nep-pol New Economics Papers
on Positive Political Economics
Issue of 2012‒03‒21
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Optimal Districting with Endogenous Party Platforms By E Bracco
  2. India: Election Outcomes and Economic Performance By Poonam Gupta; Arvind Panagariya
  3. Growth and Election Outcomes in a Developing Country By Poonam Gupta; Arvind Panagariya
  4. The Politics of Inequality and Redistribution in Latin Americaâ..s Post-Adjustment Era By Roberts, Kenneth M.
  5. Political uncertainty in a data-rich environment By Scheffel, Eric Michael
  6. Politics, Public Expenditure and the Evolution of Poverty in Africa 1920-2009 By Sue Bowden; Paul Mosley
  7. Statistical test for the mathematical theory of democracy By Tangian, Andranik
  8. Cultural and Political Determinants of Air Quality By Francisca Guedes de Oliveira; Alexandra Leitão
  9. Expert Politicians, Electoral Control, and Fiscal Restraints By Uwe Dulleck; Berthold U Wigger

  1. By: E Bracco
    Abstract: This paper proposes a theory of socially optimal districting in a legislative-election model with endogenous party platforms. We generalize the model of Coate and Knight (2007), allowing parties to strategically condition their platforms on the districting. The socially optimal districting re ects the ideological leaning of the population, so that parties internalize voters' preferences in their policy platforms. The optimal seat-vote curve is unbiased when voters are risk-neutral, and -contrary to previous findings-biased against the largest partisan group when voters are risk-averse. The model is then calibrated by an econometric analysis of the elections of U.S. State legislators during the 1990s.
    Date: 2011
  2. By: Poonam Gupta (NIPFP, India); Arvind Panagariya (Columbia University)
    Abstract: In this paper we provide the first analysis of the relationship of growth to election outcomes in India. Using a comprehensive data set consisting of all candidates contesting the election, we also provide the first systematic quantitative analysis of the 2009 Lok Sabha elections. Our key result is that superior growth performance at the level of the state gives a definite advantage to the candidates of the state incumbent party in the constituencies of that state. Conversely, poor growth performance of a state is associated with poor electoral performance by the candidates of the state incumbent party in the constituencies of that state. We offer two additional results: personal characteristics such as education and wealth have at most a small impact on election outcomes; and, at least in the 2009 election, incumbency at all levels contributed positively to election prospects of a candidate.
    Keywords: India, Election outcomes, Economic performance, Incumbency
    Date: 2011–04
  3. By: Poonam Gupta (NIPFP, India); Arvind Panagariya (Columbia University)
    Abstract: With the exception Brander and Drazen (2008), who use a comprehensive cross-country database consisting of both developed and developing countries, the hypothesis that rapid growth helps incumbents win elections has been tested exclusively for the developed countries (e.g., Ray Fair 1978). But since sustained rapid growth offers the prospect of pulling vast numbers of the voters out of poverty within a generation, such an effect is far more likely to be present in the developing rather than developed countries. In this paper, we offer the first test of the hypothesis on a large developing and poor country, India, which has seen its economy grow 8 to 9 percent recently. We first generalize the Fair model to allow for multiple candidates instead for just two and then test it using cross-state data. We find quantitatively large and statistically robust effect of growth on the prospects of the candidates of the state incumbent parties to win elections. Specifically, we use the data on 422 candidates in the 2009 parliamentary elections and show that the candidates of incumbent parties in high-growth states have much better prospects of victory than those in low-growth states.
    Keywords: India, growth, elections, developing country, poverty
    Date: 2011–08
  4. By: Roberts, Kenneth M.
    Abstract: Declining social and economic inequalities since the late 1990s coincided with several basic shifts in Latin Americaâ..s political landscape, including an electoral turn to the left and a revival of social mobilization from below. These shifts helped to â..repoliticizeâ.. inequality and return redistributive policies to a central place on the political agenda in the aftermath to the structural adjustment policies of the 1980s and 1990s.Equity gains, however, have occurred under conservative governments as well as leftist ones, and they are associated with a diverse set of public policy initiatives. The new politics of inequality, therefore, differ significantly from those of Latin Americaâ..s ISI era, as well as those that prevailed during the period of economic liberalization.
    Keywords: inequality, redistribution, structural adjustment, political parties, populism, social policy
    Date: 2012
  5. By: Scheffel, Eric Michael
    Abstract: We asses the general robustness of previous findings claiming that policy uncertainty exerts non-trivial influences on the US economy. Measuring the dynamic effects from a shock to policy uncertainty within a FAVAR model permits gauging the response of many more variables to policy uncertainty than is possible in a simple VAR model. Our results summarized by impulse responses are all corrected for small sample bias using a bootstrap-after-bootstrap method. Our findings support the view of policy uncertainty exerting a statistically significant influence on the economy, which is however not always as economically significant for a number of variables as found in previous studies.
    Keywords: policy uncertainty; FAVAR; factor analysis; principal component analysis; impulse response analysis; small-sample bias
    JEL: E22 H41 E23 E21
    Date: 2012–03–13
  6. By: Sue Bowden; Paul Mosley (Department of Economics, The University of Sheffield)
    Abstract: We investigate the historical roots of poverty, with particular reference to the experience of Africa during the twentieth century. Like the recent studies by Acemoglu et al (2001, etc) we find that institutional inheritance is an important influence on current underdevelopment; but in addition, we argue that the influence of policies on institutions is highly significant, and that in Africa at least, a high representation of European settlers in land ownership and policy-making was a source of weakness, and not of strength. We argue this thesis, using mortality rates as a proxy for poverty levels, with reference to two settler colonies – Zimbabwe and Kenya – and two peasant export colonies – Uganda and Ghana. Our findings suggest that in Africa, settler-type political systems tended to produce highly unequal income distributions and, as a consequence, patterns of public expenditure and investment in human and infrastructural capital which were strongly biased against smallholder agriculture and thence against poverty reduction, whereas peasant-export type political systems produced more equal income distributions whose policy structures and, consequently, production functions were less biased against the poor. As a consequence, liberalisation during the 1980s and 90s produced asymmetric results, with poverty falling sharply in the ‘peasant export’ and rising in settler economies. These contrasts in the evolution of poverty in the late twentieth and early twenty-first centuries, we argue, can only be understood by reference to differences between the settler and peasant export economies whose roots lie in political decisions taken a hundred years previously.
