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on Collective Decision-Making |
| By: | Emmanuelle Auriol; Nicolas Bonneton; Mattias Polborn |
| Abstract: | his article studies the behavior of rational voters who, although aware of the limitations of populist leaders, consider supporting them strategically. We present a moral hazard model of electoral accountability in which elite politicians are both office- and policy-motivated and face the risk of being replaced by elite or populist candidates. The optimal retention strategy depends on the policy implemented by the incumbent in the previous period and its perceived success, and involves differentiated punishment for a failing incumbent. Rational voters only vote for populists when the chosen policy is both perceived as failure and as benefiting the elites. This challenges the simplistic view of the populist vote as mere frustration with the elite. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_473&r=cdm |
| By: | Felix Kersting (HU Berlin) |
| Abstract: | This paper examines the consequences of a government mimicking the policy of its competitor by studying the introduction of the welfare state in 19th century Germany. The reform conducted by the conservative government targeted blue-collar workers and aimed to reduce the success of the socialist party. The result based on a difference-in-differences design shows that the socialist party benefited in elections due to the reform. The analysis of the mechanism points to the socialist's issue ownership by strengthening its reform orientation, which voters followed. The results are not driven by other political and economic channels related to the reform. |
| Keywords: | welfare state; socialism; government; opposition; issue ownership; voting behavior; Germany; |
| JEL: | D74 H53 I38 N44 P16 |
| Date: | 2023–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:448&r=cdm |
| By: | Ghiglino, C.; Muller, A. |
| Abstract: | We provide a politico-economic theory of income redistribution with endogenous social identity of voters. Our analysis uncovers a non-monotonic relationship between market income inequality and redistributive taxation in line with the mixed evidence on the sign of their empirical relationship: taxation first increases with wage inequality as all voters identify with others, but then drops sharply as affluent voters switch to identify in-group. We further add ethnicity as an identification attribute. Consistent with existing empirical evidence, our model predicts that the presence of ethnic minorities and across ethnic group inequality reduce redistribution, while within ethnic group wage inequality increases it. |
| Keywords: | Inequality, Probabilistic Voting, Redistribution, Social Class, Social Identity, Tax Rate |
| JEL: | D64 D71 D72 H20 |
| Date: | 2023–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2371&r=cdm |
| By: | Johnny Cotoc (McMaster University); Alok Johri (McMaster University); César Sosa-Padilla (University of Notre Dame/NBER) |
| Abstract: | Nations vary widely in how often they are governed by left-wing governments. Using data from 56 nations over 45 years, we find that the propensity of a nation to elect the left is positively correlated with both the average level and volatility of their sovereign spreads. To explain these facts, we build a quantitative sovereign default model in which two policymakers (left and right) alternate in power. Reelection probabilities are increasing in government spending, with the left having a small advantage (as found in the data). We use variation in the responsiveness of reelection probabilities to government spending in order to create economies that elect the left more or less frequently in equilibrium. We call these the left leaning and the right leaning economy. The left leaning economy faces worse borrowing terms due to higher default risk. Moreover, both policymakers have a greater reluctance for fiscal austerity and choose a higher share of government spending as compared to their counterparts in the right leaning economy. These features imply large welfare losses for households. |
| Keywords: | Sovereign default, Interest rate spread, Political turnover, Left-wing, Rightwing, Cyclicality of fiscal policy. |
| JEL: | F34 F41 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:aoz:wpaper:290&r=cdm |