nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒09‒16
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. On the Buyability of Voting Bodies By Felix J. J. Vardy; John Morgan
  2. Voting with the Crowd: Do Single Issues Drive Partisanship? By Martin B. Schmidt
  3. When the Powerful Drag Their Feet By Paul Schure; Francesco Passerelli; David Scoones
  4. Corruption and Democracy By Michael T. Rock
  5. The Information Content of Elections and Varieties of the Partisan Political Business Cycle By Cameron A. Shelton
  6. Moral Hazard and Free Riding in Collective Action By Vincent Anesi
  7. Political asymmetry and common external tariff in a customs union By Subhayu Bandyopadhyay; Sajal Lahiri; Suryadipta Roy
  8. Democracy and growth: An alternative empirical approach By Shen , Jian-Guang

  1. By: Felix J. J. Vardy; John Morgan
    Abstract: We study vote buying by competing interest groups in a variety of electoral and contractual settings. While increasing the size of a voting body reduces its buyability in the absence of competition, we show that larger voting bodies may be more buyable than smaller voting bodies when interest groups compete. In contrast, imposing the secret ballot---which we model as forcing interest groups to contract on outcomes rather than votes---is an effective way to fight vote buying in the presence of competition, but much less so in its absence. We also study more sophisticated vote buying contracts. We show that, regardless of competition, the option to contract on both votes and outcomes is worthless, as it does not affect buyability as compared to contracting only on votes. In contrast, when interest groups can contract on votes and vote shares, we show that voting bodies are uniquely at risk of being bought.
    Date: 2007–07–17
  2. By: Martin B. Schmidt (Department of Economics, College of William and Mary)
    Abstract: We examine whether survey data supports the anecdotal evidence which suggests that group association impacts the individual’s stated beliefs. Specifically, we examine whether a rise in the relative importance of a single issue, i.e., national security, blurs the traditional importance of socio-economic variables in determining an electorate’s political party association. Further we examine whether such blurring occurs across the responses to questions outside the scope of this single issue. We find that in the aftermath of the terrorist attacks on September 11th, 2001, the relative importance of national security rose in United States’ electorate and reduced the relative importance of socio-economic variables in determining the electorate’s political association and for both security and non-security issues.
    Keywords: Elections, Voting Preferences, Group Preferences, Conformity
    JEL: E41 E52 C32
    Date: 2007–09–07
  3. By: Paul Schure (Department of Economics, University of Victoria); Francesco Passerelli (Department of Economics, University of Victoria); David Scoones (Università degli Studi di Teramo and Università Bocconi)
    Abstract: We examine the timing of group decisions that are taken by weighted voting. Decision-making is in two stages. In the second stage, players vote on a policy restriction. In the first stage, players vote to determine the timing of the second-stage decision: “early”, before players’ types are revealed, or “late”. Players differ in both size and voting power. We show that players with greater power tend to prefer a late vote, whereas less powerful players tend to want to vote early. By contrast, large players tend to prefer an early vote and small players a late vote. We present evidence from the literatures on corporate governance, international relations, European Union governance, and oil extraction. We examine an extension in which players choose the qualified majority threshold besides the timing of the second-stage vote.
    Keywords: Timing of decisions, strategic delay, committee decisions, weighted voting, multilateralism
    JEL: D72 D78 H77
    Date: 2007–09–04
  4. By: Michael T. Rock
    Abstract: What is the impact of democracy on corruption? In most models, analysts assume a negative relationship, with more democracy leading to less corruption. But recent theoretical developments and case evidence support an inverted U relationship between corruption and democracy. By drawing on a panel data set covering a large number of countries between 1996 and 2003, substantial empirical support is found for an inverted U relationship between democracy and corruption. The turning point in corruption occurs rather early in the life of new democracies and at rather low per capita incomes.
    Keywords: corruption, electoral democracy, consolidated democracy, rule of law, government effectiveness
    JEL: O12 D72 D73 H11 H77 K42
    Date: 2007–08
  5. By: Cameron A. Shelton (Economics Department, Wesleyan University)
    Abstract: This event study uses economic forecasts and opinion polls to measure the response of expectations to election surprise. Use of forecast data complements older work on partisan cycles by allowing a tighter link between election and response thereby mitigating concerns of endogeneity and omitted variables. I fin that forecasters respond swiftly and significantly to election surprise. I further argue that the response ought to vary across countries with different institutional foundations. In support, I find that there exist three distinct patterns in forecasters' responses to partisan surprise corresponding to Hall and Soskice's three varieties of capitalism. In liberal market economies, forecasters expect the left to achieve jobless growth with virtually no cost to inflation. In Mediterranean market economies, forecasters expect the left to achieve deliver both higher output growth and lower unemployment but with higher inflation. And in coordinated market economies, forecasters expect the left to deliver lower growth, higher unemployment, and higher inflation.
    Keywords: political business cycle, varieties of capitalism, forecast data, opinion polls
    JEL: E32 E63 P16 P51
    Date: 2007–04
  6. By: Vincent Anesi (University of Nottingham)
    Abstract: Most political and economic theorists point to moral hazard in teams as the main obstacle to lobbies' collective action. In this paper, we address this important issue with a coalition-formation game. In the process of doing so, we characterize equilibrium lobby structures both in the absence and in the presence of moral hazard. Three notable results emerge from such an exercise: (i) an equilibrium lobby structure exists under both specications of the model, (ii) moral hazard in teams may raise large groups' equilibrium lobby size, and (iii) it may also raise the total contribution to lobbying of large groups with low organizational costs.
    Keywords: Collective action, Moral hazard in teams, Lobby formation, Free-rider problem
    JEL: C72 D72 H41
    Date: 2007–08
  7. By: Subhayu Bandyopadhyay; Sajal Lahiri; Suryadipta Roy
    Abstract: We present a three-nation model, where two of the nations are members of a Customs Union (CU) and maintain a common external tariff (CET) on the third (non-member) nation. The producing lobby is assumed to be union-wide and lobbies both governments to influence the CET. The CET is determined jointly by the CU. We follow the political support function approach, where the CU seeks to maximize a weighted sum of the constituents? payoff functions, the weights reflecting the influence of the respective governments in the CU. A central finding of this paper is that the CET rises monotonically with the degree of asymmetry in the weights if the two countries are equally susceptible to lobbying. If the weights are the same, but the respective governments are asymmetric in their susceptibilities to lobbying, the CET also rises monotonically with this asymmetry. However, an increase in one type of asymmetry, in the presence of the other type of asymmetry, may reduce the CET.
    Keywords: Tariff
    Date: 2007
  8. By: Shen , Jian-Guang (BOFIT)
    Abstract: This paper proposes a “before-and-after” approach to empirical examination of the relationship between democracy and growth. Rather than the commonly used cross-country regression method, this paper compares the economic performances of forty countries before and after they became democracies or semi-democracies sometime within the last forty years. The empirical evidence indicates that an improvement in growth performance typically follows the transformation to democracy. Moreover, growth under democracy appears to be more stable than under authoritarian regimes. Interestingly, wealthy countries often experience declines in growth after a democratic transformation, while very poor nations typically experience accelerations in growth. Growth change appears to be negatively related to the initial savings ratio and positively related to the export ratio to GDP. Partial correlation between growth change and primary school or secondary school enrollments and the ratio of government expenditure to GDP is not identified.
    Keywords: democracy; economic growth
    JEL: O40 O57
    Date: 2007–09–12

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