nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒03‒22
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Real Swing Voter's Curse By James A. Robinson; Ragnar Torvik
  2. Country or Leader? Political Change and UN General Assembly Voting By Axel Dreher; Nathan Jensen
  3. The Power of Proximity: Strategic Decisions in African Party Politics By Alexander Stroh
  4. Power over Pensions? Who Should Decide and How? By Sixten Korkman
  5. Do political incentives matter for tax policies? Ideology, opportunism and the tax structure By Konstantinos Angelopoulos; George Economides; Pantelis Kammas
  6. International Terrorism, Political Instability and the Escalation Effect By Campos, Nauro F; Gassebner, Martin
  7. Men,Women, and the Ballot – Woman Suffrage in the United States By Sebastian Braun; Michael Kvasnicka
  8. Livelihood and Care of the Elderly: Determinants of Public Attitudes in Japan By Bernd Hayo; Hiroyuki Ono
  9. Electoral uncertainty and the deficit bias in a New Keynesian Economy By Campbell Leith; Simon Wren-Lewis
  10. On the (Sequential) Majority Choice of Public Good Size and Location By De Donder, Philippe; Le Breton, Michel; Peluso, Eugenio
  11. Endogenous Group Formation and Public Goods Provision: Exclusion, Exit, Mergers, and Redemption By Gary Charness; Chun-Lei Yang

  1. By: James A. Robinson; Ragnar Torvik
    Abstract: A key idea in political economy is that policy is often tailored to voters who are not ideologically attached - swing voters. We show, however, that in political environments where political parties can use repression and violence to exclude voters from elections, they may optimally target the swing voters. This is because they anticipate that if they had to compete for the support of these voters, they would end up giving them a lot of policy favors. Hence in weakly institutionalized political environments swing voters are cursed rather than blessed. We illustrate the analysis with a discussion of recent political events in Zimbabwe.
    JEL: H1
    Date: 2009–03
  2. By: Axel Dreher (University of Goettingen, Germany, KOF Swiss Economic Institute, Switzerland, IZA, and CESifo Germany. E-mail:; Nathan Jensen (Department of Political Science, Washington University in St. Louis)
    Abstract: In this project we explore the relationship between leader change and relations between states. Voting in the United Nation’s General Assembly (UNGA) is often used as a measure of political proximity between countries. We use UN voting coincidence to examine how changes in leadership affect relations. Specifically, we examine how political change affects a country’s voting with the United States. In this paper we explore how leadership change affects UNGA voting. Using differences between “key” and “non-key” UN votes to the United States, we explore if political change is driven by preference change or by a changing external position. While political change has little impact on voting on non-key issues (state preferences) we find that after leadership change, countries are more likely to vote in line with the United States on key UN votes.
    Keywords: United Nations General Assembly voting, key votes
    JEL: F51 F53 D78
    Date: 2009–02
  3. By: Alexander Stroh (GIGA Institute of African Affairs)
    Abstract: Recent publications suggest that exclusively ethnoregional parties are as rare in sub- Saharan Africa as elsewhere. At the same time, the idea that ethnicity is a very special feature of African party politics persists. The paper acknowledges the general relevance of ethnicity in party competition but emphasizes the level on which it becomes important. It develops a microbehavioral approach which pays particular attention to the strategic choices of party elites in order to supplement the dominant structuralist thinking in party research on Africa. An in-depth evaluation of detailed election data from Burkina Faso shows that strategies which rely on personal proximity between the voter and the candidates influence the parties’ success to a great extent. Parties maximize their chances of winning seats if they concentrate their limited resources on the home localities of leading party members. Hence, African party politics are less dependent on ethnic demography than is often implied but more open to change through elite behavior.
