nep-pol New Economics Papers
on Positive Political Economics
Issue of 2011‒11‒07
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Knowledge is power: A theory of information, income and welfare spending By Lind, J.T.; Rohner, D.
  2. Establishing electoral administration systems in new democracies By Kawanaka, Takeshi; Asaba, Yuki
  3. Democracy and Expropriations By Christensen, Jonas Gade
  4. Stories on corruption. How media and prosecutors influence elections. By Pablo Enrique Torija JimŽnez
  5. Determinants of political tolerance : a literature review By Hazama, Yasushi
  6. Meritocracy Voting: Measuring the Unmeasurable By Peter C.B. Phillips
  7. Geopolitics, Global Patterns of Oil Trade, and China¡¦s Oil Security Quest By Sergey Mityakov; Heiwai Tang; Kevin K. Tsui
  8. Employment and the Political Economy of Trade: A Structured Review of the Literature By Craig VanGrasstek
  9. Trade Agreements, Political Economy and Endogenously Incomplete Contracts By Li, Na; Ker, Alan
  10. Political drivers of and barriers to Public-Private Partnerships: The role of political involvement By Gawel, Erik
  11. Corporate lobbying: A review of the recent literature By Martin Gregor

  1. By: Lind, J.T.; Rohner, D.
    Abstract: No voters cast their votes based on perfect information, but better educated and richer voters are on average better informed than others. We develop a model where the voting mistakes resulting from low political knowledge reduce the weight of poor voters, and cause parties to choose political platforms that are better aligned with the preferences of rich voters. In US election survey data, we find that income is more important in affecting voting behavior for more informed voters than for less informed voters, as predicted by the model. Further, in a panel of US states we find that when there is a strong correlation between income and political information, Congress representatives vote more conservatively, which is also in line with our theory.
    JEL: D31 D72 D82 H53
    Date: 2011–10–28
  2. By: Kawanaka, Takeshi; Asaba, Yuki
    Abstract: The difficulty of holding fair elections continues to be a critical problem in many newly democratized countries. The core of the problem is the electoral administration's lack of political autonomy and capability to regulate fraud. This paper seeks to identify the conditions for establishing an autonomous and capable electoral administration system. An electoral administration system has two main functions: to disclose the nature of elections and to prevent fraud. We argue in this paper that an autonomous and capable electoral administration system exists if the major political players have the incentive to disclose the information on the elections and to secure the ruler's credible commitment to fair elections. We examine this argument through comparative case studies of Korea and the Philippines. Despite similar historical and institutional settings, their election commissions exhibit contrasting features. The difference in the incentive structures of the major political players seems to have caused the divergence in the institutional evolution of the election commissions in the two countries.
    Keywords: Developing countries, South Korea, Philippines, Elections, Electoral systems, Democracy, Institution
    Date: 2011–08
  3. By: Christensen, Jonas Gade (University of Bergen)
    Abstract: In this paper I develop a voting model that shows the different effects of democratic competition and political constraints on the probability of expropriations of foreign investments. I show that these two aspects of liberal democracy might have very different effects on expropriation risks. Particularly interesting is the prediction that for low to intermediate levels of political competition for executive power, increased competition will lead to higher risk of expropriation. Testing this and other predictions on panel data for actual expropriations in 27 developing countries, I find support for the predictions from the model.
    Keywords: Democracy; Expropriations; Foreign investments
    JEL: D72 F21 F23
    Date: 2011–02–02
  4. By: Pablo Enrique Torija JimŽnez (Università di Padova)
    Abstract: I analyse whether Attorney Generals try to influence elections by adjusting the tempo of their investigations to the electoral calendar, and whether mass media have a partisan bias and hide corruption activities of their preferred parties. For doing so, I have coded the number of articles containing the word ÒcorruptionÓ of the two main Spanish newspapers, finding significant evidence of both behaviors.
    Keywords: Mass media, prosecutor, political economy, corruption, newspaper, Spain.
    JEL: H11 P16 L82
    Date: 2011–10
  5. By: Hazama, Yasushi
    Abstract: This paper reviews the current literature on political tolerance with particular reference to its individual- and aggregate-level determinants. Individual-level determinants such as authoritarianism, education, contact, and threat perception are found to have robust effects on tolerance. What are less known are the mediating factors that enhance or reduce these effects. In recent years, increasing attention has been directed toward the impact of contextual factors on threat and contact effects.
    Keywords: Developing countries, Developed countries, Internal politics, Political thoughts, Authoritarianism, Ethnicity, Political tolerance, Education, Contact, Threat
    Date: 2011
  6. By: Peter C.B. Phillips (Cowles Foundation, Yale University)
    Abstract: Learned societies commonly carry out selection processes to add new fellows to an existing fellowship. Criteria vary across societies but are typically based on subjective judgments concerning the merit of individuals who are nominated for fellowships. These subjective assessments may be made by existing fellows as they vote in elections to determine the new fellows or they may be decided by a selection committee of fellows and officers of the society who determine merit after reviewing nominations and written assessments. Human judgment inevitably plays a central role in these determinations and, notwithstanding its limitations, is usually regarded as being a necessary ingredient in making an overall assessment of qualifications for fellowship. The present paper suggests a mechanism by which these merit assessments may be complemented with a quantitative rule that incorporates both subjective and objective elements. The goal of 'measuring merit' may be elusive but quantitative assessment rules can help to widen the effective electorate (for instance, by including the decisions of editors, the judgments of independent referees, and received opinion about research) and mitigate distortions that can arise from cluster effects, invisible college coalition voting and inner sanctum bias. The rule considered here is designed to assist the selection process by explicitly taking into account subjective assessments of individual candidates for election as well as direct quantitative measures of quality obtained from bibliometric data. The methodology has application to a wide arena of quality assessment and professional ranking exercises.
