nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒01‒17
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Is the Median Voter Decisive? Evidence of 'Ends Against the Middle' From Referenda Voting Patterns By Eric J. Brunner; Stephen L. Ross
  2. A psychologically-based model of voter turnout By Ming Li; Dipjyoti Majumdar
  3. Electoral systems and the distortion of voters' preferences By Piolatto, Amedeo
  4. Selfish and Prospective. Theory and Evidence of Pocketbook Voting By Mikael Elinder; Henrik Jordahl; Panu Poutvaara
  6. Politician Preferences,Law-Abiding Lobbyists and Caps on Political Lobbying By Ivan Pastine; Tuvana Pastine
  7. Does Timing og Elections Instigate Riots? A Subnational Study of 16 Indian States, 1958-2004 By Krishna Chaitanya Vadlamannati
  8. Do Interest Groups affect US Immigration Policy? By Giovanni Facchini; Anna Maria Mayda; Prachi Mishra
  9. Global Democracy: In the Beginning By Robert E. Goodin
  10. Spending Versus Tax Cuts: Who Pays the Cost of Political Compromise? By Dean Baker
  11. Perspectives on Preference Aggregation By Regenwetter, Michel
  12. Public Debt Management and Political Cycles: Challenges for Latin America By Sebastián Nieto Parra
  13. Are the Financial Markets Politically Correct? By Sebastián Nieto Parra; Javier Santiso
  14. The Political Economy of Refugee Migration By Mathias Czaika

  1. By: Eric J. Brunner (Quinnipiac University); Stephen L. Ross (University of Connecticut)
    Abstract: This paper examines whether the voter with the median income is decisive in local spending decisions. Previous tests have relied on cross-sectional data while we make use of a pair of California referenda to estimate a first difference specification. The referenda proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 percent and 67 to 55 percent, respectively. We find that voters rationally consider future public service decisions when deciding how to vote on voting rules, but the empirical evidence strongly suggests that an income percentile below the median is decisive for majority voting rules. This finding is consistent with high income voters with weak demand for public educational services voting with the poor against increases in public spending on education.
    Keywords: Median Voter Hypothesis, Voting, Referenda, Education Spending
    JEL: H4 H7 I2
    Date: 2009–01
  2. By: Ming Li (Concordia University); Dipjyoti Majumdar (Concordia University)
    Abstract: We analyze a psychologically-based model of voter turnout. Potential voters experience regret if they fail to vote, which is the motivation for participation in voting. Regret from abstention is inversely related to the margin of victory. Voters on the winner's side experience less regret than those on the loser's side. We show that the unique equilibrium involves positive voter turnout. We show that the losing side has higher turnout. In addition, voter turnout is positively related to importance of the election and the competitiveness of the election. We also consider scenarios in which voters are uncertain about the composition of the electorate's political preferences and show similar phenomena emerge.
    Keywords: voter turnout, regret, economics and psychology
    JEL: D72
    Date: 2006–08
  3. By: Piolatto, Amedeo
    Abstract: In this paper I show that in a parliamentary democracy, contrary to common wisdom, under a proportional electoral rule governments do not necessarily represent voters' preferences better than under plurality rule. While voters affect the composition of Parliament, decisions are taken by a subset of Parliamentarians: a coalition of them decides directly and through the government. As a consequence, two distortions might occur: one at the electoral stage when Parliament is formed and the other at the coalition formation stage, when government is chosen. Through a model à la Rubinstein, I show that small parties' bargaining power increases when parties are patient; for sufficiently patient parties, the small (but pivotal) ones obtain a large bargaining power. The distortion introduced by plurality rule goes in the opposite direction; this can be beneficial (in term of voters' representativeness) as long as the impact of the two distortions is similar. I show that under non restrictive conditions, plurality rule can outperform the proportional rule in terms of representativeness of voters' preferences.