    Keywords: political parties, Burkina Faso, elections, local mobilization, resource efficiency, son of the soil
    Date: 2009–02
  4. By: Sixten Korkman
    Abstract: ABSTRACT : The economic profession has widely examined the effects of the pension system on economic efficiency, intergenerational fairness and the sustainability of public finances, while less attention has been paid to the political decision making process. Yet, the essence of the problem is arguably a political bias in decision making in favour of the interests of the present generations. The young and unborn generations may receive little weight by politicians eager to please voters in the next election. The focus in this paper is on decisions on pension entitlements and commitments within the framework of a very simple ´overlapping generations model´. The analysis is first applied to democratic decision making, based on majority voting. In Finland, however, the parliament has devolved much of its power over (earnings-related) pensions to the corporatist system. The democratic and corporatist decision making processes are compared and their relative pros and cons evaluated. The paper also considers the case for refining current decision making structures.
    Date: 2009–03–10
  5. By: Konstantinos Angelopoulos; George Economides; Pantelis Kammas
    Abstract: This paper investigates the importance of political ideology and opportunism in the choice of the tax structure. In particular, we examine the effects of cabinet ideology and elections on the distribution of the tax burden across factors of production and consumption for 21 OECD countries over the period 1970-2000 by employing four alternative cabinet ideology measures and by using the methodology of effective tax rates. There is evidence of both opportunistic and partisan effects on tax policies. More precisely, we find that left-wing governments rely more on capital relative to labor income taxation and that they tend to increase consumption taxes. Moreover, we find that income tax rates (but not consumption taxes) tend to be reduced in pre-electoral periods and that capital effective tax rates (defined broadly to include taxes on self-employed income) are reduced by more than effective labor tax rates.
    Keywords: tax structure; political economy; partisan and opportunistic effects
    JEL: H2 H1
    Date: 2009–02
  6. By: Campos, Nauro F; Gassebner, Martin
    Abstract: What are the main causes of international terrorism? The lessons from the surge of academic research that followed 9/11 remain elusive. The careful investigation of the relative roles of economic and political conditions did little to change the fact that existing econometric estimates diverge in size, sign and significance. In this paper we present a new rationale (the escalation effect) stressing domestic political instability as the main reason for international terrorism. Econometric evidence from a panel of more than 130 countries (yearly from 1968 to 2003) shows this to be a much more promising avenue for future research than the available alternatives.
    Keywords: escalation; international terrorism; political instability; terrorism
    JEL: C25 D72 F59 H56 P48
    Date: 2009–03
  7. By: Sebastian Braun; Michael Kvasnicka
    Abstract: Woman suffrage led to the greatest enfranchisement in the history of the United States. BeforeWorldWar I, however, suffrage states remained almost exclusively confined to the American West. The reasons for this pioneering role of theWest are still unclear. Studying the timing of woman suffrage adoption at state level, we find that states in which women were scarce (the West) enfranchised their women much earlier than states in which the sex ratio was more balanced (the rest of the country). High sex ratios in the West, that is high ratios of grantors to grantees, reduced the political costs and risks to male electorates and legislators of extending the franchise. They are also likely to have enhanced female bargaining power and may have made woman suffrage more attractive in the eyes of western legislators that sought to attract more women to their states. Our finding of a reduced-form inverse relationship between the relative size of a group and its success in securing the ballot may be of use also for the study of other franchise extensions and for inquieries into the dynamics of political power sharing more generally.
    Keywords: Woman suffrage, democratization, political economy, sex ratio
    JEL: D72 J16 K10 N41 N42
    Date: 2009–03
  8. By: Bernd Hayo (Faculty of Business Administration and Economics, Philipps-University Marburg); Hiroyuki Ono (Faculty of Economics, Toyo University, 5-28-20 Hakusan Bunkyo-ku, 112-8606 Tokyo, Japan)
    Abstract: This study analyses public attitudes towards the degree of government involvement in ensuring the livelihood and care of the elderly in Japan. Using four waves of individual-level annual data from the Japanese General Social Survey collected over the period 2000-2005, we estimate ordered logit models with various explanatory variables based on the socio-demographic, economic, political, and social background of the respondents. Many significant factors are common for both livelihood and care specifications, their effects being qualitatively the same and in line with our prior expectations. The estimation results also show positive coefficients of year intercept dummies, implying an increase in support of a government-based system over time. Further investigation shows that this trend is caused by those who favour government redistribution policies becoming increasingly more consistent in their support for a government-based social security system in Japan.
