nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒10‒01
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Incumbents and Criminals in the Indian National Legislature By Aidt, T.; Golden, M. A.; Tiwari, D.
  2. Why Do Voters Dismantle Checks and Balances? By Daron Acemoglu, James A. Robinson and Ragnar Torvik
  3. Politicians “on board”! Do political connections affect banking activities in Italy? By Carretta, Alessandro; Farina, Vincenzo; Gon, Abhishek; Parisi, Antonio
  4. The Canada economic action plan as electoral tool By Chandler, Vincent
  5. Sincere Versus Sophisticated Voting When Legislators Vote Sequentially By Jeffrey Milyo; Tim Groseclose
  6. Should Candidates Smile to Win Elections? An Application of Automated Face Recognition Technology By Yusaku Horiuchi; Tadashi Komatsu; Fumio Nakaya
  7. Making Outsiders' Votes Count: Detecting Electoral Fraud Through a Natural Experiment By Kentaro Fukumoto; Yusaku Horiuchi
  8. Policymakers' Horizon and Trade Reforms By Paola Conconi; Giovanni Facchini; Maurizio Zanardi
  9. Political Pressure on the National Bank of Slovakia By Peter Kukuk; Adam Gersl
  10. Independence, Investment and Political Interference: Evidence from the European Union By Carlo Cambini; Laura Rondi
  11. Measuring corruption: perception surveys or victimization surveys? Towards a better comprehension of populations’ perception mechanisms: press freedom, confidence and gossip By Thomas Roca

  1. By: Aidt, T.; Golden, M. A.; Tiwari, D.
    Abstract: Utilizing data on criminal charges lodged against candidates to the Fourteenth and Fifteenth Lok Sabha, India’s lower house of representatives, we study the conditions that resulted in approximately a quarter of members of parliament elected in 2004 and in 2009 facing or having previously faced criminal charges. Our results document that Indian political parties are more likely to select alleged criminal candidates when confronting greater electoral uncertainty and in parliamentary constituencies whose populations exhibit lower levels of literacy. We interpret the decisions of political parties to enlist known criminals as candidates as a function of the capacity of these candidates to intimidate voters. To substantiate this, we show that criminal candidates depress electoral turnout. In addition, our results suggest that India’s well-known incumbency disadvantage stems from the superior electoral performance of allegedly criminal candidates, who drive parliamentary incumbents from office. Our study raises questions for democratic theory, which claims that electoral competition improves accountability, and for the future of the Indian polity, which is experiencing a growing criminalization of the national political arena.
    Date: 2011–09–18
  2. By: Daron Acemoglu, James A. Robinson and Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology)
    Abstract: Voters often dismantle constitutional checks and balances on the executive. If such checks and balances limit presidential abuses of power and rents, why do voters support their removal? We argue that by reducing politician rents, checks and balances also make it cheaper to bribe or ináuence politicians through non-electoral means. In weakly-institutionalized polities where such non-electoral ináuences, particularly by the better organized elite, are a major concern, voters may prefer a political system without checks and balances as a way of insulating politicians from these ináuences. When they do so, they are e§ectively accepting a certain amount of politician (presidential) rents in return for redistribution. We show that checks and balances are less likely to emerge when (equilibrium) politician rents are low; when the elite are better organized and are more likely to be able to ináuence or bribe politicians; and when inequality and potential taxes are high (which makes redistribution more valuable to the majority). We show that the main intuition, that checks and balances, by making politicians ìcheaper to bribe,î are potentially costly to the majority, is valid under di§erent ways of modeling the form of checks and balances.
    Date: 2011–09–24
  3. By: Carretta, Alessandro; Farina, Vincenzo; Gon, Abhishek; Parisi, Antonio
    Abstract: This paper analyzes the effects of political presence in the boards of directors of cooperative banks. We refer our analysis to all politicians (almost 160.000) belonging to a political body in Italy. Overall, our dataset contains 1.858 board members referring to 127 cooperative banks. Results show that politically connected banks, in which politicians have executive roles in the board of directors, display higher net interest revenues, lower quality of the loans portfolio and lower efficiency relative to a control group of non-connected counterparts. Therefore, in the current debate on the reform of the statutes of the Italian cooperative banks, we argue that the problem is not for politicians to be in the boards but for them to hold executive positions.