    Keywords: Electoral systems; Proportional rule; Plurality rule; Voters' representation
    JEL: H1 C71 D72 P16
    Date: 2008–09–04
  4. By: Mikael Elinder; Henrik Jordahl; Panu Poutvaara (Department of Economics, University of Helsinki)
    Abstract: We present and test a theory of prospective and retrospective pocketbook voting. Focusing on two large reforms in Sweden, we establish a causal chain from policies to sizeable individual gains and losses and then to voting. The Social Democrats proposed budget cuts affecting parents with young children before the 1994 election, but made generous promises to the same group before the 1998 election. Since parents with older children were largely unaffected we use a difference-in-differences strategy for identification. We find clear evidence of prospective pocketbook voting. Voters respond to campaign promises but not to the later implementation of the reforms.
    Keywords: elections, economic voting, pocketbook voting, selfinterest, prospective voting, retrospective voting, child care
    JEL: C21 D72 H50
    Date: 2008–10
  5. By: NWAOBI, GODWIN (Quantitative Economics Research Bureau)
    Abstract: Nigeria was incorporated in 1914 when Frederick Lugard (First Governor General) amalgamated the two British protectorates of Northern and Southern Nigeria and the Crown Colony of Lagos into a single entity. The primary reason for amalgamation was economic rather then political. It is therefore, a matter for great regret that this country (Nigeria) has sulfured as a result of the all-pervasive disunity that has characterized all government action since our accession to independence in 1960. This disunity has distorted, complicated and to a large extent stultified every development effort undertaken by government. This paper therefore argents that the much-celebrated Nigeria reform progress might be rhetoric or much ado about nothing. And that the âÃÂÃÂBB-, BB and BâÃÂàrating of the Nigerian economy might have been a baseless exercise. Consequently, the paper recommends the adoption of e-governance (development) as a therapy for a heterogeneous and divisible nation such as Nigerian (Ceteris Paribus).
    Keywords: war; nigeria; biafra; ethnicity; trabalism; regionalcrises; disturbances; policy; democracy; governance-voting; elections; economy; corruption; coup; constitution; nigerdelta
    JEL: G30 H10 H70 K40 P16 Z10
    Date: 2009–01–05
  6. By: Ivan Pastine (Economics,UCD, Dublin 4.); Tuvana Pastine (Economics Finance and Accounting, National University of Ireland, Maynooth)
    Abstract: The effect of a contribution cap is analyzed in a political lobbying game where the politician has a preference for the policy position of one of the lobbyists. In contrast to the previous literature where the politician has no preference over policy alternatives, we find that a more restrictive binding cap always reduces expected aggregate contributions. However, the politician might support a barely binding cap over no cap on contributions. The cap always favors the lobbyist whose policy position is preferred irrespective of the identity of the high-valuation lobbyist. The introduction of politician policy preferences permits an analysis of welfare tradeoffs of contribution caps. Even a barely binding cap can have significant welfare consequences.
    Keywords: All-pay auction, campaign finance reform, explicit ceiling.
    JEL: D72 C72
    Date: 2008
  7. By: Krishna Chaitanya Vadlamannati
    Abstract: Whether timing of the elections leads to riots or not within India. In other words, does timing of elections instigate riots? Using time series crosssectional data for 16 major Indian states for the period 1958 – 2004, it is found that scheduled elections are associated with increase in riots
    Keywords: rits, elections, Indian states, electoral competition, transition economies, democracy, constitution union, state, legislative assembly
    Date: 2009
  8. By: Giovanni Facchini (University of Essex, Università degli Studi di Milano, CEPR, LdA and CES-Ifo); Anna Maria Mayda (Georgetown University, CEPR, IZA, CReAM and LdA); Prachi Mishra (Research Department, International Monetary Fund)
    Abstract: While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration across sectors. Barriers to migration are lower in sectors in which business interest groups incur larger lobby expenditures and higher in sectors where labor unions are more important.
