nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒04‒24
six papers chosen by
Eugene Beaulieu
University of Calgary

  1. Pork for Policy: Executive and Legislative Exchange in Brazil By Lee J. Alston; Bernardo Mueller
  2. Labor Market Conditions, Political Events and Palestinian Suicide Bombings By Edward A. Sayre
  3. Is Inequality Harmful for the Environment in a Growing Economy? By Hubert Kempf; Stéphane Rossignol
  4. To Draft or Not to Draft? Efficiency, Generational Incidence, and Political Economy of Military Conscription By Panu Poutvaara; Andreas Wagener
  5. Minimum Wage or Negative Income Tax: Why Skilled Workers May Favor Wage Rigidities By Maya Bacache-Beauvallet; Etienne Lehmann
  6. US Politics and World Bank IDA-Lending By Thomas Barnebeck Andersen; Henrik Hansen; Thomas Markussen

  1. By: Lee J. Alston; Bernardo Mueller
    Abstract: The Brazilian Constitution of 1988 gave relatively strong powers to the President. We model and test Executive-Legislative relations in Brazil and demonstrate that Presidents have used pork as a political currency to exchange for votes on policy reforms. In particular Presidents Cardoso and Lula have used pork to exchange for amendments to the Constitution. Without policy reforms Brazil would have had greater difficulty meeting their debt obligations. The logic for the exchange of pork for policy reform is that Presidents typically have greater electoral incentives than members of Congress to care about economic growth, economic opportunity, income equality and price stabilization. Members of Congress generally care more about redistributing gains to their constituents. Given the differences in preferences and the relative powers of each, the Legislative and Executive benefit by exploiting the gains from trade.
    JEL: D73 D72 D23
    Date: 2005–04
  2. By: Edward A. Sayre (Agnes Scott College)
    Abstract: Objectives. This paper analyzes the relationship between Palestinian suicide bombings and economic and political conditions from 1993 to 2001. Labor market conditions could affect the number of terror attacks because when the economy worsens, the opportunity cost of engaging in suicide terrorism decreases. An alternative explanation is that suicide bombings are responses to changes in the political environment. Methods. Count data regression models are employed to explore the relative importance of economic and political factors in determining the frequency of suicide bombings. Results. Economic conditions explain some of the occurrence of suicide bombings from 1993 to 2001, and some political events are also strongly correlated with bombings. Conclusions. The results imply that the roots of suicide bombing may lie in the unfulilled economic promises of the Oslo peace process, but specific acts by Israelis are a proximite cause of the attacks.
    Keywords: West Bank, Gaza, terrorism, unemployment, Palestinian
    JEL: J
    Date: 2005–04–19
  3. By: Hubert Kempf (Université Paris-1 Panthéon Sorbonne); Stéphane Rossignol (Université de Versailles, and EUREQua Université Paris-1 Panthéon-Sorbonne)
    Abstract: In this paper we investigate the relationship between inequality and the environment in a growing economy from a political economy perspective. We consider an endogenous growth economy, where growth generates pollution and a deterioration of the environment. Public expenditures may either be devoted to supporting growth or abating pollution. The decision over the public programs is done in a direct democracy, with simple majority rule. We prove that the median voter is decisive and show that inequality is harmful for the environment: the poorer the median voter relative to the average individual, the less she will tax and devote resources to the environment, preferring to support growth.
    Keywords: Inequality, Environment, Pollution abatement policy, Growth, Political economy
    JEL: D31 O11 Q50 Q58
    Date: 2005–01
  4. By: Panu Poutvaara (CEBR, Copenhagen Business School, CESifo and IZA Bonn); Andreas Wagener (University of Vienna, CESifo and CEBR)
    Abstract: We study the efficiency and distributional consequences of establishing and abolishing the draft in a dynamic model with overlapping generations, taking into account endogenous human capital formation as well as government budget constraints. The introduction of the draft initially benefits the older generation while harming the young and all future generations. Its Pareto-improving abolition requires levying age-dependent taxes on the young. These being infeasible, abolition of the draft would harm the old. The intergenerational incidence of the gains and losses from its introduction and abolition helps to explain the political allure of the draft.
    Keywords: draft, conscription, education, intergenerational fairness
    JEL: H20 H57 I21 D63
    Date: 2005–04
  5. By: Maya Bacache-Beauvallet (CEPREMAP, ENS Paris-Jourdan); Etienne Lehmann (ERMES, University of Paris 2 and IZA Bonn)
    Abstract: This article studies the political choice over the extent and the means of income redistribution between high and low skilled workers. Redistributive tools encompass fiscal transfers with negative income tax and minimum wage. Using fiscal instruments only is assumed optimal. We show that high skilled workers may favor a second-best minimum wage requirement. This is because minimum wage increases unemployment, hence the marginal cost of redistribution is higher which gives a pretext for high skilled workers to moderate low skilled workers claim for income redistribution.
    Keywords: unemployment, political economics, income redistribution, minimum wage
    JEL: D78 E24 H23 J38
    Date: 2005–04
  6. By: Thomas Barnebeck Andersen (Institute of Economics, University of Copenhagen); Henrik Hansen (Institute of Economics, University of Copenhagen); Thomas Markussen (Institute of Economics, University of Copenhagen)
    Abstract: This paper studies the role of US political factors in the allocation of World Bank concessional lending, where US political interests are proxied by voting similarity in the United Nations General Assembly on issues identified as important by the US Department of State. In contrast to previous studies we find that the US exerted a significant influence on IDA lending during the period 1993 - 2000. We demonstrate that the influence was both statistically as well as economically significant. Finally, we demonstrate that our result is robust with respect to the omission of the IDA Country Performance Rating index.
    Keywords: aid; World Bank; US political influence
    JEL: F34 F35 O19
    Date: 2004–08

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