    Keywords: Bibliometric data, Election, Fellowship, Measurement, Meritocracy, Peer review, Quantification, Subjective assessment, Voting
    JEL: A14 Z13
    Date: 2011–10
  7. By: Sergey Mityakov (Clemson University); Heiwai Tang (Tufts University and Hong Kong Institute for Monetary Research); Kevin K. Tsui (Clemson University and Hong Kong Institute for Monetary Research)
    Abstract: Does China's quest for oil raise tensions with the United States? This paper examines the effect of international relations on global oil trade patterns. Using voting records for the United Nations General Assembly to measure the state of international relations, we estimate a modified gravity model in a panel data framework over the period 1962-2000. Our presumption is that a divergence in voting patterns reflects misalignment in political interests among pairs of states, and hence an increase in "political distance." Controlling for oil exporters' endowment, potential supply disruption due to civil conflict, other standard gravity controls, as well as exporter and year fixed effects, we first show that private energy companies based in the United States import significantly less crude oil from US political opponents. The result is robust to controlling for economic sanctions and militarized interstate disputes, suggesting that the political oil import diversification is more than a wartime phenomenon. A similar oil import pattern is observed in China, in which case only a few national oil companies control the oil sector. While the incentives to diversify are stronger for both the United States and China when the exporters are nondemocratic, import sanctions have opposite effects on oil imports into the United States and China. Finally, we document that there is no such oil import pattern in other non-major power oil importing countries.
    Keywords: Energy Security, International Relations, Oil Trade Diversification
    JEL: F13 F51 F59 Q34
    Date: 2011–10
  8. By: Craig VanGrasstek
    Abstract: The aims of this paper are to review the main schools of thought on the political economy of trade and employment, to review the empirical evidence supporting these schools, and to consider the implications for public policy. Special emphasis is given to the potential costs of liberalization and the manner that concerns about these costs may inhibit countries‘ willingness to open markets and thereby limit the potential gains from trade. These issues are explored through a structured examination of the political economy literature, including the contributions of political scientists, economists, and historians, focusing on the role of different types of political actors in the formation of policy concerning trade-and-employment issues. Those actors include the general public (the members of which are simultaneously workers, consumers, and voters); economic interests (firms, associations, and labour unions); and policy makers in both the executive and legislative branches of government. The paper proceeds in three steps, the first being to define each of the main schools of thought. The next step is to review empirical studies that have tested the validity of these schools of thought. The third and final step is to consider complementary policies.
    Keywords: trade, employment, wages, inclusive growth
    Date: 2011–10–19
  9. By: Li, Na; Ker, Alan
    Abstract: We develop a political economy model of trade agreements following along the line of Grossman and Helpman (1995a) yet incorporating contracting costs, uncertainty and multiple policy instruments. We show that rent-seeking efforts do not affect tariff rates as they are offset by the substitution effect of domestic production subsidies. Similar to Horn et al (2010), we find the coexistence of uncertainty and contracting costs make optimal trade agreements incomplete contracts. Our model helps explain differential treatment on subsidies, countervailing duties, and the national treatment principle - all key provisions of the current WTO agreement.
    Keywords: Trade agreement, political economy, contracting cost, uncertainty JEL Classification:, Agricultural and Food Policy, International Relations/Trade, Political Economy, Public Economics,
    Date: 2011–06
  10. By: Gawel, Erik
    Abstract: The application and design of public-private partnerships between the extremes of purely public or purely private task fulfilment in public services is, in practice, subject to political processes. Decisions about PPPs (realisation, arrangement) are taken in the political arena and are therefore not theoretical optimisation exercises. The interests and resources of the actors who participate in the political decision-making process as well as the rules of the political process have a powerful influence on whether, in what areas, and in what form PPPs are realised. The distance between this output and solutions that are theoretically desirable given certain ideal goals (e.g. efficiency) and conditions can be referred to as political bias. So what role does the political process play in the realisation of PPPs, in the actual design of PPPs, and in their performance? Using public choice and institutional economics theory this paper analyses what chances of success PPPs have given the existing decision-making structures and the inherent incentives for participating actors, and in what way political influence is brought to bear in the first place. Furthermore, aspects of political science in this field (legitimacy, democratic control) are considered as well. Using PPPs there might be a trade-off between reduced democratic control, but also reinforced market control. It turns out that political involvement might be both an important driver as well as an obstacle for (efficient) PPPs and that it is likely to decrease efficiency either way. A case study for userfinancing PPPs in the transport sector highlights the problems of political renitency. --
    Keywords: public-private partnership,politics,bureaucracy,public choice,contract theory,agency,tax state,transaction cost,governance,legitimacy,transport infrastructure,user financing
    JEL: D72 D73 D78 H11 H44 H63 H83
    Date: 2011
  11. By: Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: This survey covers recent literature on lobbying, with particular focus on corporate lobbying. Three main research traditions --- contestsfor policy rent, persuasion games, and multiple means models --- are analyzed in detail. Various strategic aspects of lobbying arepresented in the context of a single unified model that encompasses both strategic communication and monetary contributions. Next, thereview investigates into three particular issues in the lobbying literature: (i) Incentive to lobby and the equilibrium amount of lobbying,both in the presence and absence of competitors, (ii) strategic substitution and complementarity of lobbying and contributions,and (iii) the role of intermediation in lobbying. Recent evidence from corporate lobbying is presented.
    Keywords: lobbying, political contributions, menu auction, contest, persuasion
    JEL: D72 D82 D83
    Date: 2011–11

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