nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒04‒06
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political competition, learning and the consequences of heterogeneous beliefs for long-run public projects By Antony Millner; Hélène Ollivier; Leo Simon
  2. Who's Favored by Evaluative Voting? An Experiment Conducted During the 2012 French Presidential Election By Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier; Isabelle Lebon
  3. More Political Parties, More Redistribution? Empirical Evidence from State Governments in India By Yuko Mori
  4. The Political Economy of Deforestation in the Tropics By Robin Burgess; Matthew Hansen; Benjamin Olken; Peter Potapov; Stefanie Sieber
  5. Political limits on the world oil trade : firm-level evidence from US firms By Kashcheeva, Mila
  6. Empirical Analysis of Elections and Voting Behavior in India By Yuko Mori
  7. Economics versus Politics: Pitfalls of Policy Advice By Daron Acemoglu; James A. Robinson
  8. The Dynamics of Lobbying under Uncertainty: On Political Liberalization in Arab Countries By Raouf Boucekkine; Fabien Prieur; Klarizze Puzon
  9. Domestic politics and the formation of international environmental agreements By Simon Dietz; Carmen Marchiori; Alessandro Tavoni
  10. What shapes the generosity of short- and long-term benefits? A political economy approach. By Baptiste Françon; Michaël Zemmour
  11. Why Are Women Less Democratic Than Men? Evidence from Sub-Saharan African Countries By Cecilia García-Peñalosa; Maty Konte
  12. On the Realizability of Social Preferences in Three-Party Parliamentary By Kazuya Kikuchi

  1. By: Antony Millner; Hélène Ollivier; Leo Simon
    Abstract: An incumbent political party, who cares only about voters' welfare, faces future political competition from a similarly well-intentioned party whose beliefs about the consequences of a `long-run' public policy are different from its own. We show that when the incumbent can endogenously influence whether learning occurs (active learning), future political competition gives her an incentive to distort her policy choices so as to reduce uncertainty and disagreement in the future. This incentive pushes all incumbents' policies in the same direction. We demonstrate this mechanism in a two period model of the regulation of a stock pollutant that combines the literature on uncertainty and learning in intertemporal choice with a simple model of political competition. If the interaction between active learning and political competition is strong enough, all incumbents, regardless of their beliefs, will emit more than they would like. Our model thus offers a candidate explanation for the weakness of long-run environmental policy in democracies that applies even in an ideal world in which politicians' objectives are aligned with voters'. The mechanism we identify is likely to apply in many long-run public policy contexts.
    Date: 2013–01
  2. By: Antoinette Baujard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Frédéric Gavrel (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Herrade Igersheim (BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Jean-François Laslier (PREG - Pole de recherche en économie et gestion - CNRS : UMR7176 - Polytechnique - X); Isabelle Lebon (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie)
    Abstract: Under evaluative voting, the voter freely grades each candidate on a numerical scale, with the winning candidate being determined by the sum of the grades they receive. This paper compares evaluative voting with the two-round system, reporting on an experiment which used various evaluation scales, conducted during the first round of the 2012 French presidential election. Invitations to participate in the study were extended to around 5,000 voters in three cities, and the experiment attracted 2,340 participants. Basing our argument on the ranks, relative scores, and grade profiles of candidates, we show that the two-round system favors "exclusive" candidates, that is candidates who elicit strong feelings, while evaluative rules favor "inclusive" candidates, that is candidates who attract the support of a large span of the electorate. These differences are explained by two complementary reasons: the opportunity for the voter to support several candidates under evaluative voting rules, and the specific pattern of strategic voting under the official, two-round voting rule.
    Keywords: Voting, In Situ Experiment, Evaluative Voting, Approval Voting, Two-round system
    Date: 2013–03–20
  3. By: Yuko Mori
    Abstract: This paper uses panel data accumulated from 1972 to 1997 to investigate the effect of political systems on the public expenditure of state governments in India. We focus on the decline of the Indian National Congress, which was the dominant party until the mid 1960s, and the development of regional parties (RPs) that are based on specific religious or caste groups. The effects of changes in party systems are carefully distinguished from those in voter preference, which affect party systems and government policy. We find that the decline of a dominant party increases development expenditure, which suggests that little political competition is bad for development. By contrast, an increase in seats occupied by RPs decreases development expenditure and increases non-development expenditure. This suggests that, in a pluralistic society, the diversity of political parties does not contribute to an economic development and a reduction in poverty.
    Date: 2013–03
  4. By: Robin Burgess; Matthew Hansen; Benjamin Olken; Peter Potapov; Stefanie Sieber
    Abstract: Tropical deforestation accounts for almost one-Öfth of greenhouse gas emissions worldwide and threatens the worldís most diverse ecosystems. The prevalence of illegal forest extraction in the tropics suggests that understanding the incentives of local bureaucrats and politicians who enforce forest policy may be critical to combating tropical deforestation. We Önd support for this thesis using a novel satellite-based dataset that tracks annual changes in forest cover across eight years of institutional change in post-Soeharto Indonesia. Increases in the numbers of political jurisdictions are associated with increased deforestation and with lower prices in local wood markets, consistent with a model of Cournot competition between jurisdictions. We also show that illegal logging and rents from unevenly distributed oil and gas revenues are short run substitutes, but this e§ect disappears over time as political turnover occurs. The results illustrate how incentives faced by local government o¢ cials a§ect deforestation, and provide an example of how standard economic theories can explain illegal behavior.
