nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒01‒14
seventeen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Nominations for sale By Console Battilana, Silvia; Shepsle, Kenneth
  2. Yardstick competition: a spatial voting model approach By Canegrati, Emanuele
  3. Does the Party in Power Matter for Economic Performance? By Elliott Parker
  4. The Political Economy of Transport Infrastructure Funds By Andreas Kopp
  5. The Single-Mindedness Theory: Micro-foundation and Applications to Social Security Systems By Canegrati, Emanuele
  6. The Common External Tariff in a Customs Union: Voting, Logrolling, and National Government Interests By Tavares, Samia
  7. Political Bad Reputation By Canegrati, Emanuele
  8. Special Interest Groups and 4th Best Transport Pricing By Bernhard Wieland
  9. The Single-Mindedness of Labor Unions: Theory and Empirical Evidence By Canegrati, Emanuele
  10. The Efficiency of Decentralised and Devolved Government: A Framework By Alex Christie; Kim Swales
  11. Deeper Integration and Voting on the Common European External Tariff By Tavares, Samia
  12. Exploding Crime? Topic Management in Central American Newspapers By Sebastian Huhn; Anika Oettler; Peter Peetz
  13. Crowding-out in productive and redistributive rent seeking By Giuseppe, Dari-Mattiacci; Bruno, Lovat; Eric, Langlais; Francesco, Parisi
  14. Corruption and Productivity Growth in OECD Countries By Maria Del Mar Salinas-Jimenez; Javier Salinas-Jimenez
  15. Demand Bargaining and Proportional Payoffs in Legislatures By Maria Montero; Juan Vidal-Puga
  16. The Single Mindedness Theory of Labor Unions By canegrati, emanuele
  17. Public pensions and return migration By Tim Krieger

  1. By: Console Battilana, Silvia; Shepsle, Kenneth
    Abstract: Models of nomination politics in the US often find "gridlock" in equilibrium because of the super-majority requirement in the Senate for the confirmation of presidential nominees. A blocking coalition often prefers to defeat any nominee. Yet empirically nominations are successful. In the present paper we explore the possibility that senators can be induced to vote contrary to their nominal (gridlock-producing) preferences through contributions from the president and/or lobbyists, thus breaking the gridlock and confirming the nominee. We model contributions by the president and lobbyists according to whether payment schedules are conditioned on the entire voting profile, the vote of a senator, or the outcome. We analyze several extensions to our baseline approach, including the possibility that lobbyists may find it more productive to offer inducements to the president in order to affect his proposal behavior, rather than trying to induce senators to vote for or against a given nominee.
    Keywords: lobbying; supermajority institutions
    JEL: Z19
    Date: 2006–10–26
  2. By: Canegrati, Emanuele
    Abstract: I analyse a yardstick competition game using a spatial voting model, where voters vote for a candidate according to the distance between their Ideal Point and the policy selected by a candidate. The policy which is closest to a voter’s IP provides the voter with a higher utility so that minimizing the distance means maximising the utility. I demonstrate that in the presence of asymmetrical information the existence of yardstick competition entails a selection device but not a discipline device, suggesting the existence of a trade off between these two goals. In the second part, I analyse an economic environment characterised by the presence of shocks, whose sign and magnitude are private information of incumbents. This time, the introduction of yardstick competition acts both as a selection and a discipline device.
    JEL: H73 D72 I38
    Date: 2006–04
  3. By: Elliott Parker (Department of Economics, University of Nevada, Reno)
    Abstract: In this brief paper, I consider whether five common political beliefs have any basis in fact. Does the economy grow faster when Republicans are in charge? Does the size of the government actually keep expanding? If so, is this growth correlated with Democrats being in charge? Does bigger government lead to slower growth? Finally, is it accurate to characterize Democrats as the “tax and spend” party? While correlation is not causation and theoretical relationships are complex, the data on U.S. economic performance during the postwar period does not appear to support any of these beliefs, and in fact tends more to support the alternative hypotheses.
    Keywords: deficits, government spending, economic growth, political parties
    JEL: H00 H50 H60
    Date: 2006–12
  4. By: Andreas Kopp (OECD/ECMT Transport Research Centre)
    Keywords: political economy, transport, infrastructure
    JEL: D23 H54 L91
    Date: 2006–10–02
  5. By: Canegrati, Emanuele
    Abstract: The central purpose of this paper is to introduce a new political economy approach which explains the characteristics of Social Security Systems. This approach is based on the Single-Mindedness Theory (SMT), which assumes that the more single-minded groups are able to exert a greater power of influence on Governments and eventually obtain what they ask. Governments are seen as voting-maximizer policy-makers, whose unique goal is winning elections. Using an OLG model and a probabilistic voting approach, I analyse a society divided into two groups, the old and the young, which only differ for their preferences for leisure. I show that, to win elections, the Government sets the optimal policy vector taking into account the preferences for leisure of both groups; eventually, the young gain a fiscal benefit, whilst the old have such an high marginal tax rate that they prefer to retire and spend all their time in leisure, a fraction of which is used in undertake political activities whose aim is the capture of politicians.
