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on Positive Political Economics |
| By: | Albert Solé-Ollé (Universitat de Barcelona (UB); Institut d'Economia de Barcelona (IEB); CESifo); Pilar Sorribas-Navarro (Universitat Barcelona (UB); Institut d'Economia de Barcelona (IEB)) |
| Abstract: | In this paper we test the hypothesis that intergovernmental grants allocated to co-partisans buy more political support than grants allocated to local governments controlled by opposition parties. We use a rich Spanish database containing information about the grants received by 617 municipalities during the period 1993-2003 from two different upper-tier governments (Regional and Upper-local), as well as data of municipal voting behaviour at three electoral contests held at the different layers of government during this period. Therefore, we are able to estimate two different vote equations, analysing the effects of grants given to aligned and unaligned municipalities on the vote share of the incumbent party/parties at the regional and local elections. We account for the endogeneity of grants by instrumenting them with the average amount of grants distributed by upper-layer governments. The results suggest that grants given to co-partisans buy some political support, but that grants given to opposition parties do not bring any votes, suggesting that the grantee reaps as much political credit from intergovernmental grants as the grantor |
| Keywords: | Voting, parties, grants. |
| JEL: | C72 D72 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2008/3/doc2008-2&r=pol |
| By: | Josep M. Colomer; Humberto Llavador |
| Abstract: | This paper presents a model of electoral competition focusing on the formation of the public agenda. An incumbent government and a challenger party in opposition compete in elections by choosing the issues that will key out their campaigns. Giving salience to an issue implies proposing an innovative policy proposal alternative to the status-quo. Parties trade off the issues with high salience in voters’ concerns and those with broad consensus on some policy proposal. Each party expects a higher probability of victory if the issue it chooses becomes salient in the voters’ decision. Remarkably, the issues which are considered the most important ones by a majority of votes may not be given salience during the electoral campaign. An incumbent government may survive in spite of its bad policy performance if there is no sufficiently broad consensus on a policy alternative. We illustrate the analytical potential of the model with the case of the United States presidential election in 2004. |
| Keywords: | Agenda, elections, political competition, issues, salience, consensus |
| JEL: | D72 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1070&r=pol |
| By: | Ghosal, Sayantan (Department of Economics, University of Warwick); Proto, Eugenio (Department of Economics, University of Warwick) |
| Abstract: | This paper studies the conditions under which intra-elite conflict leads to a democracy. There are two risk averse elites competing for the appropriation of a unit of social surplus, with an ex-ante uncertainty about their future relative bargaining power, and a large non-elite class unable to act collectively. We characterize a democracy as consistng of both franchise extension to, and lowering the cost of collective political activity for, individuals in the non-elite. In the absence of democracy, the stronger elite is always able to appropriate the entire surplus. We show that in a democracy, the newly enfranchised non-elite organize and always prefer to form a coalition with weaker elite against the stronger resulting in a more balanced surplus allocation between the two elites. Accordingly, the elites choose to democratize if they are sufficiently risk averse. Our formal analysis can account for stylized facts that emerge from a comparative analysis of Indian and Western European democracies. |
| Keywords: | Democracy, conflict ; collective action ; coalition formation ; party formation ; bargaining ; risk-sharing |
| JEL: | D74 O12 H11 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:844&r=pol |
| By: | Pau Castells (Institut d'Economia de Barcelona (IEB)); Francesc Trillas (Institut d'Economia de Barcelona (IEB); Universitat Autònoma de Barcelona (UAB)) |
| Abstract: | In the last days of the electoral campaign for the 2004 general election in Spain, on Thursday March 11th 2004, a series of simultaneous terror attacks caused the death of 191 persons in commuting trains in the capital Madrid. Four days later, the opposition party won the election, against all predictions that were made prior to the terror attacks. This change in expectations presents a unique opportunity to take advantage of event study techniques to test some politico-economic hypotheses. The quantitative exercise is carried out employing Seemingly Unrelated Regressions (SUR). Hypothesis testing is improved by means of bootstrapping techniques. Convergence theories prove quite resilient as, jointly, quoted firms were not significantly affected by the election outcome. The results on the impact on particular companies and industries, however, suggest that a combination of capture and agency problems may play a role in explaining the effects of the change in expectations. |
| Keywords: | Event study, median voter, agency, capture, elections. |
| JEL: | G14 G15 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2008/3/doc2008-1&r=pol |
