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on Positive Political Economics |
| By: | Matilde Bombardini; Francesco Trebbi |
| Abstract: | This paper investigates the relationship between the size of interest groups in terms of voter representation and the interest group's campaign contributions to politicians. We uncover a robust hump-shaped relationship between the voting share of an interest group and its contributions to a legislator. This pattern is rationalized in a simultaneous bilateral bargaining model where the larger size of an interest group affects the amount of surplus to be split with the politician (thereby increasing contributions), but is also correlated with the strength of direct voter support the group can offer instead of monetary funds (thereby decreasing contributions). The model yields simple structural equations that we estimate at the district level employing data on individual and PAC donations and local employment by sector. This procedure yields estimates of electoral uncertainty and politicians effectiveness as perceived by the interest groups. Our approach also implicitly delivers a novel method for estimating the impact of campaign spending on election outcomes: we find that an additional vote costs a politician between 100 and 400 dollars depending on the district. |
| JEL: | D72 H7 P48 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13672&r=pol |
| By: | Daron Acemoglu; Michael Golosov; Aleh Tsyvinski |
| Date: | 2007–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:122247000000001730&r=pol |
| By: | Baldwin, Richard; Robert-Nicoud, Frédéric |
| Abstract: | This paper posits a formal political economy model where the principle of reciprocity in multilateral trade talks results in the gradual elimination of tariffs. Reciprocity trade talks turn each nation’s exporters into anti-protectionists at home; they lower foreign tariffs by convincing their own government to lower home tariffs. Due to the new array of political forces, each government finds it politically optimal to remove tariffs that it previously found politically optimal to impose. The one-off global tariff cut then reshapes the political economy landscape via entry and exit – reducing the size/influence of import-competing sectors and increasing that of exporters. In the next round of trade talks governments therefore find it politically optimal to cut tariffs again. The process may continue until tariffs are eliminated. |
| Keywords: | Lobbying; Multilateral Trade Negotiations |
| JEL: | F13 F15 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6607&r=pol |
| By: | Dalgaard, Carl-Johan (University of Copenhagen); Olsson, Ola (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | The present paper documents that political stability is positively associated with the extent of domestic trade. In explaining this reg- ularity, we provide a model where political cohesion is linked to the emergence of a fully functioning market economy. Without market ex- change, the welfare of inherently selfish individuals will be mutually independent. As a result, political negotiations, echoing the prefer- ences of the citizens of society, will be dog-eat-dog in nature. Whoever has greater bargaining power will be willing to make decisions that en- hance the productivity of his supporters at the expense of other groups in society. If the gains from specialization become sufficiently large, however, a market economy will emerge. From being essentially non- cooperative under self-su¢ ciency, the political decision making process becomes cooperative in the market economy, as the welfare of individ- uals will be mutually interdependent due to the exchange of goods.<p> |
| Keywords: | Political cohesion; Economic growth |
| JEL: | O41 P16 |
| Date: | 2007–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0280&r=pol |
| By: | Lisa Grazzini (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Alessandro Petretto (Università degli Studi di Firenze, Dipartimento di Scienze Economiche) |
| Abstract: | We analyse voting on devolution of responsibilities for the provision of public goods to local governments in a federal country, with a bicameral national legislature. We suppose that devolution is a ?scal reform which reduces federal public expenditure on a national public good, and simultaneously increases transfers which regions receive from the State via a tax-sharing mechanism. This allows regions to augment their aggregate expenditure on a local public good which substitutes the reduction in a national public one. We show the conditions under which each chamber of the national parliament votes separately in favour or against devolution, and the conditions prompting the Federal government to carry out or to drop such a reform. |
| Keywords: | Fiscal federalism, Median voter, Public goods, Devolution |
| JEL: | H1 H41 H71 H77 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2007_09&r=pol |
| By: | Ahlerup, Pelle (Department of Economics, School of Business, Economics and Law, Göteborg University); Olsson, Ola (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | The level of ethnic diversity is believed to have significant consequences for economic and political development within countries. In this article, we provide a theoretical and empirical analysis of the determinants of ethnic diversity in the world. We introduce a model of cultural and ge- netic drift where new ethnic groups endogenously emerge among periph- eral populations as a response to an insufficient supply of public goods. In line with our model, we find that the duration of human settlements has a strong positive association with ethnic diversity. Ethnic diversity decreases with the length of modern state experience and with distance from the equator. Both "primordial" and "constructivist" hypotheses of ethnic fractionalization thus receive some support by our analysis.<p> |
| Keywords: | ethnicity; ethnic diversity; human origins |
| JEL: | N40 N50 P33 |
| Date: | 2007–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0281&r=pol |
| By: | Denisova, Irina; Eller, Markus; Frye, Timothy; Zhuravskaya, Ekaterina |
| Abstract: | A 2006 survey of 28,000 individuals in 28 post-communist countries reveals overwhelming support for revising privatization, but most respondents prefer to leave firms in private hands. We examine who wants to revise privatization and why. Respondents with poor human capital and few assets support revising privatization due to a preference for state over private property. Economic hardships during transition increase support for revising privatization due to the perceived unfairness of privatization. The institutional environment has no impact on how human capital and asset ownership influence attitudes toward privatization, but does affect how economic hardships during transition shape these attitudes. |
| Keywords: | demand for property rights; legitimacy of property rights; nationalization; privatization; property rights; revision; transition |
| JEL: | L33 P20 P26 P50 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6603&r=pol |