nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒10‒09
six papers chosen by
Eugene Beaulieu
University of Calgary

  1. Does Political Reservation Affect Voting Behavior? Empirical Evidence from India By Yuko Mori; Takashi Kurosaki
  2. Autocracies and Development in a Global Economy: A Tale of Two Elites By Anders Akerman; Anna Larsson; Alireza Naghavi
  3. Media, Institutions, and Government Action: Prevention vs. Palliation in the Time of Cholera By Chongwoo Choe; Paul A. Raschky
  4. The political economy of healthcare litigation : model and empirical application to Uruguay By Corduneanu-Huci, Cristina; Hamilton, Alexander; Masses-Ferrer, Issel
  5. No Country for Old Men: Aging Dictators and Economic Growth By Jong-A-Pin, R.; Mierau, J. O.
  6. Political Uncertainty and Risk Premia By Lubos Pastor; Pietro Veronesi

  1. By: Yuko Mori; Takashi Kurosaki
    Abstract: Using microdata from the National Election Study of the 2004 parliamentary elections in India, we empirically examine the impact of political reservation for disadvantaged castes and tribes on voting behavior. We find that in a reserved constituency, where only members of the disadvantaged castes can stand for election, voters of the disadvantaged castes are encouraged to vote. On the other hand, the system of constituency reservation does not have any impact on the turnout of voters belonging to other groups, including relatively upper caste voters. These voters, however, tend to change political party to vote for in reserved constituencies. These findings imply that there is a general acceptance of political reservation in the Indian electoral system.
    Keywords: Political Reservation, Voter Turnout, Castes, India
    Date: 2011–09
  2. By: Anders Akerman (Department of Economics, Stockholm University); Anna Larsson (Department of Economics, Stockholm University); Alireza Naghavi (University of Bologna and Fondazione Eni Enrico Mattei)
    Abstract: Data on the growth performances of countries with similar comparative (dis)advantage and political institutions reveal a striking variation across world regions. While some former autocracies such as the East Asian growth miracles have done remarkably well, others such as the Latin American economies have grown at much lower rates. In this paper, we propose a political economy explanation of these diverging paths of development by addressing the preferences of the country’s political elite. We build a theoretical framework where factors of production owned by the political elites differ across countries. In each country, the incumbent autocrat will cater to the preferences of the elites when setting trade policy and the property rights regime. We show how stronger property rights may lead to capital accumulation and labor reallocation to the manufacturing sector. This, in turn, can lead to a shift in the comparative advantage, a decision to open up to trade and an inflow of more productive foreign capital. Consistent with a set of stylised facts on East Asia and Latin America, we argue that strong property rights are crucial for success upon globalization.
    Keywords: Autocracy, Growth, Political Elites, Landowners, Capitalists, Growth Miracles, Trade, Comparative Advantage, Capital Mobility, Property Rights
    JEL: F10 F20 P14 P16 O10 O24
    Date: 2011–08
  3. By: Chongwoo Choe; Paul A. Raschky
    Abstract: This paper studies how media and the quality of institutions affect government action taken before and after a natural disaster. The key elements in this relationship are the media's role as the provider of information to voters about government action, the quality of democracy that pertains to how relevant election results are, and corruption that reduces the efficacy of government action. Provided that more media activity is focused on post-disaster government action, we show that more media activity and more democratic institutions both contribute positively to the government's palliative effort after the disaster, although corruption has a negative effect that decreases as media activity increases. On the preventive effort before the disaster, however, media and democracy both have a negative effect, as does corruption. We provide empirical evidence based on major cholera epidemics around the world, which lends some support to these hypotheses.
    Keywords: Media, democracy, corruption, government action, natural disaster
    JEL: D23 H40 L82
    Date: 2011–09
  4. By: Corduneanu-Huci, Cristina; Hamilton, Alexander; Masses-Ferrer, Issel
    Abstract: The political economy of health care is complex, as stakeholders have conflicting preferences over efficiency and equity. This paper formally models the preferences of consumer and producer groups involved in priority setting and judicialization in public health care. It uses a unique dataset of stakeholder perceptions, from Uruguay, to test whether these hypotheses are consistent with empirical evidence. The results suggest that the expectations of the political economy literature are supported: 1) regulators of public healthcare are less concerned with efficiency considerations than consumers; and 2) less organized groups are more concerned about equity than more organized interest groups. With respect to the consequences of health litigation, the findings are only partially consistent with the health care governance literature. Consumers perceive litigation as more beneficial than health care providers and regulators do. Counter-intuitively, powerful interest groups seem less willing to use litigation to shape policy outcomes.
    Keywords: Health Systems Development&Reform,Health Monitoring&Evaluation,Health Economics&Finance,Population Policies,Health Law
    Date: 2011–09–01
  5. By: Jong-A-Pin, R.; Mierau, J. O.
    Abstract: This paper develops a model of the relationship between the age of a dictator and economic growth. In the model a dictator must spread the resources of the economy over his reign but faces mortality and political risk. The model shows that if the time horizon of the dictator decreases, either due to an increase of mortality risk or political risk, the economic growth rate decreases. The model predictions are supported by empirical evidence based on a three-way fixed effects model including country, year and dictator fixed effects for a sample of dictators from 116 countries. These results are robust to sample selection, the tenure of dictators, the definition of dictatorship, and a broad set of economic growth determinants.
    JEL: H11 O11 O43
    Date: 2011–09–18
  6. By: Lubos Pastor; Pietro Veronesi
    Abstract: We study the pricing of political uncertainty in a general equilibrium model of government policy choice. We find that political uncertainty commands a risk premium whose magnitude is larger in poorer economic conditions. Political uncertainty reduces the value of the implicit put protection that the government provides to the market. It also makes stocks more volatile and more correlated when the economy is weak. In addition, we find that government policies cannot be judged by the stock market response to their announcement. Announcements of deeper reforms tend to elicit less favorable stock market reactions.
    JEL: G12 G18
    Date: 2011–09

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