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on Positive Political Economics |
| By: | Dan Usher (Queen's Unversity) |
| Abstract: | Government by majority rule voting requires that compromise be attainable, but not too easily. Little of the nation’s business could be transacted without an ability on the part of the legislators and political parties to strike bargains, but government by majority rule voting could not withstand a bargaining equilibrium comparable to the general equilibrium in a competitive economy. Democratic government is designed to foster bargaining where it should be fostered and to impede bargaining where it should be impeded. |
| Keywords: | Bargaining, Majority rule voting |
| JEL: | C70 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1245&r=pol |
| By: | Alessandra Bonfiglioli; Gino Gancia |
| Abstract: | This paper formalizes in a fully-rational model the popular idea that politicians perceive an electoral cost in adopting costly reforms with future benefits and reconciles it with the evidence that reformist governments are not punished by voters. To do so, it proposes a model of elections where political ability is ex-ante unknown and investment in reforms is unobservable. On the one hand, elections improve accountability and allow to keep well-performing incumbents. On the other, politicians make too little reforms in an attempt to signal high ability and increase their reappointment probability. Although in a rational expectation equilibrium voters cannot be fooled and hence reelection does not depend on reforms, the strategy of underinvesting in reforms is nonetheless sustained by out-of-equilibrium beliefs. Contrary to the conventional wisdom, uncertainty makes reforms more politically viable and may, under some conditions, increase social welfare. The model is then used to study how political rewards can be set so as to maximize social welfare and the desirability of imposing a one-term limit to governments. The predictions of this theory are consistent with a number of empirical regularities on the determinants of reforms and reelection. They are also consistent with a new stylized fact documented in this paper: economic uncertainty is associated to more reforms in a panel of 20 OECD countries. |
| Keywords: | Elections, Reforms, Asymmetric Information, Uncertainty. |
| JEL: | E6 H3 |
| Date: | 2010–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:aub:autbar:847.10&r=pol |
| By: | Marta Curto-Grau (Universitat de Barcelona & IEB); Alfonso Herranz-Loncán (Universitat de Barcelona); Albert Solé-Ollé (Universitat de Barcelona & IEB) |
| Abstract: | This paper examines the extent to which the public allocation of road investment was influenced by political and electoral goals during the Spanish Restoration (1874-1923). More precisely, we seek to identify those provinces that were favoured with higher road construction expenditure and whether tactical strategies adopted by the political parties varied over time to reflect increasing political competition. In so doing, this paper combines concepts from three strands of literature: legislative pork-barrel; clientelism and machine politics; and electoral competition. Our main empirical finding for a panel of Spain’s provinces suggests that constituencies electing a higher proportion of deputies from minority or opposition parties were initially punished through lower levels of road investment but that, by the end of the period, they were instead favoured with more resources than the rest. In addition, we also observe that senior deputies who had been ministers in previous administrations were more capable than other politicians of attracting resources to their constituencies |
| Keywords: | Road investment, distributive politics, electoral competition, vote buying |
| JEL: | H54 P16 D72 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2010/10/doc2010-22&r=pol |
| By: | Rodrigo Martins (Faculdade de Economia, Universidade de Coimbra); Francisco José Veiga (Universidade do Minho - NIPE) |
| Abstract: | This paper analyses the impact of economic conditions on Portuguese local electoral outcomes. We use two extensive datasets to estimate an economic voting model which accounts for the possibility that different levels of government have different levels of responsibility for economic outcomes and for clarity of government responsibility. Empirical results indicate that the performance of the national economy is important especially if local governments are of the same party as the central government. The municipal situation is also relevant particularly in scenarios of higher clarity of government responsibility. |
| Keywords: | Local governments, Elections, Portugal, Voting, Economic conditions |
| JEL: | D72 H7 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:33/2010&r=pol |
| By: | Roland Hodler; Paul Raschky |
| Abstract: | To study whether foreign aid fuels personal, regional and ethnic favoritism, we use satellite data on nighttime light for any region in any aid-recipient country, and we determine for each year and each country the region in which the current political leader was born. Having a panel with 22,850 regions in 91 aid recipient countries with yearly observations from 1992 to 2005, we compare the effect of foreign aid on nighttime light across regions. We find that in countries with poor political institutions, this effect is significantly higher in the region in which the current political leader was born than in other regions. This finding suggests that a disproportionate share of foreign aid ends up in the leader's birth region, and we argue that it supports the view that foreign aid fuels favoritism, broadly defined. We find no such difference in aid-recipient countries with sound political institutions. |
| Keywords: | Foreign aid; Political leaders; Favoritism; Political institutions |
| JEL: | C23 D73 F35 O11 |
| Date: | 2010–05 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2010-54&r=pol |
| By: | Benitez, Daniel; Estache, Antonio; Soreide, Tina |
| Abstract: | Policy recommendations for infrastructure provision usually build on a well-established understanding of best practice for sector governance. Too rarely are they adapted to the country-specific political environment even if this is an area where policy choices are likely to be subject to private agendas in politics. The fact that such private agendas are often ignored goes a long way toward explaining why infrastructure policies fail and why best practice can be counterproductive. While non-benevolence and rent-seeking are well described in the literature and anecdotes abound, there is only limited consideration of how the different incentive problems in politics impede policy improvements in infrastructure. This paper addresses why politics in infrastructure cannot be ignored, drawing on theoretical results and a systematic review of experiences. It reviews how different private agendas in politics will have different impacts for sector-governance decisions -- and hence service delivery. The concept of best practice in policy recommendations should be reconsidered in a wide perspective and allow for tailored solutions based on an understanding of the given incentive problems. Policy recommendations should take into account how coordination trade-offs may complicate efforts to reduce the possible impact of private agendas on infrastructure policy decisions. Although more transparency linked to service delivery indicators is a"safe"recommendation, it is also clear that the demand for good governance will not be sufficient to secure political accountability in a sector with huge vested interests combined with complicated funding schemes and complex contracts. |
| Keywords: | Public Sector Corruption&Anticorruption Measures,National Governance,Governance Indicators,Environmental Economics&Policies,Transport Economics Policy&Planning |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5455&r=pol |
| By: | Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Alexander James (University of Wyoming - Department of Economics and Finance); Stephane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Jason Shogren (Departement Economy and Finance, University of Wyoming - University of Wyoming) |
| Abstract: | Herein we explore whether a solemn oath can eliminate hypothetical bias in a voting referenda, a design commonly promoted in nonmarket valuation exercises for its incentive compatibility properties. First, we reject the null hypothesis that a hypothetical bias does not exist. Second, we cannot reject the hypothesis that people who sign an oath are as likely to vote for the public good (e.g., wind energy R&D) in a hypothetical referenda as in a real one. This result opens interesting avenues for improving the elicitation of preferences in the lab. |
| Keywords: | Dichotomous Choice Mechanism; Hypothetical bias; Oath; Preference revelation |
| Date: | 2010–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00490448_v1&r=pol |