nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒03‒09
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voter Turnout and Political Rents By Gani Aldashev
  2. The Dual Political Legislation Cycle in France By Fabio Padovano; Nicolas Gavoille
  3. Multiple Votes, Multiple Candidacies and Polarization By Arnaud Dellis; Mandar Oak
  4. Don't make war, make elections franchise extension and violence in XIXth-century Colombia By Leopoldo Fergusson; Juan F. Vargas
  5. Moving through the political participation hierarchy: A focus on personal values By Gail Pacheco; Barrett Owen
  6. A theory of communication in political campaigns By Denter, Philipp
  7. Mass media and public policy : global evidence from agricultural policies By Olper, Alessandro; Swinnen, Johan
  8. Credit rating agencies in emerging democracies : Guardians of fiscal discipline ? By Hanusch, Marek; Vaaler, Paul M.
  9. Does Political Competition Influence Human Development? Evidence from the Indian States. By Dash, Bharatee Bhushan; Mukherjee, Sacchidananda
  10. Political Leaders Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries By Bernd Hayo; Florian Neumeier
  11. Natural Disasters and Government Turnover By Ahlerup, Pelle
  12. Can Market Failure Cause Political Failure? By Ghatak, Maitreesh; Aney, Madhav S; Morelli, Massimo
  13. Governments and legislative production in France: the database (1959-2012) By Nicolas Gavoille
  14. Do State Campaign Finance Reforms Reduce Public Corruption? By Jeffrey Milyo; Adriana Cordis
  15. American politics, the presidency of the World Bank, and development policy By Lavelle, Kathryn C.

  1. By: Gani Aldashev
    Abstract: Is the decline in voter turnout an indicator of a worse health of a representative democracy? We build a simple probabilistic-voting model with endogenous turnout to address this question. We ?nd that a lower turnout caused by a higher cost of voting implies higher political rents. Contrarily, a lower turnout caused by a higher ideological mobility of voters or by a lower expressive bene?t of voting implies lower political rents. If voters have a civic-duty motive to vote which depends on the level of rents, multiple equilibria (a high-rents and a low-rents) can arise.
    Keywords: voter turnout, political rents, electoral competition.
    JEL: E62 H3
    Date: 2013
  2. By: Fabio Padovano (CREM CNRS UMR6211 and Condorcet Center, University of Rennes 1, France - DIPES, University Roma Tre, Italy); Nicolas Gavoille (CREM CNRS UMR6211 and Condorcet Center, University of Rennes 1, France)
    Abstract: This paper tests the Political Legislation Cycle theory on French data. The theory predicts a peak of legislative production in the pre-electoral period, when the legislator increases voters’ utility in order to be reelected. France is unique in that two elections set up the pace of political life: the presidential and the legislative elections which potentially generate a dual legislation cycle. A hierarchical Poisson model is implemented on a sample containing the monthly legislative production from January 1959 to March 2012. We found that 1) a dual cycle of the production of laws emerges, following both the presidential and the legislative elections, 2) since the constitutional reform of 2000, which synchronized the two elections, the magnitude of the cycle increased, and 3) the President of the Republic does not have an impact on the legislative production, but relies on the government.
    Keywords: Political Legislation Cycle, Economic theory of legislation, Political Budget Cycle, Hierarchical Poisson regression
    JEL: D72 C49 H61 H62
    Date: 2013–01
  3. By: Arnaud Dellis; Mandar Oak (School of Economics, University of Adelaide)
    Abstract: We use the citizen-candidate model to study the differential incentives that different voting rules provide for candidate entry, and their effect on policy polarization. In particular, we show that allowing voters to cast multiple votes leads to equilibria which support multiple candidate clusters. These equilibria are more polarized than those obtained under the Plurality Rule. We also show that equilibria under the Alternative Vote Rule do not exhibit multiple candidate clusters and they are less polarizing than those under the Plurality Rule. These results differ from those obtained in the existing literature, where the set of candidates is exogenous. Thus, our paper contributes to the scholarly literature as well as public debate on the merits of using alternative voting rules by highlighting the importance of endogenous candidacy.
    Keywords: plurality, approval voting, citizen-candidate
    Date: 2013–02
  4. By: Leopoldo Fergusson; Juan F. Vargas
    Abstract: This paper studies the effect of strengthening democracy, as captured by an increase in voting rights, on the incidence of violent civil conflict in nineteenth-century Colombia. Empirically studying the relationship between democracy and conflict is challenging, not only because of conceptual problems in defining and measuring democracy, but also because political institutions and violence are jointly determined. We take advantage of an experiment of history to examine the impact of one simple, measurable dimension of democracy (the size of the franchise) on conflict, while at the same time attempting to overcome the identification problem. In 1853, Colombia established universal male suffrage. Using a simple difference-indifferences specification at the municipal level, we find that municipalities where more voters were enfranchised relative to their population experienced fewer violent political battles while the reform was in effect. The results are robust to including a number of additional controls. Moreover, we investigate the potential mechanisms driving the results. In particular, we look at which components of the proportion of new voters in 1853 explain the results, and we examine if results are stronger in places with more political competition and state capacity. We interpret our findings as suggesting that violence in nineteenth-century Colombia was a technology for political elites to compete for the rents from power, and that democracy constituted an alternative way to compete which substituted violence.