    Keywords: Cooperative Banks; Politics; Corporate Governance
    JEL: G34 G21
    Date: 2011–06–30
  4. By: Chandler, Vincent
    Abstract: This paper models the distribution of pork barrel when the electoral benefit of pork does not accrue to the party in power but to the incumbent of the district where the pork was directed. The model shows that, under certain parametres, more pork goes to core support districts. To verify this claim empirically, I first study the distribution of projects undertaken in the scope of the 2009-2011 Canada Economic Action Plan, and find that districts supporting the party in power received more pork than opposition districts controlling for socio-economic characteristics of electoral districts and those of its representative in Parliament. Second, taking into account the missing variable bias, this paper also shows that the allocation of projects played a positive role in the reelection of the district incumbent party in 2011.
    Keywords: Pork; Government Spending; Elections; Political Economy;
    JEL: H54 D72 C35
    Date: 2011–09
  5. By: Jeffrey Milyo (Department of Economics, University of Missouri-Columbia); Tim Groseclose
    Abstract: Elsewhere (Groseclose and Milyo, 2010), we examine a game where each legislator has preferences over (i) the resulting policy and (ii) how he or she votes. The latter preferences are especially important when the legislator is not pivotal. We show that when the game follows the normal rules of legislatures - most important, that legislators can change their vote after seeing how their fellow legislators have voted - then the only possible equilibrium is one where all legislators ignore their policy preferences. That is, each legislator votes as if he or she is not pivotal. The result, consistent with empirical studies of Congress, suggests that legislators should tend to vote sincerely, rather than sophisticatedly. In this paper we examine how outcomes change if we change the rules for voting. Namely, instead of a simultaneous game, we consider a game where legislators vote sequentially in a pre-determined order. We show that, opposite to the simultaneous game, an alternative wins if and only if a majority of legislators' policy preferences favor that alternative. Our results suggest that if Congress adopted this change in rules, then sophisticated voting would become frequent instead of rare.
    Keywords: Sophisticated Voting
    JEL: A1
    Date: 2011–09–16
  6. By: Yusaku Horiuchi (The Australian National University (ANU) - Crawford School of Economics and Government); Tadashi Komatsu (Komatsu - Research Division); Fumio Nakaya (Osaka Kyoiku University)
    Abstract: Previous studies examining whether the faces of candidates affect election outcomes commonly measure study participants' subjective judgment of various characteristics of candidates, which participants infer based solely on the photographic images of candidates. We, instead, develop a smile index of such images objectively with automated face recognition technology. The advantage of applying this new technology is that the automated process of measuring facial traits is by design independent of voters' subjective evaluations of candidate attributes, based on the images, and thus allows us to estimate 'undiluted' effects of facial appearance per se on election outcomes. The results of regression analysis using Japanese and Australian data show that the smile index has statistically significant and substantial effects on the vote share of candidates even after controlling for other covariates.
    Keywords: voting behavior, automated face recognition, Australia, Japan
    JEL: D72 C81
    Date: 2011–03
  7. By: Kentaro Fukumoto (Gakushuin University); Yusaku Horiuchi (The Australian National University (ANU) - Crawford School of Economics and Government)
    Abstract: Weak electoral registration requirements are commonly thought to encourage electoral participation, but may also promote electoral fraud. For one, candidates and their supporters can more easily mobilize voters outside the district to register and vote for the candidates, even though these voters do not reside within the district. We statistically detect this classic type of electoral fraud for the first time, by taking advantage of a natural experimental setting in Japanese municipal elections. We argue that whether or not a municipal election was held in April 2003 can be regarded as an "as-if" randomly assigned treatment. The difference-in-difference analysis of municipality-month panel data shows that an increase in the new population just prior to April 2003 is significantly larger in treatment municipalities (with an election) than in control ones (without an election). The estimated effects are, in some cases, decisive enough to change the electoral results, especially when the election is competitive. We argue that our approach – "election timing as treatment" – can be applied to investigate not only this type of electoral fraud but also other "electoral connection[s]" (Mayhew 1974) in other countries.
