nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒01‒23
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Ulysses, the Sirens and the Art of Navigation: Political and Technical Rationality in Latin America By OECD
  2. Energy Regulation, Roll Call Votes and Regional Resources: Evidence from Russia By Theocharis N. Grigoriadis; Benno Torgler
  3. Collective Trust Behavior By Holm, Håkan; Nystedt, Paul
  4. State Capture in a Federation By Evgeny Yakovlev; Ekaterina Zhuravskaya
  5. Preferences for immigration restriction and opinions about immigrants' economic impacts - Evidence from the European Union before the 2004 expansion By Yuji Tamura
  6. Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis By Benno Torgler; Friedrich Schneider
  7. Divided Government European Style? Electoral and Mechanical Causes of European Parliament and Council Divisions By Manow, Philip,; Holger Döring
  8. Why should central banks be independent? By Harashima, Taiji

  1. By: OECD
    Abstract: The paper focuses on relations between experts and politicians in Latin America. It is divided into three parts. The first outlines the distinctive features of the political economy of expertise in Latin America. This provides the context to the second part, which focuses on the analysis of cognitive institutions that produce applied economic policy knowledge in the region, and the formation of policy-making epistemic communities. In order to provide a mapping of these institutions we focused on a taxonomy based on ... <BR>Le travail présenté démêle les relations étroites dans les pays en développement entre la rationalité politique et la rationalité technique. Cette question est centrale en particulier en Amérique latine, région sur laquelle se centre l’analyse, où les débordements idéologiques passés et présents tendent à éclipser la rationalité technique. A ce jour aucun exercice de cartographie exhaustive des institutions cognitives, produisant de la rationalité économique, appliquée et applicable à la conduite politique d’un pays latino-américain, n’a été engagé. Le présent travail est en ce sens...
    Date: 2006–09
  2. By: Theocharis N. Grigoriadis (The European Union Delegation to Russia); Benno Torgler (University of California)
    Abstract: This paper investigates the relative impact of regional energy production on the legislative choices of Russian Duma deputies on energy regulation between 1994 and 2003. We apply Poole’s optimal classification method of roll call votes using an ordered probit model to explain energy law reform in the first decade of Russia’s democratic transition. Our goal is to analyze the relative importance of home energy on deputies’ behavior, controlling for other factors such as party affiliation, electoral mandate, committee membership and socio-demographic parameters. We observe that energy resource factors have a considerable effect on deputies’ voting behavior. On the other hand, we concurrently find that regional economic preferences are constrained by the public policy priorities of the federal center that continue to set the tone in energy law reform in post-Soviet Russia.
    Keywords: Energy Regulation, Energy Roll Law Reform, Energy Resources, Roll Call Votes, Legislative Politics, State Duma, Russia
    JEL: Q40 D72 K23 P27 P37 P31 R11
    Date: 2006–11
  3. By: Holm, Håkan (Department of Economics, Lund University); Nystedt, Paul (Department of Economics and Management, Linköping University)
    Abstract: This paper investigates trust in situations, where decision-makers are large groups and the decision-mechanism is collective, by developing a game to study trust behavior. Theories from behavioral economics and psychology suggest that trust in such situations may differ from individual trust. Experimental results here reveal a large difference in trust but not in trustworthiness between the individual and collective setting. Furthermore, an artefactual field experiment captures the determinants of collective trust behavior among two cohorts in the Swedish population. One result is that beliefs about the other and the own group are strongly associated with collective trustworthiness and trust behavior.
    Keywords: Collective Trust; Voting; Experiment; Beliefs
    JEL: C72 C90 C93 D70
    Date: 2006–12–20
  4. By: Evgeny Yakovlev; Ekaterina Zhuravskaya (CEFIR / New Economic School)
    Abstract: The paper provides evidence that the welfare effect of decentralization in countries with weak democratic institutions depends on the multi-jurisdictional vs. single-jurisdictional span of interest group lobbies. Weak democracy leads to capture of local authorities. Captors who have multi-jurisdictional scope internalize inter-jurisdictional externalities of local policies to a larger extent than both the captors with interests in a single jurisdiction and not captured local politicians. Particularly, multi-jurisdictional captors lobby for lower inter-regional trade barriers than single-jurisdictional captors. Based on case study evidence and econometric analysis of a unique data set from Russia, we show that capture by multiregional interest groups leads to significantly better performance of firms with no political connections in the neighboring regions and worse performance of such firms in the captured region compared to capture by regional industrial interests with similar political power or situation of no capture. Our findings have implications for international trade as well: lobbying by multinationals leads to lower protectionism compared to lobbying by national corporations.