    Date: 2013–03–03
  5. By: Gail Pacheco (Department of Economics, Faculty of Business and Law, Auckland University of Technology); Barrett Owen
    Abstract: This study empirically explores the determinants of political participation. Using recent data from the European Social Survey (2010/2011), we investigate the relationship between political participation and personal values, via use of the Schwartz (1992) values inventory. Political activities are categorised into levels of participation (none, weak, medium, strong) based on the cost of participating and how unconventional the activity is. A generalised ordered logit model is applied, and finds that individuals that are more open to change and more self-transcendent, are more likely to participate. Furthermore, the patterns of influence (with respect to the majority of individual characteristics) are not monotonic in nature, as you rise through the levels of political participation, highlighting some key areas that future research could tackle. These findings are important for researchers and policy makers who may be interested in understanding determinants of, and/or enhancing the level of political participation in an economy.
    Keywords: personal values, political participation
    JEL: D72 P16
    Date: 2013–02
  6. By: Denter, Philipp
    Abstract: In this paper I develop a formal theory of campaign communications. Voters have priors about the quality of candidates' policies in the different policy issues and about the issues’ relative importance. Candidates spend time or money (TV ads, public speeches, etc.) in an effort to influence voters' decision at the ballot. Influence has two simultaneous effects: (i) it increases the quality of the policy in the issue as perceived by the voters through policy advertising and (ii) it makes the issue more salient through issue priming, thereby increasing the issue's perceived importance. A strategy is an allocation of influence activities to the different issues or topics. I show conditions under which candidates’ strategies converge or diverge, which issues – if any – will dominate the campaign, and under what conditions candidates are forced to focus on issues in which they are perceived to be weak. I develop a set of novel testable predictions and discuss the model’s predictive power by example of the 2008 presidential campaign in the U.S.
    Keywords: Multi issue campaign, campaign communication, policy advertising, issue priming
    JEL: D01 D72 P16
    Date: 2013–02
  7. By: Olper, Alessandro; Swinnen, Johan
    Abstract: Mass media play a crucial role in information distribution and in the political market and public policy making. Theory predicts that information provided by the mass media reflects the media's incentives to provide news to different groups in society and affects these groups'influence in policy making. The paper use data on agricultural policy from 69 countries spanning a wide range of development stages and media markets to test these predictions. The empirical results are consistent with theoretical hypotheses that public support for agriculture is affected by the mass media. In particular, an increase in media (television) diffusion is associated with policies that benefit the majority to a greater extent and is correlated with a reduction in agriculture taxation in poor countries and a reduction in the subsidization of agriculture in rich countries, ceteris paribus. The empirical results are consistent with the hypothesis that increased competition in commercial media reduces transfers to special interest groups and contributes to more efficient public policies.
    Keywords: Economic Theory&Research,Population Policies,Public Sector Corruption&Anticorruption Measures,Language&Communication,Labor Policies
    Date: 2013–02–01
  8. By: Hanusch, Marek; Vaaler, Paul M.
    Abstract: Credit rating agencies have drawn criticism for failing to anticipate and deter root causes of the 2008-2009 financial crisis in the United States. However, this paper presents evidence that credit rating agencies regularly anticipate and deter governments in emerging democracies from opportunistic borrowing and potential financial crises related to elections and the political budget cycle behavior they encourage. The paper considers a sample of 18 such countries holding 32 presidential elections from 1989 to 2004. The analysis shows that credit rating agencies induced greater fiscal discipline during election periods when governments had incentives to borrow opportunistically for short-term electoral gain. Countries with higher credit rating agency sovereign ratings borrowed less than lower-rated countries in election periods, but borrowed more in non-election periods. Credit rating agencies promoted fiscal discipline during increasingly frequent election periods in emerging democracies.
    Keywords: Debt Markets,Parliamentary Government,Bankruptcy and Resolution of Financial Distress,Emerging Markets
    Date: 2013–03–01
  9. By: Dash, Bharatee Bhushan (National Institute of Public Finance and Policy); Mukherjee, Sacchidananda (National Institute of Public Finance and Policy)
    Abstract: Recently, it has been argued that political competition may have similar effects on economic performance as market competition. This study empirically examines this proposition by linking political competition with the Human Development Index (HDI) of the Indian states. The findings suggest that politically competitive governments perform well along the HDI. A more detailed analysis also shows that the rural India benefits the most from the intense political competition as compared to urban India. We also found that if the same government rules a state for a relatively longer period, it helps the state in achieving higher HDI score. Increasing voter participation found to be positively associated with HDI score, but this finding is confined to the sample of major Indian states only. Increasing public spending on developmental activities is also found to have a positive and significant effect on HDI performance. These findings are robust to various forms of sensitivity analyses.
