nep-pol New Economics Papers
on Positive Political Economics
Issue of 2008‒02‒16
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Campaign Promises and Political Factions By Elena Panova
  2. Study on the Political Involvement in Senior Staffing and on the Delineation of Responsibilities Between Ministers and Senior Civil Servants By Alex Matheson; Boris Weber; Nick Manning; Emmanuelle Arnould
  3. The governance of the World Bank : analysis and implications of the decisional power of the G10. By Arthur Foch
  4. Decentralisation and Political Business Cycle: Fund Utilization of the MP-LADS in India By Pal, Rupayan; Das, Aparajita
  5. Public Investment and Growth: The Role of Corruption' By M. Emranul Haque; Richard Kneller
  6. Free Triples, Large Indifference Classes and the Majority Rule By EHLERS, Lars; BARBERÀ, Salvador
  7. The politics of displacement. Towards a framework for democratic evaluation By Roel Nahuis
  8. Contributing or Free-Riding?  A Theory of Endogenous Lobby Formation By Taiji Furusawa; Hideo Konishi

  1. By: Elena Panova
    Abstract: This paper builds a dynamic model of electoral competition with nonbinding campaign promises. We find that campaign promises by a candidate for office signal her political preferences and public policy that she intends to implement. The reason is that electoral competition induces her to pander campaign promises to political interests by a minimal majority of citizens. If their votes bring her in office, she has to raise them once again in order to be re-elected. For that, she needs to fulfill her electoral promises. To minimize the cost of pandering to re-election if in office, a candidate gives campaign promises that she would like to fulfill the most. She fulfills them if in office, unless the cost of fulfillment lies above the benefit from re-election. We show, furthermore, that representatives by a minimal majority of citizens form a faction to coordinate their electoral strategies, and we investigate the consequences of such political collusion.
    Keywords: Electoral promises, pork-barrel politics, political parties
    JEL: D72 D82
    Date: 2007
  2. By: Alex Matheson; Boris Weber; Nick Manning; Emmanuelle Arnould
    Abstract: Political involvement in administration is essential for the proper functioning of a democracy. Without this an incoming political administration would find itself unable to change policy direction. However public services need protection against being misused for partisan purposes, they need technical capacity which survives changes of government, and they need protection against being used to impair the capacity of future governments to govern.
    Date: 2007–07
  3. By: Arthur Foch (Centre d'Economie de la Sorbonne)
    Abstract: This article discusses the World Bank's formal rules of governance. It states that theoretically, each of the World Bank's member states is represented within the decision making process but in practice it is otherwise. Indeed, we demonstrate that in reality the democratic imbalance in favor of the Most Developed Countries (MDCs), caused by the voting system of the WB, is much stronger than it appears. In the first place, our analysis of the formal decision making process demonstrates that the voting system is such that a coalition of particularly coordinated countries - the eleven countries of the G10 - can, on its own, constitute a majority permitting them to vote decisively on all issues. This implies that the remaining 174 members have no influence on voting results. Thus, this minority coalition alone is in position to approve loans and their attached conditions. In the second place, four features of the World Bank's governance which protect and re-enforce the power of this coalition are found. On the one hand, this analysis provides some explanations to the failure of various initiatives made to increase the voice of the Less Developed Countries (LDCs). On the other hand, it identifies several means susceptible of increasing the power of these countries in the institution. The main interest of this study shows that the democratic imbalance caused by the voting system is more important than it seems. Indeed, not only do the World Bank's formal rules of governance give the G10 the voting weight at all three levels of decision making but several governing features also permit the G10 to protect and re-enforce the power that they already have. Due to their right of veto, the MDCs can notably block any reform proposals.
    Keywords: World Bank, governance, decision-making power, decision-making authorities, conditionality.
