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on Positive Political Economics |
| By: | Timothy Besley; Torsten Persson |
| Abstract: | Economists generally assume the existence of sufficient institutions to sustain a market economy and tax the citizens. However, this starting point cannot easily be taken for granted in many states, neither in history nor in the developing world of today. This paper develops a framework where "policy choices", regulation of markets and tax rates, are constrained by "economic institutions", which in turn reflect past investments in legal and fiscal state capacity. We study the economic and political determinants of these investments. The analysis shows that common interest public goods, such as fighting external wars, as well as political stability and inclusive political institutions, are conducive to building state capacity. Preliminary empirical evidence based on cross-country data find a number of correlations consistent with the theory. |
| JEL: | D70 E60 H10 K40 O10 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13028&r=pol |
| By: | Edward L. Glaeser; Bruce Sacerdote |
| Abstract: | In the past two elections, richer people were more likely to vote Republican while richer states were more likely to vote Democratic. This switch is an aggregation reversal, where an individual relationship, like income and Republicanism, is reversed at some level of aggregation. Aggregation reversals can occur when an independent variable impacts an outcome both directly and indirectly through a correlation with beliefs. For example, income increases the desire for low taxes but decreases belief in Republican social causes. If beliefs are learned socially, then aggregation can magnify the connection between the independent variable and beliefs, which can cause an aggregation reversal. We estimate the model's parameters for three examples of aggregation reversals, and show with these parameters that the model predicts the observed reversals. |
| JEL: | A1 |
| Date: | 2007–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13031&r=pol |
| By: | Pedro C. Vicente |
| Abstract: | Vote buying is a frequent practice during election time in many parts of the world. But no research has been done to quantify its effects on voters` electoral behavior. To address this challenge, we have designed and conducted a randomized experiment during the presidential elections of July 2006 in Sao Tome and Principe. This is a newly found oil-rich West African country that has been facing an increase in `retail` vote buying. Our research design included a randomized campaign against vote buying sponsored by the Electoral Commission of the country, and pre-electoral campaign/post-election panel surveys in treatment (exposed to the campaign) and control locations, including 1034 subjects across 50 different areas. We observe a significant effect of the campaign on perceptions of vote buying, which constitutes the exogenous variation we use to identify effects on voting behavior. We characterize determinants of vote buying (more frequent in swing and rural locations), and find that vote buying energizes the electorate by increasing turnout. Crucially, we capture real effects on candidates` relative performance, by identifying the challenger to be driving more votes through vote buying (after the treatment), which is consistent with the timeline of events (late challenger candidacy). This result controls for changes in information about the candidates (e.g. policy platforms) and location-specific minutes spent by international electoral observers. |
| Keywords: | Vote Buying, Electoral Politics, Political Economy, Randomized Experiment, West Africa |
| JEL: | D72 O55 P16 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:318&r=pol |
| By: | Erdogdu, Oya Safinaz |
| Abstract: | Considering the importance of military expenditures on political and economical success of a government, this empirical study analyzes the relations between political stability, economic growth and military expenditures. Based on the theoretical model developed by Blomberg (1996), the vector autoregression analyzes results for a democratic country indicates the significance of military expenditures on political stability and private sector investment decisions. |
| Keywords: | Defense; Political Stability; Growth; VAR |
| JEL: | C32 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2520&r=pol |
| By: | Rafael Hortala-Vallve |
| Abstract: | Can we devise mechanisms that allow voters to express the intensity of their preferences when monetary transfers are forbidden? Would we then be able to take account of how much voters wish the approval or dismissal of any particular issue? In such cases, would some minorities be able to decide over those issues they feel very strongly about? As opposed to the classical voting system (one person - one decision - one vote), we propose a new voting system where each agent is endowed with a fixed number of votes that can be distributed freely between a predetermined number of issues that must be approved or dismissed. Its novelty relies on allowing voters to express the intensity of their preferences in a simple manner. This voting system is optimal in a well-defined sense: in a setting with two voters, two issues and preference intensities uniformly and independently distributed across possible values, Qualitative Voting Pareto dominates Majority Rule and, moreover, achieves the only ex-ante optimal (incentive compatible) allocation. The result also holds true with three voters as long as the voters preferences towards the issue differ sufficiently. |
| Keywords: | Voting, Intensity Problem, Alternatives to Majority Rule, Conflict Resolution |
| JEL: | C72 D70 P16 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:320&r=pol |
| By: | Matthias Dahm; Nicolas Porteiro |
| Abstract: | Since campaign finance reform is usually motivated by the concern that existing legislation can not effectively prevent campaign contributions to ‘buy favors’, this paper assumes that contributions influence political decisions. But, given that it is also widely recognized that interest groups achieve influence by providing political decision makers with policy relevant information, we also assume that lobbies engage in non-negligible informational lobbying. We focus on a single political decision to be taken and offer a simple model in which the optimal influence strategy is a mixture of both lobbying instruments. Our main result is to show that campaign finance reform may have important side effects: It may deter informational lobbying so that less policy relevant information is available and as a result political decisions become less efficient. |
| Keywords: | party and candidate financing, lobbying, interest groups, experts, information transmission, contributions, influence, political decision making process. |
| JEL: | C72 D72 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:nwu:cmsems:1408&r=pol |
| By: | Antonio Cabrales; Antoni Calvo-Armengol; Leonard Wantchekon |
