nep-pol New Economics Papers
on Positive Political Economics
Issue of 2012‒10‒20
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. To approve or not to approve: this is not the only question By Alcantud, José Carlos R.; Laruelle, Annick
  2. To Redistribute or Not: A Politician's Dilemma By Fabiana Machado
  3. The consequences of being forced to vote: Evidence from Brazil's dual voting system By Fernanda L L de Leon; Renata Rizzi
  4. A Gubernatorial Helping Hand? How Governors Affect Presidential Elections By Erikson, Robert S.; Snyder, Jr., James M.; Folke, Olle
  5. The Golden Hello and Political Transitions By Toke, A.S.; Albornoz, F.; Gassbner, M.
  6. Security of Property as a Public Good: Institutions, Socio-Political Environment and Experimental Behavior in Five Countries By Francisco Campos-Ortiz; Louis Putterman; T. K. Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Matthias Sutter
  7. Peers' influence on political choices: Evidence from random classroom assignments in college By Camila Campos; Fernanda L L de Leon
  8. GINI DP 43: Educational Selectivity and Preferences about Education Spending By Daniel Horn
  9. The political economy of infrastructure planning in Sweden: supporting analyses By Jussila Hammes, Johanna
  10. Economic scenario of United States of America before and after 2012 U.S. Presidential Election By Sinha, Pankaj; Singhal, Anushree; Sondhi, Kriti
  11. Constituencies and legislation: the fight over the McFadden Act of 1927 By Rodney Ramcharan; Rajan G. Raghuram
  12. Do Political Blogs Matter? Corruption in State-Controlled Companies, Blog Postings, and DDoS Attacks By Enikolopov, Ruben; Petrova, Maria; Sonin, Konstantin

  1. By: Alcantud, José Carlos R.; Laruelle, Annick
    Abstract: This paper deals with electing candidates. In elections voters are frequently offered a small set of actions (voting in favor of one candidate, voting blank, spoiling the ballot, and not showing up). Thus voters can express neither a negative opinion nor an opinion on more than one candidate. Approval voting partially fills this gap by asking an opinion on all candidates. Still the choice is only between approval and non approval. However non approval may mean disapproval or just indifference or even absence of sufficient knowledge for approving the candidate. In this paper we characterize the dis&approval voting rule, a natural extension of approval voting that distinguishes between indifference and disapproval.
    Keywords: Voting rule; approval voting; vote profile
    JEL: D71 D72
    Date: 2012–10–11
  2. By: Fabiana Machado
    Abstract: A prerequisite for the adoption of redistributive policies in a democracy is that there be elected representatives who are either committed to or who have an incentive to advocate for such policies. To evaluate the prospects of such an outcome, this pa- per develops a theory exploring two fundamental factors at play during elections – the critical political stage where citizens choose their representatives. The first is the lack of information about the policy inclinations of candidates. The second refers to two motivations compelling candidates into politics (and possibly at odds with each other): the opportunity to implement one’s favored policies or to extract rents. Results indicate the existence of an equilibrium where high inequality and low redistribution can coexist. The theory’s assumptions and outcomes are explored empirically using individual-level data collected in presidential election years in Brazil.
    JEL: C11 C70 D72
    Date: 2012–09
  3. By: Fernanda L L de Leon (University of East Anglia); Renata Rizzi (Universidade de Sao Paulo)
    Abstract: This paper provides new estimates for the e§ects of compulsory voting on in- dividuals. The identification relies on the Brazilian dual voting system-voluntary and compulsory-whose exposure is determined by date of birth. Using RD and IV approaches and data from a self-collected survey, we find that the compulsory leg- islation leads to a significant increase in voter turnout. These changes are followed by a sizable increase in the probability that individuals will express preference for a political party, but not by an increase in political knowledge among the popu- lation. Moreover, we find that a first compulsory voting experience permanently a§ects individuals’ preferences.