    Keywords: probabilistic voting model; single-mindedness; social security systems
    JEL: J26 J22 D72 D31
    Date: 2006–09
  6. By: Tavares, Samia
    Abstract: Missing from the analysis of customs unions has been a consideration of collective decisionmaking by countries regarding the union’s common trade policy. In the case of the common European external tariff, how governments voted was not public information. This paper uses a unique dataset to derive member states’ tariff preferences, which are then used to establish the decision rule before 1987, when individual governments had veto power. Results indicate a principle of unanimity, as well as the presence of logrolling. The political equilibrium for the common external tariff is also illustrated to have shifted as a result of union enlargements.
    Keywords: Collective decisions; tariff preferences; political economy; European Community; decisive voter
    JEL: F14 D72 F13
    Date: 2006–07–25
  7. By: Canegrati, Emanuele
    Abstract: The goal of this paper is to explore how the connection between political ideology and voters’ preferences is able to generate different equilibria in a yardstick competition game, where good incumbents are forced to create a bad reputation or, in other words, to mimic the bad incumbents’ behavior in order to win the elections in a two-candidate political competition.
    JEL: D72 D78
    Date: 2006–08
  8. By: Bernhard Wieland (Faculty of Transportation Sciences “Friedrich List”, Dresden Technical University)
    Keywords: transport, political economy, regulation
    JEL: H54 L51 L91
  9. By: Canegrati, Emanuele
    Abstract: In this paper I analyse a labour market where the wage is endogenously determined according to an Efficient Bargaining process between a firm and a labour union whose members are partitioned into two social groups: the old and the young. Furthermore, I exploit the Single-Mindedness theory, which considers the existence of a density function which endogenously depends on leisure. I demonstrate that, when preferences of one group for leisure are higher than those of the other group the latter suffers from higher tax rates and with lower level of wage rates and lower levels of leisure. Finally, since the former is more single-minded, it may exploit its greater political power in order to get a positive intergenerational transfer. Empirical evidence from the WERS 2004 survey confirms main results of the model.
    Keywords: bargaining models; labour unions; political economy; single-mindedness
    JEL: J51 J50 J52 J38 J22 J58 D71 J21 J26 J20
    Date: 2007–01
  10. By: Alex Christie; Kim Swales
    Abstract: A wide range of geographically decentralised governance structures exists across countries (Ter-Minassian, 1997). These differences in administrative and constitutional mechanisms come about, at least partly, by historical accident and wider political factors. However, in this paper we focus on the more narrowly defined efficiency implications of such arrangements. This is useful for identifying the motives that might underlie particular administrative set ups and the possible efficiency losses associated with specific forms of decentralisation or devolution. In particular, we develop a framework that allows a comparison of the effectiveness of implementing policy through three alternative systems. These are: a centralised; a decentralised; and a fully devolved structure. In this analysis we build on the work of Canes-Wrone et al, (2001) and Maskin and Tirole (2004) on representative democracy. The novelty is that we place this analysis in the context of a potentially decentralised or devolved regional administration. We find that the choice of appropriate administrative form depends upon the degree of homogeneity between regions, the relative efficiency of regional decision makers and their time discount rate.
    Date: 2006–08
  11. By: Tavares, Samia
    Abstract: Since the 1987 Single European Act, the European Union has deepened its integration process. In the case of the determination of the common external tariff, deeper integration implies that the tariff reflected union-wide preferences. If integration is still shallow, though, the observed tariff will reflect the preferences of a pivotal national government. How governments voted, however, was not public information. This paper uses a unique dataset to test the deep vs. shallow integration hypothesis in an effort to shed light on how decisions are made in the EU. Results support the deep integration hypothesis.
    Keywords: Collective decisions; deeper integration; tariffs; European Union; decisive voter
    JEL: F14 D72 F13
    Date: 2006–07–29
  12. By: Sebastian Huhn (GIGA Institute for Ibero-American Studies); Anika Oettler (GIGA Institute for Ibero-American Studies); Peter Peetz (GIGA Institute for Ibero-American Studies)
    Abstract: It has become common to state that criminal violence has superseded political violence in Central America. This paper presents the first results of a research project which analyses the social construction of violent realities in Costa Rica, El Salvador and Nicaragua. The authors describe the print media landscape in Central America and examine both the quality of leading newspapers and the main clusters of topics constituting the news discourse on violence. The analysis of the macro-structure of topic management in Central American newspapers allows to differentiate the “talk of crime”: it is more heterogeneous than often thought. There are signs that the problem of juvenile delinquency is emerging as the center of a cross-country discourse on “ordinary violence”. On the other hand, the talk of crime is centered around few topic clusters, with sexual violence and border-related discourse on violence being of key importance. Finally, the paper points to a heterogeneous array of discourse events that is connected to political developments and power-relations.
