nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒01‒23
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Media and Political Persuasion: Evidence from Russia By Ruben Enikolopov; Maria Petrova; Ekaterina Zhuravskaya
  2. Economic Growth and the Rise of Political Extremism By Markus Brückner; Hans Peter Grüner
  3. Oil Rents, Corruption, and State Stability: Evidence from Panel Data Regressions By Rabah Arezki; Markus Brückner
  4. Endogenous growth in a model with heterogeneous agents and voting on public goods By Kirill Borissov; Alexander Surkov
  5. Brazilian 2010 presidential election: psychometric scaling of voting intention By Isabel Marques; Rodrigo Peñaloza
  6. Politicians, Bureaucrats and Targeted Redistribution: The Role of Career Concerns By Ruben Enikolopov
  7. Voting by Ballots and Feet in the Laboratory By Alessandro Innocenti; Chiara Rapallini
  8. Can the economic impact of political decentralisation be measured? By Roberto Ezcurra; Andrés Rodríguez-Pose
  9. Immigration and voting on the size and the composition of public spending By Karin Mayr
  11. Beyond "position" and "valence". A unified framework for the analysis of political issues By Lorenzo De Sio
  12. Food Prices, Conflict, and Democratic Change By Rabah Arezki; Markus Brückner
  13. Commodity Windfalls, Democracy, and External Debt By Rabah Arezki; Markus Brückner
  14. What Anti-Corruption Policy Can Learn from Theories of Sector Regulation By Antonio Estache; Liam Wren-Lewis
  15. Is Democracy Good for the Environment? Quasi-Experimental Evidence from Regime Transitions By Laura Policardo

  1. By: Ruben Enikolopov (New Economic School (Moscow)); Maria Petrova (New Economic School (Moscow)); Ekaterina Zhuravskaya (Paris School of Economics and New Economic School)
    Abstract: This paper compares electoral outcomes of 1999 parliamentary elections in Russia among geographical areas with differential access to the only independent from the government national TV channel. It was available to three-quarters of Russia’s population and its signal availability was idiosyncratic conditional on observables. Independent TV decreased aggregate vote for the government party by 8.9 percentage points, increased the combined vote for major opposition parties by 6.3 percentage points, and decreased turnout by 3.8 percentage points. The probability of voting for opposition parties increased for individuals who watched independent TV even controlling for voting intentions measured one month before elections.
    JEL: J0 D0 H0
    Date: 2010–12
  2. By: Markus Brückner (School of Economics, University of Adelaide); Hans Peter Grüner (University of Mannheim and CEPR)
    Abstract: In many western democracies, political parties with extreme platforms challenge more moderate incumbents. This paper analyses the impact of economic growth on the support for extreme political platforms. We provide a theoretical argument in favor of growth effects (as opposed to level effects) on the support for extreme political parties and we empirically investigate the relationship between growth and extremist votes. Lower growth rates benet right-wing and nationalist parties, but do not have a robust positive eect on the support for communist parties. Our estimates indicate that extreme political platforms are unlikely to gain majorities in OECD countries, unless there is an extreme drop in the GDP per capita growth rate.
    Keywords: political regimes, political extremism, economic growth
    JEL: O40 O52 P16
    Date: 2011–01
  3. By: Rabah Arezki (International Monetary Fund (IMF)); Markus Brückner (School of Economics, University of Adelaide)
    Abstract: We examine the effects of oil rents on corruption and state stability exploiting the exogenous within-country variation of a new measure of oil rents for a panel of 30 oil-exporting countries during the period 1992 to 2005. We find that an increase in oil rents significantly increases corruption, significantly deteriorates political rights while at the same time leading to a significant improvement in civil liberties. We argue that these findings can be explained by the political elite having an incentive to extend civil liberties but reduce political rights in the presence of oil windfalls to evade redistribution and conflict. We support our argument documenting that there is a significant effect of oil rents on corruption in countries with a high share of state participation in oil production while no such link exists in countries where state participation in oil production is low.
    Keywords: oil rents; corruption; state stability; state participation
    JEL: C33 D73 D74 D72 H21
    Date: 2011–01
  4. By: Kirill Borissov; Alexander Surkov
    Abstract: We consider a Barro-type endogenous growth model in which the government's purchases of goods and services enter into the production function. The provision of government services is financed by flat-rate (linear) income or lump-sum taxes. It is assumed that individuals differing in their discount factors vote on the tax rates. We propose a concept of voting equilibrium leading to some versions of the median voter theorem for steady-state equilibria, fully characterize steady-state equilibria and show that if the median voter discount factor is sufficiently low, the long-run rate of growth in the case of flat-rate income taxation is higher than that in the case of lump-sum taxation.