    Date: 2012–09–19
  4. By: Erikson, Robert S. (Columbia University); Snyder, Jr., James M. (Harvard University and NBER); Folke, Olle (Research Institute of Industrial Economics (IFN))
    Abstract: It is commonly argued in the media that a presidential candidate will be helped in a state by having a governor of the same party in office. However, there is little research to support this claim. To address this question we use a regression discontinuity design. The basic idea behind this is that in very close elections the party of the governor is decided essentially by a coin flip. Focusing on these very close elections therefore allows us to estimate the causal effect of gubernatorial party control. We show that a presidential candidate is not helped, but in fact hurt, by having a governor from the same party. On average, winning the governor’s election leads to a 2–3 percentage point reduction in a state’s presidential vote share in the following election. Using a similar methodology, we also show that voters punish the presidential party when voting for governor in midterm years. Having established these relationships, we explore why this is the case. One possible explanation is a variation of the ideological balancing argument, whereby voters’ choices for one office are conditional on which party holds office at a different level.
    Keywords: Presidential Elections; Regression Discontinuity Design; Electoral Balancing
    JEL: H00
    Date: 2012–10–10
  5. By: Toke, A.S.; Albornoz, F.; Gassbner, M.
    Abstract: We analyze the influence of IMF and World Bank programs on political regime transitions. We develop an extended version of Acemoglu and Robinson's [American Economic Review 91, 2001] model of political transitions to show how the anticipation of new loans from international financial institutions can trigger political transitions which would not otherwise have taken place. We test this unexplored implication of the theory empirically. We find in a world sample from 1970 to 2002 that the anticipation of receiving new programs immediately after a political regime transition increases the probability of a transition from autocracy to democracy and reduces the probability of democratic survival.
    Keywords: political transitions, autocracy, democracy, international financial institutions
    JEL: O19 D72 F59 F53
    Date: 2012–10–08
  6. By: Francisco Campos-Ortiz; Louis Putterman; T. K. Ahn; Loukas Balafoutas; Mongoljin Batsaikhan; Matthias Sutter
    Abstract: We study experimentally the protection of property in five widely distinct countries-Austria, Mexico, Mongolia, South Korea and the United States. Our main results are the correlations between experimental choices with indicators regarding the security of property, trust and the quality of government. We show that subjects from countries with: (1) higher levels of trust or perceptions of safety are more prone to abstain from plundering and devote less resources to protect their property; and (2) high-quality political institutions support collective protection of property through taxation more often. Our results highlight the relevance of socio-political factors in determining countries' success in addressing collective action problems including safeguarding property rights.
    Keywords: Property Rights, Efficiency, Experiment, Socio-Political Factors.
    JEL: C91 C92 D03 H41 P14
    Date: 2012–10
  7. By: Camila Campos (Insper); Fernanda L L de Leon (University of East Anglia)
    Abstract: Social networks are believed to a§ect individuals’ political views; however, quantifying this e§ect and understanding the channels behind this influence are empirically challenging. This study investigates peer e§ects on political behavior, using a self-collected survey among freshmen from the largest university in Brazil. The identification relies on the random assignment of freshmen to classrooms. We found that a relevant peer influence occurs through classmates’ political involve- ment, increasing students’ political participation, knowledge and moving their ideologies toward the center. Other mechanisms of influence, such as social pres- sure to adopt certain views or reinforcement of one’s own preferences, were not observed in the data.
    Date: 2012–10–07
  8. By: Daniel Horn (Institute of Economics, Hungarian Academy of Sciences, TÁRKI Social Research Institute (TÁRKI))
    Abstract: This paper argues that preferences for educational redistribution are not driven by income but by the level of education. While income and preferences for educational redistribution follow the conventional story – rich want less spending –, the level of education associates positively with spending on education, which effect is altered by the selectivity of the education system. Highly educated citizens are relatively more likely to support government spending on education in countries where the system is selective compared to highly educated people’s preferences in countries with comprehensive systems.
    Keywords: spending on education, selectivity, preferences on government spending, ISSP1996, ISSP2006
    Date: 2012–04
  9. By: Jussila Hammes, Johanna (VTI)
    Abstract: We study factors affecting the choice of objects to be included in the National Transport Infrastructure Plans for 2004-2015 and for 2010-2021 in Sweden, controlling for the CBA results. The present working paper contains both a comparative analysis between the two Plans, and sensitivity analyses for the econometric regressions of the 2010-21 Plan conducted in Jussila Hammes (forthcoming). We find that the centre-right government tended to favour those counties that voted for it. Both a centre-right and a centre-left government have favoured rail investments over road. Lobbying also matters; projects with co-financing from the local municipality(ies) have a greater probability of being included in the Plan. Industry lobbying has at best a borderline significant effect and affects the probability of a project being included in the Plan positively.
