nep-pol New Economics Papers
on Positive Political Economics
Issue of 2012‒11‒24
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Exchange Rates, Soybean Supply Response, and Deforestation in South America By Richards, Peter D.
  2. Values for Markovian coalition processes By Ulrich Faigle; Michel Grabisch
  3. Moderating Government By Francesco De Sinopoli; Leo Ferraris; Giovanna Iannantuoni
  4. More can be Less: Hyper Plurality of Candidates, the Rationality of Electoral Choice and Need for Electoral Reform in India By Bhattacharya, Kaushik; Mitra, Subrata
  5. Inter-jurisdictional migration and the size of government By Giuranno, Michele G.; Rongili, Biswas
  6. Security of Property as a Public Good: Institutions, Socio-Political Environment and Experimental Behavior in Five Countries By Campos-Ortiz, Francisco; Putterman, Louis; Ahn, T.K.; Balafoutas, Loukas; Batsaikhan, Mongoljin; Sutter, Matthias
  7. Uncertainty, Electoral Incentives and Political Myopia By Alessandra Bonfiglioli; Gino Gancia
  8. Parties, institutions and political budget cycles at the municipal level By Marika Cioffi; Giovanna Messina; Pietro Tommasino
  9. An Inquiry into the Use of Illegal Electoral Practices and Effects of Political Violence By Roxana Gutiérrez Romero

  1. By: Richards, Peter D.
    Abstract: The advancement of South America’s agro-pastoral frontier has been widely linked to losses in biodiversity and tropical forests, with particular impacts on the Brazilian cerrado, the Atlantic Forest, and the Amazon. Here I consider an important, yet largely overlooked, driver of South America’s soybean expansion, namely the devaluation of local currencies against the US dollar in the late 1990s and early 2000s. Much interest has emerged in recent years over the environmental implications of soybean production in Brazil, with evidence of both direct incursions into moist tropical forest by soybean producers and of potential indirect effects, via the displacement of existing ranching operations. In this research I utilize historical trends in soybean prices, exchange rates, and cropland dedicated to soybean production in Bolivia, Paraguay, and Brazil to estimate the impact of currency devaluations on area of production. The results suggest that approximately 80,000km2, or 31 percent of the current extent of soybean production in these countries, emerged as a supply area response to the devaluation of local currencies in the late 1990s. The results also indicate that the more recent depreciation of the dollar and appreciation of the Brazilian real have counteracted a recent rise in global soybean prices, in the process sparing an estimated nearly 90,000 km2 from new cropland, 40,000 km2 of this in the Amazon alone.
    Keywords: Soybeans, Amazon, Exchange Rates, Environmental Economics and Policy, International Development, Land Economics/Use, Political Economy,
    Date: 2012
  2. By: Ulrich Faigle (Zentrum für Angewandte Informatik Köln - Universität zu Köln); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: Time series of coalitions (so-called scenarios) are studied that describe processes of coalition formation where several players may enter or leave the current coalition at any point in (discrete) time and convergence to the grand coalition is not necessarily prescribed. Transitions from one coalition to the next are assumed to be random and to yield a Markov chain. Three examples of such processes (the Shapley-Weber process, the Metropolis process, and an example of a voting situation) and their properties are presented. A main contribution includes notions of value for such series, \emph{i.e.}, schemes for the evaluation of the expected contribution of a player to the coalition process relative to a given cooperative game. Particular processes permit to recover the classical Shapley value. This methodology's power is illustrated with well-known examples from exchange economies due to Shafer (1980) and Scafuri and Yannelis (1984), where the classical Shapley value leads to counterintuitive allocations. The Markovian process value avoids these drawbacks and provides plausible results.
    Keywords: coalitional game; coalition formation process; exchange economy; Markov chain; Shapley value
    Date: 2012
  3. By: Francesco De Sinopoli; Leo Ferraris; Giovanna Iannantuoni
    Abstract: We consider a model where policy motivated citizens vote in two simultane- ous elections, one for the President who is elected by majority rule, in a single national district, and one for the Congressmen, each of whom is elected by ma- jority rule in a local district. The policy to be implemented depends not only on who is elected President but also on the composition of the Congress. We characterize the equilibria of the model using a conditional sincerity concept that takes into account the possibility that some voters may be simultaneously decisive in both elections. Such a concept emerges naturally in a model with trembles. A crucial feature of the solution is the moderation of Government.
    Date: 2011–07
  4. By: Bhattacharya, Kaushik; Mitra, Subrata
    Abstract: A large number of candidates have become a regular feature of Indian elections. Given the regulatory concerns the problem has evoked, the paper reviews the process of candidate entry in select developed countries. The review reveals the presence of diverse approaches, ruling out the necessity for extreme options like debarring fringe candidates – a course suggested by several Indian expert groups. Among various policy options, India had largely relied on electoral deposit. Our results suggest that an increase in deposit had a significant negative impact on candidate entry in India. However, for an effective deterrence, India needs to continue to keep deposits at a very high level compared to the current international benchmark, discriminating political participation of genuinely underprivileged groups. In contrast, the current level of signature requirement, a relatively unused policy tool in India, was found to be too low and could be easily increased further in order to be effective. We argue that given the high variation and lack of stability in candidate structure across regions and over time, a local approach on signature requirement -- as in the US -- could be an effective deterrent in India. Accordingly, we suggest that the Election Commission of India (ECI) should not only have the power to determine the deposit before each election, it should also have the power to change the minimum signature requirement across constituencies (subject to some standard checks and balances).