    Date: 2009–01
  9. By: Robert E. Goodin (Philosophy Program, Research School of Social Sciences, Australian National University)
    Abstract: Talk about global democracy seems to be fixated on a Reform-Act model of democracy, with 'one person one vote for all affected by the decisions' as for example in a second popularly-apportioned chamber of UN. Politically, that seems wildly unrealistic. But remember that the Reform Acts came very late in process of democratization domestically. The first steps in the beginning that eventually led to full democratization of that sort were: a) limiting the arbitrary rule on the part of the sovereign; and (b) making the sovereign accountable to others (initially a limited set of others, which then expanded). Globally, there are moves afoot globally in both those directions. And once those pieces are in place, there are good reasons for expecting the circle of accountability basically only to expand and virtually never to contract.
    Keywords: global democracy, accountability, rule of law
    JEL: F53 H11 K33 N40
    Date: 2008–05
  10. By: Dean Baker
    Abstract: President Obama and the Democratic leadership will undoubtedly have to make some political compromises in order to get a stimulus package through Congress. However, it is important to keep in mind that there will be real costs associated with these compromises insofar as they result in a less effective stimulus package. A less effective package will mean less economic growth, which will, in turn, mean that fewer people will have jobs.
    Keywords: economic crisis, economic stimulus, fiscal stimulus
    JEL: H H5 H6 H2
    Date: 2009–01
  11. By: Regenwetter, Michel (University of Illinois at Urbana-Champaign)
    Abstract: For centuries, the mathematical aggregation of preferences by groups, organizations or society has received keen interdisciplinary attention. Extensive 20th century theoretical work in Economics and Political Science highlighted that competing notions of “rational social choice” intrinsically contradict each other. This led some researchers to consider coherent “democratic decision making” a mathematical impossibility. Recent empirical work in Psychology qualifies that view. This nontechnical review sketches a quantitative research paradigm for the behavioral investigation of mathematical social choice rules on real ballot, experimental choice, or attitudinal survey data. The paper poses a series of open questions. Some classical work sometimes makes assumptions about voter preferences that are descriptively invalid. Do such technical assumptions lead the theory astray? How can empirical work inform the formulation of meaningful theoretical primitives? Classical “impossibility results” leverage the fact that certain desirable mathematical properties logically cannot hold universally in all conceivable electorates. Do these properties nonetheless hold in empirical distributions of preferences? Will future behavioral analyses continue to contradict the expectations of established theory? Under what conditions and why do competing consensus methods yield identical outcomes?
    Date: 2008–12–15
  12. By: Sebastián Nieto Parra
    Abstract: Over the last five years, most Latin American governments have made considerable strides in managing the composition of their public debt, while reducing their foreign-currency exposure. Issuing public debt in local currency is not new for Latin America; what is new, however, is the widespread issuing of local currency debt abroad. Indeed, while five years ago all Latin American sovereign external debt was denominated in foreign currency, today half the debt of countries like Brazil, Colombia, Peru and Uruguay is issued in local currencies.
    Date: 2008–10
  13. By: Sebastián Nieto Parra; Javier Santiso
    Abstract: Are the financial markets politically correct? In other words, do they have preferences when it comes to political regimes or partisans? This issue has often been explored with regard to foreign direct investment (FDI) or public development aid, but rarely in relation to portfolio flows in emerging countries.
    Date: 2008–09
  14. By: Mathias Czaika (Department of International Economic Policy, University of Freiburg)
    Abstract: This article examines the driving forces of the magnitude, composition and duration of refugee movements caused by conflict and persecution. The decision to seek temporary or permanent refuge in the region of origin or in a more distant asylum destination is based on inter-temporal optimization. We find that asylum seeking in Western countries is rather a phenomenon of comparatively less persecuted people. In an attempt to reduce their respective asylum burdens, Western countries and host countries in the region of origin are likely to end up in a race to the bottom of restrictive asylum policies. As an alternative, this study shows that proactive refugee-related aid transfers are, under certain circumstances, an effective instrument to relieve Western countries from asylum pressure.
    Keywords: Refugee Movements, Asylum Policy, Foreign Aid
    Date: 2009–01

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