nep-pol New Economics Papers
on Positive Political Economics
Issue of 2005‒07‒25
four papers chosen by
Eugene Beaulieu
University of Calgary

  1. How Interest Groups with Limited Resources can Influence Political Outcomes: Information Control and the Landless Peasant Movement in Brazil. By Lee J. Alston; Gary D. Libecap; Bernardo Mueller
  2. Even Giants Need A Club: Domestic Institutions, Market Size, And Regulatory Influence By DAVID BACH
  3. Öffentlichkeitsarbeit der Regierung (Governmental Public Relations) By Christoph Engel
  4. Accession to EMU and exchange rate policies in Central Europe - decision under institutional constraints By Andreas Freytag

  1. By: Lee J. Alston; Gary D. Libecap; Bernardo Mueller
    Abstract: In this paper we examine how an interest group with limited resources (votes and campaign contributions) nevertheless effectively influenced political policy through the control of information to general voters. Voters in turn lobbied politicians to take actions desired by the interest group. Our focus is on the Landless Peasants Movement (Movimento Sem-Terra) or MST and its success in invigorating land reform in Brazil. Although we direct attention to the MST, our analysis can be generalized to interest group behavior in other settings.
    Keywords: Landless Peasant Movement; MST; Interest groups; multiprincipal; multitask; land reform.
    JEL: D23 D72 D78
    Date: 2005–06
  2. By: DAVID BACH (Instituto de Empresa)
    Abstract: This paper show that work on international market regulation has paid insufficient attention to the critical role played by domestic political and regulatory institutions. Existing literature emphasizes the role of market power, determined by market size, in analyzing international regulatory influence. While we do not contest the importance of market power, we introduce the notion of domestic regulatory capacity to capture the domestic institutional side of international market regulation that previous work has sidestepped. Domestic regulatory capacity is the missing link between latent market power vested in market size and international influence activated through regulatory institutions.
    Date: 2005–03
  3. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn, Germany)
    Abstract: Should government be allowed to spend tax payers’ money on public relations? If one frames the question that way, the negative answer suggests itself. Yet government communication serves more purposes. These purposes may be analysed in terms of behavioural economics and psychology. In moral suasion, government communication is the governance tool itself. Most other governance tools do not automatically reach their addressees. Appropriate communication is necessary for them to become effective. Finally, government is a legitimate player in political process, and communication to the public is a legitimate element of this process. Specifically, the normatively desirable and the normative problematic aspects can usually not be fully disentangled. Hence, the potential distortion of elections must be outweighed against the governance effect. This paper does so by interpreting governmental public relations as a bundled product. It models the people as the principal, and the political parties running government as the agent. The distortion effect is observable, the governance effect is not. This set-up of the model invites a second-best solution in terms of mechanism design. Government is free to advertise. But advertising is costly in that it generates a handicap at the next elections. This solution is taken as a benchmark for discussing politically more digestible third and forth best alternatives.
    Keywords: Governmental Public Relations; Governmental Communication; Mechanism Design; Constitutional Law
    JEL: D72 D82
    Date: 2005–01
  4. By: Andreas Freytag
    Abstract: Currently, five Central and Eastern European (CEE) countries are negotiating about the membership in the European Union: Czech Republic, Estonia, Hungary, Poland and Slovak Republic. There is a broad consensus that they will eventually become members of the European Monetary Union. This requires careful analysis of the appropriate exchange rate regime prior to the accession. The exchange rate arrangement of the EU applicants plays an important - but not exclusive - role in their policy-mix. The history of transition economies as well as of other emerging markets illustrates that exchange rate policies as such are not a distinctive factor for the success and failure of monetary policy with respect to price stability. In this paper it is argued that this outcome has not emerged by chance. There is no naturally superior exchange rate regime that can be applied to all advanced countries in transition aiming at stability. By way of contrast, an exchange rate arrangement is part of the monetary regime, which itself is a component of the economic order. The latter consists of both politically chosen and spontaneously evolved institutions. This leads to the hypothesis that the choice of an exchange rate arrangement in CEE is constrained by this institutional setting. The theoretical considerations as well as empirical evidence indeed suggest that for guaranteeing stability, beside the legal monetary commitment (part of which being the exchange rate regime) the institutional framework in the country is decisive. If the latter matches the commitment, the credibility of a monetary regime is relatively high, obviously encouraging monetary stability. Therefore, the institutional setting in each country should be analysed extensively before an exchange rate arrangement is chosen.

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