| Abstract: | We propose a model of the transition from a ”big man” authoritarian regime to either a liberal democracy or a communist regime. An underground organization votes on whether to summon a mass event. If it is summoned, the organization members decide whether to put effort into the event. Higher effort makes regime change more likely, but it is individually risky. This creates the possibility, in principle, of high and low effort equilibria. But we show, using weak dominance arguments, that only the high effort equilibrium is ”credible.” Thus, internal party democracy is shown to be an efficiency enhancing element for political transitions. We extend the model to show that other internal organization aspects are key for the existence and welfare properties of this equilibrium. Finally we also show when is the process likely to end up in either democracy (and its ”quality”) or a full communist regime. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we072212&r=pol |
| By: | Ali Cheema (Lahore University of Management Sciences, Lahore); Asad Sayeed (Collective for Social Science Research, Karachi) |
| Abstract: | This paper takes a political economy perspective in analysing the nature and causes on the decline in bureaucratic conduct. Section 1 lays out the details of this structure. Based on a logical model which places the bureaucracy within the larger context of the objective function of the state, the nature of the political process, the degree of centralisation and fragmentation of the bureaucratic structure and processes for monitoring and accountability of the bureaucracy, this model provides the basis for subsequent analysis. Section 2 provides a historical overview with regard to changes in the bureaucratic and political structure and the impact it had on the above mentioned balance between bureaucratic conduct and political compulsions. Section 3 then analyses the consequences on service delivery that this systematic weakening of the bureaucratic structure has had. Section 4 then critically assesses some of the recent attempts at bureaucratic reform in the light of the framework developed in Section 1. The conclusion then summarises the paper and draws implications for pro-poor change of the structure and conduct of the bureaucratic structure in Pakistan |
| Keywords: | Poverty, Poor, Bureaucracy |
| JEL: | I38 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2006:3&r=pol |
| By: | Antonio Cabrales; Rosemarie Nagel; Jose V. Rodriguez Mora |
| Abstract: | We perform an experiment on social insurance to provide a laboratory replica of some important features of the welfare state. In the experiment, all individuals in a group decide whether to make a costly effort, which produces a random (independent) outcome for each one of them. The group members then vote on whether to redistribute the resulting and commonly known total sum of earnings equally amongst themselves. This game has two equilibria, if played once. In one of them, all players make effort and there is little redistribution. In the other one, there is no effort and nothing to redistribute. A solution to the repeated game allows for redistribution and high effort, by the threat to revert to the worst of these equilibria. Our results show that redistribution with high effort is not sustainable. The main reason for the absence of redistribution is that rich agents do not act differently depending on whether the poor have worked hard or not. There is no social contract by which redistribution may be sustained by the threat of punishing the poor if they do not exert effort. Thus, the explanation of the behavior of the subjects lies in Hobbes, not in Rousseau. |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:cte:werepe:we071808&r=pol |
| By: | Kern, Holger; Hainmueller, Jens |
| Abstract: | A common claim in the democratization literature is that foreign free media undermine authoritarian rule. No reliable micro-level evidence on this topic exists, however, since independent survey research is rarely possible in authoritarian regimes and self-selection into media consumption complicates causal inferences. In this case study of the impact of West German television on political attitudes in communist East Germany, we address these problems by making use of previously secret survey data and a natural experiment. While most East Germans were able to tune in to West German broadcasts, some of them were cut off from West German television due to East Germany's topography. We exploit this plausibly exogenous variation to estimate the impact of West German television on East Germans' political attitudes using instrumental variable estimators. Contrary to conventional wisdom, East Germans who watched West German television were more satisfied with life in East Germany and the communist regime. To explain this surprising finding, we demonstrate that West German television's role in transmitting political information not available in the state-controlled communist media was insignificant and that television primarily served as a means of entertainment for East Germans. Archival material on the reaction of the East German regime to the availability of West German television corroborates our argument. |
| Keywords: | instrumental variables; causal inference; local average response function; media effects; East Germany; democratization |
| JEL: | F50 D83 O17 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2702&r=pol |
| By: | Pedro C. Vicente |
| Abstract: | This paper explores an oil discovery natural experiment to assess the role of natural resources in determining corruption. We argue that an anticipated oil boom may increase corruption by boosting the value attributed by an elite to being in power when the actual oil exploration begins. We test this proposition by analyzing the impact of the oil discovery announcements that took place in 1997-99 in Sao Tome and Principe (West Africa). For this objective we conducted purposedly-designed household surveys on perceived corruption in the public services/sector. These were carried out in Sao Tome and Principe and in Cape Verde, a control West African country sharing strong cultural ties and important contemporary economic/political shocks. The unique survey instrument was retrospective and used personal histories to elicit memories from the respondents. Urban subjects, public officials, and respondents with higher reported experience with the services/issues at stake are used as internal treatment groups. Comparisons are also made with corresponding groups in Cape Verde. In addition, the regressions control for well-known `good old times` bias: this is done by using data from direct questions on optimism and from the inclusion of a `placebo` period (when no major occurrence had arisen). We conclude that a clear increase in perceived corruption has occurred in Sao Tome and Principe in recent years, ranging from 21 to 38% of the subjective scale. Consistently with our theoretical mechanism, which underlines the importance of being in power when the oil boom occurs, these effects are most robust in vote buying, education, and state jobs. |
| Keywords: | Corruption, Influence, Political Economy, Natural Resources, Oil, West Africa |
| JEL: | D73 O13 O55 P16 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:wpaper:317&r=pol |