nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒05‒19
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. In a democracy, Bayrou would have won. Application of the Borda Fixed Point method to the 2007 French presidential elections By Colignatus, Thomas
  2. Political Support and Candidate Choice By Hannes Mueller
  3. Expected Benefits of Voting and Voter Turnout By Richard J. Cebula; Garey C. Durden
  4. The Impact of Social Conditioning (Internal Motivation) on the Probability of Voting By Garey C. Durden; Richard J. Cebula; Patricia Gaynor
  5. Optimal Two Stage Committee Voting Rules By Ian Ayres, Colin Rowat and Nasser Zakariya
  6. Electing a parliament By Francesco De Sinopoli; Leo Ferraris; Giovanna Iannantuoni
  7. Money, Political Ambition, and the Career Decisions of Politicians By Michael P. Keane; Antonio Merlo
  8. A Simple Coase-Like Mechanism that Transfers Control of Government Spending Levels from Politicians to Voters By Graves, Philip E.
  9. Outside income and moral hazard : the elusive quest for good politicians By Stefano Gagliarducci; Tommaso Nannicini; Paolo Naticchioni
  10. Foreign Exchange Intervention and the Political Business Cycle : A Panel Data Analysis By Axel Dreher; Roland Vaubel
  11. Do fiscal rules cause budgetary outcomes? By Signe Krogstrup; Sébastien Wälti
  12. How Much Do Perceptions of Corruption Really Tell Us? By Weber Abramo, Claudio

  1. By: Colignatus, Thomas
    Abstract: Democratic nations are advised to have parliaments select the chief executive by the Borda Fixed Point method. The current practice of having direct popular elections using systems that have originated in history is inoptimal and actually quite undemocratic since winners are selected who don’t reflect the national sentiment. The paper gives the example of the 2007 French presidential elections. Under the currently and historically grown system of run-off plurality Sarkozy got elected while the more democratic method of Borda Fixed Point would have generated Bayrou. The example uses reasonable assumptions on underlying micro preferences.
    Keywords: voting theory; voting systems; elections; public choice; political economy; run-off plurality; Borda Fixed Point; democracy
    JEL: D71 H0 A2
    Date: 2007–05–10
  2. By: Hannes Mueller (STICERD, London School of Economics)
    Abstract: This paper proposes a simple model of political supporters in an environment of spatial political competition. We assume that supporters are driven by sympathy for a candidate with similar preferences on their side of the policy space and by fear of a candidate with different preferences on the other side. If parties maximize support in their candidate selection, political platforms can diverge significantly. We show that radical candidates have a positive effect on support for the other party. If candidate choice internalizes this externality, platforms converge and overall support decreases to a minimum.
    Keywords: Party competition, activism, conflict
    JEL: D72 D74
    Date: 2007–05
  3. By: Richard J. Cebula; Garey C. Durden
    Abstract: This empirical study seeks to identify key aggregate-level economic and non-economic determinants of the expected benefits from voting and hence aggregate voter turnout. A unique dimension of this study is the hypothesis that PAC (political action committee) election campaign contributions, e.g., to U.S. Senate races, may reduce the expected benefits of voting and hence voter turnout because the greater the growth of real PAC contributions, the greater the extent to which eligible voters may become concerned that these contributions lead to PAC political influence over elected officials. Indeed, this study finds for the period 1960-2000 that the voter participation rate has been negatively impacted by the growth in real PAC contributions to Senate election campaigns. Another interesting finding is that voter turnout is directly/positively related to strong public approval or strong public disapproval of the incumbent President. This study also finds that the voter participation rate has been positively impacted by the opportunity to vote in Presidential elections, the Vietnam War, a “too slowly” growing real GDP, and inflation rates when they exceed five percent per annum. Furthermore, this study also finds the voter participation rate to have been negatively impacted by the public’s general dissatisfaction with government.