    Keywords: Transport infrastructure plan; Lobbying; Co-financing; Freight benefits; Politics
    JEL: D61 D72 L98
    Date: 2012–10–04
  10. By: Sinha, Pankaj; Singhal, Anushree; Sondhi, Kriti
    Abstract: This paper examines the economic scenario of the United States, before and after the 2012 US Presidential election by analyzing various macroeconomic variables such as GDP, Public Debt, Exchange Rate, Social Benefit Spending, Trade, Budget Deficit/ Surplus, Unemployment Rate, Inflation and others. We forecast the macroeconomic variables post 2012 using ARIMA modeling and present a picture of the U.S. economy post 2012 US Presidential election. With GDP growth being the major focus, both the parties are formulating policies to promote faster economic recovery by making reforms to reduce the $1 trillion deficit and maintain a balanced budget. Democratic Candidate Barack Obama has policies in place to increase investment in healthcare and education, open up opportunities, favour middle class families, a better trained workforce, double up exports and cuts in military expenses. Whereas Republican Candidate Mitt Romney’s focus is to achieve energy independence, open trade, champion small businesses and lower the tax rates along with lowering expenses. In this paper, we analyze the impact of expected outcome of 2012 U.S. presidential election on various macroeconomic variables of U.S. economy. The findings indicate that GDP is expected to grow at an average of about 2 percent and that a recession is not impending in 2013. Also going by the current policies, it is forecasted that U.S. exports and imports are expected to increase as the U.S. economy recovers. Barack Obama’s policies will inflate the Budget deficit while Mitt Romney’s strategy will lower the US Public Debt and Budget deficit. ARIMA models indicate that with the continuance of present government’s policies, budgetary deficit is estimated to decrease to 4.55 percent of GDP in 2014 from a maximum of 10.1 percent of GDP in 2010.
    Keywords: ARIMA; Box-Jenkins; U.S. economy; forecast; US 2012 presidential election; macroeconomic variables; presidential debate
    JEL: O1 F4 N1 O11 C53 C5 O24 E17 E6 F31
    Date: 2012–10–04
  11. By: Rodney Ramcharan; Rajan G. Raghuram
    Abstract: The McFadden Act of 1927 was one of the most hotly contested pieces of legislation in U.S. banking history, and its influence was still felt over half a century later. The act was intended to force states to accord the same branching rights to national banks as they accorded to state banks. By uniting the interests of large state and national banks, it also had the potential to expand the number of states that allowed branching. Congressional votes for the act therefore could reflect the strength of various interests in the district for expanded banking competition. We find congressmen in districts in which landholdings were concentrated (suggesting a landed elite), and where the cost of bank credit was high and its availability limited (suggesting limited banking competition and high potential rents), were significantly more likely to oppose the act. The evidence suggests that while the law and the overall regulatory structure can shape the financial system far into the future, they themselves are likely to be shaped by well organized elites, even in countries with benign political institutions.
    Date: 2012
  12. By: Enikolopov, Ruben; Petrova, Maria; Sonin, Konstantin
    Abstract: Though new media has become a popular source of information, it is less clear whether or not they have a real impact on economic activity. In authoritarian regimes, where the traditional media are not free, this impact might be especially pronounced. We study consequences of blog postings of a popular Russian anti-corruption blogger and shareholder activist Alexei Navalny on the stock prices of state-controlled companies. In an event-study analysis, we find a negative effect of company-related blog postings on both daily abnormal returns and within-day 5-minute returns. To cope with identification problem, we use the incidence of distributed denial-of-services (DDoS) attacks as a variable that negatively affects blog postings, but is orthogonal to other determinants of asset prices. There is a substantial positive effect of the DDoS attacks on abnormal returns of the companies Navalny wrote about, and this effect is increasing in amount of his attention to these companies. the effect is decreasing in attention to posts of other top bloggers, increasing in visitors’ attention to Navalny’s posts, and is consistent with more pronounced individual, in contrast to institutional, trading. Finally, there are long-term effects of certain types of posts on stock returns, trading volume, and volatility. Overall, our evidence implies that blog postings about corruption in state-controlled companies have a negative causal impact on stock performance of these companies.
    Keywords: Alexei Navalny; blogs; corruption; political economy; Russia
    JEL: L82 L86 P16
    Date: 2012–10

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