    JEL: P26 P27 D71 D72
    Date: 2006–01
  5. By: Yuji Tamura
    Abstract: We investigate the importance of citizens’ opinions about economic impacts of immigration in their countries to their preferences for immigration restriction. We focus on personal views regarding how immigrants would affect the national labor market and the domestic public finance. Our analysis of survey data from 7 EU countries during the period 2002-2003 suggests that personal opinions about these issues do not explain individual preferences for immigration restriction. We find somewhat unexpectedly that employers were more likely to prefer immigration restriction than the rest. Those who relied on unemployment benefits were less likely to prefer immigration restriction than the others, although they were more likely to anticipate a negative labor market impact of immigration. The higher the relative income position, the lower the likelihood of preferring immigration restriction, and also the lower the likelihood of thinking that immigrants would negatively affect the national labor market. However, those whose income was relatively high were more likely to expect a negative net fiscal impact of immigration than low-income citizens.
    Keywords: Immigration, Citizens’preferences, European Union
    Date: 2007–01–17
  6. By: Benno Torgler; Friedrich Schneider
    Abstract: This paper analyses how governance or institutional quality and tax morale affect the shadow economy, using an international country panel and also within country data. The literature strongly emphasizes the quantitative importance of these factors to understand the level and changes of shadow economy. However, the limited number of investigations use cross-sectional country data with a relatively small number of observations, and hardly any paper has investigated tax morale and provides evidence using within country data. Using more than 25 proxies that measure governance and institutional quality we find strong support that its increase leads to a smaller shadow economy. Moreover, an increase in tax morale reduces the size of the shadow economy.
    Keywords: Shadow economy; tax morale; governance quality; government intervention; corruption.
    JEL: D73 D78 H2 H26 O17 O5
    Date: 2007–01
  7. By: Manow, Philip,; Holger Döring
    Abstract: Abstract Voters who participate in elections to the European Parliament tend to use these elections to punish their domestic governing parties. Many students of the EU therefore claim that the party-political composition of the Parliament should systematically differ from that of the Council. This study, which compares empirically the party-political centers of gravity of these two central political actors, shows that opposed majorities between Council and Parliament may have other than simply electoral causes. The logic of domestic government formation works against the representation of politically more extreme parties, and hence against more EU-skeptic parties in the Council. At the same time, voters in EP elections vote more often for these more extreme and more EU-skeptic parties. The different locations of Council and Parliament in the pro-/contra-EU dimension may thus be caused by two – possibly interrelated – effects: a mechanical effect, due to the translation of votes into seats and then into ‘office’, and thus also into Council representation, and an electoral effect in elections to the European Parliament. The paper discusses the implications of this finding for our understanding of the political system of the EU and of its democratic legitimacy.
    Keywords: democracy; European elections; legitimacy; multilevel governance; multilevel governance; spatial theory; national parliaments; European Council; European Parliament
    Date: 2006–12–18
  8. By: Harashima, Taiji
    Abstract: Most explanations for the necessity of an independent central bank rely on the time-inconsistency model and therefore assume that governments are weak, foolish, or untruthful and tend to cheat people. The model in this paper indicates, however, that an independent central bank is not necessary because governments are weak or foolish. Central banks must be independent because governments are economic Leviathans. Only by severing the link between the political will of a Leviathan government and economic activities is inflation perfectly guaranteed not to accelerate. A truly independent central bank is necessary because it severs this link.
    Keywords: Central Bank Independence; Inflation; The Fiscal Theory of the Price Level; Leviathan; Monetary Policy
    JEL: E61 E63 E52 E58
    Date: 2007–01–15

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.