nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒02‒27
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Agency and the Structure of Party Competition: Alignment, Stability and the Role of Political Elites By Kevin Deegan-Krause; Zsolt Enyedi
  2. Media and Polarization By Campante, Filipe R.; Hojman, Daniel
  3. How Can Economic and Political Liberalisation Improve Financial Development in African Countries? By Enowbi Batuo, Michael; Kupukile, Mlambo
  4. When parties (also) position themselves: an introduction to the EU Profiler By Alexander H. Trechsel; Peter Mair
  5. Do coup leaders matter? Leadership change and economic growth in politically unstable countries By Richard Jong-A-Pin; Shu Yu
  6. The Political Economy of the Yield Curve By Di Maggio, Marco
  7. Regulatory Governance and the Challenge of Constitutionalism By Colin Scott
  8. Supply-Side Peacekeeping: Theories and New Evidence from a Panel Data Analysis By Vincenzo Bove
  9. Political Objectives and Privatization Decisions - Selection of Firms into Privatization or Long-Term State Ownership in Romania By Adam Szentpeteri; Almos Telegdy

  1. By: Kevin Deegan-Krause; Zsolt Enyedi
    Abstract: The study of cleavages focuses primarily on constraints imposed by socio-demographic factors. While scholars have not ignored the agency of political elites, such scholarship remains fragmented among sub-fields and lacks a coherent conceptual framework. This article explores both temporal stability and positional alignments linking vote choice with socio-demographic characteristics, values and group identity to distinguish among particular kinds of structural constraints. On the basis of those distinctions, it identifies various methods by which elites reshape structures, and it links those to a broader framework that allows more comprehensive research connecting political agents and structural constraints in the electoral realm.
    Keywords: political parties; public opinion
    Date: 2010–01–15
  2. By: Campante, Filipe R. (Harvard University); Hojman, Daniel (Harvard University)
    Abstract: This paper provides a model of how media environments affect political polarization. We first develop a model of how media environments, characterized by their levels of accessibility and variety of content, interact with citizens' ideological views and attitudes and political motivation. We then embed it in a model of majoritarian electoral competition in which politicians react to those media-influenced views. We show how equilibrium polarization is affected by changes in the media environment, through two channels: the variety effect, whereby a decrease in media variety leads to convergence in citizens' views and hence to lower polarization; and the composition effect, whereby a lowering of barriers to media accessibility increases turnout and hence lowers polarization, since newly motivated voters are relatively more moderate. We take the model's predictions to the data, in the US context of the introduction of broadcast TV, in the 1940s and 1950s, and radio, in the 1920s and 1930s. We show that, consistent with the model's predictions, TV decreased polarization, and exposure to (network) radio was correlated with lower polarization. The evidence suggests that the variety effect was more important than the composition effect.
    JEL: D72 L82 O33
    Date: 2010–01
  3. By: Enowbi Batuo, Michael; Kupukile, Mlambo
    Abstract: The objective of this paper is to study the interactions between economic liberalisation, political liberalisation and financial development in African countries. More specifically, we seek to establish the impact of economic, political and institutional openness on financial deepening. The empirical approach will be two-step procedure, first using a difference in difference method to show the various aspect of financial liberalisation on economic and political freedom while the second step will be using panel data techniques from period 1990 to 2005. The estimation results can be summarised as the following, first, Economic and financial liberalisation did account significantly for the financial development performance. While political stability show a positive overall effect on financial development, the association with Political freedom is consistent only after controlling the endogeneity of Political freedom on financial development. This result indicates that the transformation of the political and economic environment has improved the performance of the financial sector.
    Keywords: Political Liberalisation; Economic Liberalisation; Financial Development and Africa
    JEL: O55 G2 O17 C23 O16 C21
    Date: 2009–10
  4. By: Alexander H. Trechsel; Peter Mair
    Abstract: This paper is intended to frame and describe a novel method of political party positioning within the European Union and beyond. Ever since the groundbreaking work by Downs in the 1950s, political scientists have derived a variety of methods to empirically determine the position of parties on dimensions measuring differences in policies or ideologies. Today, two sets of techniques dominate this research domain: expert surveys and manifesto/ programme coding. What is common to both techniques is that the positioning is done by qualified scholars and other experts outside the parties, and that it is not always possible to trace the grounds on which a party was coded in one way rather than another. The EU Profiler project, a large-scale, interdisciplinary and pan-European research endeavour, takes a step beyond these established methods by using party self-positioning and by offering full documentation. That is, and in addition to conventional expert coding, some 300 political parties in Europe have been invited to place themselves on 30 issue dimensions. Moreover, and in so far as it proved possible, each coded position for each party is fully documented with extracts from party manifestos, party leaders' speeches, or relevant press or policy statements. The resulting data offer unique opportunities for comparing the accuracy and efficiency among party positioning techniques, exploring for the first time and in a systematic way the auto-positioning of political parties throughout Europe, and offering close textual documentation for the positions taken on each issue dimension.
