|
on Positive Political Economics |
| By: | Potrafke, Niklas |
| Abstract: | This paper examines whether electoral motives and government ideology influence short-term economic performance. I employ data on annual GDP growth in 21 OECD countries over the 1951-2006 period and provide a battery of empirical tests. In countries with two-party systems GDP growth is boosted before elections and, under leftwing governments, in the first two years of a legislative period. These findings indicate that political cycles are more prevalent in two-party systems because voters can clearly punish or reward political parties for governmental performance. My findings imply that we need more elaborate theories of how government ideology and electoral motives influence short-term economic performance. |
| Keywords: | political cycles, partisan politics, electoral motives, government ideology, short-term economic performance, panel data |
| JEL: | C23 O57 D72 |
| Date: | 2010–07–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23751&r=pol |
| By: | Markus Brückner; Antonio Ciccone |
| Abstract: | According to the economic approach to political transitions, transitory negative economic shocks can open a window of opportunity for democratic improvement. Testing the theory requires a source of transitory shocks to the aggregate economy. We use rainfall shocks in Sub-Saharan African countries and find that negative rainfall shocks are followed by significant improvement in democratic institutions. Instrumental variable estimates indicate that following a transitory negative income shock of 1 percent, democracy scores improve by 0.9 percentage points and the probability of a democratic transition increases by 1.3 percentage points. |
| Keywords: | democratization, transitory economic shocks |
| JEL: | O0 P0 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:bbv:wpaper:1010&r=pol |
| By: | Paulo Reis Mourão (Universidade do Minho - NIPE); Linda Gonçalves Veiga (Universidade do Minho - NIPE) |
| Abstract: | This paper tests the joint hypotheses that policymakers engage in fiscal policy opportunism and that voters respond by rewarding that opportunism with higher vote margins. Furthermore, it investigates the impact of fiscal illusion on the previous two dimensions. Empirical results, obtained with a sample of 68 countries from 1960 to 2006, reveal that opportunistic measures of expenditures and revenues generate larger winning margins for the incumbent and that the opportunistic manipulation of fiscal policy instruments is larger when the current government is less likely to be reelected. Furthermore, fiscal illusion contributes to the entrenchment of incumbent policymakers in office and promotes opportunistic behaviour. |
| Keywords: | fiscal policy, voting, opportunism, fiscal illusion |
| JEL: | D7 E6 H3 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:18/2010&r=pol |
| By: | Hubert Kempf (Centre d'Economie de la Sorbonne - Paris School of Economics et Banque de France); Stéphane Rossignol (LIRAES - Université Paris Descartes et Centre d'Economie de la Sorbonne) |
| Abstract: | International agreements about transnational issues are difficult to reach, as the examples of the Copenhagen summit or the never-ending discussions of the future of the European Union make clear. In this paper, we relate this difficulty to the political process and the conflicts of interest attached to an agreement, both within and between national electorates, related to national income distributions. We set up a political economy model of a two-country world economy, where an international agreement on the financing of an international public good has to be negociated by two elected national delegates. We prove that any international agreement involves higher taxes in both countries than in the case of no-agreement. If reachable, an IA may generate losers in either country. If the political process involves a constraint on tax rates, an agreement may or may not be reached. Finally, when an agreement is reached, it may exhibit strategic delegation when the median voters are the Condorcet winners in both countries : this delegation is the outcome of the struggle by electorates to transfer the tax burden to the other country's taxpayers. In brief, the fate of an international agreements depends on national politics and distributive issues in the involved countries. |
| Keywords: | International agreements, bargaining, delegation, voting. |
| JEL: | D72 H77 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:10052&r=pol |
| By: | David Fielding; Anja Shortland |
| Abstract: | This paper uses a detailed database of political violence in Egypt to study European and US tourists' attitudes towards travelling to a conflict region. We use time series analysis to study the heterogeneous impacts of different dimensions of political violence and counter-violence on tourist flows to Egypt in the 1990s. We find that both US and EU tourists respond negatively to attacks on tourists, but do not appear to be influenced by casualties arising in confrontations between domestic groups. However, European tourists are sensitive to the counter-violence measures implemented by the Egyptian government. There is also evidence of tourism in Egypt being affected by the Israeli / Palestinian conflict, with arrivals of tourists into Egypt rising when fatalities in Israel increase. |
| Keywords: | Tourism, political violence, Egypt |
| JEL: | P48 L83 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1022&r=pol |
| By: | Dannenberg, Astrid; Lange, Andreas; Sturm, Bodo |
| Abstract: | The provision of public goods often relies on voluntary contributions and cooperation. While most of the experimental literature focuses on individual contributions, many real-world problems involve the formation of institutions among subgroups (coalitions) of players. International agreements serve as one example. This paper experimentally tests theory on the formation of coalitions in different institutions and compares those to a voluntary contribution mechanism. The experiment confirms the rather pessimistic conclusions from the theory: only few players form a coalition when the institution prescribes the full internalization of mutual benefits of members. Contrary to theory, coalitions that try to reduce the freeriding incentives by requiring less provision from their members, do not attract additional members. Substantial efficiency gains occur, however, both along the extensive and intensive margin when coalition members can each suggest a minimum contribution level with the smallest common denominator being binding. The experiment thereby shows that the acceptance of institutions depends on how terms of coalitions are reached. -- |
| Keywords: | public goods,institutions,coalition formation,cooperation |
| JEL: | C72 C92 D71 H41 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10037&r=pol |
| By: | Dartanto, Teguh |
| Abstract: | This research is conducted to quantitatively measure the relationship between corruption and public investment at municipalities’ level in Indonesia. According to Nash Equilibrium derived from mixed strategies, the relationship between corruption and public investment can be both positive and negative depending on the level of the corruption Index. Moreover, the econometric estimations from cross section data and pooled data consistently confirm that the relationship between corruption and public investment is in non linear quadratic form. It was found that the public investment reaches the lowest level when the corruption index ranges from 4.42-4.64. |
| Keywords: | Corruption; Public Investment; Game Theory; Regional Development |
| JEL: | H0 R11 C72 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:23736&r=pol |