nep-pol New Economics Papers
on Positive Political Economics
Issue of 2008‒09‒29
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Vote-Buying and Growth By Hans Gersbach; Felix Mühe
  2. Do Voters Vote Ideologically?, Third Version By Arianna Degan; Antonio Merlo
  3. Lobbying, Corruption and Other Banes By Campos, Nauro F.; Giovannoni, Francesco
  4. The Efficacy of Parochial Politics: Caste, Commitment, and Competence in Indian Local Governments By Kaivan Munshi; Mark Rosenzweig
  5. Preferences for Childcare Policies: Theory and Evidence By Borck, Rainald; Wrohlich, Katharina
  7. Media versus Special Interests By Alexander Dyck; David Moss; Luigi Zingales
  8. Resources and the Political Economy of State Fragility in Conflict States: Iraq and Somalia By Dibeh, Ghassan
  9. Interest Groups and Economic Performance: Some New Evidence By Zimmermann, Klaus W.; Horgos, Daniel
  10. Resorting to Statism to Find Meaning:Conservatism and Leftism By Klein, Daniel B.
  11. The Political Economy of the 2003 Reform of the Common Agricultural Policy By Johan F.M. Swinnen
  12. Constitutions around the world : A View from Latin America By Cordeiro, Jose Luis
  13. The Impact of Trust on Reforms By Heinemann, Friedrich; Tanz, Benjamin
  14. State Fragility: Concept and Measurement By Baliamoune-Lutz, Mina N.; McGillivray, Mark

  1. By: Hans Gersbach (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland); Felix Mühe (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: Vote-buying is widely used by parties in developing countries to influence the outcome of elections. We examine the impact of vote-buying on growth. We consider a model with a poverty trap where redistribution can promote growth. We show that vote-buying contributes to the persistence of poverty as taxed wealthy people buy votes from poor people. We then show that there exists a democratic constitution that breaks vote buying and promotes growth. Such a constitution involves rotating agenda setting, a taxpayer-protection rule and repeated voting. The latter rule makes vote buying prohibitively costly.
    Keywords: vote-buying, political economy, poverty traps, economic development, voting rules, repeated voting
    JEL: D72 I20 I30 O10 P16
    Date: 2008–09
  2. By: Arianna Degan (Department of Economics, UQAM and CIRPEE); Antonio Merlo (Department of Economics, University of Pennsylvania)
    Abstract: In this paper we address the following question: To what extent is the hypothesis that voters vote “ideologically” (i.e., they always vote for the candidate who is ideologically “closest” to them) testable or falsifiable? We show that using data only on how individuals vote in a single election, the hypothesis that voters vote ideologically is irrefutable, regardless of the number of candidates competing in the election. On the other hand, using data on how the same individuals vote in multiple elections, the hypothesis that voters vote ideologically is potentially falsifiable, and we provide general conditions under which the hypothesis can be tested.
    Keywords: voting, spatial models, falsifiability, testing
    JEL: D72 C12 C63
    Date: 2007–01–01
  3. By: Campos, Nauro F. (Brunel University); Giovannoni, Francesco (University of Bristol)
    Abstract: Although the theoretical literature often uses lobbying and corruption synonymously, the empirical literature associates lobbying with the preferred mean for exerting influence in developed countries and corruption with the preferred one in developing countries. This paper challenges these views. Based on whether influence is sought with rule-makers or rule-enforcers, we develop a conceptual framework that highlights how political institutions are instrumental in defining the choice between bribing and lobbying. We test our predictions using survey data for about 6000 firms in 26 countries. Our results suggest that (a) lobbying and corruption are fundamentally different, (b) political institutions play a major role in explaining whether firms choose bribing or lobbying, (c) lobbying is more effective than corruption as an instrument for political influence, and (d) lobbying is more powerful than corruption as an explanatory factor for enterprise growth, even in poorer, often perceived as highly corrupt, less developed countries.
    Keywords: lobbying, corruption, political institutions
    JEL: E23 D72 H26 O17 P16
    Date: 2008–09
  4. By: Kaivan Munshi (Brown University); Mark Rosenzweig (Yale University)
    Abstract: Parochial politics is typically associated with poor leadership and low levels of public good provision. This paper explores the possibility that community involvement in politics need not necessarily worsen governance and, indeed, can be efficiency enhancing when the context is appropriate. Complementing the new literature on the role of community networks in solving market problems, we test the hypothesis that strong traditional social institutions can discipline the leaders they put forward, successfully substituting for secular political institutions when they are ineffective. Using new data on Indian local governments at the ward level over multiple terms, and exploiting the randomized election reservation system, we find that the presence of a numerically dominant sub caste (caste equilibrium) is associated with the selection of leaders with superior observed characteristics and with greater public good provision. This improvement in leadership competence occurs without apparently diminishing leaders' responsiveness to their constituency.
