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on Positive Political Economics |
| By: | Berliant, Marcus; Tabuchi, Takatoshi |
| Abstract: | We consider information aggregation in national and local elections when voters are mobile and might sort themselves into local districts. Using a standard model of private information for voters in elections in combination with a New Economic Geography model, agglomeration occurs for economic reasons whereas voter stratification occurs due to political preferences. We compare a national election, where full information equivalence is attained, with local elections in a three district model. A stable equilibrium accounting for both the economic and political sectors is shown to exist. Restricting to an example, we show that full information equivalence holds in only one of the three districts when transport cost is low. The important comparative static is that full information equivalence is a casualty of free trade. When trade is more costly, people tend to agglomerate for economic reasons, resulting in full information equivalence in the political sector. Under free trade, people sort themselves into districts, most of which are polarized, resulting in no full information equivalence in these districts. We examine the implications of the model using data on corruption in the legislature of the state of Alabama and in the Japanese Diet. |
| Keywords: | Information aggregation in elections; Informative voting; New economic geography; Local politics |
| JEL: | D82 D72 R12 |
| Date: | 2011–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29771&r=pol |
| By: | Hans Gersbach (ETH Zurich, Switzerland) |
| Abstract: | We present a model of elections in which interest group donations allow candidates to shift policy positions. We show that if donations were prohibited, then a unique equilibrium regarding the position choices of candidates would exist. With unrestricted financing of political campaigns two equilibria emerge, depending on whether a majority of interest groups runs to support the leftist or rightist candidate. The equilibria generate a variety of new features of campaign games and may help identify the objective functions of candidates empirically. |
| Keywords: | elections, campaign contributions, interest groups |
| JEL: | C72 D72 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:11-143&r=pol |
| By: | André, Pierre; Mesplé-Somps, Sandrine |
| Abstract: | The body of literature on purely democratic countries can sometimes fail to explain the behavior of government in semi-democratic African countries. Empirical and theoretical political economic papers find that public funds target ruling party supporters and swing districts. Our results, however, suggest that the opposite was true of Ghana. We observe that pro-government districts received less public investment when the NDC was in power. We posit that this finding is partially driven by the government's will to curry favor with opposition politicians. Indeed, in addition to pursuing its electoral objectives, the government of an emerging democracy may fear political instability and keep the lid on potential unrest by bargaining with opposition leaders. Our analysis also shows that, when controlling for votes and other covariates (including wealth, urbanization and density), public goods allocation is not driven by ethnic group targeting either. |
| Keywords: | Public goods, elections, ethnic, Africa, Ghana |
| JEL: | O1 D7 R11 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29873&r=pol |
| By: | Zudenkova, Galina |
| Abstract: | This paper studies party discipline in a congress within a political agency framework with retrospective voting. Party discipline serves as an incentive device to induce office-motivated congress members to perform in line with the party leadership's objective of controlling both the executive and the legislative branches of government. I show first that the same party is more likely to control both branches of government (i.e., unified government) the stronger the party discipline in the congress is. Second, the leader of the governing party imposes more party discipline under unified government than does the opposition leader under divided government. Moreover, the incumbents' aggregate performance increases with party discipline, so a representative voter becomes better off. |
| Keywords: | Party discipline; Political agency; Retrospective voting; Office-motivated politicians. |
| JEL: | D72 |
| Date: | 2011–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29890&r=pol |
| By: | Cervellati, Matteo; Fortunato, Piergiuseppe; Sunde, Uwe |
