nep-pol New Economics Papers
on Positive Political Economics
Issue of 2012‒06‒13
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Effects of Voting Costs on the Democratic Process and Public Finances By Roland Hodler; Simon Luechinger; Alois Stutzer
  2. The timing of sovereign defaults over electoral terms By Nathan Foley-Fisher
  3. Isolated Capital Cities, Accountability and Corruption: Evidence from US States By Campante, Filipe R.; Do, Quoc-Anh
  4. Determinants of Employment in the Ministerial Bureaucracy By Thomas Braendle
  5. (Don’t) Make My Vote Count By Marco Faravelli; Santiago Sanchez-Pages
  6. News, Politics, and Negativity By Stuart Soroka; Stephen McAdams
  7. Do Good Institutions Promote Counter-Cyclical Macroeconomic Policies? By César Calderón; Roberto Duncan; Klaus Schmidt-Hebbel
  8. Distance and Political Boundaries: Estimating Border Effects under Inequality Constraints. By Fernando Borraz; Alberto Cavallo; Roberto Rigobon; Leandro Zipitría
  9. Democracy and Reforms: Evidence from a New Dataset By Paola Giuliano; Prachi Mishra; Antonio Spilimbergo
  10. The Economics of Political Borders. By Enrico Spolaore
  11. Education and the Quality of Government By Juan Botero; Alejandro Ponce; Andrei Shleifer
  12. Brief note about the dilemmas of public election By Estrada, Fernando

  1. By: Roland Hodler; Simon Luechinger; Alois Stutzer (University of Basel)
    Keywords: Fiscal policies, political knowledge, postal voting, special-interest politics, voter turnout, voting costs
    JEL: D72 D78 H00
    Date: 2012
  2. By: Nathan Foley-Fisher
    Abstract: I construct a database that maps the timing of sovereign default decisions into elected politicians' terms of office, that provides an empirical means of investigating political economy theories of sovereign default. I find no robust patterns in the timing of default decisions over terms of office. I also find no evidence in support of the political reputation theory of sovereign debt repayment. Finally, there is some tentative evidence that elected leaders who default are also those more likely to be re-elected. Motivated by anecdotal evidence, I use a stylised model of political leaders with career concerns to demonstrate how this can occur when politicians care about re-election.
    Date: 2012
  3. By: Campante, Filipe R. (Harvard University); Do, Quoc-Anh (Singapore Management University)
    Abstract: We show that isolated capital cities are robustly associated with greater levels of corruption across US states. In particular, this is the case when we use the variation induced by the exogenous location of a state's centroid to instrument for the concentration of population around the capital city. We then show that different mechanisms for holding state politicians accountable are also affected by the spatial distribution of population: newspapers provide greater coverage of state politics when their audiences are more concentrated around the capital, and voter turnout in state elections is greater in places that are closer to the capital. Consistent with lower accountability, there is also evidence that there is more money in state-level political campaigns in those states with isolated capitals. We find that the role of media accountability helps explain the connection between isolated capitals and corruption. In addition, we provide some evidence that this pattern is also associated with lower levels of public good spending and outcomes.
    JEL: D72 D73 L82 R12 R50
    Date: 2012–05
  4. By: Thomas Braendle (University of Basel)
    Keywords: political selection, public servants, public-sector growth, bureaucracy, patronage
    JEL: D72 D73 H11 H72
    Date: 2012
  5. By: Marco Faravelli (School of Economics, The University of Queensland); Santiago Sanchez-Pages
    Abstract: Proponents of proportional electoral rules often argue that majority rule depresses turnout and may lower welfare due to the “tyranny of the majority†problem. The present paper studies the impact of electoral rules on turnout and social welfare. We analyze a model of instrumental voting where citizens have private information over their individual cost of voting and over the alternative they prefer. The electoral rule used to select the winning alternative is a combination of majority rule and proportional rule. Results show that the above arguments against majority rule do not hold in this set up. Social welfare and turnout increase with the weight that the electoral rule gives to majority rule when the electorate is expected to be split, and they are independent of the electoral rule employed when the expected size of the minority group tends to zero. However, more proportional rules can increase turnout within the minority group. This e¤ect is stronger the smaller the minority group. We then conclude that majority rule fosters overall turnout and increases social welfare, whereas proportional rule fosters the participation of minorities.
