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on Positive Political Economics |
| By: | Carlos Scartascini; Ernesto Stein; Mariano Tommasi |
| Abstract: | This paper introduces preliminary evidence from a cross-country database of policy characteristics and potential uses of that database. While most databases have emphasized either the content of policies (e.g., size of government deficits) or countries’ formal institutions (e.g., political regime, electoral system), the variables in this database reflect the policymaking capabilities of different polities. The paper attempts to explain these policy characteristics as depending on the workings of political institutions, using a logic emphasizing intertemporal political compromise. The paper also contrasts this logic with alternatives such as the veto players approach. The paper concludes by suggesting the use of these policy characteristics or state capabilities as explanatory variables for the effectiveness of public spending in various social areas. |
| Keywords: | Political institutions, Public policies, Government capabilities, Veto players, Intertemporal cooperation, Development, Human Development Index, Public expenditures, Policy index, Adaptability, Stability, Judicial independence, Party institutionalization, Congress capabilities, Cabinet stability |
| JEL: | D72 D78 H10 H50 O10 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4608&r=pol |
| By: | Rongili Biswas |
| Abstract: | The paper attempts to construct political influence variables and explain discrepancies in fund disbursement through proper econometric specification in the Indian context. |
| Keywords: | political, fund, discretionary, fiscal, federalism, central, state, centre, disbursement, econometric, Indian, economists, politics, finance, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1842&r=pol |
| By: | Jaideep Roy; M Dziubinski |
| Abstract: | We study a model of political competition between two candidates with two orthogonal issues, where candidates are office motivated and committed to a particular position in one of the dimensions, while having the freedom to select (credibly) any position on the other dimension. We analyse two settings: a homogeneous one, where both candidates are committed to the same dimension and a heterogeneous one, where each candidate is committed to a different dimension. We characterise and give necessary and suffcient conditions for existence of convergent and divergent Nash equilibria for distributions with a non-empty and an empty core. We identify a special point in the ideology space which we call a strict median, existence of which is strictly related to existence of divergent Nash equilibria. A central conclusion of our analysis is that for divergent equilibria, strong extremism (or differentiation) seems to be an important equilibrium feature. |
| Keywords: | Spatial Voting, Two Issues, Uni-Dimensional Commitment, Strict Median, Extremism |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:005887&r=pol |
| By: | Francisco Martínez-Mora |
| Abstract: | Population ageing has triggered concerns about the sustainability of public systems of education. The empirical evidence is still inconclusive, whereas some theoretical results present a somewhat optimistic view (Gradstein and Kaganovich, 2004; Levy, 2005). The present note re-examines the political economy of public education in an ageing society, using the classical median voter model. The normative analysis shows that elderly households introduce distortions that render political outcomes inefficient except in rare circumstances. It is then explained that the interplay among the political and financial consequences of ageing gives rise to a non-linear, and possibly non-monotonic (inverted-U shaped) relationship between spending per pupil and the share of childless households in the population. Income inequality is shown to play a crucial role of in the process, revealing that ageing has a stronger tendency towards underprovision in economies with high inequality. The implications for the empirical literature are discussed. |
| Keywords: | population ageing; income inequality; median voter model; public education |
| JEL: | I20 J10 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:09/3&r=pol |
| By: | Hans Agné |
| Abstract: | In democratic theory it goes without saying that people should establish their own political orders.1 Perhaps the most famous expression of this moral intuition is found in the preamble of the American constitution. By the opening phrase ‘we the people … establish this constitution’ the founders sent a message to revolutionary movements throughout the world that people may establish not only the rights and obligations that will regulate their public life, i.e. their own constitutions, but also the organisations which will exercise supreme power over the territories in which they live, i.e. their own states. However, the making of new states, or new constitutions in existing states, sometimes involves people with no intention of subjecting themselves to the political orders that they seek to establish. The US-led imposition of new regimes in Afghanistan and Iraq is one example and the UN administration of postconflict societies in Kosovo and East Timor is another (Zaum 2007). Could such policies be reconciled with the idea that people should establish their own political orders? |