    Keywords: Central America, violence, discourse analysis, media
    Date: 2006–11
  13. By: Giuseppe, Dari-Mattiacci; Bruno, Lovat; Eric, Langlais; Francesco, Parisi
    Abstract: This paper presents a general rent-seeking model in which participants decide on entry before choosing their levels of efforts. The conventional wisdom in the rent-seeking literature suggests that the rent dissipation increases with the number of potential participants and with their productivity of effort. In this paper, we show that this result of the rent-seeking literature is far from general and applies only when participants are relatively weak and enter the game with certainty. In the presence of strong competitors, the expected total dissipation actually decreases, since participation in the game is less frequent. We further consider the impact of competitors' exit option, distinguishing between \textquotedblright redistributive rent-seeking\textquotedblright\ and \textquotedblright productive rent-seeking\textquotedblright\ situations. In redistributive rent-seeking, no social loss results from the fact that all competitors exit the race. In productive rent-seeking, instead, lack of participation creates a social loss (the \textquotedblright lost treasure\textquotedblright\ effect), since valuable rents are left unexploited. We show that the lost-treasure effect perfectly counterbalances the reduction in rent dissipation due to competitors' exit. Hence, unlike redistributive rent-seeking, in productive rent-seeking the total social loss remains equal to the entire rent even when parties grow stronger or the number of players increases.
    Keywords: Rent-seeking; rent dissipation; Tullock's paradox.
    JEL: K00 D72 C72
    Date: 2004–10–20
  14. By: Maria Del Mar Salinas-Jimenez; Javier Salinas-Jimenez
    Abstract: The study of corruption is attracting lot of attention in recent years. Focusing on the economic consequences of corruption, the empirical evidence points to a positive relation between institutional integrity, or absence of corruption, and economic growth. Although most developed countries tend to have lower corruption than less developed ones, there exists significant variation within OECD countries. As an example, it may be observed that the gap in perceived corruption between the Nordic countries and southern Europe is larger than the gap between southern Europe and the average of the emerging economies. In this context, the objective of this paper is to analyze the impact of corruption on economic performance in a sample of OECD countries during the period 1980-2000. Specifically, we study the effect of corruption on productivity and efficiency change, trying to determine whether productivity growth is greater in countries with lower corruption. To this end, different productivity measures are compared by considering both output per worker and Total Factor Productivity (TFP). Furthermore, TFP change is decomposed into efficiency change and technological progress by means of Malmquist productivity indices. On the basis of this of this decomposition we will analyze whether corruption affect TFP growth via efficiency gains or technological change, thus gaining insight into the channels through which corruption influence economic growth.
    Date: 2006–08
  15. By: Maria Montero (University of Nottingham); Juan Vidal-Puga (University of Vigo)
    Abstract: We study a majoritarian bargaining model in which the parties make payoff demands in decreasing order of voting weight. If the game is constant-sum and homogeneous, the unique subgame perfect equilibrium is such that the minimal winning coalition of the players who move first forms and payoffs are proportional to the voting weights.
    Date: 2006–11
  16. By: canegrati, emanuele
    Abstract: In this paper I analyse a labor market where the wage is endogenously determined according to a Right-to-Manage bargaining process between a firm and a labor union whose members are partitioned into two social groups: the old and the young. Furthermore, I exploit the Single Mindedness theory, which considers the existence of a density function which endogenously depends on leisure. I demonstrate that, when preferences of the old for leisure are higher than those of the young and when the level of productivity of the young is higher than that of the old, the young suer from higher tax rates and gain higher level of wage rates and lower levels of leisure. Finally, since the old are more single minded than the young, they exploit their greater political power to get positive transfers from the young in a PAYG system.
    Keywords: bargaining models; labor unions; political economy; single mindedness
    JEL: J24 D71 J58 J22 J51 D78 D72 J52
    Date: 2006–12
  17. By: Tim Krieger (Department of Economics, University of Paderborn)
    Abstract: In a median-voter framework with pensions and immigration we show that too few unskilled immigrants are allowed into the country because the unskilled native median voter is concerned with negative effects on his wage. He does not consider the positive effects to other groups in society. When return migration is allowed for, the median voter is more willing to accept immigration because he can shift some of the burden to future generations.
    Keywords: migration, return migration, unfunded pension system, voting
    JEL: H55 J61 D72
    Date: 2006–12–14

This nep-pol issue is ©2007 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.