nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒01‒24
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Expectations about Coalitions and Strategic Voting under Proportional Representation By Herrmann, Michael
  2. Trading Places: The Effect of Voting Systems On Multicandidate Elections By Derek Johnson; Randy Simmons; Ryan Yonk
  3. Electoral System Change in Belgium 2003: Party Strategies and Voter Responses By Gschwend, Thomas
  4. A Reputational Theory of Two Party Competition By Tasos Kalandrakis
  5. Political Mergers as Coalition Formation: Evidence from Japanese Municipal Amalgamations By Eric Weese
  6. Banking on Democracy: The Political Economy of International Private Bank Lending in Emerging Markets By Rodríguez, Javier; Santiso, Javier
  7. Information and Voting: the Wisdom of the Experts versus the Wisdom of the Masses By Joseph McMurray
  8. A Vindication of Responsible Parties By John Duggan; Dan Bernhardt; Francesco Squintani
  9. Measuring US Presidents Political Commitment for Fiscal Discipline between 1920 and 2008 By Francesc Pujol
  10. A preliminary simulative assessment of disproportionality indices By Migheli, Matteo; Ortona, Guido; Ponzano, Ferruccio
  11. Public and Private Expenditures on Health in the Presence of Inequality and Endogenous Mortality: A Political Economy Perspective By Radhika Lahiri; Elizabeth Richardson
  12. Dynamics of the Presidential Veto: A Computational By John Duggan; Tasos Kalandrakis; Vikram Manjunath
  13. Women Empowerment in India By Nayak, Purusottam; Mahanta, Bidisha
  14. Do Gender Quotas Influence Women’s Representation and Policies? By Chen, Li-Ju
  15. Women in Politics: A New Instrument for Studying the Impact of Education on Growth By Chen, Li-Ju

  1. By: Herrmann, Michael (Sonderforschungsbereich 504)
    Abstract: In this paper, I suggest that voters may act strategically in proportional representation elections with post-election coalition building. Based on a stylized setup involving three possible coalitions of four parties on a single policy dimension, voters whose preferred coalition is least likely to win are predicted to strategically cast their ballot for a centrist party. By contrast, those who perceive a chance for their preferred coalition to become the next government are predicted to strategically vote for a non-centrist party. I test these predictions against the standard model of sincere proximity voting, using a unique dataset on voter expectations in the Austrian parliamentary election 2006. Analyses show that believing one's preferred coalition is non-viable raises the probability of voting for a centrist vs. non-centrist party while believing one's preferred coalition to be viable lowers the probability of voting for a centrist vs. non-centrist party.
    Date: 2008–12–17
  2. By: Derek Johnson (Department of Economics and Finance, Utah State University); Randy Simmons (Department of Economics and Finance, Utah State University); Ryan Yonk (Department of Economics and Finance, Utah State University)
    Abstract: This paper examines effects that voting systems can have on electoral outcomes in multicandidate elections. Using ballots collected from a county Republican Party special election, we recount the votes using preference based voting systems and compare the results to the special election outcome. Relative rankings of candidates change across vote counting rules and voting systems. Because candidates trade places depending on rules, there are strong strategic implications for candidates and for those establishing the rules.
    Date: 2009–01–13
  3. By: Gschwend, Thomas (Sonderforschungsbereich 504)
    Abstract: The paper addresses two points: First, what is the effect of changes to the electoral system in Belgium and second, how do voters respond to the new electoral rules? If seat-maximization is the key link then this would lead to the prediction that parties that supported the change of the electoral system particularly the parties of the incumbent governing coalition (before the change took place for the 2003 election), should expect to fare better under the new rules than the old rules that translate votes into seats. The mechanical effects of the new electoral rules for 2003 when applied to the number of votes cast in 1995 and 1999 do have a small effect in the direction predicted by the theory. The governing parties together, particular the rancophone ones, can expect to fare better under the new rules than under the old rules. Regarding the second question, the number of Strategic Voters in a given district is typically predicted by the district magnitude, i.e. the number of seats that are awarded at the primary electoral district level. Contrary to previous studies there is strong evidence of strategic voting particularly within the small Belgian districts. This analysis further demonstrates that even the new incentives to cast a strategic vote through the need for every party to overcome 5% of the district vote share before gaining representation has already a systematic impact on the decision-making process of Belgium voters.
    Date: 2008–12–17
  4. By: Tasos Kalandrakis (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158)
    Abstract: We study a dynamic game of incomplete information in which two political parties contest elections with endogenously formed reputations regarding the preferences that prevail within each party. Party preferences exhibit serial correlation and change with higher probability following defeat in elections. We show that when partisans care sufficiently about office, extreme policies are pursued with positive probability by the government if the ruling party is perceived relatively more extreme than the opposition. In equilibrium such policies occur when (a) both parties are perceived to be more extreme than a fixed benchmark level, and (b) elections are close in that both parties have similar reputations. Two qualitatively different equilibrium dynamics are possible depending on the relative speed with which preferences of parties in government or in the opposition change: One produces regular government turnover and extreme policies along the path of play, another involves a strong incumbency advantage and policy moderation.