    Keywords: Political competition ; Human development ; Indian states
    Date: 2013–02
  10. By: Bernd Hayo (University of Marburg); Florian Neumeier (University of Marburg)
    Abstract: This paper empirically analyses the relationship between political leaders socioeconomic backgrounds and public budget deficits utilising panel data on 21 OECD countries from 1980 to 2008. Building on sociological, as well as economic, research, we argue that the socioeconomic status of political decision-makers, i.e., presidents or prime ministers, is an important determinant of fiscal budget decisions. Our theory-consistent findings show that the tenures of lower-class leaders i.e., leaders of low socioeconomic status are associated with a deficit-to-GDP ratio which is 1.6 percentage points higher than that during tenures of upperclass leaders.
    Keywords: Budget deficit, political leaders, socioeconomic status, time preference.
    JEL: E62 H11 H62 Z13
    Date: 2013
  11. By: Ahlerup, Pelle (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Natural disasters have been linked to both violent conflict and, in some settings, poor economic growth, but do they also drive government parties out of office? We study gov- ernment turnover in a global sample of more than 200 elections to the executive. Natural disasters are associated with more frequent turnover, but not in highly democratic countries. The e¤ect of geophysical disasters is especially strong, and even stronger when endogeneity is addressed.<p>
    Keywords: natural disasters; elections
    JEL: D72 P48 Q54
    Date: 2013–02–20
  12. By: Ghatak, Maitreesh (London School of Economics); Aney, Madhav S (Singapore Management University); Morelli, Massimo (Columbia University)
    Abstract: We study how ineffciencies of market failure may be further amplified by political choices made by interest groups created in the inefficient market. We take an occupational choice framework, where agents are endowed heterogeneously with wealth and talent. In our model, market failure due to unobservability of talent endogenously creates a class structure that affects voting on institutional reform. In contrast to the world without market failure where the electorate unanimously vote in favour of surplus maximising institutional reform, we nd that the preferences of these classes are often aligned in ways that creates a tension between surplus maximising and politically feasible institutional reforms.
    Keywords: occupational choice, adverse selection, property rights, asset liquidation, po- litical failure, market failure
    Date: 2013
  13. By: Nicolas Gavoille (CREM CNRS UMR6211, Condorcet Center, University of Rennes 1, France)
    Abstract: This article introduces a new database focusing on the legislative production as well as the characteristics of the governments in France, from the early months of the Vth Republic in January 1959 to the end of the XIIIth legislature in March 2012. It provides a large amount of variables covering several aspects of the legislative production, classified in four different groups: composition of the governments, political constraints, institutional variables and legislative production. Most of the variables are observed at a monthly rate.
    Keywords: Economic theory of legislation, Legislative production function, Political fragmentation, Political Legislation Cycle
    JEL: Y10 H69 D72
    Date: 2013–01
  14. By: Jeffrey Milyo (Department of Economics, University of Missouri-Columbia); Adriana Cordis
    Abstract: The Supreme Court has long held that campaign finance regulations are permissible for the purpose of preventing corruption or the appearance of corruption. Yet the implied hypothesis that campaign finance reforms are effective tools for combating public corruption has gone essentially untested. We conduct the first systematic evaluation of the effects of campaign finance laws on actual corruption rates in the states. We examine the effects of state reforms on both convictions and filings in public corruption cases over the last 25 years; overall, we find no strong or convincing evidence that state campaign finance reforms reduce public corruption. Earlier research that employs similar methods also finds little support for the contention that state campaign finance regulations increase public trust and confidence in government. Together, these results call into question the legal rationale for campaign finance regulations.
    Keywords: public corruption, campaign finance, regulation
    JEL: D72 D78 H70 K40
    Date: 2013–01–17
  15. By: Lavelle, Kathryn C.
    Abstract: The World Bank's president has been an American by tradition. Yet little work has explored the consequences for this connection in influencing visions of development in the organization across time. This paper uses evidence from archives, congressional hearing records, and memoirs and histories of World Bank presidents to investigate United States-World Bank relations and development policy during four presidencies--Eugene Meyer, Eugene Black, Robert McNamara, and James Wolfensohn. The author argues that at times the political arrangements had the effect of pushing the Bank toward greater institutional independence from the United States, particularly when partisanship in American politics rose and new United States presidential administrations came into office with the World Bank president's term holding over from before. At other times, United States-World Bank connections pulled the Bank into foreign policy issues in the United States that the Bank might not otherwise have addressed when advocates pressed their case on Capitol Hill.
    Keywords: Banks&Banking Reform,Public Sector Corruption&Anticorruption Measures,Corporate Law,Access to Finance,Hazard Risk Management
    Date: 2013–03–01

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