nep-pol New Economics Papers
on Positive Political Economics
Issue of 2008‒03‒01
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. War and Endogenous Democracy By Davide Ticchi; Andrea Vindigni
  2. Corruption and Political Interest: Empirical Evidence at the Micro Level By Benno Torgler; Bin Dong
  3. Democratic Institutions and Provision of Public Good By Sarani Saha
  4. The spatial range of public goods revealed through referendum voting By Robert Deacon; Felix Schläpfer
  5. Referendum Design, Quorum Rules and Turnout By Luís Aguiar-Conraria; Pedro C. Magalhães
  6. Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico By Ben Lockwood; Mercedes Garcia-Escribano; Giorgio Brosio; José Antonio González Anaya; Ernesto Revilla; Ehtisham Ahmad
  7. Is Corruption an Efficient Grease ? By Pierre-Guillaume Méon; Laurent Weill
  8. Exiting a lawless state By Stiglitz, Joseph E.; Hoff, Karla
  9. Female Policymaker and Educational Expenditure: Cross-Country Evidence By Chen, Li-Ju

  1. By: Davide Ticchi (Department of Economics, University of Urbino (Italy)); Andrea Vindigni (Department of Politics, Princeton University & IZA)
    Abstract: Many episodes of extension of franchise in the 19th and especially in the 20th century occurred during or in the aftermath of major wars. Motivated by this fact, we offer a theory of political transitions which focuses on the impact of international conflicts on domestic political institutions. We argue that mass-armies, which appeared in Europe after the French Revolution, are an effective military organization only if the conscripted citizens are willing to put effort in fighting wars, which in turn depends on the economic incentives that are provided to them. The need to provide such incentives, implies that an oligarchy adopting a mass-army may voluntarily decide to promise some amount of income redistribution to its citizens, conditionally on satisfactory performance as soldiers. When the elite cannot credibly commit to provide an incentive-compatible redistribution, they may cope with the moral hazard problem of the citizens-soldiers only by relinquishing political power to them through the extension of franchise. This is because democracy always implements a highly redistributive fiscal policy, which makes fighting hard incentive-compatible for the citizens-soldiers. We show that a transition to democracy is more likely to occur when the external threat faced by an incumbent oligarchy is in some sense intermediate. A very high external threat allows the elite to make credible commitments of future income redistribution in favor of the citizens, while a limited external threat makes optimal for the elite not making any (economic or political) concession to the masses. Some historical evidence consistent with our theory is also provided.
    Keywords: Autocracy, Democracy, Wars, Redistribution.
    JEL: D72 D74 H56 N40 P16
    Date: 2007–12
  2. By: Benno Torgler; Bin Dong
    Abstract: In recent years the topic of corruption has attracted a great deal of attention. However, there is still a lack of empirical evidence about the determinants of corruption at the micro level. Therefore we explore in detail the impact of political interest using three different proxies. Furthermore, investigation of the effects of political interest on corruption has been neglected in the present literature. We address this deficiency by analyzing a cross-section of individuals, using the World Values Survey to explore the determinants of corruption using not only perceived corruption as a dependent variable, but also the justifiability of corruption. In addition, we present empirical evidence at both the cross-country level and at the within country level. The results of the multivariate analysis suggest that political interest has an impact on corruption, when controlling for additional significant factors such as institutional conditions (e.g., voice and accountability).
    Keywords: Corruption; Political Interest; Social Norms
    JEL: K42 D72 O17 J24
    Date: 2008–01
  3. By: Sarani Saha (UCSB Economics)
    Abstract: This paper aims to test empirically the predictions of a theory that deals with the effect of different democratic regimes on public good provision. The theory predicts higher provision of public good in proportional electoral systems and parliamentary political regimes in comparison to majoritarian systems and presidential regimes respectively. The tests are performed using cross-country data from the 1990s on health and education quantity indicators of public good. Use of quantity indicators instead of expenditure data, previously used by other researchers, enables a cleaner test of the theory as a higher amount of any quantity measure clearly indicates a higher supply of public good. Overall, the robust results in this paper do not provide enough support for the theory. Electoral system has no effect on any of the public good indicators while except for two indicators under education, the nature of the political regime has no significant effect either.