    Keywords: economic growth, taxation, voting
    JEL: O40 D91 H21 H24 H31 P16
    Date: 2010–08–04
  5. By: Isabel Marques (Confederação Nacional da Indústria (CNI)); Rodrigo Peñaloza (Departamento de Economia (Department of Economics) Faculdade de Economia, Administração, Contabilidade e Ciência da Informação e Documentação (FACE) (Faculty of Economics, Administration, Accounting and Information Science) Universidade de Brasília)
    Abstract: We apply the Thurstone method of unidimensional psychometric scaling to data sampled by CNI/IBOPE in three di¤erent periods before the Brazilian presidential election in 2010 regarding voting intention with respect to the main three candidates. Our results coincide with the overall rank of the candidates in each period and with the switch between the two main candidates in the last quarter before the election.
    Date: 2011–01
  6. By: Ruben Enikolopov (New Economic School (Moscow))
    Abstract: Stronger career concerns induce appointed bureaucrats to adopt different policies than elected politicians. In particular, bureaucrats are less likely to use targeted redistribution to achieve personal political goals. I use the example of patronage jobs in local governments in the United States to provide empirical support for this claim. I show that the number of full-time public employees is signi?cantly higher in local governments with elected chief executives. This difference increases during election years. In addition, consistent with the notion that career concerns are especially strong for young bureaucrats, I ?nd that the number of full-time public employees increases with the age of appointed chief executives. There is no such relationship in the case of elected chief executives.
    Date: 2010–09
  7. By: Alessandro Innocenti; Chiara Rapallini
    Abstract: This paper provides laboratory evidence on the efficiency-enhancing properties of the Tiebout model as a decentralized system of public goods provision. Tiebout (1956) shows that if a sufficient number of local communities exist to accommodate different types of preferences, individuals sort themselves in a way that provides an efficient allocation of public goods and taxes. Our experiment aims to disentangle the effect of voting participation and is composed of two treatments. In the non-participation treatment, local public good provision is chosen by only one subject, while the other members of the community can only stay in or move to another community. In the participation treatment, all the community members have the right to vote as well as to move to another community and collective decisions are taken by majority rule. Our findings show that social welfare is greater in the participation than in the non-participation treatment. We conclude that voting with one’s feet increases efficiency if all the community members vote and that the influence of voting participation on the allocation of local public goods should be taken into account to assess the viability of the Tiebout model.
    Keywords: Tiebout model, local public goods, voting participation, federalism, experiment.
    JEL: C91 H41 C92 D23
    Date: 2011–01
  8. By: Roberto Ezcurra (Universidad Pública de Navarra); Andrés Rodríguez-Pose (IMDEA Social Sciences Institute)
    Abstract: This paper examines whether, given the increasing salience of subnational governments, political decentralisation has an impact on overall economic performance. It uses panel data analyses in order to determine the association between a number of the different indices of political decentralisation developed over the last decade and a half with two basic measures of economic performance: changes in aggregate GDP per head and the evolution of within country territorial inequalities. The results highlight that, in the case of economic growth, the perception we may have of how political decentralisation affects economic performance is highly contingent on the index we use, with results ranging from a mildly positive to a neutral influence of political decentralisation on economic growth. For regional inequalities, political decentralisation seems to lead to a rise in disparities, regardless of how political decentralisation is measured.
    Keywords: political decentralisation; economic growth; regional disparities; regions; Europe
    JEL: H70 R11 R59
    Date: 2011–01–05
  9. By: Karin Mayr
    Abstract: This paper develops a model to analyze the effects of immigration by skill on the outcome of a majority vote among natives on both the size as well as the composition of public spending. Public spending can be of two types, spending on rival goods (transfers) and on non-rival goods (public goods). I find that relative preferences for the different types of public spending are crucial for the effects of immigration. In particular, immigrants of either skill can increase (decrease) the size of total public spending, if natives have a relative preference for spendingon public goods (spending on transfers). I provide some illustration of potential relative spending preferences in OECD countries using panel data for 1980 - 2010.
