nep-pol New Economics Papers
on Positive Political Economics
Issue of 2009‒12‒11
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Electoral accountability in a country with two-tiered government By Granlund, David
  2. Vote Splitting, Reelection and Electoral Control: Political Gridlocks, Ideology and the War on Terror By Bugarin, Mauricio S.
  3. Political Institutions and Street Protests in Latin America By Fabiana Machado; Carlos Scartascini; Mariano Tommasi
  4. Do re-election probabilities influence public investment? By Jon H. Fiva; Gisle James Natvik
  5. The Making of Policy: Institutionalized or Not? By Carlos Scartascini; Mariano Tommasi
  6. Using Eurobarometer data on voter participation in the 2004 European elections to test the RECON models By Dionysia Tamvaki
  7. Colonialism, European descendants and democracy By Luis Angeles
  8. Recognition and political theory: Paradoxes and conceptual challenges of the politics of recognition By Tanja Hitzel-Cassagnes; Rainer Schmalz -Bruns
  9. Land Acquisition: Fragmentation, Political Intervention and Holdout By Roy Chowdhury, Prabal
  10. On the manipulability of approval voting and related scoring rules By Peters Hans; Roy Souvik; Storcken Ton
  11. Political Selection of Firms into Privatization Programs. Evidence from Romanian Comprehensive Data. By Adam Szentpeteri; Almos Telegdy

  1. By: Granlund, David (Department of Economics, Umeå University)
    Abstract: In democracies, elections are the primary mechanism for making politicians act in voters' interests. Voters' ability to ensure that politicians act in their interests is weakened when a second level of government is added, resulting in more resources being diverted to political rents. With two levels of government, the political rents can be reduced by voters increasing the beneficial public expenditures they require for reelecting incumbents. Both these results work for higher taxes with two levels of government than with one. The results also show that voters can strengthen their power by holding politicians also liable for decisions made by the other level of government. When the incumbent at one level acts as a Stackelberg leader with respect to the other, there is no risk of this leading to Leviathan policies on the part of the incumbents.
    Keywords: moral hazard; separation of powers; Stackelberg; transparency; voting theory
    JEL: D72 H00 H77
    Date: 2009–11–27
  2. By: Bugarin, Mauricio S.
    Date: 2009–10
  3. By: Fabiana Machado; Carlos Scartascini; Mariano Tommasi
    Abstract: This paper argues that where institutions are strong, actors are more likely to participate in the political process through institutionalized arenas, while where they are weak, protests and other unconventional means of participation become more appealing. This relationship is explored empirically by combining country-level measures of institutional strength with individual-level information on protest participation in 17 Latin American countries. Evidence is found that weaker political institutions are associated with a higher propensity to use alternative means for expressing preferences, that is, to protest. Also found are interesting interactions between country-level institutional strength and some individual-level determinants of participation in protests.
    Keywords: Political institutions, Public policies, Institutional strength, Protests, Alternative Political Technologies, Political party representation, Ideology, Ideological extremism, Latin America
    JEL: D72 D74 D78 H89 K42
    Date: 2009–11
  4. By: Jon H. Fiva (University of Oslo); Gisle James Natvik (Norges Bank)
    Abstract: We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects their investments in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital.
    Keywords: Political economics, strategic capital accumulation, identifying popularity shocks.
    JEL: E62 H40 H72
    Date: 2009
  5. By: Carlos Scartascini; Mariano Tommasi
    Abstract: This paper develops a framework for analyzing different policymaking styles, their causes and their consequences in Latin America, finding that lower institutionalization and greater use of alternative political technologies (APTs) are more likely the lower the cost of using these technologies, the higher the potential damage they can cause, the lower the wealth of the economy, and the more asymmetric the distribution of de jure political power. Moreover, strategic complementarity exists in the use of alternative political technologies; for instance "bribes by the rich" and "protests by the poor" are likely to be countervailing forces, and will both occur in polities with weaker political institutions.
    Keywords: Political institutions, Public policies, Institutional strength, Protests, Alternative Political Technologies, Development, Judicial independence, Party institutionalization, Congress capabilities, Cabinet stability, Corruption
    JEL: D72 D74 D78 H89 K42
    Date: 2009–11
  6. By: Dionysia Tamvaki
    Keywords: democracy; European elections; European Parliament
    Date: 2009–11–15
  7. By: Luis Angeles
    Abstract: This paper advances that the share of European descendants in the population is a major determinant of democracy in former colo- nial countries. We test this hypothesis using cross-section and panel regressions with 60 developing and developed countries that were once colonies. We …nd that the share of European descendants can explain more than half of the di¤erence in measures of democracy between the least and the most democratic countries in our sample. We control for other potential determinants of democracy and test for endogeneity bias using instrumental variables.
    Keywords: democracy, European descendants, colonialism.
