nep-pol New Economics Papers
on Positive Political Economics
Issue of 2010‒12‒23
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Corruption, Voting and Employment Status: Evidence from Russian Parliamentary Elections By Olga Popova
  2. Strategy-proof voting rules on a multidimensional policy space for a continuum of voters with elliptic preferences By Peters Hans; Roy Souvik; Storcken Ton
  3. A political economy model of road pricing By Bruno DE BORGER; Stef PROOST
  4. A note on Fairness and Redistribution By Rafael Di Tella; Juan Dubra
  5. The political economy of fixed regional investment shares with an illustration for Belgian Railway investments By Stef PROOST; Vera ZAPOROZHETS
  6. Political leadership change: A theoretical assessment using a human capital ?learning by doing? model By Miguel Rocha de Sousa
  7. Does government ideology influence budget composition? Empirical evidence from OECD countries By Niklas Potrafke
  8. Decentralisation, Democracy and Allocation of Poverty Alleviation Programmes in Rural India By Takahiro Sato; Katsushi S. Imai
  9. Democracy, Foreign Direct Investment and Natural Resources By Elizabeth Asiedu; Donald Lien
  10. Independent Opinions? By Dietrich Franz; Spiekermann Kai
  11. Corruption Perceptions: the Trap of Democratization, a Panel Data Analysis By Thomas Roca; Eda Alidedeoglu-Buchner

  1. By: Olga Popova
    Abstract: This paper examines to what extent the distribution of votes and voting behavior of people with different employment status are affected by regional differences in corruption. Using data from the Russian Parliamentary (State Duma) Elections 1999 and 2003, I develop and estimate a SUR system of equations which takes into account specific features of the Russian electoral system. The paper distinguishes between hard and perceived measures of corruption and analyzes the effects of corruption on the voting shares of particular parties and on voters' participation in elections. Additionally, a series of Monte Carlo simulations are performed to analyze the effects of corruption on the distribution of votes.
    Date: 2010–12
  2. By: Peters Hans; Roy Souvik; Storcken Ton (METEOR)
    Abstract: We consider voting rules on a multidimensional policy space for a continuum of voters with elliptic preferences. Assuming continuity, y-strategy-proofness - meaning that coalitions of size smaller or equal to a small number y cannot manipulate - and unanimity, we show that such rules are decomposable into one-dimensional rules. Requiring, additionally, anonymity leads to an impossibility result. The paper can be seen as an extension of the model of Border and Jordan (1983) to a continuum of voters. Contrary, however, to their finite case where single voters are atoms, in our model with nonatomic voters even a small amount of strategy-proofness leads to an impossibility.
    Keywords: microeconomics ;
    Date: 2010
  3. By: Bruno DE BORGER; Stef PROOST
    Abstract: In this paper, we take a political economy approach to study the introduction of urban congestion tolls, using a simple majority voting model. Making users pay for external congestion costs is for an economist an obvious reform, but successful introductions of externality pricing in transport are rare. The two exceptions are London and Stockholm that are characterized by two salient facts. First, the toll revenues were tied to improvements of public transport. Second, although a majority was against road pricing before it was actually introduced, a majority was in favor of the policy reform after its introduction. This paper constructs a model to explain these two aspects. Using a stylized model with car and public transport, we show that it is easier to obtain a majority when the toll revenues are used to subsidize public transport than when they are used for a tax refund. Furthermore, introducing idiosyncratic uncertainty for car substitution costs, we can explain the presence of a majority that is ex ante against road pricing and ex post in favor. The ex ante majority against road pricing also implies that there is no majority for organizing an experiment that would take away the individual uncertainty.
    Date: 2010–06
  4. By: Rafael Di Tella (Harvard Business School, Business, Government and the International Economy Unit); Juan Dubra (Universidad de Montevideo)
    Abstract: We note some problems in Alesina and Angeletos (2005) and suggest a way to maintain the key insight of that paper, which is that a demand for fairness could lead to different economic systems such as those observed in France versus the US (multiple equilibria).
    Keywords: Inequality, taxation, redistribution, political economy.
    JEL: D31 E62 H2 P16
    Date: 2010–12
    Abstract: Many local public goods are allocated by federal governments using fixed regional shares: every region is entitled a fixed share of the total budget for a particular type of public good. This paper compares this fixed regional sharing rule with two alternative allocation rules: first best and common pool allocation. We find that the fixed regional sharing rule performs relatively well if the regional shares are reasonable. Legislative bargaining theory is used to study the determination of the fixed regional shares.
    Keywords: local public goods, political economy, railways
    JEL: H41 H77 L9
    Date: 2010–02
  6. By: Miguel Rocha de Sousa (Universidade de Évora, Departmento de Economia e NICPRI-UE)
    Abstract: We present an economic growth model with human capital, based upon Arrow (1962), in which we assess the impact of political leadership change either in governments or political parties. The change of leadership might be seen as a change in embedded human capital, and thus we might evaluate the loss or gain for society due to these political activities. The approach is theoretical using Arrowian economic setting. We formulate the conditions in which it is worth it, or how long does it take to recover from a political leadership change. The embedded process is an economic one, known as ?learning by doing?, but this time applied to political processes.