    JEL: O16 O19 F35 F59
    Date: 2007–11
  4. By: Pal, Rupayan; Das, Aparajita
    Abstract: The Members of Parliament Local Area Development Scheme (MP-LADS) came in effect in 1993, closely followed by the 73rd Amendment to the Constitution, along with the wave of democratic decentralisation process in India. The MP-LADS allows for a fixed amount, non-lapsable Rs. 2 crores per year for each Member of the Parliament (MP), at the discretion of the MPs to carry out developmental works of capital nature in their respective constituencies. In last 14 years, more than 8 times of the annual expenditure on higher education by the central government has been spent on the MP-LADS. This paper examines whether there is any political business cycle in spending funds under the MP-LADS, its extent, and determinants. We find that there are political business cycles in spending by the MPs, and its extent varies across Lok Sabha constituencies. The extent of political business cycle is lower in case of leftist MPs compared to that in case of centrist and rightist MPs. Higher degree of competition faced in the last election by an MP induces him/her to misuse the scheme more severely, and younger MPs seems to be less inclined to generate political business cycle in spending. We also find that higher level of awareness of general citizens and better law and order conditions in states restricts MPs from misusing funds to gain political mileage.
    Keywords: Decentralisation; Political Business Cycle; Local Area Development; Members of Parliament
    JEL: D7 O53 H7
    Date: 2008–02–01
  5. By: M. Emranul Haque; Richard Kneller
    Abstract: In this paper, we examine the growth effects of public investment in the presence of corruption. Our methodology improves on previous research on this topic by explicitly recognizing the role of simultaneity between public investment, corruption and growth and the possible biases arising from omission of correlated variables from the single reduced form equation based analysis. We use three-stage least squares method in a panel set up for a system of four equations on growth, public investment, corruption and private investment. Our primary results are twofold. First, corruption increases public investment. Second, corruption reduces the returns to public investment and makes it ineffective in raising economic growth.
    Date: 2008
  6. By: EHLERS, Lars; BARBERÀ, Salvador
    Abstract: We consider situations in which agents are notable to completely distinguish between all alternatives. Preferences respect individual objective indifferences if any two alternatives are indifferent whenever an agent cannot distinguish between them. We present necessary and sufficient conditions of such a domain of preferences under which majority rule is quasi-transitive and thus Condorcet winner sexist for any set of alternatives. Finally, we compare our proposed restrictions with others in the literature, to conclude that they are independent of any previously discussed domain restriction.
    Keywords: Quasi-Transitivity ; Majority Rule
    Date: 2007
  7. By: Roel Nahuis
    Abstract: The confrontation of values and interests and an impact in the public realm constitutes a broadly recognised political dimension of technological innovation processes. There is, however, a gap between empirical research into these politics of innovation and normative research into their democratic evaluation. Especially methods for evaluating the democratic quality of dynamic and non-formal forms of innovation politics are lacking. This paper aims to fill the gap by developing a framework for analysing the politics of innovation in terms of displacements of issues. Its first part reviews different theoretical approaches and concludes that decision-making about design and use generally takes place in a multitude of settings and that this circumstance calls for theoretical investigation of displacements between settings. In the second part, the notions of ‘issue’, ‘setting’, and ‘displacement’ are further elaborated and related to one another. A conceptual framework is construed that is suggested to be helpful in the democratic evaluation of the politics of displacements. The paper ends with a reflection on the applicability of recently developed democratic criteria. Because these criteria are devised for proceduralised and static decision-making processes, they needed to be reduced to three democratic principles that are general enough to capture local variation and specific enough to make a difference between good and bad politics.
    Date: 2008–02
  8. By: Taiji Furusawa (Hitotsubashi University); Hideo Konishi (Boston College)
    Abstract: We consider a two-stage public goods provision game: In the first stage, players simultaneously decide if they will join a contribution group or not. In the second stage, players in the contribution group simultaneously offer contribution schemes in order to influence the government's choice on the level of provision of public goods. Using perfectly coalition-proof Nash equilibrium (Bernheim, Peleg and Whinston, 1987 JET), we show that the set of equilibrium outcomes is equivalent to an "intuitive" hybrid solution concept, the free-riding-proof core, which is always nonempty but does not necessarily achieve global efficiency. It is not necessarily true that an equilibrium lobby group is formed by the players with highest willingness-to-pay, nor is it a consecutive group with respect to their willingnesses-to-pay. We also show that the equilibrium level of public goods provision shrinks to zero as the economy is replicated.
    Keywords: common agency, public good, free rider, core, lobby, coalition formation, coalition-proof Nash equilibrium
    JEL: C71 C72 F13 H41
    Date: 2008–02–11

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