| Abstract: | This paper investigates the role of violent civil conflicts during the process of democratization for the quality of emerging democracies, and in particular, the protection of civil (political and economic) liberties. A simple theory in which different groups may engage in violent conflict in order to become the ruler predicts a crucial role of the democratization scenario. A peaceful democratization leads to democracies with a high degree of civil liberties, reflecting a social contract according to which all groups are politically represented and the rulers deliberately abstain from wasteful rent extraction. A transition to democracy under a violent conflict is less likely to lead to a system with a high degree of civil liberties. Empirical evidence from the third wave of democratization based on a difference-indifference methodology supports the theoretical predictions. The findings suggest that violent conflicts during the democratic transition have persistent negative effects on the quality of the emerging democracies. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2011:08&r=pol |
| By: | Fatica, Serena |
| Abstract: | Using survey data from a cross-section of European countries, this paper analyzes the determinants of individual support for a large government motivated by redistributive policies and for progressive tax schedules. Preferences for political redistribution, as well as fairness beliefs, aversion to equality and perceptions on the actual functioning, the sustainability and the effects - among which immigration - of the welfare system are found to significantly determine the demand for more generous benefits and higher taxes. Moreover, preferences for redistribution play an important role in shaping the attitudes toward progressive income taxation, in addition to self-interest calculus. Overall, these findings are revealing on the political feasibility of tax reforms, as well as of alternative measures to achieve fiscal consolidation - a relevant policy issue after the strains put by the recent financial and economic crisis on national budgets. |
| Keywords: | political redistribution; size of goverment; tax progressivity |
| JEL: | D63 H11 A13 H24 |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:29782&r=pol |
| By: | David M. McEvoy (Department of Economics, Appalachian State University); Todd L. Cherry (Department of Economics, Appalachian State University); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst) |
| Abstract: | This paper examines the endogenous formation of coalitions that provide public goods in which players implement a minimum participation requirement before deciding whether to join. We demonstrate theoretically that payoff-maximizing players will vote to implement efficient participation requirements and these coalitions will form. However, we also demonstrate that if some players are averse to inequality they can cause inefficient outcomes. Inequality-averse players can limit free riding by implementing larger than efficient coalitions or by blocking efficient coalitions from forming. We test the theory with experimental methods and observe individual behavior and coalition formation consistent with a model of inequality-averse players. |
| Keywords: | public goods, coalition formation, inequality aversion, participation requirement, experiments |
| JEL: | C92 H41 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:dre:wpaper:2011-2&r=pol |
| By: | Francisco J. Delgado (University of Oviedo); Santiago Lago-Peñas (REDE, IEB and University of Vigo); Matías Mayor (University of Oviedo) |
| Abstract: | This paper studies the determinants of local tax rates. For the two main local taxes in Spain - the property tax and the motor vehicle tax - we test the existence of tax mimicking, yardstick competition and political trends in a sample of 2,713 municipalities. Using different spatial models, the results support the hypothesis of tax mimicking, with coefficients over 0.40. We also show the relevance of political variables such as the ideology of the incumbents and political fragmentation. The fact that incumbents with weaker political support display stronger mimicking behaviour is interpreted as evidence in favour of yardstick competition. Finally, we find incumbents mimic neighbouring municipalities ruled by the same political party, confirming the political trends hypothesis. |
| Keywords: | Local taxation, tax mimicking, yardstick competition, political trends |
| JEL: | C31 H71 H77 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2011/3/doc2011-4&r=pol |
| By: | Siddhartha Bandyopadhyay; Bryan C McCannon |
| Abstract: | We examine if elections of public prosecutors (as is common in the U.S.) influence the way they handle cases. In particular, does it affect which cases are taken to trial? A theoretical model is constructed where voters use outcomes of the criminal justice system as a signal of prosecutor's quality. This leads to a distortion of the mix of cases they take to trial. Our results imply that when re-election pressures are high (i) prosecutors take too many cases to trial. This increases the number of convictions from trial and reduces the amount of plea bargaining so that (ii) the proportion of convictions stemming from trial increases. Consequently, (iii) the average sanction obtained in both jury trials and plea bargains decreases. A detailed dataset from North Carolina is used to identify empirical evidence of such distortions. Our empirical findsings verify that elections do affect the decision of which cases to take to trial and confirms our predictions. |
| Keywords: | elections, prosectutor, trials |