    Date: 2012–04
  5. By: Kashcheeva, Mila
    Abstract: International politics affect trade patterns, especially for firms in extractive industries. We construct the firm-level dataset for the U.S. oil-importing companies over 1986-2010 to test whether the state of international relations with the trading partners of the U.S. affect importing behavior of the U.S. firms. To measure "political distance" between the U.S. and her trading partners we use voting records for the UN General Assembly. We find that the U.S. firms, in fact, import significantly less oil from the political opponents of the U.S. Our conjecture is that the decrease in oil imports is mainly driven by large, vertically-integrated U.S. firms that engage in foreign direct investment (FDI) overseas.
    Keywords: United States, Petroleum, International trade, Petroleum industry, International relations, Oil imports, Political distance, FDI
    JEL: F14 F51 Q34
    Date: 2013–03
  6. By: Yuko Mori
    Date: 2013–03
  7. By: Daron Acemoglu; James A. Robinson
    Abstract: The standard approach to policy-making and advice in economics implicitly or explicitly ignores politics and political economy, and maintains that if possible, any market failure should be rapidly removed. This essay explains why this conclusion may be incorrect; because it ignores politics, this approach is oblivious to the impact of the removal of market failures on future political equilibria and economic efficiency, which can be deleterious. We first outline a simple framework for the study of the impact of current economic policies on future political equilibria and indirectly on future economic outcomes. We then illustrate the mechanisms through which such impacts might operate using a series of examples. The main message is that sound economic policy should be based on a careful analysis of political economy and should factor in its influence on future political equilibria.
    JEL: O20 P16 P48
    Date: 2013–03
  8. By: Raouf Boucekkine (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IRES-CORE - Université Catholique de Louvain); Fabien Prieur (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - Université Montpellier I - CNRS : UMR5474 - Institut national de la recherche agronomique (INRA) : UR1135 - Centre international de hautes études agronomiques méditerranéennes [CIHEAM]); Klarizze Puzon (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - Université Montpellier I - CNRS : UMR5474 - Institut national de la recherche agronomique (INRA) : UR1135 - Centre international de hautes études agronomiques méditerranéennes [CIHEAM])
    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
    Date: 2013–03
  9. By: Simon Dietz; Carmen Marchiori; Alessandro Tavoni
    Abstract: The theory of international environmental agreements overwhelmingly assumes that governments engage as unitary agents. Each government makes choices based on benefits and costs that are simple national aggregates, and similarly on a single set of national-level motivations, together drawing a strong analogy with the behaviour of an individual or firm in other strategic contexts. In reality, however, various domestic special interests shape environmental policy, including how national governments cooperate on cross-border issues. Therefore in this paper we introduce to a classic model of international environmental cooperation the phenomenon of domestic political competition, whereby lobby groups seek to influence policy by offering to fund political campaigning. We use the model to establish some general conditions for the effects of lobbying on the stringency of policy and the size of coalitions cooperating to provide an environmental good. Using specific functional forms, we obtain a range of further results, including circumstances in which the omission of lobbying results in environmental protection being underestimated.
    Date: 2012–08
  10. By: Baptiste Françon (Centre d'Economie de la Sorbonne); Michaël Zemmour (Centre d'Economie de la Sorbonne)
    Abstract: Degressivity of unemployment benefits is a major feature of social protection in most industrialised countries: the replacement rate (the ratio between the level of welfare benefits and the previous income) typically declines with the length of the unemployment spell. Moreover degressivity of unemployment benefits has significant distributive effects as the risk of long-term unemployment varies from one individual to another. This paper proposes a formal model of political support for unemployment insurance that takes into account the decrease in the level of benefits over time. A discount factor is introduced that diminishes the level of benefits for long-term unemployed. The main predictions of our model are the following: i) Unemployment insurance size negatively depends on both the average level and the heterogeneity of unemployment risk ii) The degressivity increases with the average level and the heterogeneity in the individual level of employability defined as the probability of finding a job when unemployed. These predictions are then tested using a dataset of 24 OECD countries. Empirical results are consistent with the model.
    Keywords: Long-term unemployment, political economy, replacement rate, risk heterogeneity, unemployment insurance, voting behaviour.
    JEL: D72 J65 P16
    Date: 2013–03
  11. By: Cecilia García-Peñalosa (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Maty Konte (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))
    Abstract: A substantial literature has examined the determinants of support for democracy and although existing work has found a gender gap in democratic attitudes, there have been no attempts to explain it. In this paper we try to understand why females are less supportive of democracy than males in a number of countries. Using data for 20 Sub-Saharan African countries, we test whether the gap is due to individual differences in policy priorities or to country-wide characteristics. We find that controlling for individual policy priorities does not offset the gender gap, but those women who are interested in politics are more democratic than men. Furthermore, our results indicate that the gap disappears in countries with high levels of human development and political rights.
    Keywords: Support for democracy; gender gap; policy priorities; institutions
    Date: 2013–03
  12. By: Kazuya Kikuchi
    Abstract: It is widely held that compared with a legislature with a single majority party, a multi-party legislature achieves more precise representation of society. But the scope of such an advantage that a multi-party system has is rarely discussed. We study the range of social preferences that a three-party system can realize through majority voting. We present a procedure to construct a three-party system that will induce the policy choice specified by a given social preference relation. We provide a sufficient condition for a social preference relation to be compatible with some three-party system. The condition describes a certain restriction on the structure of cycles of social preferences.
    Date: 2013–03

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