    Date: 2009–12–15
  5. By: Richard Jong-A-Pin (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Shu Yu (University of Groningen, the Netherlands)
    Abstract: We examine the impact of leadership change after a coup d’etat on economic growth. We consider successful coup attempts as our treatment group and use failed coup attempts as controls to condition on political instability. To take account of selection bias, we control for the determinants of coup success. Our main finding is that leadership changes after a coup d’état have a positive effect on economic growth in the least developed countries, but have a negative effect in other developing countries.
    Keywords: economic growth, coup d’etat, political instability
    Date: 2010–02
  6. By: Di Maggio, Marco
    Abstract: This paper proposes a novel method to recover the market's beliefs about the Fed's monetary policy by using the responses of interest rates to economic news. We investigate the differential impact of news over time showing that the impact of this information is time varying, and that the importance of the housing and labor markets has sharply increased after the crisis. We follow a difference-in-difference estimation procedure to test for the presence of political constraints in the U.S., employing as control group the response of the European swap rates to macroeconomic announcements. We provide strong evidence that after the crisis of 2007, the Federal Reserve has been subject to the political pressure exerted by the Congress.
    Keywords: Fed; Financial Crisis; Political Pressure; Yield Curve; Political Constraints
    JEL: E43 G14 E58 G18
    Date: 2010–01–31
  7. By: Colin Scott
    Abstract: The late twentieth century witnessed significant shifts in the institutions and processes of governance in most members states of the OECD, as direct provision (sometimes characterised as welfare state governance) was, to some degree, displaced by the rise of the regulatory state. Changes in the nature of state intervention have been accompanied also by fundamental challenges to traditional conceptions of the centrality of the nation state as regards its dominance of key resources (notably taxation and capacities for coercion) and for the maintenance of the rule of law and democracy, as transnational and non-state power have assumed greater significance. In this paper I assess both narrow and broad versions of the challenge presented to the values of constitutionalism by regulatory governance. The narrow constitutionalist critique locates the problem of regulatory governance with the delegation of governmental power to regulatory agencies. A broader constitutionalist critique looks beyond delegation to other organs of the state, and notes that the de-centring of regulatory governance has increasingly implicated both non-state and supranational governmental bodies in regulatory tasks through implicit and explicit delegation and through the assumption of regulatory powers with little or no state involvement. I suggest that one response to the broad critique is to institutionalise broader modes of control and accountability which are best able to match the governance powers which are targeted.
    Keywords: regulation; governance; rule of law
    Date: 2010–02–15
  8. By: Vincenzo Bove (Department of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: Why do nations with heterogeneous economies, geographic positions and institutions agree to dispatch their troops to remote conflict areas? This paper explores the domestic and international determinants of countries' contribution to peacekeeping operations from 1999 to 2009. Individual nations make their decision about where, when and how to send their military personnel as well as the justifications on which they base their involvement in sovereign states. Moral imperative for peacekeeping may be universally accepted but a country decision to participate is also based on self-interest combined to the geo-strategic dimension and finally constrained by political and technical considerations. Empirical results suggest that at the domestic level technical forces, such as the sustainability of multiple missions and military capabilities, all play a role. At the international level peacekeeping contributions are driven by the security threat that a conflict poses and the number of displaced people.
    Date: 2010–02
  9. By: Adam Szentpeteri (Central European University of Budapest, Eotvos Lorand University); Almos Telegdy (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: With the help of a peculiar institutional feature of early Romanian privatization, when a group of firms was explicitly banned to become private, we test which factors contributed to the selection of firms into long-term state ownership. We find that politicians sheltered large and inefficient firms from privatization, which paid low wages and had high overdue payments. These results are consistent with minimization of employment losses, even if efficiency enhancement of privatization or revenue maximization had to be sacrificed. We hypothesize that this behavior was induced by the unfavorable economic conditions in Romania which brought about large employment losses during the first several years of economic transition.
    Keywords: privatization, government objectives, Romania
    JEL: L33 P26
    Date: 2009–11

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