    Keywords: electoral fraud, natural experiment, local elections, Japan
    JEL: C90 D72
    Date: 2011–03
  8. By: Paola Conconi; Giovanni Facchini; Maurizio Zanardi
    Abstract: Does policymakers’ horizon affect their willingness to support economic reforms? Voting in the U.S. Congress provides an ideal setting to address this question. Differences between the House and Senate, in which members serve two-year and six-year mandates respectively, allow to examine the role of term length; the staggered structure of the Senate allows to compare the behavior of different “generations” of senators and study the impact of election proximity. Considering all major trade liberalization reforms undertaken by the U.S. since the early 1970’s, we find that Senate members are more likely to support them than House members. However, inter-cameral differences disappear for third-generation senators, who face re-election at the same time as House members. Considering Senate votes alone, we find that the last generation is more protectionist than the previous two, a result that holds both when comparing different senators voting on the same bill and individual senators voting on different bills. Inter-generational differences disappear instead for senators who hold safe seats or have announced their retirement, indicating that the protectionist effect of election proximity is driven by legislators’ fear of losing office.
    Keywords: term length; election proximity; trade reforms
    JEL: D72 F10
    Date: 2011–08
  9. By: Peter Kukuk (UniCredit Bank, Prague); Adam Gersl (Czech National Bank; Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This paper analyzes political pressure on the National Bank of Slovakia, using the Havrilesky (1993) methodology based on media signalling. This methodology allows the pressure on the Central Bank of Slovakia to be compared with the pressure on the central banks to which the methodology was already applied, namely – the U.S. Federal Reserve, the Deutsche Bundesbank and the Czech National Bank. The analysis and the comparison reveals a relatively weak signalling of pressure in media in Slovakia and prevailance of financial sector representatives as the main commentaries on monetary policy of the National Bank of Slovakia in the period before euro adoption.
    Keywords: political economy, central banks, monetary policy
    JEL: E52 D78
    Date: 2011–09
  10. By: Carlo Cambini; Laura Rondi
    Abstract: This paper examines the implications of “modern” regulatory governance - i.e. the inception of Independent Regulatory Authorities (IRAs) - for the investment decisions of a large sample of EU publicly traded regulated firms from 1994 to 2004. These firms provide massively consumed services, and this is why governments are highly sensitive to regulatory decisions and outcomes. We therefore analyse and empirically investigate if: i) the inception of IRAs reduces the time-inconsistency problems that lead regulated firms to underinvest, and ii) governments’ political orientation and residual state ownership interfere with investment decisions. To control for potential endogeneity of the key institutional variables, we draw our identification strategy from the political economy literature. Our results show that regulatory independence has a positive impact on regulated firms’ investment while private vs. state ownership is not significant. We also find that, under executives at the extreme of the political spectrum, government interference in the functioning of the IRA is likely to re-introduce instability and uncertainty in the regulatory framework, thus undermining investment incentives.
    Keywords: Institutions; Firm Investment; Private and State ownership; regulatory independence; government's political orientation
    Date: 2011–07–07
  11. By: Thomas Roca (GED, Université Montesquieu Bordeaux IV)
    Abstract: While methodologies and survey techniques recorded progress over the years, corruption measurement remains a many-headed monster. Since 2003 and the first publication of Transparency International’s Global Corruption Barometer, researchers have access to population’s feeling about the corruption scourge across institutions. Thereby, wider room emerged for populations’ perceptions in the field of corruption quantification. In this paper, we analyze the gulf separating perceived corruption from experienced bribe situations using global household surveys in a Panel dataset. We show that the gap between these two types of data can be wide and unevenly distributed across countries. Introducing further objective and subjective data we try to puzzle out perception mechanisms. Bien que les techniques d’enquête et les méthodologies se soient améliorées au fil des années, la mesure corruption demeure problématique. Depuis 2003 et la première publication du Baromètre Mondial de la Corruption par Transparency International, les chercheurs ont dorénavant accès aux perceptions des populations pour évaluer l’étendue de la corruption au sein de différentes administrations. Dans cet article, nous analysons l’écart entre les perceptions de la corruption et l’expérience concrète de celle-ci en utilisant des données de panel issues d’enquêtes ménages menées à une échelle mondiale. Nous comparons ainsi, au sein même des populations, les écarts entre expériences et perceptions de la corruption, afin d’isoler au mieux les mécanismes à l’oeuvre dans la construction des perceptions. Nous montrons alors que les écarts entre ces deux types de donnée peuvent être importants et inégalement distribués.(Full text in english)
    JEL: O11 O19
    Date: 2011–06

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