    Date: 2012
  6. By: Stuart Soroka; Stephen McAdams
    Abstract: Work in political communication has discussed the ongoing predominance of negative news, but has offered few convincing accounts for this focus. A growing body of literature shows that humans regularly pay more attention to negative information than to positive information, however. This paper argues that we should view the nature of news content in part as a consequence of this asymmetry bias observed in human behavior. A psychophysiological experiment capturing viewers' reactions to actual news content shows that negative news elicits stronger and more sustained reactions than does positive news. Results are discussed as they pertain to political behavior and communication, and to politics and political institutions more generally. <P>
    Keywords: negativity bias, mass media, political communication, psychophysiology,
    Date: 2012–05–01
  7. By: César Calderón; Roberto Duncan; Klaus Schmidt-Hebbel
    Abstract: The literature has argued that developing countries are unable to adopt countercyclical monetary and fiscal policies due to financial imperfections and unfavorable political-economy conditions. Using a world sample of 115 industrial and developing countries for 1984-2008, we find that the level of institutional quality plays a key role in countries’ ability to implement counter-cyclical macroeconomic policies. The results show that countries with strong (weak) institutions adopt counter- (pro-) cyclical macroeconomic policies, reflected inextended monetary policy and fiscal policy rules. The threshold level of institutional quality at which monetary and fiscal policies are a-cyclical is found to be similar.
    Keywords: Counter-cyclical macroeconomic policies, institutions, fiscal policy, monetary policy
    JEL: E43 E52 E62
    Date: 2012
  8. By: Fernando Borraz; Alberto Cavallo; Roberto Rigobon; Leandro Zipitría
    Abstract: The “border effect” literature finds that political borders have a very large impact on relative prices, implicitly adding several thousands of miles to trade. In this paper we show that the standard empirical specification suffers from selection bias, and propose a new methodology based on quantile regressions. Using a novel data set from Uruguay, we apply our procedure to measure the segmentation introduced by city borders. City borders should matter little for trade. We find that when the standard methodology is used, two supermarkets separated by 10 kilometers across two different cities have the same price dispersion as two supermarkets separated by 30 kilometers within the same city; so the city border triples the distance. When our methodology is used, the city border effect becomes insignificant. We further test our methodology using online prices for the largest supermarket chain in the country, and show that the “online border” is equivalent to the average distance from the online warehouse to each of the offline stores.
    JEL: F40 F41
    Date: 2012–06
  9. By: Paola Giuliano; Prachi Mishra; Antonio Spilimbergo
    Abstract: Empirical evidence on the relationship between democracy and economic reforms is limited to few reforms, countries, and periods. This paper studies the effect of democracy on the adoption of economic reforms using a new dataset on reforms in the financial, capital and banking sectors, product markets, agriculture, and trade for 150 countries over the period 1960–2004. Democracy has a positive and significant impact on the adoption of economic reforms but there is scarce evidence that economic reforms foster democracy. Our results are robust to the inclusion of a large variety of controls and estimation strategies.
    JEL: E6 O57
    Date: 2012–06
  10. By: Enrico Spolaore
    Abstract: This paper presents concepts from economic analysis that shed light on the formation and breakup of sovereign states. First, we discuss the key trade-off between economies of scale in the provision of public good and political costs from heterogeneity of preferences. Second, we present four economic perspectives on the formation of borders: efficient borders, borders as democratic outcomes, borders in a world of rent-seeking Leviathans, and borders as outcomes of conflict and wars. Finally, we provide an analytical illustration of the basic ideas within a simple framework.
    Date: 2012
  11. By: Juan Botero; Alejandro Ponce; Andrei Shleifer
    Abstract: Generally speaking, better educated countries have better governments, an empirical regularity that holds in both dictatorships and democracies. We suggest that a possible reason for this fact is that educated people are more likely to complain about misconduct by government officials, so that, even when each complaint is unlikely to succeed, more frequent complaints encourage better behavior from officials. Newly assembled individual-level survey data from the World Justice Project show that, within countries, better educated people are more likely to report official misconduct. The results are confirmed using other survey data on reporting crime and corruption. Citizen complaints might thus be an operative mechanism that explains the link between education and the quality of government.
    JEL: D73 D78 O43
    Date: 2012–06
  12. By: Estrada, Fernando
    Abstract: In this brief comment, the public choice theory aims to distinguish the dilemmas and conflicts in formal and empirical. The hypothesis argues that the reality more complex than the principles of choice of Pareto and Liberalism*. Both the ethics and politics are taking decisions that are not always in line with the requirements of rationality and complete information.
    Keywords: Public choice theory; public election; rational choice; social welfare; economic psychology
    JEL: D70 D71 H41 D82 C72
    Date: 2012

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