| By: | Daunfeldt, Sven-Olov (The Swedish Retail Institute (HUI)); Hellström, Jörgen (Department of Economics); Landström, Mats (Department of Economics) |
| Abstract: | It is something of a puzzle that politicians around the world have chosen to give up power to independent central banks, thereby reducing their possibilities to fine-tune the economy. In this paper the determinants of central bank independence (CBI) reforms are studied using a new data set on the possible event of such reforms in 119 countries. According to the data, as much as 81 countries had implemented CBI-reforms during the study period. The results indicate, moreover, that policymakers are more likely to delegate power to independent central banks when the foreign debt is relatively high. In non-OECD countries, the likelihood of a CBI-reform also seems to increase when policymakers face a high probability of getting replaced. |
| Keywords: | Central bank independence; political economy |
| JEL: | E42 E58 E61 P16 |
| Date: | 2008–02–29 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:huiwps:0013&r=pol |
| By: | Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Agnieszka Rusinowska (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | In the paper, we introduce and study generalized weighted influence indices of a coalition on a player, where players have an ordered set of possible actions. Each player has an inclination to choose one of the actions. Due to influence of a coalition of other players, a final decision of the player may be different from his original inclination. An influence in such situations is measured by the general weighted influence index. In a particular case, the decision of the player may be closer to the inclination of the influencing coalition than his inclination was. The weighted influence index which captures such a case is called the positive weighted influence index. We also consider the negative weighted influence index, where a final decision of the player goes farther away from the inclination of the influencing coalition. Some special cases of the weighted influence indices, called a possibility influence index and an equidistributed influence index, are also defined. We consider different influence functions and study their properties. A set of followers and a set of a conditional followers of a given coalition are defined, and their properties are analyzed. We define the concepts of success, decisiveness, luck, and failure for the multi-choice model of influence. |
| Keywords: | decisiveness ; follower of a coalition ; influence function ; influence indices ; success |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00260863_v1&r=pol |
| By: | Michael Grimm; Stephan Klasen |
| Abstract: | There is a well-known debate about the roles of geography versus institutions in explaining the long-term development of countries. These debates have usually been based on cross-country regressions where questions about parameter heterogeneity, unobserved heterogeneity, and endogeneity cannot easily be controlled for. The innovation of Acemoglu, Johnson and Robinson (2001) was to address this last point by using settler mortality as an instrument for geography-induced endogenous institutions and found that this supported their line of reasoning. We believe there is value-added to consider this debate at the micro level within a country as particularly questions of parameter heterogeneity and unobserved heterogeneity are likely to be smaller than between countries. Moreover, at the micro level it is possible to identify more precise transmission mechanisms from geography via institutions to economic development outcomes. In particular, we examine the determinants of economic development across villages on the Indonesian Island of Sulawesi and find that geography-induced endogenous emergence of land rights is the critical institutional link between geographic conditions and technological change. We therefore highlight and empirically validate a new transmission channel from endogenously generated institutions on economic development. |
| Keywords: | Geography, migration, land rights, institutions, technology adoption, agricultural development, Indonesia |
| JEL: | K11 O12 Q12 |
| Date: | 2008–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:got:cegedp:70&r=pol |
| By: | Irina Denisova (CEFIR); Markus Eller (CEFIR); Ekaterina Zhuravskaya (New Economic School/CEFIR and CEPR) |
| Abstract: | We use data from the 2006 round of the Russian Longitudinal Monitoring Survey (RLMS) to describe perceptions of Russian people about the transition process and the role of the state. We also study which groups of the population hold more positive and more negative views of transition. Overall, we find that the Russian population is divided in their assessment of transition. About one half is deeply disappointed with transition results and has serious nostalgia about the life under the communist regime. There is a lot more unanimity about the role of the state in the economy. A vast majority of Russians opts for a very high state intervention into all spheres of economic life. However, an average Russian faces a cognitive dissonance: a perception that the state should be more involved in the economy is combined with a deep mistrust of specific state institutions. The variation in these perceptions is systematically related to age, education, employment histories and transition experiences. |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0113&r=pol |