    Keywords: Livelihood of elderly, care of elderly, public attitudes, aging societies, Japan
    JEL: H55 Z10
    Date: 2009
  9. By: Campbell Leith; Simon Wren-Lewis
    Abstract: Recent attempts to incorporate optimal fiscal policy into New Keynesian models subject to nominal inertia, have tended to assume that policy makers are benevolent and have access to a commitment technology. A separate literature, on the New Political Economy, has focused on real economies where there is strategic use of policy instruments in a world of political conflict. In this paper we combine these literatures and assume that policy is set in a New Keynesian economy by one of two policy makers facing electoral uncertainty (in terms of infrequent elections and an endogenous voting mechanism). The policy makers generally share the social welfare function, but differ in their preferences over fiscal expenditure (in its size and/or composition). Given the environment, policy shall be realistically constrained to be time-consistent. In a sticky-price economy, such heterogeneity gives rise to the possibility of one policy maker utilising (nominal) debt strategically to tie the hands of the other party, and influence the outcome of any future elections. This can give rise to a deficit bias, implying a sub-optimally high level of steady-state debt, and can also imply a sub-optimal response to shocks. The steady-state distortions and inflation bias this generates, combined with the volatility induced by the electoral cycle in a sticky-price environment, can significantly raise the costs of having a less thankfully benevolent policy maker.
    Keywords: New Keynesian Model; Government Debt; Monetary Policy; Fiscal Policy, Electoral Uncertainty, Time Consistency.
    JEL: E62 E63
    Date: 2008–05
  10. By: De Donder, Philippe; Le Breton, Michel; Peluso, Eugenio
    Abstract: In this paper, we lay the first building blocks of a positive theory of nation formation where national choices consist of the size and location of a public good. Individuals differ both in income and in their preferences for the public good location. Public expenditures are financed either by a lump sum tax or by a proportional income tax. We study both the simultaneous and the sequential determinations of the public good size and location. We show that, while the choice of the type of public good follows the traditional median logic, the majoritarian determination of the taxation rate need not coincide with the choice of a median income citizen. With lump sum financing, income heterogeneity plays no role and the sequential equilibrium consists of the median location together with the public good level most-preferred by the individual located at the median distance from the median. This policy bundle also constitutes an equilibrium with simultaneous voting in the special case of a uniform bivariate distribution of individuals' income and location. With proportional taxation, there is no policy equilibrium with simultaneous voting. We offer a complete characterization of the equations describing the sequential equilibrium in the general case and we show why and how our results depart from those obtained with the lump sum case. The public good level is lower than the one emerging under lump sum taxation when the income distribution is concave and when the correlation between individuals' income and location is positive but not perfect.
    Keywords: bidimensional policy and trait spaces; proportional income taxation
    JEL: D72 H41
    Date: 2009–03
  11. By: Gary Charness (University of California, Santa Barbara); Chun-Lei Yang
    Abstract: We test a mechanism whereby groups are formed endogenously, through the use of voting. Once formed, groups play a public-goods game, where there are economies of scale: in two treatments the social value of an incremental contribution to the group account increases with the size of the group, but in the second treatment, the social value is capped once a certain group size is reached. Societies of nine people are initially formed randomly into three groups of three people who play the game for three periods. Individuals then learn about the average contribution of each individual (by ID number) in one's current own group, as well as the average contribution in other groups, and can decide whether to exit the group. Remaining group members choose whether to exclude any current members from the group; the new groups and 'free agents' then choose whether to merge with other existing groups and/or other free agents. We find a great degree of success for this mechanism. The average contribution rate is quite high in both treatments, but is modestly (albeit significantly) higher in the first treatment, when there is no cap on the social value of a contribution. In the first treatment, we see large and stable groups forming, but we see considerably more instability and smaller group sizes in the second treatment. The driving force appears to be the economies of scale combined with the awareness that bad behavior will result in ostracism, but in the Athenian sense of possible redemption. This redemption is a unique feature of our environment, with about one-third of the population becoming good citizens after initially being low contributors.
    Keywords: Endogenous group formation, Exclusion, Experiment, Merger, Ostracism, Public goods, Social efficiency, Voting,
    Date: 2008–09–29

This nep-pol issue is ©2009 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.