    Keywords: politics, commitment, governance
    JEL: H11 H44 O12
    Date: 2008–09
  5. By: Borck, Rainald (DIW Berlin); Wrohlich, Katharina (DIW Berlin)
    Abstract: We analyse preferences for public, private or mixed provision of childcare theoretically and empirically. We model childcare as a publicly provided private good. Richer households should prefer private provision to either pure public or mixed provision. If public provision redistributes from rich to poor, they should favour mixed over pure public provision, but if public provision redistributes from poor to rich, the rich and poor might favour mixed provision while the middle class favour public provision ('ends against the middle'). Using estimates for household preferences from survey data, we find no support for the ends-against-the-middle result.
    Keywords: childcare, redistribution, political preferences, public provision of private goods
    JEL: J13 D72 H42 D19
    Date: 2008–09
  6. By: Emma Galli; Veronica Grembi; Fabio Padovano (University of Rome 3, (Italy))
    Abstract: This paper evaluates the erosion of electoral accountability of the “Governors” of the Italian Regions in three subsequent political moments: 1) the elections; 2) the inaugural speeches of the Governor; 3) their first important policy decision, the long-term regional budget (DPEFR). We use content analysis (Laver et al., 2003) to assess the position of each Governor on a left to right distribution at the moment of the inaugural speeches and of the DPEFR. We then analyze the correlation between the distributions of 1) the electoral results and the inaugural speeches and 2) the inaugural speeches and the DPEFR, under the hypothesis that greater similarity can be interpreted as greater accountability. The analysis detects some erosion of accountability from the elections to the inaugural speeches, and a more serious one from the inaugural speeches to the DPEFR. A series of ANOVA tests suggests that the Region’s relative economic position/dependency on transfers from the central governments partly explains such loss of accountability.
    Date: 2008
  7. By: Alexander Dyck; David Moss; Luigi Zingales
    Abstract: We argue that profit-maximizing media help overcome the problem of "rational ignorance" highlighted by Downs (1957) and in so doing make elected representatives more sensitive to the interests of general voters. By collecting news and combining it with entertainment, media are able to inform passive voters on politically relevant issues. To show the impact this information has on legislative outcomes, we document the effect "muckraking" magazines had on the voting patterns of U.S. representatives and senators in the early part of the 20th century. We also show under what conditions profit-maximizing media will cater to general (less affluent) voters in their coverage, providing a counterbalance to special interests.
    JEL: L51 N41 P16
    Date: 2008–09
  8. By: Dibeh, Ghassan
    Abstract: This paper studies state failure and governance in two conflict-states in the Middle East: Iraq and Somalia. Iraq is currently undergoing a social experiment under which a new form of government is being constructed after the passage of autocratic rule. The government envisaged is a consociational democratic state designed a priori as a political mechanism for the redistribution of resources, mainly oil. Somalia represents a stateless society or anarchy. The paper argues that in resource-rich countries such as Iraq, the consociational project leads to an Olson-type rent-seeking confessional behaviour that hampers economic growth and development. The rent-seeking behaviour in Iraq is fuelling the insurgency that perceives the consociational system as a grabbing attempt of the country?s resources by other ethnic groups. However, state construction is possible since there is a positive economic effect of combining government and resources. In Somalia, on the other hand, the developments and the evolution of anarchy since state collapse in 1991 exemplify the result of prolonged conflict in a resource-poor state. The lack of resources, direct access of producers to resources and low productivity and weak redistributional potential of combining resources and government offer no material incentives to the various groups for resurrecting central authority.
    Keywords: fragile states, political economy, resources
    Date: 2008
  9. By: Zimmermann, Klaus W. (Helmut Schmidt University, Hamburg); Horgos, Daniel (Helmut Schmidt University, Hamburg)
    Abstract: Mancur Olson's theory of the decline of nations is path-breaking in political economics. It has been tested cross-sectionally in numerous empirical studies. We survey the existing results briefly, with a special focus on studies using the number of lobbies as an exogenous variable. Using data from the period 1973-2006, we then present the field's first time-series analysis of the effects of the number of interest groups on the German lobby list and macroeconomic performance, gauged in terms of economic growth and inflation. The number of interest groups (as a proxy for their influence) is shown to have an important impact on macrovariables: Interest group activity significantly leads to a decline in the growth rate and a rise in the inflation rate.
