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on Positive Political Economics |
| By: | Urs Steiner Brandt (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | This paper seeks to investigate the following issues: What is the resulting out-come, when regulation is determined by interest groups that compete for influ-ence over the regulatory process? Given this, can we predict how climate change related changes in the underlying biological factors will affect the be-haviour of the interest groups and the resulting regulatory outcome. |
| Date: | 2005–03 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:63&r=pol |
| By: | S. Gupta; Raghbendra Jha |
| Abstract: | This paper examines allocation of local public goods over jurisdictions (villages) with individuals with identical tastes and different incomes, in a model with democratic institutions and majority rule. The median voter (in income) in each jurisdiction determines the probability of re-election for the incumbent government. The jurisdiction with the median of these median voters is most favoured. With identical median voters in jurisdictions, and with re-election requiring less than 50mandate, jurisdictions with higher income inequality get favoured. Results from a survey data (from NCAER) on infrastructure provision in 1669 Indian villages confirm this hypothesis. Ethnic fragmentation does not affect public good provision but political fragmentation does. Finally, villages with the median population are the most favoured for public goods allocation. Sparsely populated and too densely populated villages are relatively neglected. |
| Keywords: | median voter, local public good, reservation utility |
| JEL: | H41 H72 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2006-06&r=pol |
| By: | Kira Boerner (Department of Economics, University of Munich, Gebelestr. 13, 81679 Munich, Tel: +49 89 980970, Fax: +49 89 2180 2767, kira@dr-boerner.de); Christa Hainz (Department of Economics, University of Munich, Akademiestr. 1/III, 80799 Munich, Tel.: +49 89 2180 3232, Fax.: +49 89 2180 2767, christa.hainz@lrz.uni-muenchen.de.) |
| Abstract: | In many developing countries, we observe rather high levels of corruption. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. We explain why citizens do not exert enough political pressure to reduce corruption if financial institutions are missing. Our model is based on the fact that corrupt officials have to pay entry fees to get lucrative positions. The mode of financing this entry fee determines the distribution of the rents from corruption. In a probabilistic voting model, we show that a lack of financial institutions can lead to more corruption as more voters are part of the corrupt system. Thus, the economic system has an effect on political outcomes. Well-functioning financial institutions, in turn, can increase the political support for anti-corruption measures. |
| Keywords: | Corruption, Financial Markets, Institutions, Development, Voting |
| JEL: | D73 D72 O17 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:135&r=pol |
| By: | Kira Börner (Department of Economics, University of Munich, Akademiestr. 1/III, 80799 Munich, boerner@lmu.de); Silke Uebelmesser (Center for Economic Studies, Schackstr. 4, 80539 Munich, uebelmesser@lmu.de) |
| Abstract: | This paper investigates the impact of emigration on the political choice regarding the size of the welfare state. Mobility has two countervailing effects: the political participation effect and the tax base effect. With emigration, the composition of the constituency changes. This increases the political influence of the less mobile part of the population. The new political majority has to take into account that emigration reduces tax revenues and thereby affects the feasible set of redistribution policies. The interaction of the two effects has so far not been analyzed in isolation. We find that the direction of the total effect of migration depends on the initial income distribution in the economy. Our results also contribute to the empirical debate on the validity of the median-voter approach for explaining the relation between income inequality and redistribution levels. |
| Keywords: | migration, redistribution, voting |
| JEL: | F22 H50 D31 D72 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:154&r=pol |
| By: | JOhn Bennett; Saul Estrin; |
| Abstract: | We address the impact of corruption in a developing economy in the context of an empirically relevant hold-up problem - when a foreign firm sinks an investment to provide infrastructure services. We focus on the structure of the economy’s bureaucracy, which can be centralized or decentralized, and characterize the ‘corruptibility’ of bureaucrats in each case. Results are explained in terms of the noninternalization, under decentralization, of the ‘bribe externality’ and the ‘price externality.’ In welfare terms, decentralization is favoured, relatively speaking, if the tax system is less inefficient, funding is less tight, bureaucrats are less venal, or compensation for expropriation is ungenerous. |
| Keywords: | Corruption, Bureaucratic Structure, Developing Economy |
| JEL: | D73 H11 H77 |
| Date: | 2006–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2006-825&r=pol |
| By: | Scott Gehlbach; Konstantin Sonin |
