nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒05‒23
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Hold Your Nose and Vote: Why Do Some Democracies Tolerate Corruption? By Marco Pani
  2. Why does the amount of income redistribution differ between the United States and Europe? The Janus face of Switzerland By Sule Akkoyunlu; Ilja Neustadt; Peter Zweifel
  3. On Political Representation: Myths and Challenges By Johannes Pollak, Jozef Bátora, Monika Mokre, Emmanuel Sigalas; Peter Slominski
  4. Global Aging and Fiscal Policy with International Labor Mobility: A Political Economy Perspective By Tosun, Mehmet S.
  5. Measuring voting power: The paradox of new members vs. the null player axiom By László Á. Kóczy
  6. The politico-economic determinants and productivity effects of regional transport investment in Europe By Kemmerling , Achim; Stephan, Andreas
  7. Family Ties and Political Participation By Alesina, Alberto; Giuliano, Paola
  8. Constitutional Design: Separation of Financing and Project Decision By Hans Gersbach; Volker Hahn; Stephan Imhof
  10. Does decentralization matter for regional disparities? A cross-country analysis By Andrés Rodríguez-Pose; Roberto Ezcurra
  11. Power distribution in the electoral body with an application to the Russian Parliament By Fuad Aleskerov
  12. Opinion Surveys on the Euro: a Multilevel Multinomial Logistic Analysis By Cristina Conflitti

  1. By: Marco Pani
    Abstract: This paper analyses why corruption can persist for long periods in a democracy and inquires whether this can result from a well-informed rational choice of the citizens. By applying a citizen-candidate model of representative democracy, the paper analyzes how corruption distortsthe allocation of resources between public and private expenditure, altering the policy preferences of elected and nonelected citizens in opposite directions. The result is a reduction in real public expenditure and, if the median voter's demand for public goods is sufficiently elastic, a tax reduction. In this case, some citizens can indirectly benefit from corruption. The paper shows that, under this condition, if the citizens anticipate a shift in policy preferences in favor of higher public expenditure, they may support institutional arrangements that favor corruption (such as a weak enforcement of the law) in order to alter future policy decisions in their favor. This result complements the findings of other studies that have attributed the persistence of corruption in a democracyto some failure on the part of the voters or the electoral system. It also bears implications for developing effective anticorruption strategies and for redefining the role that can be played by the international community.
    Keywords: Corruption , Developed countries , Developing countries , Governance , Political economy , Government expenditures , Private sector , Legislation , Economic models ,
    Date: 2009–04–22
  2. By: Sule Akkoyunlu (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Ilja Neustadt (University of Zürich, Socioeconomic Institute, Zürich); Peter Zweifel (University of Zürich, Socioeconomic Institute, Zürich)
    Abstract: In this paper, the amount of income redistribution in the United States, the European Union, and Switzerland is compared and empirically related to economic, political, and behavioral determinants elaborated in the literature. Lying in between the two poles, Switzerland provides unique evidence about the relative merits of competing hypotheses. It tips the balance against the economic explanation, which predicts more rather than less income redistribution in the United States compared to the EU. It only weakly supports the political model linking proportional representation and multiparty structure (which also characterize Switzerland) to redistribution; yet the Swiss share of transfers in the GDP is low. Behavioral explanations receive a good deal of support from the case of Switzerland, a country that shares with the United States the belief that hard work rather than luck, birth, connections, and corruption determine wealth. In this way, the Janus face of Switzerland may help to explain the difference in the amount of U.S. and EU income redistribution.
