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on Positive Political Economics |
| By: | DE LA CROIX, David (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); DELAVALLADE, Clara |
| Abstract: | We bridge the gap between the standard theory of growth and the mostly static theory of corruption. Some public investment can be diverted from its purpose by corrupt individuals. Voters determine the level of public investment subject to an incentive constraint equalizing the returns from productive and corrupt activities. We concentrate on two exogenous institutional parameters: the "technology of corruption" is the ease with which rent-seekers can capture a proportion of public spending. The "concentration of political power" is the extent to which rent-seekers have more political influence than other people. One theoretical prediction is that the effects of the two institutional parameters on income growth and equilibrium corruption are different according to the constraints that are binding at equilibrium. In particular, the effect of judicial quality on growth should be stronger when political power is concentrated. We estimate a system of equations where both corruption and income growth are determined simultaneously and show that income growth is more affected by our proxies for legal and political institutions in countries where political rights and judicial institutions respectively are limited. |
| Keywords: | economic growth, corruption, rule of law, incentive constraint, political power |
| JEL: | O41 H50 D73 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvco:2008035&r=pol |
| By: | Atif Mian; Amir Sufi; Francesco Trebbi |
| Abstract: | We examine the determinants of congressional voting behavior on two of the most significant pieces of federal legislation in U.S. economic history: the American Housing Rescue and Foreclosure Prevention Act of 2008 and the Emergency Economic Stabilization Act of 2008. We find evidence that constituent interests and special interests influence voting patterns during the crisis. Representatives from districts experiencing an increase in mortgage default rates are significantly more likely to vote in favor of the AHRFPA. They are precise in responding only to mortgage related constituent defaults, and are significantly more sensitive to defaults of their own-party constituents. Increased campaign contributions from the financial services industry is associated with a higher likelihood of voting in favor of the EESA, a bill which transfers wealth from tax payers to the financial services industry. We also examine the trade-off between politician ideology and constituent and special interests, and find that conservative politicians are less responsive to constituent and special interest pressure. This latter finding suggests that politicians, through ideology, can commit against intervention even during severe crises. |
| JEL: | D72 G21 L51 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14468&r=pol |
| By: | Milanovic, Branko; Hoff, Karla; Horowitz, Shale |
| Abstract: | The authors develop and implement a method for measuring the frequency of changes in power among distinct leaders and ideologically distinct parties that is comparable across political systems. The authors find that more frequent alternation in power is associated with the emergence of better governance in post communist countries. The results are consistent with the hypothesis that firms seek durable protection from the state, which implies that expected political alternation is relevant to the decision whether to invest in influence with the governing party or, alternatively, to demand institutions that apply predictable rules, with equality of treatment, regardless of the party in power. |
| Keywords: | National Governance,Governance Indicators,Public Sector Corruption&Anticorruption Measures,Parliamentary Government,Emerging Markets |
| Date: | 2008–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4747&r=pol |
| By: | Giuseppe Russo |
| Abstract: | The claim that "skilled immigration is welcome" is often associated to the increasing adoption of selective immigration policies. I study the voting over differentiated immigration policies in a two-country, three-factor one-period model where there exist skilled and unskilled workers, migration decisions are endogenous, enforcing immigration restriction is costly, and natives dislike unskilled immigration. According to my findings, decisions over border closure are made to protect the median voter when her capital endowment is sufficiently small. Therefore I argue that the professed favour for skilled immigration veils the protection for the insiders. This result is confirmed by the observation that entry is rationed for both skilled and unskilled workers. Moreover, immigration aversion helps to explain the existence of entry barriers for unskilled workers in countries where the majority of voters is skilled. |
| Keywords: | Selective immigration policies, multidimensional voting, Condorcet winner. |
| JEL: | D72 F22 J18 |
| Date: | 2008–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2008_14&r=pol |
| By: | Rainald Borck; Katharina Wrohlich |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp140&r=pol |
| By: | Rotte, Ralph (RWTH Aachen University); Steininger, Martin (University of Munich) |
| Abstract: | This paper investigates the consequences of immigration, crime and socio-economic depriviation for the performance of right-wing extremist and populist parties in the German city state of Hamburg between 1986 and 2005. The ecological determinants of voting for right-wing parties on the district level are compared to those for mainstream and other protest parties. Parallels and differences in spatial characteristics between right-wing extremist and populist parties' performance are identified. Our empirical results tend to confirm the general contextual sociological theory of right-wing radicalization by general social deprivation and immigration. Nevertheless they indicate that one has to be very cautious when interpreting the unemployment/crime - right-winger nexus. Moreover, crime does not seem to have a strong significant effect on right-wing populist parties' election successes despite its importance for their programmes and campaigns. |
| Keywords: | elections, political extremism, labor market policy, welfare policy, immigration |
| JEL: | D60 D72 I28 J60 P16 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3779&r=pol |
| By: | Matthias Wrede (Faculty of Business Administration and Economics, Philipps Universitaet Marburg) |