    Keywords: Africa, economic history, settler economies, peasant export economies
    JEL: O10 N0
    Date: 2012–01
  7. By: Tangian, Andranik
    Abstract: In economics and other social sciences, complex processes are often represented by numerical models of reality which more or less well reflect behavioral relationships and interactions. Such attempts are the subject of a lecture course 'Mathematical Theory of Democracy' by the author at the Faculty of Economics of the Karlsruhe Institute of Technology. One new result in this field is presented here in the form of a statistical test to decide whether a political party or coalition of parties represents a majority of the population. For this purpose, party or coalition positions on a sample of policy issues, like introduction of a legal nationwide minimum wage, privatization of railways, and others, are compared with the results of public opinion polls on the same issues. The test is based on estimating the statistical significance of the coincidence observed (i.e. how likely is the coincidence by chance) to the end of accepting or rejecting the representativeness hypothesis. The test is developed for single parties and coalitions of two or three parties. It is illustrated with an estimation of representativeness of five major German parties and their potential coalitions basing on the official party manifestos published before the German parliamentary elections 2009 and on relevant polls of public opinion. -- In der Ökonomie und den anderen Sozialwissenschaften wird immer wieder versucht, komplexe Prozesse der Wirklichkeit durch numerische Modelle abzubilden - was mit Abstraktionen für z. B. Verhaltens- und Wirkungsrelationen mehr oder weniger gut gelingt. Solche Versuche sind Gegenstand einer Vorlesungsreihe 'Mathematische Theorie der Demokratie' des Autors an der Wirtschaftswissenschaftlichen Fakultät des Karlsruhe Institut für Technologie. Ein neues Ergebnis in diesem Bereich wird hier vorgelegt in Form eines statistischen Tests, der entscheiden soll, ob eine politische Partei oder eine Parteienkoalition repräsentativ im Sinn der Bevölkerungsmehrheit agiert. Zu diesem Zweck wird die Übereinstimmung von Parteien- oder Koalitionspositionen mit Ergebnissen von Meinungsumfragen in der Bevölkerung verglichen, etwa zur Einführung eines bundesweiten gesetzlichen Mindestlohns oder der Privatisierung des Schienenverkehrs und anderem mehr. Der Test basiert auf der Einschätzung der statistischen Signifikanz der beobachteten Übereinstimmung (d.h. wie wahrscheinlich ist eine nur zufällige Übereinstimmung), um die Hypothese von der Repräsentativität der Politik zu akzeptieren oder abzulehnen. Die Studie spielt die Repräsentativität von einzelnen Parteien sowie von Zweier- und Dreier-Koalitionen durch. Darunter ist auch die Konstellation der fünf großen deutschen Parteien und ihrer potentiell möglichen Koalitionen auf der Basis der Bundestagswahl von 2009.
    Keywords: mathematical theory of democracy,statistical test,parties,coalitions,representativeness,Bernoulli matrices,sums of random vectors
    JEL: C12 C44 C63 D71 D72
    Date: 2012
  8. By: Francisca Guedes de Oliveira (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto); Alexandra Leitão (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto)
    Abstract: This paper investigates empirically the determinants of air quality in a large cross-section of countries. We assess air quality by sulfur emissions and, following the literature, we consider three different groups of determinants: economic, political and cultural. We confirm the existence of an EKC for sulfur (inverted-U shaped relation between wealth and pollution). Political determinants are proxied by ethnic or religious fractionalization indexes and the country’s legal origin (we consider five possible legal origins: English common law, French civil law, German civil law, Scandinavian legal system and Socialist legal system). Cultural determinants are assessed by the percentage of a country’s population that belongs to one of the three main religions (Catholic, Muslim or Protestant). Our goal is to establish the economic, political and cultural profile of a country that manages to be efficient in providing good air quality. We conclude that a country will provide higher air quality if it has one or more of the following characteristics: it is ethnic and/or religious homogeneous, it has a German or Scandinavian legal tradition; it is Protestant.
    Keywords: Air quality, political determinants, cultural determinants,environmental efficiency
    JEL: H40 H89 Q53 Q59
    Date: 2012–03
  9. By: Uwe Dulleck (QUT); Berthold U Wigger (Karlsruhe Institute of Technology)
    Abstract: Fiscal restraints have been argued to force today’s governments to internalize the externalities that result from extensive borrowing on future electorates and governments as well as on other countries by causing fiscal instability. In this article we provide an alternative argument for fiscal restraints which is based on an agency perspective on government. A budget maximizing politician is better informed than the electorate about the necessary spending to ensure the states ability to provide services for the economy. In this respect, the politician is an expert in the meaning of the credence good literature. The electorate, being able to observe the budget but not the necessary level of spending, will reelect a government if its budget does not exceed a critical level. A fiscal restraint limits the maximum spending a government will choose if the reelection level is not sufficient to ensure the state’s ability to provide services to the economy. We determine when such a fiscal restraint improves voter welfare and discuss the role of the opposition in situations where very high levels of spending are required.
    Keywords: Electoral control, Fiscal restraints, Credence goods
    JEL: D82 H50 H61
    Date: 2012–02–13

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