    JEL: P16 N46
    Date: 2009–11
  8. By: Tanja Hitzel-Cassagnes; Rainer Schmalz -Bruns
    Abstract: Both in moral philosophy more generally and in political philosophy and theory (including constitutional theory) more specifically we have been witnessing a paradigmatic challenge of the conceptual foundations of moral constructivism and political liberalism. Although building on rather different sources such as the ethics of authenticity and difference, or on socio-philosophical inspirations derived from a critical interest in the pathologies of modern forms of life, approaches based on recognition theory seem to share a basic (Hegelian) conviction that morality and justice must be seen as anchored not in practical reason as such, but in a much broader web of normative concerns and orientations shaping an ethical form of life. Seen in this light, recognition presents itself as a theoretical alternative to political justice which acquires priority over justice, and in political terms promises to establish a new kind of balance between self-fulfilment, self-realisation, and self-determination. Accordingly, political liberalism is challenged as being too constrained as to handle the many faces of injustice and the multiple forms of oppression, exploitation and alienation; as such it seems too restrictive in order to do justice to all those concerned, be it within existing constitutional orders of ‘res publica’ or as a hypothetical idea of realising Kant’s ‘societas generis humani’ within the framework of a word-constitution. While acknowledging that recognition theory tries to capture the fact that self-realisation is not only a matter of justice, but that justice is a matter of self-realisation in the sense that we are asked to look for remedies of all sorts of failed or oppressed forms of self-realisation, we confront the question whether recognition theory allows for a distinction between legitimate and illegitimate claims to recognition – i.e., if it may also provide us with a normatively convincing account of self-limiting mechanisms that are built into the social, political or psychological dynamics of self-realisation.
    Keywords: constitution building; diversity/homogeneity; identity; legitimacy; normative political theory
    Date: 2009–11–15
  9. By: Roy Chowdhury, Prabal
    Abstract: This paper provides a theory of holdout based on the landowners' inability to manage large sums of money and consequent lack of consumption smoothing in case of sale. We find that under some reasonable conditions fragmentation increases holdout and moreover, this happens if and only if large landowners are relatively more willing to sale. Turning to the effects of politicization, we find that voice coupled with collective bargaining increases efficiency provided fragmentation is severe. Further, whether there is political intervention or not depends on the political maturity of the landowners, i.e. if they already have voice or not.
    Keywords: Land acquisition; holdout; fragmentation; politics; voice; collective bargaining.
    JEL: L14 D23 C78 D62
    Date: 2009–11
  10. By: Peters Hans; Roy Souvik; Storcken Ton (METEOR)
    Abstract: We characterize all preference profiles at which the approval (voting) rule is manipulable, under three extensions of preferences to sets of alternatives: by comparison of worstalternatives, best alternatives, or by comparison based on stochastic dominance. We perform a similar exercise for $k$-approval rules, where voters approve of a fixed number $k$ of alternatives. These results can be used to compare ($k$-)approval rules with respect to their manipulability. Analytical results are obtained for the case of two voters, specifically, the values of $k$ for which the $k$-approval rule is minimally manipulable -- has the smallest number of manipulable preference profiles -- under the various preference extensions are determined. For the number of voters going to infinity, an asymptotic result is that the $k$-approval rule with $k$ around half the number of alternatives is minimally manipulable among all scoring rules. Further results are obtained by simulation and indicate that $k$-approval rules may improve on the approval rule as far as manipulability is concerned.
    Keywords: public economics ;
    Date: 2009
  11. By: Adam Szentpeteri (Central European University, E”tv”s Lor nd University); Almos Telegdy (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: Exploiting a unique institutional feature of the early Romanian privatization setup, when a group of firms was explicitly barred from any privatization, we test how politicians select firms into privatization. Using comprehensive data that includes all firms inherited from socialism, we estimate the relation between pre-privatization firm characteristics - the information known to politicians at the time of decision making - and the effect of privatization on employment, efficiency and wages. With the estimated coefficients we simulate the effect of privatization on non-privatizable and privatizable firms separately, including in the latter group both actually privatized and not privatized enterprises. The simulations show that politicians expected privatization to increase the employment of the privatizable group by 7 - 10 percent, and to decrease it in the non-privatizable group by 10 - 30 percent, depending on the first-stage estimation method, OLS or matching combined with OLS. We do not find such discrepancies in the expected change in firm efficiency; the simulated efficiency effect of privatization is large and positive for both groups of firms, and it 52 - 65 percent for non-privatizable, and 41 - 43 percent for the privatizable firms. The analysis does not support the hypothesis that wages played an important role in privatization decisions. Our study suggests that employment concerns played the key role in selecting firms for privatization, even if efficiency gains had to be sacrificed.
    Keywords: Privatization, Government objectives, Firm Efficiency, Employment, Wages, Romania
    JEL: L33 P26
    Date: 2009–09

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