    Date: 2008–07
  5. By: Eric Weese
    Abstract: Political coalition formation games can describe the formation and dissolution of nations, as well as the creation of coalition governments, the establishment of political parties, and other similar phenomena. These games have been studied from a theoretical perspective, but the models have not been used extensively in empirical work.This paper presents a method of estimating political coalition formation models with many-player coalitions, and then applies this method to the recent heisei municipal amalgamations in Japan to estimate structural coefficients that describe the behaviour of municipalities. The method enables counterfactual analysis, which in the Japanese case shows that the national government could increase welfare via a counter-intuitive policy involving transfers to richer municipalities conditional on their participation in a merger.
    Keywords: Coalition Formation, Municipal Mergers, Japan
    JEL: C71 H77
    Date: 2008–12
  6. By: Rodríguez, Javier; Santiso, Javier
    Abstract: Clearly, a new agenda is emerging for private international banks. Political issues such as human rights seem to be a current concern. But what about democracy? What about political regimes? Are they taken into account by private banks when they decide whether to invest in a country? Put another way, do private banks have democratic political preferences? In this article, we focus on cross-border lending from international bank(er)s. The questions asked are as follows. Do bank(er)s react positively (that is by increasing their lending) when an emerging democracy appears? Do we witness increased bank lending after democratic transitions? Lastly, is there any relation between democratic consolidation and bank lending?
    Keywords: Banks;Capital flows;Democracy;Emerging markets
    JEL: G2
    Date: 2008
  7. By: Joseph McMurray (University of Rochester Economics Department, Harkness Hall, University of Rochester, Rochester, NY 14627)
    Abstract: In a common-values election with continuously distributed information quality, the incentive to pool private information conflicts with the swing voters curse. In equilibrium, therefore, some citizens abstain despite clear private opinions, and others vote despite having arbitrarily many peers with superior information. The dichotomy between one's own and others' information quality can explain the otherwise puzzling empirical relationship between education and turnout, and suggests the importance of relative information variables in explaining turnout, which I verify for U.S. primary elections. Though voluntary elections fail to utilize nonvoters' information, mandatory elections actually do worse; e¤orts to motivate turnout may actually reduce welfare.
    Date: 2008–07
  8. By: John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Dan Bernhardt (Department of Economics and Department of Finance,Department of Economics, University of Illinois, 1206 S. Sixth Street, Champaign, IL 61820, US); Francesco Squintani (Department of Economics, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ, United Kingdom)
    Abstract: Electoral platform convergence is perceived unfavorably by both the popular press and many academic scholars. This paper provides a formal account of these perceived negative effects. We show that when parties do not know voters’ preferences perfectly, voters prefer some platform divergence to the convergent policy outcome of competition between opportunistic, office-motivated, parties. We characterize when voters prefer responsible parties (which weight policy positively in their utility function) to oppor- tunistic ones. Voters prefer responsible parties when office benefits and concentration of moderate voters are high enough relative to the ideological polarization between parties. In particular, with optimally-chosen office benefits, responsible parties improve welfare.
    Date: 2008–07
  9. By: Francesc Pujol (Department of Economics, Universidad de Navarra)
    Abstract: We propose a theoretical method to catch politicians' fiscal attitude concerning deficits and debt based on the analysis of the political discourse. We describe the methodological steps used to obtain it. The methodology is applied to the case of US President during the period 1920 to 2008. The results can be exploited in order to better understand the formation and the evolution of fiscal preferences and their influence on fiscal performance. As the index is based on normative and positive attitudes about deficits, their analysis can show the presence of strategic political behavior, giving thus a way to test some theoretical models on budgetary political behavior.
    Keywords: fiscal discipline, fiscal conservatism, political attitude, discourse analysis
    JEL: D72 H30 H6
    Date: 2009–01–18
  10. By: Migheli, Matteo; Ortona, Guido; Ponzano, Ferruccio
    Abstract: What do indices of disproportionality actually measure? They provide an aggregate estimation of the difference between votes cast and seats assignment, but the relation between the value of the indices and the will of the voters is highly questionable. The reason is that when casting the vote the voter is deeply affected by the electoral system itself, possibly more deeply than s/he understands. The aim of this paper is to assess the performance of the most used indices of disproportionality with respect to the will of voters. To do so we compare by simulation their performance in some major electoral systems and with reference to some stylised typical cases. We use as a benchmark a "true" index, i.e. an index that measures the difference between the will of the voters (instead of the votes) and the assignment of seats. In our experiment all the indices considered perform poorly, with the unexpected exception of the Loosemore-Hanby index.