    Keywords: Redistribution, Income Mobility, Openness, Political Economy, Beliefs, Religion, Immigration
    JEL: D31 D63 D64 H53 I31
    Date: 2009–05
  3. By: Johannes Pollak, Jozef Bátora, Monika Mokre, Emmanuel Sigalas; Peter Slominski
    Abstract: In this paper we critically reassess the standard account of political representation, in order to question the mythical foundation of its premises and explain why it can no longer serve as an adequate explanatory framework in the modern political context. We argue that representation was not invented as a second-best solution, that the represented are not always a collective of individuals, that there is an indirect rather than direct link between the represented and the representatives, that representatives can be legitimately chosen by methods other than elections and, finally, that good representation cannot be reduced to responsiveness. Despite the inconsistencies of different theories of representation, the standard account survived long enough for reasons we explain in this paper. The consolidation of the EU as a supranational political arena and the burgeoning activity of transnational actors resulted in a multiplication of structures and opportunities for political representation which seriously challenges the effectiveness and suitability of the standard representation model. Growing complexity, diminishing transparency and the prospect of competing representative claims from concurrent majorities create a volatile dynamic for the future of democracy at both national and EU level.
    Keywords: accountability; democracy; democratization; legitimacy; multilevel governance; political representation; supranationalism
    Date: 2009–05–15
  4. By: Tosun, Mehmet S. (University of Nevada, Reno)
    Abstract: This paper uses an overlapping generations model with international labor mobility and a politically responsive fiscal policy to examine aging in developed and developing regions. Migrant workers change the political structure composed of young and elderly voters in both labor-receiving and labor-sending countries. Numerical simulations show that the developed region benefits more from international labor mobility through the contribution of migrant workers as laborers, savers, and voters. The developing region experiences significant growth in all specifications but benefit more under international capital mobility. Restricting political participation of migrant workers in the developed region produces inferior growth results.
    Keywords: population aging, overlapping generations, endogenous fiscal policy, international labor mobility, international capital mobility
    JEL: E62 F21 F22 F43 H30 J10
    Date: 2009–05
  5. By: László Á. Kóczy (Budapest Tech)
    Abstract: Qualified majority voting is used when decisions are made by voters of different sizes. In such situations the voters' influence on decision making is far from obvious; power measures are used for an indication of the decision making ability. Several power measures have been proposed and characterised by simple axioms to help the choice between them. Unfortunately the power measures also feature a number of so-called paradoxes of voting power. In this paper we show that the Paradox of New Members follows from the Null Player Axiom. As a corollary of this result it follows that there does not exist a power measure that satisfies the axiom, while not exhibiting the Paradox.
    Date: 2009
  6. By: Kemmerling , Achim (Jacobs University Bremen); Stephan, Andreas (Jonkoping International Business School)
    Abstract: We study the determinants and productivity effects of regional transportation infrastructure investment in France, Germany, Italy, and Spain. We estimate productivity effects with regional production functions for each country controlling for the potential endogeneity of public infrastructure investment. In analyzing the determinants of public infrastructure investment two broad categories are considered: First, the normative principles such as efficiency, equity, and redistribution; and second, political factors such as electoral competition and electoral rents. The evidence shows that road infrastructure positively contributes to regional production. As to the determinants, efficiency and redistribution are consistently found to be the dominant norms while equity considerations appear to be less important. However, we find remarkable differences across countries regarding the political determinants. Which political factors matter for infrastructure investment is related to the different political systems of the various countries.
    Keywords: transport infrastructure; regional growth; political economy
    JEL: H54 O40 R10
    Date: 2008–07–18
  7. By: Alesina, Alberto (Harvard University); Giuliano, Paola (University of California, Los Angeles)
    Abstract: We establish an inverse relationship between family ties, generalized trust and political participation. The more individuals rely on the family as a provider of services, insurance, transfer of resources, the lower is civic engagement and political participation. The latter, together with trust, are part of what is known as social capital, therefore in this paper we contribute to the investigation of the origin and evolution of social capital over time. We establish these results using within country evidence and looking at the behavior of immigrants from various countries in 32 different destination places.
    Keywords: family ties, trust, culture
    JEL: Z10 Z13
    Date: 2009–04
  8. By: Hans Gersbach (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland); Volker Hahn (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland); Stephan Imhof (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: We examine the provision of public projects under separate tax and subsidy rules. We find that tax rules separated from project cum subsidy decisions exhibit several advantages when incentive problems of the agenda-setter are taken into account. In particular, tax rules may prevent the proposal of inefficient projects which benefit only a small lobby group. We propose “redistribution efficiency” as a socially desirable property of proposals and find that tax rules always guarantee redistribution efficiency. We show that rules on subsidies combined with discretion regarding taxes always yield socially inferior proposals. Finally, tax rules induce the agenda-setter to look for potential improvements of public projects.