| Keywords: | economics; democracy; law; diversity/homogeneity |
| Date: | 2008–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:conweb:p0034&r=pol |
| By: | Marcel Dziubinski; Jaideep Roy |
| Abstract: | We study a model of political competition between two candidates with two orthogonal issues, where candidates are office motivated and committed to a particular position in one of the dimensions, while having the freedom to slect (credibly) any position on the other dimension. We analyse two settings: a homogeneous one, where both candidates are committed to the same dimension and a heterogeneous one, where each candidate is committed to a different dimension. We characterise and give necessary and sufficient conditions for existence of convergent and divergent Nash equilibria for distributions with a non-empty and an empty core. We identify a special point on the ideology space whcih we call a strict median, existence of which is strictly related to existence of divergent Nash equilibria. A central conclusion of our anlysis is that for divergent equilibria, strong extremism (or differentiation) seems to be an important equlibrium feature. |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:edb:cedidp:08-19&r=pol |
| By: | Khan, Safdar Ullah; Saqib, Omar Farooq |
| Abstract: | This study investigates the effects of political instability on inflation in Pakistan. Applying the Generalized Method of Moments and using data from 1951-2007, we examine this link in two different models. The results of the ‘monetary’ model suggest that the effects of monetary determinants are rather marginal and that they depend upon the political environment of Pakistan. The ‘nonmonetary’ model’s findings explicitly establish a positive association between measures of political instability and inflation. This is further confirmed on analyses based on interactive dummies that reveal political instability significantly leading to high (above average) inflation. |
| Keywords: | political instability; inflation; Pakistan |
| JEL: | E31 E63 |
| Date: | 2008–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:13056&r=pol |
| By: | Sanjay Jain (University of Virginia); Sumon Majumdar (Queen's University); Sharun Mukand (Tufts University) |
| Abstract: | Despite potentially large welfare gains, the barriers to the international mobility of workers are high and persistent. We develop a simple framework that throws light on why the globalization of labor differs from that of goods and capital. In doing so we ask whether a government will ever spurn the large welfare increase from freer labor mobility, even if such a policy had no distributional impact on native workers, was desired by the host country's citizens and if the repatriation of overstaying workers could be costlessly enforced. In addressing these questions we examine the role of culture in driving the political economy of migration policy. The paper shows that there exists a broad political failure that results in inefficiently high barriers restricting the import of foreign workers. We examine the conditions under which a country is best positioned to reap the economic gains from the globalization of temporary (or permanent) labor migration. We show that culturally homogeneous countries that are poor at cultural assimilation may be better positioned to take advantage of short term foreign worker programs than more culturally diverse and tolerant countries. Our framework suggests that simple alteration of existing policy measures can help encourage international labor mobility. In particular, restrictions on the mobility of the foreign worker across firms (e.g. the H-1B program in the U.S. or the Employment R in Singapore) might work to the detriment of the host country, and make it more difficult to sustain a credible temporary worker migration program. Therefore, any policy measure that improves the mobility (and bargaining power) of the foreign worker helps not only the worker, but more surprisingly, also boosts host country welfare. |
| Keywords: | international migration, political economy, cultural heterogeneity, temporary workers |
| JEL: | D72 F22 J61 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1196&r=pol |
| By: | Nobuyuki Ito (Graduate School of Economics, Kobe University); Kenji Takeuchi (Graduate School of Economics, Kobe University); Koichi Kuriyama (School of Political Science and Economics, Waseda University); Yasushi Shoji (Graduate School of Agriculture, Hokkaido University); Takahiro Tsuge (Faculty of Economics, Konan University); Yohei Mitani (School of Political Science and Economics, Waseda University) |
| Abstract: | We conduct an experimental survey to analyze how rules for collective decision-making influence individual preferences concerning nature restoration projects. Our study compares two decision-making rules - a consensus rule and a majority rule - wherein participants decide on a plan concerning nature restoration in the Kushiro Wetland, Japan. Our main finding is that the difference between the individual preferences and collective decision-making is less significant under the consensus rule than the majority rule. Furthermore, there is a larger disparity with regard to the marginal willingness to pay between collective and individual decisions when participants are unsatisfied with the results of collective choice. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:koe:wpaper:0820&r=pol |