| JEL: | K41 D82 |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:11-08&r=pol |
| By: | J.W. Fedderke; I. Lourenco; F. Gwenhamo |
| Abstract: | This paper presents new institutional measures for Zambia. Coverage is of political rights and freedoms, of property rights, and of political instability. The sample period is from 1947 to 2007. Comparison of the indices with directly comparable Zimbabwean and Malawian series, shows strong sources of divergence in institutional conditions. The paper also considers interaction amongst the institutional measures, and between the institutional measures and measures of economic development. We find that there is an association among the institutional variables, with the various rights dimensions moving together, and being negatively associated with political instability. The evidence further suggests that the institutional measures are associated benevolently with economic development. In this sense the indicators of the present paper therefore conform to the precepts of the new institutional economics |
| Keywords: | Institutions, Political freedom, Property rights, Political Instability and Zambia |
| JEL: | K00 N4 O1 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:207&r=pol |
| By: | FURUSAWA Taiji; KONISHI Hideo |
| Abstract: | We consider a (pure) public goods provision problem with voluntary participation in a quasi-linear economy. We propose a new hybrid solution concept, the free-riding-proof core (FRP-Core), which endogenously determines a contribution group, public goods provision level, and how to share the provision costs. The FRP-Core is always nonempty in public goods economies but does not usually achieve global efficiency. The FRP-Core has support from both cooperative and noncooperative games. In particular, it is equivalent to the set of perfectly coalition-proof Nash equilibria (Bernheim, Peleg, and Whinston, 1987) of a dynamic game with players' participation decisions followed by a common agency game of public goods provision. |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11028&r=pol |
| By: | Skoufias, Emmanuel; Narayan, Ambar; Dasgupta, Basab; Kaiser, Kai |
| Abstract: | This paper takes advantage of the exogenous phasing of direct elections in districts and applies the double difference estimator to: (i) measure impacts on the pattern of public spending and revenue generation at the district level; and (ii) investigate the heterogeneity of the impacts on public spending. The authors confirm that the electoral reforms had positive effects on district expenditures and these effects were mainly due to the increases in expenditures in the districts outside Java and Bali and the changes in expenditures brought about by non-incumbents elected in the districts. Electoral reforms also led to higher revenue generation from own sources and to higher budget surplus. Finally, the analysis finds that in anticipation of the forthcoming direct elections, district governments tend to have higher current expenditures on public works. |
| Keywords: | Subnational Economic Development,Public Sector Expenditure Policy,Parliamentary Government,E-Government,Debt Markets |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5614&r=pol |
| By: | Matz Dahlberg (Uppsala University, IFAU, CESifo & IEB); Eva Mörk (Uppsala University, IFAU, CESifo, IZA & IEB) |
| Abstract: | Do governments increase public employment in election years? This paper answers this question by using data from Sweden and Finland, two countries that are similar in many respects but in which local elections are held at different points in time. These facts make it possible for us to separate an election effect from other time effects. Our results indicate that there is a statistically significant election year effect in local public employment, a production factor that is highly visible in the welfare services provided by the local governments in the Scandinavian countries. The effect also seems to be economically significant; the municipalities employ 0.6 more full-time employees per 1,000 capita in election years than in other years (which correspond to an increase by approximately 1 percent). |
| Keywords: | election cycle, public employment, exogenous elections |
| JEL: | D72 H72 P16 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2011/4/doc2011-8&r=pol |
| By: | Gabrielle Demange (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This paper presents results on the transitivity of the majority relation and the existence of a median representative ordering. Building on the notion of intermediate preferences indexed by a median graph, the analysis extends well-known results obtained when the underlying graph is a line. In contrast with other types of restrictions such as single-peakedness, intermediate preferences allow for a clear distinction between restrictions on the set of preferences characteristics and those on the set of alternatives. |
| Keywords: | majority rule ; median graph ; tree ; Condorcet winner ; intermediate preferences |
| Date: | 2011–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-00581310&r=pol |