    Date: 2007
  4. By: Garey C. Durden; Richard J. Cebula; Patricia Gaynor
    Abstract: This paper extends the well known rational interest voting (rational voter) model to include a composite measure to capture the residual effects of internal, sociological motives not previously accounted for in empirical studies of general election voting. These motives are referred to here as “social conditioning” or “internal motivation” and may to at least some extent reflect a sense of duty or sense of civic duty to vote, as well as a simple “habit” of voting. Estimations using CPS data from the 1984 Presidential elections suggest that previously unmeasured internal motives, which we capture in a variable called “Social Conditioning,” may exert a powerful influence on individual voting behavior.
    Date: 2007
  5. By: Ian Ayres, Colin Rowat and Nasser Zakariya
    Abstract: We study option management by committee. Analysis is illustrated by tenure decisions. Our innovations are two-fold: we treat the committee's problem as one of social choice, not information aggregation; and we endogenise the outside option: rejecting a candidate at either the probationary or tenure stage return the committee to a candidate pool. For committees with N members, we find: (1) a candidate's fate depends only on the behaviour of two `weather-vane' committee members - generalised median voters; (2) en- thusiastic assessments by one of these weather-vanes may harm a candidate's chances by increasing others' thresholds for hiring him; and (3) sunk time costs may lead voters who opposed hiring a candidate to favour tenuring him, even after a poor probationary performance. We characterise the opti- mal voting rule when N = 2. A patient or perceptive committee does best with a (weak) majority at the hiring stage and unanimity at the tenure stage. An impatient or imperceptive committee does best under a double (weak) majority rule. If particularly impatient or imperceptive, this rule implies that any hire is automatically tenured. Perversely, the performance of a patient, imperceptive committee improves as its perceptiveness further declines.
    Keywords: intertemporal strategic voting, real options, tenure
    JEL: C73 D71 D72 D80 G12
    Date: 2007–03
  6. By: Francesco De Sinopoli; Leo Ferraris; Giovanna Iannantuoni
    Abstract: We present a model where a society elects a parliament by voting for candidates belonging to two parties. The electoral rule determines the seats distribution between the two parties. We analyze two electoral rules, multidistrict majority and single-district proportional. In this framework, the policy outcome is simply a function of the number of seats parties take in the election. We prove that in both systems there is a unique pure strategy perfect equilibrium outcome. Finally, we compare the outcomes in the two systems.
    Date: 2007–04
  7. By: Michael P. Keane (Department of Economics, Arizona State University); Antonio Merlo (Department of Economics, University of Pennsylvania)
    Abstract: In this paper we assess the impact of a variety of policies that may influence the career decisions of members of the U.S. Congress, using the empirical framework of Diermeier, Keane and Merlo (2005). These policies alter incentives to run for re-election, run for higher office or leave Congress, by altering wages, nonpecuniary rewards and career prospects (both in and out of Congress). We find that reducing the relative wage of politicians would substantially reduce the duration of congressional careers. Notably, however, the effect varies considerably across different types of politicians. A reduction in the congressional wage would disproportionately induce exit from Congress by “skilled” politicians, Democrats, politicians who were relatively young when first elected, and those without pre-congressional political experience. Interestingly, however, it would not cause the type of politicians who most value legislative accomplishments (“achievers”) to disproportionately exit Congress. Thus, wage reductions would not reduce the “quality” composition of Congress in this sense. Term limits also have similar effects on achievers and non-achievers. However, we find that term limits would disproportionately induce members of the majority party to exit Congress. This has the interesting implication that term limits make it more difficult to sustain substantial congressional majorities over time. We do find three types of policies that disproportionately induce nonachievers to leave Congress: (i) elimination of seniority as a determinant of key committee assignments, (ii) restricting private sector employment after leaving Congress, and (iii) reducing the seniority advantage in elections.
    Keywords: politicians, political careers, monetary and non-monetary incentives, U.S. Congress
    JEL: D72 J44 J45
    Date: 2007–05–01
  8. By: Graves, Philip E.
    Abstract: Elected representatives have little incentive to pursue the interests of those electing them once they are elected. This well-known principle-agent problem leads, in a variety of theories of government, to nonoptimally large levels of government expenditure. An implication is that budgetary rules are seen as necessary to constrain politicians’ tax and spending behavior. Popular among such constraints are various Balanced Budget Amendment proposals. These approaches, however, are shown here to have serious limitations, including failure to address the central concern of spending level. An alternative approach is advanced here that relies on a Coase-like mechanism that transfers control of government spending to the voter. Prisoner's dilemma incentives and political competition are seen to be critical to the superiority of the present mechanism to approaches requiring budget balance.