    Keywords: Candidate Entry; Electoral Regulation; Electoral Deposits; Signature Requirements; Indian Elections; Independent Candidates
    JEL: D72
    Date: 2012–11
  5. By: Giuranno, Michele G.; Rongili, Biswas
    Abstract: This paper develops a model of centralized public spending where decision-makers are the regional median voters instead of the national median voter of the received literature. Regional representatives decide the level of public spending by bargaining in the central legislature. We study how exogenous changes in the composition of the regional electorate either deteriorate or mitigate inter-jurisdictional redistributive conflicts and how these, in turn, influence the size of the government. We find the conditions under which migration-induced inter-regional income convergence (divergence) leads either to a bigger or a smaller government. Finally, the relationship between migration and efficiency is explored within the present framework.
    Keywords: Demographic Changes; Government Spending; Inequality; Redistribution; Bargaining; Political Economy Theory
    JEL: H50 R1 D30 H41 D78 H00
    Date: 2012–10–29
  6. By: Campos-Ortiz, Francisco (Bank of Mexico); Putterman, Louis (Brown University); Ahn, T.K. (Seoul National University); Balafoutas, Loukas (University of Innsbruck); Batsaikhan, Mongoljin (Georgetown University); Sutter, Matthias (University of Innsbruck)
    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 that the security of property varies with experimental institutions, and that our subject pools exhibit significantly different behaviors that correlate with country-level property security, trust and quality of government. Subjects from countries with higher levels of trust or perceptions of safety are more prone to abstain initially from theft and devote more resources to production, and subjects from countries with higher quality political institutions are more supportive of protecting property through compulsory taxation. This highlights the relevance of socio-political factors in determining countries' success in addressing collective action problems including safeguarding property rights.
    Keywords: experiment, efficiency, theft, property rights, socio-political factors
    JEL: C91 C92 D03 H41 P14
    Date: 2012–11
  7. By: Alessandra Bonfiglioli; Gino Gancia
    Abstract: We study the determinants of political myopia in a rational model of electoral accountability where political ability is ex-ante unknown and policy choices are not perfectly observable. On the one hand, elections improve accountability and allow to keep well-performing incumbents. On the other, politicians invest too little in costly policies with future returns in an attempt to signal high ability and increase their reelection probability. Contrary to the conventional wisdom, uncertainty reduces political myopia and may, under some conditions, increase social welfare. We use the model to study how political rewards can be set so as to maximize social welfare and the desirability of imposing a one-term limit to governments. The predictions of our theory are consistent with a number of stylized facts and with a new empirical observation documented in this paper: aggregate uncertainty, measured by economic volatility, is associated to better fiscal discipline in a panel of 20 OECD countries.
    Keywords: elections, political myopia, asymmetric information, uncertainty
    JEL: E6 H3
    Date: 2012–10
  8. By: Marika Cioffi (Bank of Italy); Giovanna Messina (Bank of Italy); Pietro Tommasino (Bank of Italy)
    Abstract: We study the magnitude, the determinants and the electoral consequences of pre-electoral fiscal manipulation by incumbent politicians. To this aim, we build a dataset covering all the Italian municipalities. We document several facts. First, there is a clear political cycle in the path of expenditures, driven by capital outlays. Second, only mayors not affiliated to a national political party induce an election-driven expenditure cycle. Third, pre-electoral expenditure boosts increase re-election prospects of the incumbent only if she is not affiliated to a party. These results are consistent with the hypothesis that national parties have both the incentives and the resources to curb the pre-electoral profligacy of party-affiliated mayors. We also consider the impact of formal institutions. In particular, we find that budget rules reduce the effects of the political cycle, whereas binding term limits seem to be ineffective.
    Keywords: political budget cycles, local public finance, political parties
    JEL: D72 H72
    Date: 2012–10
  9. By: Roxana Gutiérrez Romero (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: This article investigates whether vote-buying and the instigation of violence in the disputed 2007 Kenyan elections were strategically motivated, and whether those affected by electoral violence changed their views towards ethno-politics and the use of violence. To answer these questions, a panel survey conducted before and after the elections is combined with external indicators of electoral violence. We find that political parties targeted vote-buying towards specific groups to weaken the support of their political rivals and to mobilize their own supporters. Furthermore, parties instigated violence strategically in areas where they were less likely to win. Although the victims of violence would prefer that parties are no longer allowed to organize in ethnic or religious lines, they are more likely to identify in ethnic terms, support the use of violence and avoid relying on the police to resolve disputes. The overall findings suggest an increased risk of electoral-violence reoccurring.
    Keywords: Political competition, electoral violence, vote-buying, election fraud, ethnic identity, Kenya
    Date: 2012–11

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