nep-pol New Economics Papers
on Positive Political Economics
Issue of 2008‒01‒19
six papers chosen by
Eugene Beaulieu
University of Calgary

  1. Television and Political Persuasion in Young Democracies: Evidence from Russia By Ruben Enikolopov; Maria Petrova; Ekaterina Zhuravskaya
  2. Environmental Policy in Majoritarian Systems By Per G. Fredriksson; Xenia Matschke; Jenny Minier
  3. Law, State Power, and Taxation in Islamic History By Metin Cosgel; Rasha Ahmed; Thomas Miceli
  4. Political and institutional factors in regime change in the ERM: An application of duration analysis By Simón Sosvilla-Rivero; Francisco Pérez-Bermejo
  5. Natural Resources and Violent Conflict: Resource Abundance, Dependence and the Onset of Civil Wars By Christa N. Brunnschweiler; Erwin Bulte
  6. Fiscal Sustainability Across Government Tiers By Peter Claeys; Raúl Ramos; Jordi Suriñach

  1. By: Ruben Enikolopov (Harvard University); Maria Petrova (Harvard University); Ekaterina Zhuravskaya (New Economic School (NES), Center for Economic and Financial Research (CEFIR), Center for Economic Policy Research (CEPR))
    Abstract: Governments control media in much of the developing world. Does this have an effect on political choices of voters? We address this question using exogenous variation in the availability of the signal of the only independent from the government national TV channel in Russia during the 1999 parliamentary elections. We find that the presence of an independent source of political news on TV significantly decreased the vote in favor of the government party and increased the vote in favor of the opposition parties. We find that the difference in TV coverage significantly changed voting behavior even controlling for voters’ inclinations just one month prior to the elections. The effects we find are larger than those found in established democracies.
    Date: 2007–12
  2. By: Per G. Fredriksson (University of Louisville); Xenia Matschke (University of Connecticut); Jenny Minier (University of Kentucky)
    Abstract: This paper sheds new light on the determination of environmental policies in majoritarian federal electoral systems such as the U.S., and derives implications for the environmental federalism debate on whether the national or local government should have authority over environmental policies. In majoritarian systems, where the legislature consists of geographically distinct electoral districts, the majority party (at either the national or the state level) favors its own home districts; depending on the location of polluting industries and the associated pollution damages, the majority party may therefore impose sub-optimally high or low pollution taxes due to a majority bias. We show that majority bias can influence the social-welfare ranking of alternative government policies and, in some cases, may actually bring distortionary policies closer to the first-best solution.
    Keywords: Institutions, environmental policy, environmental federalism, geography, majority bias, political economy.
    JEL: Q48 D72 D78 H20 R50
    Date: 2008–01
  3. By: Metin Cosgel (Economics Dept., The University of Connecticut.); Rasha Ahmed (Economics Dept., The University of Connecticut.); Thomas Miceli (Economics Dept., The University of Connecticut.)
    Abstract: This paper studies the unique nature, institutional roots, and economic consequences of the ruler’s political power in Islamic History. An influential interest group in Islamic societies has been the legal community, whose power could range from being able to regulate the rulers to being entirely under their control. The struggle was over the provision of legal goods and services, the legal community gradually gaining control of the law in history and the rulers seeking to appropriate political power by controlling the legal community. The economic consequence of power was the ability to dictate the choice of tax bases and rates.
    Keywords: state power, taxation, political economy, Islamic Law, legal community
    JEL: K3 H2
    Date: 2008–01–15
  4. By: Simón Sosvilla-Rivero (FEDEA and Universidad Complutense de Madrid); Francisco Pérez-Bermejo (KPMG-Spain)
    Abstract: This paper analyses the functioning of the European Exchange Rate Mechanism (ERM). To that end, we apply duration models to estimate an augmented target-zone model, explicitly incorporating political and institutional factors into the explanation of European exchange rate policies. The estimations are based on quarterly data of eight currencies participating in the ERM, covering the complete history of the European Monetary System. Our results suggest that both economic and political factors are important determinants of the ERM currency policies. Concerning economic factors, the money supply, the real exchange rate, the interest in Germany and the central parity deviation would have negatively affected the duration of a given central parity, while credibility and the price level in Germany would have positively influenced such duration. Regarding political variables, elections, central bank independence and left-wing administrations would have increased the probability of maintaining the current regime, while unstable governments would have been associated with more frequent regime changes. Moreover, we show how the political augmented model outperforms, both in terms of explanatory power and goodness of fit, the model which just incorporates pure economic determinants.
    Keywords: Duration analysis, political variables, exchange rates, European Monetary System
    JEL: C41 D72 F31 F33
    Date: 2007–10
  5. By: Christa N. Brunnschweiler (CER-ETH Center of Economic Research at ETH Zurich, Switzerland); Erwin Bulte (Development Economics Group, Wageningen University, and Department of Economics, Tilburg University, Netherlands)
    Abstract: In this paper we examine the claim that natural resources invite civil conflict, and challenge the main stylized facts in this literature. We find that the nature of causation between resource dependence and civil war is opposite to conventional wisdom. In particular, (i) civil war creates dependence on primary sector exports, but the reverse is not true, and (ii) resource abundance is associated with a reduced probability of the onset of war. These results are robust to a range of specifications and, considering the conflict channel, we conclude there is no reason to regard resources as a general curse to development.
    Keywords: Civil war, resource abundance, resource dependence, greed versus grievance, resource curse
    JEL: Q34 O11 N40 N50
    Date: 2008
  6. By: Peter Claeys (Grup d'Anàlisis Quantitativa Regional(AQR) i Institut de Recerca en Economia Aplicada (IREA), Departament d'Econometria, Estadística i Economia Espanyola. Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barcelona.); Raúl Ramos (Grup d'Anàlisis Quantitativa Regional(AQR) i Institut de Recerca en Economia Aplicada (IREA), Departament d'Econometria, Estadística i Economia Espanyola. Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barcelona.); Jordi Suriñach (Grup d'Anàlisis Quantitativa Regional(AQR) i Institut de Recerca en Economia Aplicada (IREA), Departament d'Econometria, Estadística i Economia Espanyola. Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barcelona.)
    Abstract: This paper analyses how fiscal adjustment comes about when both central and sub-national governments are involved in consolidation. We test sustainability of public debt with a fiscal rule for both the federal and regional government. Results for the German Länder show that lower tier governments bear a relatively smaller part of the burden of debt consolidation, if they consolidate at all. Most of the fiscal adjustment occurs via central government debt. In contrast, both the US federal and state levels contribute to consolidation of public finances.
    Keywords: Fiscal policy, fiscal rules, EMU, SGP, fiscal federalism.
    JEL: E61 E62 H11 H72 H77
    Date: 2007

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