland, Sweden, the United Kingdom and the United States). Subject to various sensitivity tests, it is found that the democratic version of the model corresponds best to the real data and that in all countries the voting records are informative about future monetary policy, making a case for publishing the records.
    Keywords: Collective decision-making, monetary policy, transparency, voting record.
    JEL: C78 D78 E52 E58
    Date: 2010–12
  4. By: Andreas Peichl; Nico Pestel; Sebastian Siegloch
    Abstract: Using a unique dataset of German members of parliament with information on total earnings including outside income, this paper analyzes the politicians¿ wage gap (PWG). After controlling for observable characteristics as well as accounting for selection into politics, we find a positive PWG which is statistically and economically significant. It amounts to 40-60% compared to citizens with an executive position. Hence, we show that the widely held claim that politicians would earn more in the private sector is not confirmed by our data. Our findings are robust with respect to potential unobserved confounders. We further show that the PWG exceeds campaigning costs and cannot be justified by extraordinary workload. Hence, our results suggest that part of the PWG can be interpreted as rent extraction. This calls for a reform of the regulation of outside earnings, which account for a sizeable share of the wage premium.
    Keywords: Politicians' wage gap, descriptive representation, citizen-candidate model, political rents, outside earnings
    JEL: D72 H11 H83 J31 J45
    Date: 2011
  5. By: Tarhan, Simge
    Abstract: Political candidates raise campaign funds from a variety of sources. Whether contributions from certain sources should be restricted has been the subject of debate in the U.S. since the Federal Election Campaign Act of 1971. I contribute to this debate by showing that the source of contributions affects the policy choice of candidates. When lobby contributions are limited, and candidates need to choose between costly fundraising activities or self-financing of the campaign, two types of candidates emerge: "rich" candidates with non-partisan positions and "poor" candidates choosing policies along party lines. An implication of the model is that restricting self-finance causes policy platforms to diverge under certain conditions. For instance, the Millionaires' Amendment in McCain-Feingold, which raised limits on contributions for candidates whose opponent is relying heavily on personal funds, could increase political polarization in the United States.
    Keywords: Campaign finance; contribution limits; PACs; partisan voters; self-financing
    JEL: D72
    Date: 2010–11–01
  6. By: Petros G. Sekeris (Center for Research in the Economics of Development, University of Namur)
    Abstract: In weak institutional settings, autocrats barter political and economic concessions for support to remain in power and extract rents. Instead of viewing the favors’ beneficiaries, i.e. the elites, as an exogenous entity, we allow the king to decide whom to coopt provided the subjects are heterogeneous in the potential support - their strength - they could bring to the regime. While the ruler can select the elites on the basis of their personal characteristics, an alternative strategy consists in introducing some uncertainty in the cooptation process. The latter strategy allows the king to reduce the clients’ cooptation price since in the event of a revolution the likelihood of being included in the future body of elites is lower. We show that weak rulers are more likely to coopt the society’s strongest individuals, while powerful rulers diversify the composition of their clientele. Moreover, when agents value more future discounted outcomes, the king is more likely to randomly coopt subjects. Weak institutions Autocracy Rent seeking Elites
    Keywords: Weak Institutions, Autocracy, Rent Seeking, Elites.
    Date: 2010–03
  7. By: Frederik Herzberg (Institute of Mathematical Economics, Bielefeld University)
    Abstract: This paper continues Dietrich and List's [2010] work on propositional-attitude aggregation theory, which is a generalised unification of the judgment-aggregation and probabilistic opinion-pooling literatures. We first propose an algebraic framework for an analysis of (many-valued) propositional-attitude aggregation problems. Then we shall show that systematic propositional-attitude aggregators can be viewed as homomorphisms in the category of C.C. Chang's [1958] MV-algebras. Since the 2-element Boolean algebra as well as the real unit interval can be endowed with an MV-algebra structure, we obtain as natural corollaries two famous theorems: Arrow's theorem for judgment aggregation as well as McConway's [1981] characterisation of linear opinion pools.
    Keywords: propositional attitude aggregation, judgment aggregation, linear opinion pooling, Arrow's impossibility theorem, many-valued logic, MV-algebra, homomorphism, Arrow's impossibility theorem, functional equation
    JEL: D71
    Date: 2011–03
  8. By: Bhattacharya, Kaushik
    Abstract: The paper attempts to explain the number of independent candidates in Indian parliamentary election in the year 2004. The statistical models developed are applications and generalizations of Poisson and Negative Binomial distributions. Our results suggest that the distribution of independent candidates can be explained well with a negative binomial probability model or its generalizations. Our results also help to identify three major factors behind the variations in the number of independent candidates. First, a major determinant of the number of independent candidates is political fractionalization. Results suggest that the number of non-independent candidates would typically lead to more independent candidates in the fray. Interestingly, our analysis points out that the major determinant appears to be political fractionalization at the State level rather than at the constituency itself. Second, we find some indirect evidence of presence of free riders. Free riders typically stand in urban constituencies and against the so called VIP candidates. Third, our results suggest that SC and ST constituencies would have typically lower number of independent candidates due to lack of potential candidates as compared to general constituencies.
    Keywords: Independent Candidates; Election; Poisson; Negative Binomial
    JEL: C25
    Date: 2010–05
  9. By: Osterloh, Steffen
    Abstract: Regional transfers are assumed to have an impact on the public opinion towards the benefactor, but empirical evidence is still scarce. In this paper we test this hypothesis for the structural funds of the European Union (EU) by combining detailed data on regional transfers with public opinion surveys. A positive impact of transfers on public support for the EU can be confirmed. Moreover, we scrutinize the role of awareness of being a recipient of funds in this process. In particular, we find that the impact of the amount of transfers on the individual's awareness is heterogenous and particularly depends on education. Finally, we show that the type of information source which arouses the citizen's awareness of the transfers affects the impact on his opinion. --
    Keywords: Regional policy,vote purchasing,public opinion,European Union
    JEL: D72 F59 H73
    Date: 2011

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