nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒05‒15
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Identification of Voters with Interest Groups improves the Electoral Chances of the Challenger By Vjollca Sadiraj; Jan Tuinstra; Frans van Winden
  2. Sincere Scoring Rules By Nunez Matias
  3. Fiscal and Political Decentralization and Government Quality By Andreas P. Kyriacoua; Oriol Roca-Sagalésb
  4. Political economics of higher education finance By Jordi Jofre-Monseny; Martin Wimbersky
  5. Aging and Immigration Policy in a Representative Democracy By Lena Calahorrano
  6. Decentralization and Nationalization of Party Systems By Ignacio Lago-Peñas; Santiago Lago-Peñas
  7. Representation and regional redistribution in federations By Tiberiu Dragu; Jonathan Rodden
  8. The historical relationship between inflation and political rebellion, and what it might teach us about neoliberalism By Cohen, Joseph N; Linton, April
  9. Parliamentary Election Cycles and the Turkish Banking Sector By Christopher F. Baum; Mustafa Caglayan; Oleksandr Talavera

  1. By: Vjollca Sadiraj (Georgia State University); Jan Tuinstra (University of Amsterdam); Frans van Winden (University of Amsterdam)
    Abstract: Interest groups are introduced in a spatial model of electoral competition between two political parties. We show that, by coordinating voting behavior,these interest groups increase the winning set, which is defined as the set of policy platforms for the challenger that will defeat the incumbent. Therefore interest groups enhance the probability of the challenger winning the election.
    Keywords: Spatial voting models; electoral competition; winning set; interest groups
    JEL: D71 D72
    Date: 2009–11–11
  2. By: Nunez Matias (THEMA, Universite de Cergy-Pontoise)
    Abstract: Approval Voting is shown to be the unique scoring rule that leads strategic voters to sincere behavior of three candidates elections in Poisson Games. However, Approval Voting can lead to insincere behavior in elections with more than three candidates.
    Keywords: Sincerity, Approval Voting, Scoring rules, Poisson Games
    JEL: D72
    Date: 2010
  3. By: Andreas P. Kyriacoua (Departament d’Economia, Universitat de Girona); Oriol Roca-Sagalésb (Departament d’Economia Aplicada, Universitat Autònoma de Barcelona)
    Abstract: In this paper we apply both cross-section and panel analysis to the relationship between fiscal and political decentralization and government quality. We find that fiscal decentralization has a positive impact. Moreover, political decentralization tends to reduce the positive impact of fiscal decentralization on the quality of government. This negative impact of political decentralization on government quality persists when controlling for the degree of democratic maturity of countries but disappears when controlling for the extent of experience with statehood or public administration. This suggests that it is more affordable, in terms of government quality, to combine fiscal and political decentralization in countries with a long history of statehood.
    Keywords: Quality of government, fiscal decentralization, political decentralization, democratic maturity, cross-section and panel data
    Date: 2010–02–01
  4. By: Jordi Jofre-Monseny (University of Passau); Martin Wimbersky (University of Munich)
    Abstract: We study voting over higher education finance in an economy with risk averse households who are heterogeneous in income. We compare four different systems and analyse voters' choices among them: a traditional subsidy scheme, a pure loan scheme, income contingent loans and graduate taxes. Using numerical simulations, we find that majorities for income contingent loans or graduate taxes become more likely as the income distribution gets more equal. We also perform sensitivity analyses with respect to risk aversion and the elasticity of substitution between high skilled and low skilled workers.
    Keywords: Voting, higher education, financing scheme
    JEL: H52 H42 D72
    Date: 2010
  5. By: Lena Calahorrano (RWTH Aachen University)
    Abstract: This paper analyzes how population aging affects immigration policy in rich industrialized countries. It sets up a two-period model of a representative democracy with two overlapping generations. The government’s preferred immigration rate increases with the share of retirees in the population. The paper differentiates between an economy without a pension system and one with pay-as-you-go pensions. As immigrants have more children than natives, the chosen immigration rate is contingent on the design of the pension system. If pension contributions and benefits are set freely by the government, equilibrium immigration is lower than it is in the absence of a pension system. On the contrary, it is higher if the pension level is fixed ex ante to a relatively generous level, since native workers then benefit from sharing the burden of pension contributions with the immigrants.
    Keywords: Demographic Change, Political Economy, Immigration Policy
    JEL: J1 D78 F22
    Date: 2010
  6. By: Ignacio Lago-Peñas (Universitat Pompeu Fabra, Department of Social and Political Sciences); Santiago Lago-Peñas (REDE, IEB, and University of Vigo)
    Abstract: Based on a sample of 227 elections in seventeen Western European countries over the period of 1945-1998, this paper examines to what extent party systems are shaped by fiscal and political decentralization. With the exception of a few special cases, empirical evidence does not support the existence of a robust relationship between the degree of decentralization and the nationalization of party systems.
    Keywords: Decentralization, federalism, nationalization, party systems.
    Date: 2010–02–01
  7. By: Tiberiu Dragu (University of Illinois); Jonathan Rodden (Stanford University)
    Abstract: This paper examines the role of institutions of territorial representation in shaping long-term patterns of inter-regional redistribution within federations. A simple legislative bargaining model with endogenous taxation suggests that over-represented states should be favored in the distribution of inter-governmental grants regardless of their income level. We demonstrate that a striking relationship between legislative representation and grants holds up in a diverse group of federations from around the world. The relationship appears not to be an artifact of economic development, population size, population density, or the historical conditions under which the federal bargain was struck. Furthermore, we suggest that the attractiveness of poor states as coalition partners implies that intergovernmental transfer systems will often tend toward progressivity under equal apportionment, but the systematic over-representation of wealthy (or poor) states can undermine (or bolster) this logic.
    Keywords: Redistribution, federalism, intergovernmental transfers, malapportionment
    JEL: D72 D78 H77
    Date: 2010
  8. By: Cohen, Joseph N; Linton, April
    Abstract: Chronic inflation is argued to be politically destabilizing. We examine data on inflation and political instability that goes as far back as 500 years. Although the behavior of both prices and political rebellion have changed over these five centuries, and enduring relationship between price and political destabilization appears in our analyses. This relationship may provide insight into the context from which neoliberalism emerged, potential reasons for its failure, and some of the key dilemmas upon which the post-2008 global economic order may hinge
    Keywords: inflation; political instability; long-run history;
    JEL: E31 N2 N4
    Date: 2010–02
  9. By: Christopher F. Baum (Boston College; DIW Berlin); Mustafa Caglayan (University of Sheffield); Oleksandr Talavera (School of Economics, University of East Anglia)
    Abstract: This paper analyzes the effects of parliamentary election cycles on the Turkish banking system. Using annual bank-level data representing all banks in Turkey during 1963-2005, we find that there are meaningful differences in the structure of assets, liabilities and financial performance across different stages of the parliamentary election cycle. However, we find that government-owned banks operate similarly to both domestic and foreign-owned private sector banks before, during and after elections. Our estimates also show that government-owned banks underperform their domestic and foreign-owned private sector counterparts.
    Keywords: elections, state banks, domestic banks, foreign-owned banks, loans, interest rate margin
    JEL: G21 G28
    Date: 2010–04–21

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