nep-pol New Economics Papers
on Positive Political Economics
Issue of 2012‒07‒14
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Electoral Competition through Issue Selection By Aragonés, Enriqueta; Castanheira, Micael; Giani, Marco
  2. Political strongholds and budget allocation for developmental expenditure: Evidence from Indian states, 1971-2005 By Kaushik, Arun; Rupayan Pal
  3. Do parents affect the early political prioritisation of nature in their children? By Hazel Pettifor
  4. Heterogeneity and Voting: A Framed Public Good Experiment By Kerri Brick; Martine Visser
  5. Electoral Rules and Clientelistic Parties: A Regression Discontinuity Approach By Miquel Pellicer; Eva Wegner
  6. Benefit or burden? Unraveling the effect of economic freedom on subjective well-being By Gehring, Kai
  7. Do good institutions promote counter-cyclical macroeconomic policies? By César Calderón; Roberto Duncan; Klaus Schmidt-Hebbel
  8. Trust in government and its effect on preferences for income redistribution and perceived tax burden By Yamamura, Eiji

  1. By: Aragonés, Enriqueta; Castanheira, Micael; Giani, Marco
    Abstract: Politics must tackle multiple issues at once. In a first-best world, political competition constrains parties to prioritize issues according to the voters' true concerns. In the real world, the opposite also happens: parties manipulate voter priorities by emphasizing issues selectively during the political campaign. This phenomenon, known as priming, should allow parties to pay less attention to the issues that they intend to mute. We develop a model of endogenous issue ownership in which two vote-seeking parties (i) invest to attract voters with "better" policy proposals and (ii) choose a communication campaign to focus voter attention on specific issues. We identify novel feedbacks between communication and investment. In particular, we find that stronger priming effects can backfire by constraining parties to invest more resources in all issues, including the ones they would otherwise intend to mute. We also identify under which conditions parties prefer to focus on their "historical issues" or to engage in issue stealing. Typically, the latter happens when priming effects are strong, and historical reputations differentiates parties less.
    Keywords: Electoral competition; issue selection and ownership; party strategy; priming; salience
    JEL: D72 H11
    Date: 2012–06
  2. By: Kaushik, Arun (Indira Gandhi Institute of Development Research); Rupayan Pal (Indira Gandhi Institute of Development ResearchInstitute of Economic Growth)
    Abstract: This paper examines the effects of political factors on allocation of revenue budget for developmental expenditure by the sub-national governments, using data from 15 major states in India during the period 1971-2005. It measures the ruling party's political stronghold on the basis of constituency level electoral outcomes and shows that greater stronghold of the ruling party in a state leads to significantly higher proportion of revenue budget allocated for developmental expenditure. It also shows that voters' turnout and political regime change have positive and significant effect on proportion of revenue budget allocated for developmental expenditure. However, political ideology, within government fragmentation, disproportionality in representation, and effective number of political parties do not have any significant impact on budget allocation decisions of the Indian state governments. Results of this paper also indicate that greater reliance on market forces reduces the share of developmental expenditure. These are new and robust results.
    Keywords: Political stronghold, budget allocation, developmental expenditure, state government, ruling party, political factors, India
    JEL: D72 H72 D71
    Date: 2012–06
  3. By: Hazel Pettifor
    Abstract: This study is concerned with the roots of environmentalism in young people in Britain and in particular the role parents play in the formation of deep green political attitudes in their children. Using a series of multiple logistic regressions on a pooled sample of children aged 11 to 16 (n=6,590) it is observed that compared to any other political party the odds of a child choosing the Green Party are greater if the father or the mother is also partisan to the green party. Contrary to other empirical research there is no significant difference found between the size of the effects of mothers and fathers on their children and provided the parent is more likely to be politically aligned with ideals of ecologism, this study observes an increased probability in their childrens choice of the Green Party compared to the average child.