| Abstract: | We initiate examination of the political boundaries of the firm by exploring the phenomenon of “businessman candidates”: business owners and managers who bypass conventional means of political influence to run for public office themselves. We argue that in-house production of political influence will be more likely in institutional environments where candidates find it difficult to make binding campaign promises. When campaign promises are binding, then a businessman may always pay a professional politician to run on the platform that political competition would otherwise compel the businessman to adopt. In contrast, when commitment to a campaign platform is impossible, then candidate identity matters for the policies that will be adopted ex post, implying that a businessman may choose to run for office if the stakes are sufficiently large. We illustrate our arguments through discussion of gubernatorial elections in postcommunist Russia, where businessmen frequently run for public office, institutions to encourage elected officials to keep their campaign promises are weak, and competition for rents is intense. |
| Keywords: | Businessman candidates, elections, citizen candidates, institutions, political economy |
| JEL: | D72 P16 P26 N40 |
| Date: | 2004–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-733&r=pol |
| By: | J Carlos Dominguez (QEH) |
| Abstract: | How and why can a political mobilisation prevent what appears to be an economically rational and beneficial government investment? The present paper explores the ways in which both public policy and contentious politics theories can be potentially bridged to answer this question. It suggests ways in which concepts used by public policy theorists such as 'policy windows' (Kingdon, 1984) or 'advocacy coalitions' (Sabatier, 1999) may be useful to understand the emergence of political opportunities or the construction of collective action frames. The case study to be used is the project to export liquefied gas from Bolivia to California, which was promoted by the administration of Gonzalo Sánchez de Lozada in 2002 and was cancelled after civil society groups not only mobilise to resist it, but to demand the resignation of the president. |
| URL: | http://d.repec.org/n?u=RePEc:qeh:qehwps:qehwps127&r=pol |
| By: | Jürgen von Hagen (ZEI, University of Bonn, Indiana University, and CEPR) |
| Abstract: | We discuss two essential problems of the political economy of public finances: The principal agent problem between voters and elected politicians and the common pool problem arising from the fact that money drawn from a general tax fund is used to pay for policies targeting more or less narrow groups in society. Three institutional mechanisms exist to deal with these problems, ex-ante rules controlling the behavior of elected policy makers, electoral rules creating accountability of and competition among policy makers, and budgeting processes internalizing the common pool externality. We review recent theoretical and empirical research and discuss its implications for research and institutional design. |
| Keywords: | electoral systems, fiscal rules, budgeting processes |
| JEL: | H11 H61 H62 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:149&r=pol |
| By: | Urs Steiner Brandt (Department of Environmental and Business Economics, University of Southern Denmark); Frank Jensen (Institute of Local Government Studies, Denmark); Lars Gårn Hansen (Institute of Local Government Studies, Denmark); Niels Vestergaard (Department of Environmental and Business Economics, University of Southern Denmark) |
| Abstract: | Real life implies that public procurement contracting of renewable resources results in repeated interaction between a principal and the agents. The present paper analyses ratchet effects in contracting of renewable resources and how the presence of a resource constraint alters the “standard” ratchet effect result. We use a linear reward scheme to influence the incentives of the agents. It is shown that for some renewable resources we might end up both with more or with less pooling in the first-period compared to a situation without a resource constraint. The reason is that the resource constraint implies a smaller performance de-pendent bonus, which reduces the first-period cost from concealing information but at the same time the resource constraint may also imply that second-period benefits from this concealment for the efficient agent are reduced. In situations with high likelihood of first-period pooling, the appropriateness of applying lin-ear incentive schemes can be questioned. |
| Keywords: | Political support function, political economy, environmental regula-tion, lobbyism, rent-seeking, taxation, auction, grandfathering, emission trad-ing, European Union, interest groups, industry, consumers, environmentalists |
| JEL: | Q28 H2 H4 |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:sdk:wpaper:44&r=pol |
| By: | Alex Cobham (QEH) |
| Abstract: | The Black Book of Sudan claims to identify a pattern of political control - by people of its northern regions - which is unbroken during the post-independence period. This is the basis for the view of many of the rebels in the south and west of the country that the conflicts are the result not of racial or religious discrimination but rather of regional marginalisation. This paper uses the available data to evaluate the extent to which differences in regional access to power have resulted in differential human development progress. Indicators ranging from infant mortality to adult literacy, coupled with data on regional expenditure allocations, offer substantial support to the idea that policy has discriminated against the population of the southern and western regions, not least Darfur. The danger is that development community efforts that do not recognise the basis for the conflict may facilitate a continuation of the same distortions and sow the seeds for future conflict even before peace is achieved. |
| URL: | http://d.repec.org/n?u=RePEc:qeh:qehwps:qehwps121&r=pol |