nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒09‒09
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. A Structural Model of Turnout and Voting in Multiple Elections, Fourth Version By Arianna Degan; Antonio Merlo
  2. Institutional Traps and Economic Growth By Gradstein, Mark
  3. Public pensions and return migration By Tim Krieger
  4. The political economy of reforms: Empirical evidence from post-communist transition in the 1990s By Kim, Byung-Yeon; Pirttilä, Jukka
  5. Reevaluating the Modernization Hypothesis By Acemoglu, Daron; Johnson, Simon; Robinson, James A; Yared, Pierre
  6. Partisan Bias in Economic News: Evidence on the Agenda-Setting Behavior of U.S. Newspapers By Valentino Larcinese; Riccardo Puglisi; James M. Snyder, Jr.
  7. Governance and Rural Public Expenditures in Latin America. The Impact on Rural Development. By Gustavo Anríquez
  8. On the Optimal Number of Representatives By Auriol, Emmanuelle; Gary-Bobo, Robert J.

  1. By: Arianna Degan (Department of Economics, UQAM and CIRPEE); Antonio Merlo (Department of Economics, University of Pennsylvania)
    Abstract: This paper develops a unified approach to study participation and voting in multiple elections. The theoretical setting combines an “uncertain-voter” model of turnout with a spatial model of voting behavior. We apply our framework to the study of turnout and voting in U.S. presidential and congressional elections. We structurally estimate the model using individual-level data for the 2000 elections, and quantify the relationships between observed individual characteristics and unobserved citizens’ ideological preferences, information, and civic duty. We then use the estimated model, which replicates the patterns of abstention, selective abstention, split-ticket voting, and straight-ticket voting observed in the data, to assess the effects of policies that may increase citizens’ information and sense of civic duty on their turnout and voting behavior.
    Keywords: elections, turnout, selective abstention, split-ticket voting
    JEL: D72
    Date: 2007–02–01
  2. By: Gradstein, Mark
    Abstract: This paper's point of departure is that low-quality institutions, concentration of political power, and underdevelopment are persistent over time. Its analytical model views an equal distribution of political power as a commitment device to enhance institutional quality thereby promoting growth. The politically powerful coalition contemplates relinquishing of its power, weighing this advantageous consequence against the limit on own appropriative ability that it entails. The possibility of two developmental paths is exhibited: with concentration of political and economic power, low-quality institutions, and slow growth; and a more equal distribution of political and economic resources, high-quality institutions, and faster growth.
    Keywords: growth; inequality; institutional quality; political bias
    JEL: D31 D72 O10 O11
    Date: 2007–08
  3. 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
  4. By: Kim, Byung-Yeon (BOFIT); Pirttilä, Jukka (BOFIT)
    Abstract: Using a novel data set from post-communist countries in the 1990s, this paper examines linkages between political constraints, economic reforms and growth. A dynamic panel analysis suggests public support for reform is negatively associated with income inequality and unemployment. Both the ex post and ex ante political constraints of public support affect progress in economic reform, which in turn influences economic growth. The findings highlight that while economic reforms are needed to foster growth, they must be designed so that they do not undermine political support for reform.
    Keywords: political constraints; economic reform; transition; growth; dynamic panel models
    JEL: C33 O11 P26
    Date: 2007–09–04
  5. By: Acemoglu, Daron; Johnson, Simon; Robinson, James A; Yared, Pierre
    Abstract: This paper revisits and critically re-evaluates the widely-accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy. We argue that existing studies find support for this hypothesis because they fail to control for the presence of omitted variables. There are many underlying historical factors that affect both the level of income per capita and the likelihood of democracy in a country, and failing to control for these factors may introduce a spurious relationship between income and democracy. We show that controlling for these historical factors by including fixed country effects removes the correlation between income and democracy, as well as the correlation between income and the likelihood of transitions to and from democratic regimes. We argue that this evidence is consistent with another well-established approach in political science, which emphasizes how events during critical historical junctures can lead to divergent political-economic development paths, some leading to prosperity and democracy, others to relative poverty and non-democracy. We present evidence in favor of this interpretation by documenting that the fixed effects we estimate in the post-war sample are strongly associated with historical variables that have previously been used to explain diverging development paths within the former colonial world.
    Keywords: democracy; economic growth; institutions; political development
    JEL: O10 P16
    Date: 2007–08
  6. By: Valentino Larcinese; Riccardo Puglisi; James M. Snyder, Jr.
    Abstract: We study the agenda-setting political behavior of a large sample of U.S. newspapers during the last decade, and the behavior of smaller samples for longer time periods. Our purpose is to examine the intensity of coverage of economic issues as a function of the underlying economic conditions and the political affiliation of the incumbent president, focusing on unemployment, inflation, the federal budget and the trade deficit. We investigate whether there is any significant correlation between the endorsement policy of newspapers, and the differential coverage of bad/good economic news as a function of the president's political affiliation. We find evidence that newspapers with pro-Democratic endorsement pattern systematically give more coverage to high unemployment when the incumbent president is a Republican than when the president is Democratic, compared to newspapers with pro-Republican endorsement pattern. This result is not driven by the partisanship of readers. There is on the contrary no evidence of a partisan bias -- or at least of a bias that is correlated with the endorsement policy -- for stories on inflation, budget deficit or trade deficit.
    JEL: D72 D78 L82
    Date: 2007–09
  7. By: Gustavo Anríquez (Agricultural and Development Economics Division, Food and Agriculture Organization)
    Abstract: In this paper we examine the effects of the composition (between private and public goods) of government expenditures in the rural world, and the effect that corruption has in the political game that determines these allocation decisions. In the first section of this paper we develop a political economy model where corruption and trade openness counteract to determine, within a political equilibrium, the amount of public funds to be devoted to the rural world, and their composition between public and private goods. In the second section we contrast the implications of the political economy model with recently released data on rural public expenditures in Latin America. We find that corruption reduces the amount of public funds that reach the rural world, but not its composition. We also find that after accounting for the endogeneity of public expenditure decisions, the composition of these expenditures significantly determines rural development (as proxied by agricultural GDP).
    Keywords: Corruption, trade openness, public spending, rural development, public goods.
    JEL: H2 H50 H41 O13 Q10
    Date: 2007
  8. By: Auriol, Emmanuelle; Gary-Bobo, Robert J.
    Abstract: We propose a normative theory of the number of representatives based on a stylized model of a representative democracy. We derive a simple formula, a "square-root theory" which gives the number of representatives in parliament as proportional to the square root of total population. Simple econometric tests of the formula on a sample of a 100 countries yield surprisingly good results. These results provide a benchmark for a discussion of the appropriateness of the number of representatives in some countries. It seems that the United States have too few representatives, while France and Italy have too many. The excess number of representatives matters: it is positively correlated with indicators of red tape, barriers to entrepreneurship and perceived corruption.
    Keywords: Constitution Design; Incentives; Number of Representatives; Representative Democracy
    JEL: D7 H11 H40
    Date: 2007–08

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