nep-pol New Economics Papers
on Positive Political Economics
Issue of 2007‒10‒20
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political budget cycles and social security budget increases in the Republic of Ireland, 1923-2005 By Cousins, Mel
  2. Growth, Volatility and Political Instability: Non-Linear Time-Series Evidence for Argentina, 1896-2000 By Campos, Nauro F; Karanasos, Menelaos
  3. Rent seeking, interest groups and environmental lobbying: Cane Farmers versus Great Barrier Reef Protectionists By Beard, Rodney
  4. Forecasting elections using expert surveys: an application to U.S. presidential elections By Jones, Randall J.; Armstrong, J. Scott; Cuzan, Alfred G.
  5. Modelling the Composition of Government Expenditure in Democracies By John Creedy; Solmaz Moslehi
  6. Equity and Trade Policy By Joseph Francois; Hugo Rojas-Romagosa
  7. The effect of voter identification laws on turnout By Alvarez, R. Michael; Bailey, Delia; Katz, Jonathan
  8. The Political Economy of EDP Fiscal Forecasts: An Empirical Assessment By Álvaro Pina; Nuno Venes
  9. How Does the Government (Want to) Fund Science? Politics, Lobbying and Academic Earmarks By John M. de Figueiredo; Brian S. Silverman

  1. By: Cousins, Mel
    Abstract: This paper examines social security increases in Ireland as a case study of the existence of political budget cycles in European countries. Ireland is an appropriate country to examine, first because it has a system of proportional representation and some studies suggest that proportional electoral systems are associated with expansions of welfare spending both before and after elections. Second, it is generally recognised that Irish political parties occupy the middle ground in terms of political ideology. Again studies would suggest that an absence of a strong ideological commitment to particular policies may make political budget cycles more likely. Utilising the distinctive nature of the public expenditure process in relation to welfare budget increases, this article examines the issue of whether or not a political budget cycle can be seen in Ireland in relation to social security expenditure. It draws a number of conclusions as to the existence and incidence of political budget cycles in an Irish context and also looks at whether political budget cycles have succeeded in their apparent objective i.e. securing election for the relevant political party.
    Keywords: Political budget cycle; welfare state; social security; public expenditure; Ireland
    JEL: I38 H55 H53
    Date: 2007–06–26
  2. By: Campos, Nauro F; Karanasos, Menelaos
    Abstract: What is the relationship between economic growth and its volatility? Does political instability affect growth directly or indirectly, through volatility? This paper tries to answer such questions using a power-ARCH framework with annual time series data for Argentina from 1896 to 2000. We show that while assassinations and strikes (what we call “informal” political instability) have a direct negative effect on economic growth, “formal” political instability (constitutional and legislative changes) has an indirect (through volatility) negative impact. We also find preliminary support for the idea that while the effects of “formal” instability are stronger in the long-run, those of “informal” instability are stronger in the short-run.
    Keywords: economic growth; political instability; power-ARCH; volatility
    JEL: C14 D72 E23 O40
    Date: 2007–10
  3. By: Beard, Rodney
    Abstract: In this paper an interest group model of rent seeking behaviour between sugarcane farmers and environmental protectionists is developed. The motivation for this scenario comes from the debate over fertilizer run-off and its possible impact on Queensland’s Great Barrier Reef. The paper takes Gordon Tullock’s rent-seeking model and applies it to the bargaining process over controls on fertilizer application in an effort to learn something about the likely political outcomes of this debate.
    Keywords: Public choice; Environmental economics; Agricultural policy
    JEL: Q18 Q58 Q53
    Date: 2007–10
  4. By: Jones, Randall J.; Armstrong, J. Scott; Cuzan, Alfred G.
    Abstract: Prior research offers a mixed view of the value of expert surveys for long-term election forecasts. On the positive side, experts have more information about the candidates and issues than voters do. On the negative side, experts all have access to the same information. Based on prior literature and on our experiences with the 2004 presidential election and the 2008 campaign so far, we have reason to believe that a simple expert survey (the Nominal Group Technique) is preferable to Delphi. Our survey of experts in American politics was quite accurate in the 2004 election. Following the same procedure, we have assembled a new panel of experts to forecast the 2008 presidential election. Here we report the results of the first survey, and compare our experts’ forecasts with predictions by the Iowa Electronic Market .