    Keywords: Interest groups; economic performance; growth rate; inflation rate
    JEL: D61 D72 D78
    Date: 2008–08
  10. By: Klein, Daniel B. (George Mason University)
    Abstract: The paper develops the idea of configuration of ownership to distinguish three primary political ideologies: (classical) liberalism, conservatism, and leftism. The liberal configuration is atomistic in its recognition of owners and ownership claims; it conforms closely to Adam Smith’s “commutative justice,” which Smith represented as a sort of social grammar. The conservative configuration also strives for a social grammar, but it counts among the set of owners certain spirit-lords such as God and Patria. The liberal and conservative configurations become isomorphic if and only if the ownership claims of the conservative spirit-lords are reduced to nothing. The left configuration ascribes fundamental ownership of resources to the people, the state, and sees laws as organizational house-rules into which one enters voluntary by choosing to remain within the polity; the type of justice that pertains is parallel to Smith’s “distributive justice,” which Smith associated with aspirational rules for achieving beauty in composition. The scheme illuminates why the left’s conception of liberty consists in civil liberties. The formulation of configurations is used to interpret the semantics of the three primary ideologies. Meanwhile, it is noted that actually existing parties and movements are admixtures of the three primary ideologies. For example, what makes Republicanism “conservative” is that it is relatively conservative; it by no means thoroughly or consistently rejects the precept of collective ownership by the polity.
    Keywords: ownership; justice; liberalism; statism; conservatism; leftism;
    JEL: A10 A13
    Date: 2008–09–22
  11. By: Johan F.M. Swinnen
    Abstract: The 2003 reform of the European Union’s Common Agricultural Policy (CAP) under Commissioner Fischler was the most radical in the history of the CAP. This paper analyzes the causes and constraints of the reform. The paper argues that an unusual combination of pro-reform factors came together in the first years of the 21st century, making this reform possible.
    Date: 2008
  12. By: Cordeiro, Jose Luis
    Abstract: This paper gives a global summary of the number of constitutions and the number of articles in each constitution for many representative countries around the world. Several works have already been written comparing different legal systems and different constitutional traditions around the world; the purpose of this paper is just to compare the numbers of constitutions and articles in the diverse regions of the world, namely: North America, Latin America, Europe, Oceania, Middle East, Asia and Africa. Around the world, on average, Latin America has had the most convoluted constitutional history. The Dominican Republic has had a total of 32 constitutions, the largest number of constitutions of any country, since its independence in 1844. Three other countries have also had 20 or more constitutions throughout their history, all of them in Latin America: Venezuela (26), Haiti (24) and Ecuador (20). On the other hand, there are economies and societies that do not even have codified constitutions, like the United Kingdom in Europe, Hong Kong in Asia and New Zealand in Oceania. The United States has had only one constitution, even if it has been amended several times. There are also the special cases of Israel and Saudi Arabia, both in the Middle East, that do not have official written constitutions for historical and religious reasons. Comparative constitutional numbers and history help explain several things about the stability of political systems, but not necessarily about their quality.
    Keywords: constitutions, law and economics, Latin America
    JEL: K00 K10 K40
    Date: 2008–07
  13. By: Heinemann, Friedrich; Tanz, Benjamin
    Abstract: In a constantly changing economic environment a country's ability to undertake institutional reforms is crucial to maintain economic growth and to promote the welfare of its citizens. A wide range of determinants for institutional reforms have been identified. However, the impact of trust on reforms has so far never been addressed. We provide theoretical arguments why trust should influence institutional changes and test the relationship empirically. We find a significant positive relation between trust and reforms with regard to government size, the legal system, and deregulation of private businesses and the labor market. The results in other policy fields are ambiguous.
    Keywords: Trust, Economic Freedom, Policy Reforms
    JEL: E60 H11
    Date: 2008
  14. By: Baliamoune-Lutz, Mina N.; McGillivray, Mark
    Abstract: The international donor community has grave concerns about the prospects for poverty reduction in what it terms fragile states. A state is classified as fragile if its country policy and institutional assessment (CPIA) score falls below a particular threshold. Recognizing that all states are fragile to varying degrees, this paper questions the method used by the international community to deem a country fragile. This paper develops a framework that uses fuzzy-set theory to deem a country as fragile. Fuzzy sets allow for gradual transition from one state to another while also allowing one to incorporate rules and goals, and hence are more appropriate for measuring outcomes that are ambiguous. Such ambiguity is an inherent characteristic of cross-country fragility classifications. The paper applies its framework to 76 low-income countries, for which the CPIA data are publicly available. The fragile state group that this framework provides is compared to that which the international donor community has constructed.
    Keywords: fragile states, policies, institutional performance, CPIA scores, fuzzy set theory
    Date: 2008

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