    Keywords: Simulations, Representativity indices, Fitness of indices
    JEL: A12 C15 D72
    Date: 2009–01
  11. By: Radhika Lahiri; Elizabeth Richardson
    Abstract: In this paper we study an overlapping-generations model in which agents’ mortality risks, and consequently impatience, are endogenously determined by private and public investment in health care. The proportion of revenues allocated for public health care is also endogenous, determined as the outcome of a voting process. Higher substitutability between public and private health is associated with a “crowding-out” effect which leads to lower public expenditures on health care in the political equilibrium. This in turn impacts on mortality risks and impatience leading to a greater persistence in inequality and long run distributions of wealth that are bimodal.
    Keywords: health; inequality; political economy; income distribution dynamics
    JEL: I12 I20 O5
    Date: 2008–12–15
  12. By: John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Tasos Kalandrakis (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Vikram Manjunath (Department of Economics, University of Rochester)
    Abstract: We specify and compute equilibria of a dynamic policy-making game between a president and a legislature under insitutional rules that emulate those of the US Constitution. Policies are assumed to lie in a two-dimensional space in which one issue dimension captures systemic differences in partisan preferences, while the other summarizes non-partisan attributes of policy. In any period, the policy choices of politicians are influenced by the position of the status quo policy in this space, with the current policy outcome determining the location of the status quo in the next period. Partisan control of the legislature and presidency changes probabilistically over time. We find that politicians strategically compromise their ideal policy in equilibrium, and that the degree of compromise increases when the opposition party is more likely to take control of the legislature in the next period, while politicians become relatively more extreme when the opposition party is more likely to control the presidency. We measure gridlock by (the inverse of ) the expected distance of enacted policies from the status quo in the long run, and we show that both gridlock and the long run welfare of a representative voter are maximized when government is divided without a super majority in the legislature. Under unified government, we find that the endogeneity of the status quo leads to a non-monotonic effect of the size of the legislative ma jority on gridlock; surprisingly, under unified government, gridlock is higher when the party in control of the legislature has a superma jority than when it has a bare ma jority. Furthermore, a relatively larger component of policy change occurs in the non-partisan policy dimension when a superma jority controls the legislature. We conduct constitutional experiments, and we find that voter welfare is minimized when the veto override provision is abolished and maximized when the presidential veto is abolished.
    Date: 2008–04
  13. By: Nayak, Purusottam; Mahanta, Bidisha
    Abstract: The present paper is an attempt to analyze the status of women empowerment in India using various indicators like women’s household decision making power, financial autonomy, freedom of movement, political participation, acceptance of unequal gender role, exposure to media, access to education, experience of domestic violence etc based on data from different sources. The study reveals that women of India are relatively disempowered and they enjoy somewhat lower status than that of men in spite of many efforts undertaken by government. Gender gap exists regarding access to education and employment. Household decision making power and freedom of movement of women vary considerably with their age, education and employment status. It is found that acceptance of unequal gender norms by women are still prevailing in the society. More than half of the women believe wife beating to be justified for one reason or the other. Fewer women have final say on how to spend their earnings. Control over cash earnings increases with age, education and with place of residence. Women’s exposure to media is also less relative to men. Rural women are more prone to domestic violence than that of urban women. A large gender gap exists in political participation too. The study concludes by an observation that access to education and employment are only the enabling factors to empowerment, achievement towards the goal, however, depends largely on the attitude of the people towards gender equality.
    Keywords: Women Empowerment; Gender
    JEL: O15
    Date: 2009–01–06
  14. By: Chen, Li-Ju (Dept. of Economics, Stockholm University)
    Abstract: This paper investigates the effect of applying gender quotas on policy decisions. I first examine the effect of gender quotas on the representation of female legislators, study the correlation between gender quotas and different types of government expenditures, and then use quotas as an instrument for the proportion of female legislators to investigate the effect of female legislators on policy outcomes. The results show that an increase in the share of female legislators by one percentage point increases the ratio of government expenditure on health and social welfare to GDP by 0.18 and 0.67 percentage points, respectively. The robustness check supports that the effect of quotas on female legislators is likely to be translated into the influence of female policymakers on social welfare.
    Keywords: female legislator; gender quotas; policy outcomes
    JEL: D78 H50 J16
    Date: 2009–01–15
  15. By: Chen, Li-Ju (Dept. of Economics, Stockholm University)
    Abstract: This paper tests the growth model of distance to the technological frontier, which states that the closer an economy is to the frontier, the higher the relative importance of innovation relative to imitation as a source of productivity growth. Hence, an economy closer to the technological frontier should invest more in skilled labor since innovation is a skill-intensive activity. I use the proportion of female legislators as an instrument for skilled labor, in contrast to Vandenbussche, Aghion, and Meghir (2006) who used lagged educational expenditures. The results with the new instrument are consistent with the theoretical prediction and the previous results of Vandenbussche, Aghion, and Meghir (2006).
    Keywords: distance to the technological frontier; women in politics
    JEL: H52 I20 J16 O30 O40
    Date: 2009–01–15

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