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on Positive Political Economics |
| By: | Elena Panova |
| Abstract: | This paper builds a theory of electoral campaign contributions. Interest groups contribute to political campaigns to signal their private information on the valence of candidates for office. Campaign contributions by an interest group enhance electoral fortunes by a candidate who is valent with this group. The candidate preferred by an interest group whose private information is the most precise receives the highest contributions and wins political office. Campaign contributions are smaller than donor electoral sorting benefits. |
| Keywords: | Campaign contributions, incumbency advantage |
| JEL: | D72 D82 M37 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:0722&r=pol |
| By: | Aidt, T.S.; Gassebner, M. |
| Abstract: | The paper analyzes whether the political regime of a country inuences its involvement in international trade. Firstly, we develop a theoretical model that predicts that autocracies trade less than democracies. Secondly, we test the predictions of the model empirically using a panel of more than 130 countries for the years 1962 to 2000. In contrast to the existing literature, we use data on individual importing and exporting countries, rather than a dyadic set-up. In line with the model, we and that autocracies import substantially less than democracies, even after controlling for official trade policies. This finding is very stable and does not depend on a particular set-up or estimation technique. Key words: International trade; democracy; autocracy; gravity model. |
| JEL: | F13 F14 O24 P45 P51 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0742&r=pol |
| By: | Felix Schlaepfer (Socioeconomic Institute, University of Zurich); Marcel Schmitt (Economics Division, Federal Research Institute WSL, Birmensdorf, Switzerland); Anna Roschewitz (Economics Division, Federal Research Institute WSL, Birmensdorf, Switzerland) |
| Abstract: | This paper examines the role of simplified heuristics in the formation of preferences for public goods. Political scientists have suggested that voters use simplified heuristics based on the positions of familiar parties to infer how a proposed policy will affect them and to cast a vote in line with their interests and values. Here, we use a two-stage field-survey experiment to investigate how knowledge of party positions affects policy choices. We followed standard procedures in developing an attribute-based choice experiment on alternative land-use policies in Switzerland. In contrast to the usual formulation, however, the hypothetical costs of the proposed policies were formulated as a percentage change in taxes. The benefit of this formulation relative to the usual absolute money amounts is that the credibility of the (hypothetical) costs for respondents does not depend on respondent income. Furthermore, the formulation allowed us to solicit party positions on the proposed policies. Six out of eight contacted parties provided their positions. We then conducted a split-sample mail survey where we included a table of the party positions with a sub-sample of the questionnaires. We report six main experimental results. (1) The response rate of the survey was unaffected by the party positions. (2) The proportion of no-choice answers was decreased by forty percent relative to the control. (3) The party information significantly affected the choices directly and in interaction with respondents’ general attitudes towards public spending for nature and landscape conservation and thus affected the way how individuals mapped from general attitudes to preferences for specific policies. (4) The information interacted with educational level in only eight out of forty choice sets, suggesting that even the more educated relied on simplified heuristics. (5) Respondents who knew the party positions were more sensitive to the tax attribute. (6) For respondents with medium and higher tax bills, the resulting willingness-to-pay estimates were decreased by a factor of two to ten relative to the control. These findings suggest that the party information helped the respondents to articulate more consistent preferences than in the treatment without the party information. |
| Keywords: | agriculture, bounded rationality, choice experiment, contingent valuation, landscape, heuristics, information, preference formation, public goods, voting |
| JEL: | D61 D70 D81 Q26 Q28 Q51 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0712&r=pol |
| By: | Oskar Nupia |
| Abstract: | Powerful local elites are quite common in developing countries. Thus, whether decentralization reduces or not the level of corruption in the presence of these elites is a relevant issue for these economies. We motivate this paper with some empirical evidence. Using cross-country information we find that the negative average effect of decentralization on corruption documented in the literature is absent for developing countries. Then, we build an imperfect information model of corruption and political accountability to study if the influence local elites may have on the allocation of public resources can explain this outcome. We find that not only the power of the elites but also other unexpected factors matter. In particular, both the existence of regions with a relatively weak accountability sector and the design of decentralization and grants can also explain the lack of success of decentralization in combating corruption in these economies. |
| Date: | 2007–09–09 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:004013&r=pol |
| By: | Kesternich, Iris; Schnitzer, Monika |
| Abstract: | This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such as expropriation, corruption and confiscatory taxation. In our theoretical analysis we find that, as political risk increases, the ownership share always decreases, whereas leverage can both increase or decrease, depending on the type of political risk. Using the Microdatabase Direct Investment of the Deutsche Bundesbank, we find supportive evidence for these different effects. |
| Keywords: | capital structure; leverage; Multinational firms; ownership structure; political risk |
| JEL: | F21 F23 G32 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6468&r=pol |
| By: | Pedro Dal Bo; Andrew Foster; Louis Putterman |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2007-9&r=pol |