    JEL: F2 H4 H5
    Date: 2010–10
  10. By: Vladimir Hlasny
    Abstract: Causes and consequences of deregulation and restructuring in utility markets in US states continue to draw heated debate. It is unclear why different utilities choose retail restructuring, price caps or sliding-scale plans. Various economic and political reasons lend themselves to explaining regulatory decisions. This study uses a stylized capture model to formulate predictions about regulators’ net benefits from a particular form of deregulation. Empirical hazard model evaluates the revealed choice at each regulator-utility pair. Among state-level political factors, frequency and timing of commissioner re-elections, system of selection of commissioners, and party composition of the commissions and state legislatures are significant in explaining the pattern of deregulation. Utilities’ prices, capacity and scope of operations help explain the timing of deregulation. Market concentration contributes. A negative significant association between the prevalence of restructuring (and sliding-scale plans), and of price caps across utility industries is identified.
    Keywords: gas, deregulation, restructuring, commissioner elections, hazard model
    JEL: L51 L95
    Date: 2010–12
  11. By: Lorenzo De Sio
    Abstract: Starting from a review of models of positional and valence issues, the paper – by tapping into the original definition of valence issue – introduces a classification of issues based on their level of overall, dychotomic agreement. This allows the placement of both positional and valence issues on a same continuum. A second dimension is then introduced, which identifies how much specific issues are over- or undersupported within a specific party. A visual classification of issues based on these two dimensions (the AP diagram) is then introduced, highlighting risks and opportunities for a party in campaigning on specific issues. Specific indicators (namely, issue yield) and hypotheses derived from the AP model are tested on survey data from the EU Profiler project, which collected issue profiles of Internet users from the 27 EU Countries before the EP 2009 Elections. The results show that the suggested dimensions and indicators identify a wide cross-country and cross-issue variance. Also, indicators generated by the AP model are powerful predictors of issue saliency, even subsuming traditional Downsean indicators.
    Keywords: political issues; valence; position; party competition; European elections
    Date: 2010–10–26
  12. By: Rabah Arezki (International Monetary Fund (IMF)); Markus Brückner (School of Economics, University of Adelaide)
    Abstract: We examine the effects that variations in the international food prices have on democracy and intra-state conflict using panel data for over 120 countries during the period 1970-2007. Our main finding is that in Low Income Countries increases in the international food prices lead to a significant deterioration of democratic institutions and a significant increase in the incidence of anti-government demonstrations, riots, and civil conflict. In the High Income Countries variations in the international food prices have no significant effects on democratic institutions and measures of intra-state conflict. Our empirical results point to a significant externality of variations in international food prices on Low Income Countries' social and political stability.
    Keywords: food prices, conflict, political institutions
    JEL: F34 H63 O13 P16 Q33 Q38
    Date: 2011–01
  13. By: Rabah Arezki (International Monetary Fund (IMF)); Markus Brückner (School of Economics, University of Adelaide)
    Abstract: We examine the effects that revenue windfalls from international commodity price booms have on external debt in a panel of 93 countries during the period 1970-2007. Our main finding is that increases in the international prices of exported commodity goods lead to a significant reduction in the level of external debt in democracies, but to no significant reduction in the level of external debt in autocracies. To explain this result, we show that in autocracies commodity windfalls lead to a statistically significant and quantitatively large increase in government expenditures. In democracies on the other hand government expenditures did not increase significantly. We also document that following commodity windfalls the risk of default on external debt decreased in democracies, but increased significantly in autocracies.
    Keywords: commodity windfalls, debt, political institutions
    JEL: F34 H63 O13 P16 Q33 Q38
    Date: 2011–01
  14. By: Antonio Estache; Liam Wren-Lewis
    Abstract: This paper reviews the theories of corruption in regulated sectors to further understand the impact of corruption and the ways in which it can be reduced. The aim is to draw out the policy implications of the different theoretical approaches and to examine the support that can be garnered for such policies from empirical evidence and practice. We then attempt to draw out some of the broader lessons that can be learnt for anti-corruption policy in general.
    Date: 2010–09
  15. By: Laura Policardo
    Abstract: This paper tests the hypothesis that democratisation is conducive to less environmental depletion due to human activity. Using Interrupted Time Series (ITS) design for a panel of 47 transition countries and two indexes of pollution, CO2 emissions and PM10 concentrations, I find that democracies and dictatorships have two different targets of environmental quality, with those of democracies higher than those of dictatorships. Income inequality may as well alter this targets, but with opposite effects in the two different regimes
    Keywords: Democracy; Environment; Cointegration; Interrupted Time Series; Segmented Regression
    JEL: C23 D31 H23 Q58 Q51
    Date: 2010–12

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