    Keywords: constitutional design, provision of public projects, voting, taxes and subsidies
    JEL: D72 H40
    Date: 2009–05
  9. By: Hemanshu Kumar
    Abstract: The Indian states have been the standard unit of analysis for research on India that uses official data sources. For many empirical questions, states are a natural starting point because state governments set political agendas and budgets and administer a wide range of services. In addition, the boundaries of many states have been unchanged for over half a century and those of all major states were largely unchanged between 1971 and 2000. This stability has resulted in the relatively easy construction and use of panel data sets at the state level and these data have been used to ask a variety of questions relating to the e ectiveness of public policy. The purpose of this paper is to provide data on the composition of all Indian districts over the 1971-2001 period that can enable the construction of district panels.[CDE DSE WP NO 176]
    Keywords: Census; disaggregated district data; child populations; literate population; Equivalence Table of Administrative Divisions; National Sample Survey; National Family Health Survey; error free panels; Intercensal Boundary Changes
    Date: 2009
  10. By: Andrés Rodríguez-Pose (London School of Economics); Roberto Ezcurra (Universidad Pública de Navarra)
    Abstract: This paper looks at the relationship between fiscal and political decentralization and the evolution of regional inequalities in a panel of 26 countries – 19 developed and 7 developing – for the period between 1990 and 2006. Using an instrumental variables method, it finds that whereas for the whole sample decentralization is completely dissociated for the evolution of regional disparities, the results are highly contingent on the level of development, the existing level of territorial inequalities, and the fiscal redistributive capacity of the countries in the sample. Decentralization in high income countries has, if anything, been associated with a reduction of regional inequality. In low and medium income countries, fiscal decentralization has been associated with a significant rise in regional disparities, which the positive effects of political decentralization have been unable to compensate. Policy preferences by subnational governments for expenditure in economic affairs, education, and social protection have contributed to this trend.
    Keywords: fiscal decentralization; political decentralization; regional disparities; territorial inequality; fiscal redistribution
    JEL: H11 H71 R11
    Date: 2009–05–14
  11. By: Fuad Aleskerov
    Abstract: This paper presents several new approaches to evaluate power distribution in an electoral body. We define the index of consistency of two groups’ positions (briefly, the consistency index) which is used to separate possible coalitions in the Parliament. This allows to analyze power distribution within restricted coalition formations. Then we provide several new power indices for the case in which the intensity of factions to coalesce is taken into account. Our analysis of the power distribution model extends the one proposed by Shapley-Owen. A new consistency index is given allowing to construct such an extension. We illustrate these approaches via the analysis of power distribution among factions in the Russian Parliament (Duma) from 1993 to 2005.
    Date: 2008–06
  12. By: Cristina Conflitti
    Abstract: The main contribution of the paper is to identify the socio economic characteristics that affect the perception of the euro across the original 12 Euro Area countries by specifying and estimating a multilevel multinomial model for polytomous data. The analysis is based on the Flash Eurobarometer dataset that contains cross-country data augmented speci?c country macroeconomic and political series. The use of the multilevel multinomial logistic regression allows to estimate the model considering individuals features and countries characteristics in a single analysis with two-level structure. This structure takes into account dependence between individuals within the same country given a certain component of unobserved heterogeneity between countries. The attitudes towards the euro vary across individuals and across countries and are driven by personal considerations based on the bene?ts and costs of using a single currency within a common area. Individual features, as a high level of education and living in a metropolitan area, have a positive impact towards the perception of the euro, since people having these characteristics can bene?t more from new markets opportunities created by the common area. Moreover, a positive country economic context (low in?ation and high growth) can in?uence people attitudes.
    Keywords: Public attitudes, opinion surveys, European integration, multilevel modeling, gllamm.
    JEL: C31 C35 C42 E65 F15
    Date: 2009

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.