| Abstract: | This paper analyzes inter- and intraregional redistribution in a centralized state using the citizen-candidate model. It focuses on conflicting interests among regions and among citizens of varying mobility. If discrimination with respect to place of residence and degree of mobility is possible, diversity of interests is high. Under the plurality rule and with sincere voting, the largest socioeconomic group of citizens supplies the winning candidate and discriminates against all other groups. However, if discrimination with respect to the degree of mobility is constrained, mobile citizens may gain power and interregional redistribution is reduced. |
| Keywords: | Voting, mobility, inter- and intraregional redistribution, discrimination |
| JEL: | D7 H1 H7 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:200817&r=pol |
| By: | Berdugo, Binyamin |
| Abstract: | This paper analyses leadership and charisma within the framework of social choice. In societies that lack formal institutional authorities, the power of leaders to coerce is limited. Under such conditions, we find that social outcomes will depend not only on policy preferences but also on how a leader's ability to transform voluntary efforts into some public good are conceived by other society members. The paper has three main results: (1) institutionalized and uninstitutionalized societies that have identical characteristics might have different political equilibria (namely, they might choose different leaders and different policies); (2) under imperfect information regarding individuals' abilities, social choice may be biased toward less competent but more charismatic leaders; and (3) in uninstitutionalized societies, less competent, more charismatic leaders can achieve more in terms of social goals and welfare than can more competent and less charismatic ones. |
| Keywords: | Candidates; Charisma; Leadership; Public Goods ; Voting |
| JEL: | D71 D72 D82 |
| Date: | 2008–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:11408&r=pol |
| By: | Rebecca Morton (New York University); Jean-Robert Tyran (Department of Economics, University of Copenhagen) |
| Abstract: | We examine abstention when voters in standing committees are asymmetrically informed and there are multiple pure strategy equilibria-swing voter's curse (SVC) equilibria where voters with low quality information abstain and equilibria when all participants vote their information. When the asymmetry in information quality is large, we find that voting groups largely coordinate on the SVC equilibrium which is also Pareto Optimal. However, we find that when the asymmetry in information quality is not large and the Pareto Optimal equilibrium is for all to participate, significant numbers of voters with low quality information abstain. Furthermore, we find that information asymmetry induces voters with low quality information to coordinate on a non-equilibrium outcome. This suggests that coordination on "letting the experts" decide is a likely voting norm that sometimes validates SVC equilibrium predictions but other times does not. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:0825&r=pol |
| By: | James Roumasset (Department of Economics, University of Hawaii at Manoa; University of Hawaii Economic Research Organization) |
| Abstract: | This essay explores the nature, causes, and consequences of corruption as it pertains to entire regimes. Grand corruption is modeled as a type of unproductive rent-seeking at the highest levels of government. The economic costs of corruption are assumed to increase in the decentralization (and relaxation) of its governance, increase convexly in the percentage extracted, and decreasing in the opportunities for productive rent-seeking. Combining these assumptions with the benefits of corruption yields the results that optimal corruption revenues are increasing in greed of the regime and in economic opportunities but that the economic costs of corruption may be highest in the least avaricious regime. The theory is illustrated with a stylized account of corruption in three Philippine administrations, from 1973-1998. Policy implications are discussed, including the role of the economist in making corruption less attractive. |
| Keywords: | Corruption, Philippines, kleptocracy |
| JEL: | H11 K42 O5 |
| Date: | 2008–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:200805&r=pol |
| By: | Martin Hering |
| Abstract: | This article argues that an increase of the retirement age from 65 years to 67 or higher, which is the most unpopular pension reform measure, is politically feasible if the major parties build either a formal or an informal grand coalition. It argues further that institutional rules and agreed standards, especially the goals expressed in relation to pension policy, facilitate the formation of a grand coalition and increase the autonomy of governments vis-à-vis trade unions. Specifically, by restricting key policy instruments for responding to fiscal pressures, they lead political parties to consider the controversial option of raising the retirement age and to engage in a coordinative discourse about the necessity of this change and the limits of other reform options. This argument implies that the success of a retirement age reform does not depend on a negotiated agreement between a government and trade unions. By examining the agenda-setting and decisionmaking processes in Germany from the mid-1990s to 2007, this article shows that governments raise the retirement age only if they face constraints that rule out tax increases and benefit cuts and that they are able to enact even comprehensive retirement age reforms that increase not only the normal age but also the earliest eligibility age for both public and private pensions. |
| Keywords: | welfare state, pension politics, retirement age, policy paradigms, institutional constraints, blame avoidance |
| JEL: | D70 H53 H55 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:sedapp:233&r=pol |
| By: | Bruno S. Frey; Benno Torgler |
| Abstract: | In the course of history, a large number of politicians have been assassinated. Rational choice hypotheses are developed and tested using panel data covering more than 100 countries over a period of 20 years. Several strategies, in addition to security measures, are shown to significantly reduce the probability of politicians being attacked or killed: extended institutional and governance quality, democracy, voice and accountability, a well functioning system of law and order, decentralization via the division of power and federalism, larger cabinet size and strengthened civil society. There is also support for a contagion effect. |
| Keywords: | Assassinations, rational choice, governance, democracy, dictatorship, deterrence, protection. |
| JEL: | D01 D70 K14 K42 Z10 |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:391&r=pol |