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on Positive Political Economics |
| By: | Morrow, John; Carter, Michael |
| Abstract: | The political left turn in Latin America, which lagged its transition to liberalized market economies by a decade or more, challenges conventional economic explanations of voting behavior. This paper generalizes the forward-looking voter model to a broad range of dynamic, non-concave income processes. The model implies support for redistributive policies materializes rapidly if few prospects of upward mobility are present. In contrast, under imperfect information, a slow and polarizing shift toward redistributive preferences occurs. Simulation using fitted income dynamics suggests that imperfect information better accounts for the shift back to the left, and offers additional insights about political dynamics. |
| Keywords: | income dynamics, redistributive politics, polarization, Bayesian learning, Latin America |
| JEL: | D3 D7 D8 P1 |
| Date: | 2013–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45020&r=pol |
| By: | Arthur Schram (schram@uva.nl); Aljaz Ule (a.ule@uva.nl) |
| Abstract: | This paper investigates infrastructure investment in markets where regulation is subject to varying degrees of manipulation by elected politicians. Based on a model of price regulation in a market with increasing demand and long-term returns on investment we construct a multi-period game between a service provider, consumers with voting rights and elected decision makers. In each period the consumers elect a decision maker who may then regulate the price for service provision. Before an election the service provider chooses whether to increase its capacity. Investment is irreversible and profitable only with a sufficiently high price. We derive the subgame perfect equilibrium for this game and investigate the price and investment dynamics through an experiment with human subjects. The experimental results show that service providers invest when decision-makers' interests align with their own, though prices may rise inefficiently high when the regulatory framework is made independent of future political manipulation. Independency of regulation thus decreases efficiency and consumer surplus. In contrast, when decision-makers' interests do not align with service providers' we find efficiency only when regulation can be made independent from electoral dynamics. |
| Keywords: | Infrastructural investment; regulation; electoral competition; laboratory experiment |
| JEL: | L5 L43 D92 C9 |
| Date: | 2013–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130046&r=pol |
| By: | Raouf Boucekkine (Aix-Marseille University (Aix-Marseille School of Economics, CNRS & EHESS, IRES and CORE, Université Catholique de Louvain.); Fabien Prieur (LAMETA, Université Montpellier I and INRA); Klarizze Puzon (LAMETA, Universite Montpellier I.) |
| Abstract: | We consider a framework à la Wirl (1994) where political liberalization is the outcome of a lobbying differential game between a conservative elite and a reformist group, the former player pushing against political liberalization in opposition to the latter. In contrast to the benchmark model, we introduce uncertainty. We consider the typical case of an Arab oil exporter country where oil rents are fiercely controlled by the conservative elite. We assume that the higher the oil rents, the more reluctant to political liberalization the elite is. Two states of nature are considered (high vs low resource rents). We then compute the Market-perfect equilibria of the corresponding piecewise deterministic differential game. It is shown that introducing uncertainty in this manner increases the set of strategies compared to Wirl's original setting. In particular, it is shown that the cost of lobbying might be significantly increased under uncertainty with respect to the benchmark. This ultimately highlights some specificities of the political liberalization at stake in Arab countries and the associated risks. |
| Keywords: | Rent-seeking, lobbying, natural resources, Arab countries, piecewise deterministic differential games |
| JEL: | D72 C61 C73 |
| Date: | 2013–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:1317&r=pol |
| By: | Andreas Assiotis; Kevin Sylwester |
| Abstract: | Many studies examining whether corruption lowers economic growth do not consider if the effects of corruption differ across countries. Whether corruption produces the same effects everywhere or whether its effects are conditional on some country characteristics is an important question. We investigate the association between corruption and growth, where the marginal impact of corruption is allowed to differ across democratic and non democratic regimes. Using cross-country, annual data from 1984 to 2007, we regress growth on corruption, democracy, and their interaction. We find that decreases in corruption raise growth but more so in authoritarian regimes. Possible reasons are in autocracies corruption causes more uncertainty, is of a more pernicious nature, or is less substitutable with other forms of rent seeking. |
| Keywords: | Economic Growth, Democracy, Corruption |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:06-2013&r=pol |