    Keywords: forecasting; elections; expert surveys; Delphi
    JEL: Y80
    Date: 2007–10–02
  5. By: John Creedy; Solmaz Moslehi
    Abstract: This paper considers whether the ratio of transfer payments to expenditure on public goods in democracies can be explained as the outcome of majority voting. A simple model is constructed in which individuals vote for government expenditure on a public good, for a given income tax rate. The transfer payment is then determined by the government’s budget constraint. The equilibrium ratio of transfers to public good expenditure per person is expressed as a quadratic function both of the ratio of the median to the mean wage, and of the tax rate. Data for 29 democratic countries are used to estimate a cross-sectional regression. The empirical results confirm that reductions in the skewness of the wage rate distribution are associated with reductions in transfer payments relative to public goods expenditure, at a decreasing rate. Furthermore, increases in the tax rate, from relatively low levels, are associated with increases in the relative importance of transfer payments. But beyond a certain level, further tax rate increases are associated with a lower ratio of transfers to public goods.
    Date: 2007
  6. By: Joseph Francois (Johannes Kepler University (Linz)); Hugo Rojas-Romagosa (CPB (the Hague))
    Abstract: We develop a dual approach to analyzing general equilibrium relationships between trade policy and household (as distinct from functional) income distribution, highlighting how general equilibrium distributional aspects of social welfare related to import protection may be examined alongside corresponding efficiency aspects in a dual framework. This includes the introduction of a social welfare function into the dual GE system that is explicitly separable between mean income and income dispersion. This then follows through to the government ob jective function. For government, this is manifested not only in special interest politics, but also through the direct impact of inequality on a governmentÕs ob jective function. We find that equity considerations may serve to counter lobbying interests in both capital-rich and capital-poor countries, though with an opposite marginal impact on the final policy outcome. We also identify a protectionist bias on the part of welfare maximizing governments in capital-rich countries. Our dual framework also offers a possible empirical framework for decomposition of policy-induced price changes into household inequality for a broad class of models.
    Keywords: Trade and inequality, Sen welfare functions, duality, political economy of equity
    JEL: F13 O15 D31 D72
    Date: 2007–05
  7. By: Alvarez, R. Michael; Bailey, Delia; Katz, Jonathan
    Date: 2007–10
  8. By: Álvaro Pina; Nuno Venes
    Abstract: This paper analyses the track record of fiscal forecasts reported by 15 European countries in the context of the Excessive Deficit Procedure. For the budget balance, gross fixed capital formation (GFCF) and interest payments, we study the statistical properties of forecast errors and their politico-institutional determinants. While errors in interest and GFCF expenditure present few systematic patterns, budget balance errors are responsive to fiscal institutions and to opportunistic motivations, especially from 1999 onwards: upcoming elections induce over-optimism, whereas commitment or mixed forms of fiscal governance and numerical expenditure rules (but not deficit and debt rules) are associated to greater prudence.
    Keywords: fiscal forecasting; Stability and Growth Pact; Excessive Deficit Procedure; fiscal rules
    JEL: E62 H62 H68
    Date: 2007
  9. By: John M. de Figueiredo; Brian S. Silverman
    Abstract: This paper examines academic earmarks and their role in the funding of university research. It provides a summary and review of the evidence on the supply of earmarks by legislators. It then discusses the role of university lobbying for earmarks on the demand side. Finally, the paper examines the impact of earmarks on research quantity and quality.
    JEL: H41 O38 P16
    Date: 2007–10

This nep-pol issue is ©2007 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.