    Keywords: political incentives, government spending, mechanism design, balanced budget amendments
    JEL: H11 H61 H62 H72
    Date: 2007
  9. By: Stefano Gagliarducci; Tommaso Nannicini; Paolo Naticchioni
    Abstract: In most modern democracies elected officials can work in the private sector while appointed in parliament. We show that when the political and market sectors are not mutually exclusive, a trade-off arises between the quality of elected officials and the effort they exert in political life. If high-ability citizens can keep earning money outside of parliament, they will be more likely to run for election; for the same reason, they will also be more likely to shirk once elected. These predictions are confronted with a unique dataset about members of the Italian Parliament from 1996 to 2006. Empirical evidence shows that bad but dedicated politicians come along with good but not fully committed politicians. There is in fact a non-negligible fraction of citizens with remarkably high pre-election incomes who are appointed in parliament. These citizens are those who gain relatively more from being elected in terms of outside income. Conversely, they show higher absenteeism rates in parliament votes.
    Date: 2007–04
  10. By: Axel Dreher (KOF Swiss Economic Institute, ETH Zurich Switzerland and CESifo, Germany); Roland Vaubel (University of Mannheim, Dept. of Economics, Mannheim, Germany,)
    Abstract: By combining expansionary open market operations with sales of foreign exchange, the central bank can expand the monetary base without depreciating the exchange rate. Thus, if there is a monetary political business cycle, sales of foreign exchange are especially likely before elections. Our panel data analysis for up to 146 countries in 1975-2001 supports this hypothesis. Foreign exchange reserves relative to trend GDP depend negatively on the preelection index. The relationship is significant and robust irrespective of the type of electoral variable, the choice of control variables and the estimation technique.
    Keywords: Foreign exchange interventions, political business cycles
    JEL: F31 E58
    Date: 2007–04
  11. By: Signe Krogstrup (IUHEI, The Graduate Institute of International Studies, Geneva); Sébastien Wälti
    Abstract: This paper focuses on the observed empirical relationship between fiscal rules and budget deficits, and examines whether this correlation is driven by an omitted variable, namely voter preferences. We make use of two different estimation methods to capture voter preferences in a panel of Swiss sub-federal jurisdictions. First, we include a recently constructed measure of fiscal preferences. Second, we capture preferences through fixed effects with a structural break as women are enfranchised. We find that fiscal rules continue to have a significant impact on real budget balances.
    Keywords: Fiscal policy; fiscal rules; fiscal institutions; budget deficits; fiscal preferences; endogeneity
    JEL: C2 D7 E6 H6
    Date: 2007–05
  12. By: Weber Abramo, Claudio
    Abstract: Regressions and tests performed on data from Transparency International Global Corruption Barometer 2004 survey show that personal or household experience of bribery is not a good predictor of perceptions held about corruption among the general population. In contrast, perceptions about the effects of corruption correlate consistently among themselves. However, no consistent relationship between opinions about general effects and the assessments of the extent with which corruption affects the institutions where presumably corruption is materialized is found. Countries are sharply divided between those above and below the US$ 10,000 GDP per capita line in the relationships between variables concerning corruption. Among richer countries, opinions about institutions explain very well opinions concerning certain effects of corruption, while among poorer countries the explanatory power of institutions for the effects of corruption falls. Furthermore, tests for dependence applied between the variables in the sets of respondents for each of 60 countries also show that, for most of them, it is likely that experience does not explain perceptions. On the other hand, opinions tend to closely follow the trend of other opinions. Additionally, it is found that in the GCB opinions about general effects of corruption are strongly correlated with opinions about other issues, as much as to justify the hypothesis that it would suffice to measure the average opinion of the general public about human rights, violence etc. to accurately infer what would be the average opinion about least petty and grand corruption. The findings reported here challenge the value of perceptions of corruption as indications of the actual incidence of the phenomenon.
    Keywords: corruption, perceptions, corruption indicators
    JEL: D73 H11 K42
    Date: 2007

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