nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒09‒05
six papers chosen by
Eugene Beaulieu
University of Calgary

  1. Revisiting Political Budget Cycles in Latin America By Sebastián Nieto Parra; Javier Santiso
  2. Gender, corruption and sustainable growth in transition countries By Michailova, Julija; Melnykovska, Inna
  3. The Welfare Effects of Social Mobility: An Analysis for OECD countries. By Fischer, Justina AV
  4. Ethnic diversity and attitudes towards redistribution: a review of the literature By Stichnoth, Holger; Straeten, Karine Van der
  5. A small victorious war: political institutions and international conflict By Libman, Alexander
  6. Disease, Institutions and Underdevelopment By Hasan, Lubna

  1. By: Sebastián Nieto Parra; Javier Santiso
    Abstract: In this paper we test the impact of elections on fiscal policy in Latin American economies in comparison to OECD countries over the period 1990-2006. We find that in Latin American countries, the average primary balance declines by an amount close to 0.7 per cent of GDP during an election year, confirming the hypothesis of fiscal deteriorations during the election cycle. Most of this movement is due to the expenditure component and within this it is current (close to 0.8 per cent of GDP) rather than capital expenditure that is most affected. By contrast, in OECD countries, the observed changes in the primary balance and current expenditures during election years are minimal. Our analysis also suggests that re-elections of incumbent candidates in Latin America have a considerable impact on the expenditure side of the fiscal balance. Finally, by comparing the 2005-2006 electoral cycle with respect to prior electoral cycles, we note a slight improvement of fiscal management around elections in the region. We derive policy implications and recommendations from our findings.<BR>L’objectif de cet article est de tester l’impact des élections sur la politique budgétaire dans les pays d’Amérique Latine par rapport aux pays de l’OCDE pendant la période 1990-2006. Nos résultats montrent qu’en moyenne le solde primaire diminue de près de 0,7 pourcent du PIB pendant l’année électorale, ce qui confirme l’hypothèse d’une détérioration de la discipline budgétaire pendant le cycle électoral en Amérique Latine. Une grande partie de ce mouvement s’explique par une croissance des dépenses publiques qui trouve son origine dans les dépenses courantes (près de 0,8 pourcent du PIB) plus que dans les dépenses en capital. En revanche, dans les pays de l’OCDE, le solde primaire et les dépenses courantes évoluent peu pendant l’année électorale. Notre analyse suggère également que les réélections des candidats en exercice en Amérique Latine ont un impact considérable sur les dépenses budgétaires. Enfin, la comparaison du cycle électoral de 2005-2006 aux cycles passés fait apparaître une amélioration, bien qu’encore réduite, de la discipline budgétaire de la région en période électorale. Nous analysons les implications politiques de ces résultats et proposons des recommandations.
    Keywords: elections, élections, Latin America, Amérique latine, incumbent candidates, candidats en exercice, political budget cycle, cycle politique et budgétaire
    JEL: D72 E62 H62 P16
    Date: 2009–08–14
  2. By: Michailova, Julija; Melnykovska, Inna
    Abstract: Numerous studies have found negative connection between corruption level and economic development. At the same time few of them demonstrate correlation between women representation in politics and corruption level. This paper analyzes correlation between gender and corruption for a specific sample of countries, sharing common cultural and historical legacy – transition countries. Relationship between higher number of women in parliament and decreasing level of corruption is supported by data. Relations with other forms of women social activity were found to be insignificant. Contribution of this paper to the research literature on this topic is twofold. First analysis on gender and corruption in transition economies has previously not been done. Second, this study could also be used for the practical policies on fighting corruption by application of gender quotas.
    Keywords: Gender; Corruption; Growth; Transition countries.
    JEL: H11 O10 K42 J16
    Date: 2009–05–12
  3. By: Fischer, Justina AV
    Abstract: The question whether a socially mobile society is conducive to subjective well-being (SWB) has rarely been investigated. This paper fills this gap by analyzing the SWB effects of intergenerational earnings mobility and equality in educational attainment at the societal level. Using socio-demographic information on 44’000 individuals in 30 OECD countries obtained from the World Values Survey 1997-2001, this study shows that living in a socially mobile society is conducive to individual life satisfaction. Differentiating between perceived and actual social mobility, we find that both exert rather independent effects, particularly in their interplay with income inequality. We identify a positive interaction of perceived social mobility that mitigates the overall SWB lowering effect of income inequality. In contrast to expectations, a high degree of actual social mobility yields an overall impact of income inequality that is SWB lowering, while for low social mobility the effect of inequality is positive. Thus, people bear income inequality more easily when they perceive their society as mobile, but also - surprisingly - when their society is actually rather immobile. These interactions hold stronger for pre-transfer than post-transfer income inequality suggesting that government redistribution disentangles the effect of income inequality from that of social mobility. Robustness using a world sample is tested.
    Keywords: Social mobility; Happiness; Well-Being; Life satisfaction; Inequality; Voting; Equal opportunities; Fairness; Justice
    JEL: D31 D63 J62 I31 A14
    Date: 2009–09–02
  4. By: Stichnoth, Holger; Straeten, Karine Van der
    Abstract: We review the empirical literature that studies the effect of ethnic diversity on the welfare state and on individual attitudes. The outcome variables that we cover in the survey are on the one hand public spending, and on the other hand individual attitudes and behaviour, including charity spending. We also review the fast-growing literature that uses experiments to study the effects of ethnic diversity. Many of these studies have appeared since the pioneering survey by Alesina and La Ferrara (2005a), and have not been covered by a survey before.
    Keywords: redistribution,social security,welfare state,immigration,ethnic diversity,survey
    JEL: H53 H55 I38 J15 J61
    Date: 2009
  5. By: Libman, Alexander
    Abstract: The paper provides an extremly simple model of the interaction of international and internal conflicts. However, unlike the dominant approach in the literature, which looks at these two types of conflicts as substitutes in terms of investments of agents, this paper analyzes the situation when these investments are complementary. In this case the existence of internal conflict may in fact trigger international war. The discussion is then placed in the context of the democratic peace theory.
    Keywords: Democratic peace; internal conflict; international conflict
    JEL: D74
    Date: 2009
  6. By: Hasan, Lubna
    Abstract: What explains poverty of Sub Saharan Africa and South Asia? One view holds the disease environment of these regions as the primary culprit. Others see it as a typical symptom of growth retarding institutions. We test validity of these competing assertions for a cross section of countries. Our results indicate that institutions are the prime determinant of economic performance of countries. Disease does not play a significant role in determining outcomes. On the contrary, we find support for the indirect effect of disease via institutions, as asserted by the 'institutions school'. Interestingly, the 'institutions school' contention about geography having no direct effect on income is also not validated. Our results show that being land locked can pose significant disadvantage for a country. Endowment of hydrocarbon, however, is beneficial for economic outcomes.
    Keywords: Economic Performance; Institutions; Disease.
    JEL: O43 I10
    Date: 2009–08–19

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