    Date: 2012–07–02
  4. By: Kerri Brick; Martine Visser
    Abstract: The lack of cooperation and prevalence of free riding in efforts to reduce emissions reflects the public good dilemma synonymous with climate change: whereby individual incentives lead to sub-optimal outcomes. This study examines how cooperative norms can be fostered through democratic processes. Specifically, we assess whether a given policy affects cooperation more significantly when it is democratically chosen by heterogeneous subjects as opposed to exogenously imposed by the experimenter. Subjects with differing marginal costs of abatement must democratically select an institution to reduce a national greenhouse gas inventory. By majority vote, subjects can choose between communication and two carbon tax variants. The experimental literature from studies with homogenous subjects suggests that cooperation improves when policy is endogenously selected as opposed to exogenously enforced. Overall we find that endogenous choice does not improve cooperation when subjects are heterogeneous. Furthermore, we find that, in the absence of a binding commitment, cooperation declines with endogenous choice as the prevalence of free-riding increases.
    Keywords: heterogeneity; voting; communication; public good
    Date: 2012
  5. By: Miquel Pellicer; Eva Wegner (SALDRU, School of Economics, University of Cape Town)
    Abstract: This paper studies the causal effect of electoral systems on the performance of clientelistic vs. programmatic parties. We argue that, contrary to majoritarian systems, proportional systems disfavor clientelistic parties as voters can hardly be pivotal for electing their local patron. We test this insight using data from local elections in Morocco from 2003 and 2009. We use a regression discontinuity approach exploiting the fact that the law stipulates a population threshold below which the system is majoritarian and above which it is proportional. Results show a differential causal effect of proportional systems on programmatic and clientelisticparties: Clientelistic parties halve their seats and the programmatic party doubles them when crossing the threshold of proportionality. An important caveat is that the sample size around the threshold being relatively small, some coefficients are estimated relatively imprecisely. Fixed effects estimates exploiting a change in threshold from 2003 to 2009 yield qualitatively similar results.
    Date: 2012
  6. By: Gehring, Kai
    Abstract: Does economic freedom increase the utility of an average citizen? Public choice theory in particular has emphasized the shortcomings of governments and voting processes, and the advantages of relying on markets and individual decision making. However, an increasing amount of people are refusing to accept classical measures like GDP as signs of improvements in welfare. Data on subjective well-being allow economists to test if economic freedom really does improve the overall quality of life. However, existing studies have either failed to control for necessary control variables or lacked theoretical foundation. This paper explains economic and psychological reasons why the influence of economic freedom reaches beyond material well-being. Empirical results from a panel of 86 countries over the 1990-2005 period suggest that economic freedom indeed has a positive effect on happiness. Specifically legal security and property rights, access to sound money, and freedom from excessive regulation are significantly positive throughout the analysis. Regarding freedom to trade, the results show that particularly regulatory trade barriers have a significant negative effect. The positive effect depends on socio-demographic characteristics and is, on average, stronger for poorer countries and left-wing voters, and varies with age.
    Keywords: economic freedom; happiness; life Satisfaction; government size
    JEL: H11 A13 D60
    Date: 2012–07–04
  7. By: César Calderón; Roberto Duncan; Klaus Schmidt-Hebbel
    Abstract: The literature has argued that developing countries are unable to adopt counter-cyclical monetary and fiscal policies due to financial imperfections and unfavorable politicaleconomy 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 in extended 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: Interest rates ; Monetary policy ; Fiscal policy
    Date: 2012
  8. By: Yamamura, Eiji
    Abstract: This paper explores how a trust in government shared by neighbors is associated with individual preferences for income redistribution and individual perceptions regarding income tax burden. Three measures for trust in government are used: “trust in ministries and government agencies”, “trust in diet members”, and “trust in members of municipal councils”. After controlling for individual characteristics, the key findings are: (1) people are more likely to express preferences for income redistribution when trust in government in their residential area is high; (2) people are more likely to perceive their tax burden as low when trust in government in their residential area is high; and (3) when the sample is divided into high- and low-income earners, these results are only clearly observed for high-income earners and not low-income earners.
    Keywords: Trust in government; Redistribution; Perception of tax; Inequality
    JEL: D63 H20 D30 Z13
    Date: 2012–07–03

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