    Keywords: Arrow?s model, Human capital, Learning by doing (LBD), Political leadership, Rotation of leaders, Time to recover from political leadership change
    JEL: J24 O41
    Date: 2010
  7. By: Niklas Potrafke (Department of Economics, University of Konstanz, Germany)
    Abstract: This paper examines whether government ideology has influenced the allocation of public expenditures in OECD countries. I analyze two datasets that report different expenditure categories and cover the time periods 1970-1997 and 1990-2006, respectively. The results suggest that government ideology has had a rather weak influence on the composition of governments’ budgets. Leftist governments, however, increased spending on “Public Services” in the period 1970-1997 and on “Education” in the period 1990-2006. These findings imply, first, that government ideology hardly influenced budgetary affairs in the last decades, and thus, if ideology plays a role at all, it influences non-budgetary affairs. Second, education has become an important expenditure category for leftist parties to signal their political visions to voters belonging to all societal groups.
    Keywords: budget composition, public expenditures, government ideology, partisan politics, education policy, panel data
    JEL: D72 H50 H61 I28 C23
    Date: 2010–12–13
  8. By: Takahiro Sato; Katsushi S. Imai
    Abstract: This paper investigates the effect of the devolution of power to the village level government on the household-level allocation of poverty alleviation programmes, drawing upon National Sample Survey data and the Election Commission’s election data. First, greater inequality in land-holdings and less competition between the two major political parties generally lead to less provision of the poverty alleviation programmes. Second, the disadvantaged groups were not necessarily likely to be the primary beneficiaries of the poverty alleviation programmes. Third, our results based on the natural experiment approach suggest that decentralisation did not lead to wider household access to poverty alleviation programmes during the 1990s. Our results imply the possibility that the power and resources were captured by the local elite after decentralisation, that is, decentralisation did not necessarily contribute to the improvement of the welfare of the socially disadvantaged groups.
    Date: 2010
  9. By: Elizabeth Asiedu (Department of Economics, The University of Kansas); Donald Lien (Department of Economics, University of Texas, San Antonio)
    Abstract: Existing studies assume that the impact of democracy on FDI is the same for re- source exporting and non-resource exporting countries. This paper examines whether natural resources alter the relationship between FDI and democracy. We estimate a linear dynamic panel-data model using data from 112 developing countries over the period 1982-2007, and we .nd that there is some critical value of the share of miner- als and oil in total exports below which democracy enhances FDI, and above which democracy reduces FDI. We identify 90 countries where an expansion of democracy may enhance FDI and 22 countries where an increase in democratization may reduce FDI.
    Keywords: Democracy, Foreign Direct Investment, Natural Resources.
    JEL: F23 D72
    Date: 2010–12
  10. By: Dietrich Franz; Spiekermann Kai (METEOR)
    Abstract: Democratic decision-making is often defended on grounds of the ''wisdom of crowds'': decisions are more likely to be correct if they are based on many independent opinions, so a typical argument in social epistemology. But what does it mean to have independent opinions? Opinions can be probabilistically dependent (threatening the ''wisdom of crowds'') even if individuals form their opinion in causal isolation from each other. We distinguish four probabilistic notions of opinion independence. Which of them holds depends on how individuals are causally affected by environmental factors such as commonly perceived evidence. In a general theorem, we identify causal conditions guaranteeing each kind of opinion independence. These results have implications for whether and how ''wisdom of crowds'' arguments are possible, and how truth-conducive institutions can be designed.
    Keywords: mathematical economics;
    Date: 2010
  11. By: Thomas Roca (GED, Université Montesquieu Bordeaux IV); Eda Alidedeoglu-Buchner (Université Paris Dauphine)
    Abstract: L’indice de perception de la corruption de Transparency International (TI) est le plus célèbre des indicateurs de corruption depuis sa première publication, en 1995. Cet indicateur est également considéré comme la plus robuste des mesures de ce fléau. Cependant, puisque il s’agit précisément d’un indicateur basé sur des perceptions, il connait certaines limites. Bien que Transparency International appelle inlassablement à une utilisation plus prudente de ses indicateurs, les décideurs continuent de lui prêter un rôle d’outil d’aide à la prise de décision. Nous avions isolé, dans un article précédent, le rôle joué par les médias dans les perceptions de la corruption. Nous avions suggéré que les jeunes démocraties puissent être pénalisées par l’indicateur phare de Transparency International. En effet, nous avions montré que l’ouverture des médias conduisait à une meilleure couverture des actes de corruption, entrainant avec elle une plus forte perception de la corruption déjà existante, mais non révélée. Notre article précédent utilisait des données en coupe transversale. Dans un souci d’amélioration de la robustesse et de la précision de l’analyse précédemment menée, nous avons collecté des séries temporelles afin d’entreprendre une analyse en données de panel. Dans ce nouvel article, nous analysons le lien entre démocratie et perceptions de la corruption à la lueur d’un possible biais d’ouverture des régimes en place, biais que nous avions qualifié de « réflectif ». The Corruption Perception Index (CPI) is the most famous corruption evaluation since its first publication by Transparency International (TI), in 1995. This index is also considered the most robust measure of corruption perceptions. However, since it precisely refers to perceptions, it inevitably faces some limitations. Although Transparency International continuously advocates for a better use of its indexes, policy makers keep using the CPI as a decision making tool. In a previous article we isolated the role played by the media in corruption perceptions. We previously suggested that young democracies were penalized by Transparency International. Indeed, we showed that media aperture leads to a better coverage of corruption deeds and therefore drives a stronger perception of already existing - but not yet broadcasted - corruption. Our previous paper was using cross-section data. Pursuing more consistent evidence and robustness improvement, we collected time series to perform a panel data analysis, questioning the stability and precision of our earlier findings. In this new paper, we investigate the link between democracy and corruption perceptions, in the light of a possible opening bias, we already called “reflective bias”. (Full text in french)
    JEL: O11 O17 O19
    Date: 2010–12

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