    Keywords: good, democracy, political regime, electoral system,
    Date: 2007–04–30
  4. By: Robert Deacon (University of California, Santa Barbara); Felix Schläpfer (Socioeconomic Institute, University of Zurich, Switzerland)
    Abstract: Billions of dollars are now spent annually in the United States and Europe for spatially delineated environmental services such as agricultural landscape management and river restoration programs, yet little is known about the spatial distribution of the benefits from these policies. This paper develops a framework for recovering information on this question from the spatial pattern of votes cast for referenda on the provision of spatially delineated public goods. We specify a model linking voter support for environmental improvement to the distance at which such improvements are expected to occur. The empirical application is to a river restoration referendum in the Swiss canton of Bern. Our results indicate that the benefits from river restoration have a strong local component, sufficiently strong that voter approval would not occur if only canton-wide benefits were at stake. Surprisingly, support of river restoration is no greater, and in some specifications is actually lower, in locations where rivers are a prominent feature in the environment.
    Keywords: voting, local public goods, valuation,
    Date: 2007–08–01
  5. By: Luís Aguiar-Conraria (Universidade do Minho - NIPE); Pedro C. Magalhães (University of Lisbon, Social Sciences Institute,)
    Abstract: What is the impact of different referenda designs on the willingness of the electorate to vote? In this article, we focus on quorum requirements. We use a rational choice-voting model to demonstrate that certain types of quorum requirements change the incentives each elector faces. In particular, participation quorums induce electors who oppose changes in the status quo and expect to be in the minority to abstain rather than vote. As a result, such quorums decrease turnout. We test this model prediction using data for all referendums held in current European Union countries from 1970 until 2007. We show that that the existence of participation quorums does increase abstention by 10 percentage points.
    Date: 2008
  6. By: Ben Lockwood; Mercedes Garcia-Escribano; Giorgio Brosio; José Antonio González Anaya; Ernesto Revilla; Ehtisham Ahmad
    Abstract: An equalization system ensures that subnational governments can provide similar level of public services at a comparable level of own tax-effort. This paper focuses on the importance of spending needs factors in the design of equalization transfers as well as special purpose transfers-and the role that this could have in setting the agenda for better accountability for recipient governments, illustrating both design and implementation questions with examples from Mexico. The paper also takes into account the difficult political economy constraints to reforming any system of transfers.
    Keywords: Working Paper , Fiscal policy , Mexico , Government expenditures , Public sector , Economic reforms , Political economy ,
    Date: 2007–10–30
  7. By: Pierre-Guillaume Méon; Laurent Weill (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg)
    Abstract: This paper tests whether corruption can be viewed as an efficient grease in the wheels of an otherwise deficient institutional framework. It does so by analyzing the interaction between aggregate efficiency, corruption, and other dimensions of governance for a panel of 54 countries both developed and developing. Using three measures of corruption and five measures of other aspects of governance, we repeatedly observe that corruption is always detrimental in countries where institutions are effective, but that it may be positively associated with efficiency in countries where institutions are ineffective. We thus find evidence of the grease the wheels hypothesis.
    Keywords: Governance, corruption, income, aggregate productivity, efficiency.
    JEL: C33 K4 O43 O47
    Date: 2008
  8. By: Stiglitz, Joseph E.; Hoff, Karla
    Abstract: An earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset-stripping, and the prevalence of asset-stripping led to the absence of a demand for the rule of law, highlighting a coordination failure. This paper looks more carefully at the dynamics of transition from a non-rule-of-law state. The paper identifies a commitment problem as the critical feature inhibiting the transition: the inability, under a rule of law, to forgive theft. This can lead to the perpetuation of the non-rule-of-law state, even when it might seem that the alternative is Pareto-improving.
    Keywords: Public Sector Corruption & Anticorruption Measures,National Governance,Labor Policies,Gender and Law,Economic Theory & Research
    Date: 2008–02–01
  9. By: Chen, Li-Ju (Dept. of Economics, Stockholm University)
    Abstract: This paper investigates the influence of women's participation in politics on decision making. I take educational expenditure as the target. The results suggest that an increase by one percentage point in the share of female legislators increases by 0.034 percentage points the ratio of educational expenditure to GDP. Moreover, one percentage point increases in the fraction of female legislators would lead to an estimated 0.54% rise in total educational expenditure per capita. The positive effect of female legislators on educational policies is strengthened by forms of government. This study also supports the hypothesis that the identity of legislators matter for policy.
    Keywords: Education; female legislator; political economy
    JEL: H52 J16 P48
    Date: 2008–02–27

This nep-pol issue is ©2008 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.