nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒08‒16
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. A Spatial Model of Voting with Endogenous Proposals: Theory and Evidence from Chilean Senate By Matteo Triossi; Patricio Valdivieso; Benjamín Villena-Roldán
  2. What Is European Integration Really About? A Political Guide for Economists By Spolaore, Enrico
  3. How close is your government to its people? Worldwide indicators on localization and decentralization By Ivanyna, Maksym; Shah, Anwar
  4. Do institutions affect social preferences? Evidence from divided Korea By Byung-Yeon Kim; Syngjoo Choi; Jungmin Lee; Sokbae 'Simon' Lee; Kyunghui Choi
  5. The interrelation of informal institutions and governance quality in shaping Welfare State attitudes By Hans Pitlik; Ludek Kouba
  6. War and Relatedness By Spolaore, Enrico; Wacziarg, Romain
  7. The Value of Democracy: Evidence from Road Building in Kenya By Robin Burgess; Remi Jedwab; Edward Miguel; Ameet Morjaria; Gerard Padro i Miquel
  8. Terrorism and Integration of Muslim Immigrants By Elsayed, Ahmed; de Grip, Andries

  1. By: Matteo Triossi; Patricio Valdivieso; Benjamín Villena-Roldán
    Abstract: Proposers strategically formulate legislative bills before voting takes place. However, spatial voting models that estimate legislator’s ideological preferences do not explicitly consider this fact. In our model, proposers determine the ideology and valence of legislative bills to maximize their objective functions. Approaching to the median legislator ideology and increasing costly valence increases the passing probability, but usually decreases the proposer’s payoff. Using quantile utility proposer preferences, the model becomes tractable and estimable. In this way, we deal with the bill sample selection problem to estimate legislator’s preferences and also, the ideology of proposers, the proposed valence change, and the ideological stance of the statu quo in a common scale. Using Chilean Senate 2009 - 2011 roll call data, our results suggests that (1) political party affiliation significantly affects Senators’ ideology, (2) popular, young and male Senators are more extremist, and (3) proposers during Bachelet and Piñera’s terms have similar ideologies. Key words:
    Date: 2013
  2. By: Spolaore, Enrico (Tufts University)
    Abstract: Europe’s monetary union is part of a broader process of integration that started in the aftermath of World War II. In this “political guide for economists” we look at the creation of the euro within the bigger picture of European integration. How and why were European institutions established? What are the goals and determinants of European Integration? What is European integration really about? We address these questions from a political-economy perspective, building on ideas and results from the economic literature on the formation of states and political unions. Specifically, we look at the motivations, assumptions, and limitations of the European strategy, initiated by Jean Monnet and his collaborators, of partially integrating policy functions in a few areas, with the expectation that more integration will follow in other areas, in a sort of chain reaction towards an “ever-closer union.” The euro with its current problems is a child of that strategy and its limits
    Keywords: European integration
    Date: 2013
  3. By: Ivanyna, Maksym; Shah, Anwar
    Abstract: This paper is intended to provide an assessment of the impact of the silent revolution (decentralization reforms) of the last three decades on moving governments closer to people to establish fair, accountable, incorruptible and responsive governance. To accomplish this, a unique data set is constructed for 182 countries by compiling data from a wide variety of sources to examine success toward decentralized decision making across the globe. An important feature of this data set is that, for comparative purposes, it measures government decision making at the local level rather than at the sub-national levels used in the existing literature. The data are used to rank countries on political, fiscal and administrative dimensions of decentralization and localization. These sub-indexes are aggregated and adjusted for heterogeneity to develop an overall ranking of countries on the closeness of their government to the people. The resulting index is associated with higher level of human development and lower level of corruption, and thus provides a useful explanation of the Arab Spring and other recent political movements and waves of dissatisfaction with governance around the world. --
    Keywords: localization,decentralization,home rule,fiscal autonomy,political autonomy,administrative autonomy,local governance,government accountability,trust in government,good governance,responsive,accountable and fair governance
    JEL: H10 H11 H83 I31 O10
    Date: 2013
  4. By: Byung-Yeon Kim; Syngjoo Choi (Institute for Fiscal Studies and University College London); Jungmin Lee (Institute for Fiscal Studies and University of Arkansas); Sokbae 'Simon' Lee (Institute for Fiscal Studies and Seoul National University); Kyunghui Choi
    Abstract: The Cold War division of Korea, regarded as a natural experiment in institutional change, provides a unique opportunity to examine whether institutions affect social preferences. We recruited North Korean refugees and South Korean students to conduct laboratory experiments eliciting social preferences, together with standard surveys measuring subjective attitudes toward political and economic institutions. Our experiments employ widely used dictator and trust games, with four possible group matches between North and South Koreans by informing them of the group identity of their anonymous partners. Experimental behaviour and support for institutions differ substantially between and within groups. North Korean refugees prefer more egalitatian distribution in the dictator games than South Korean students, even after controlling for individual characteristics that could be correlated with social preferences; however, the two groups show little difference in the trust game, once we control for more egalitarian behaviour of North Koreans. North Korean refugees show less support for market economy and democracy than South Korean subjects. Attitudes toward insitutions are more strongly associated with the experimental behaviours among South Korean subjects than among North Korean subjects. An online appendix to accompany this publication is available here
    Keywords: social preferences, experiment, institutions, market economy, democracy
    JEL: C92 C93 D03 P20
    Date: 2013–08
  5. By: Hans Pitlik; Ludek Kouba
    Abstract: This paper addresses empirically determinants of individual support for the Welfare State. We examine the interrelation of informal institutions with the perceived quality of a country's institutional framework. As a proxy for informal institutions, we concentrate on three core beliefs (trust in other people, perceived control over one's own life, and religiousness) which reflect different aspects of the way people feel about internal and external constraints in managing their own lives. To analyze preferences we follow a comprehensive concept of the Welfare State, measuring attitudes toward its two basic roles, (income) redistribution and government intervention. For this purpose the paper uses survey data from the World Values Survey/European Values Study as well as different indicators for governance quality. Our results indicate that people who interpret their life course as being not at their own disposition report a substantially more positive attitude toward income equalization and government interventions. A higher quality of public administration and low confidence in major private companies amplify preferences for redistribution and intervention of people under such an external locus of control. Social trust is generally associated with higher support for redistribution and government intervention only if perceived quality of administration is high and confidence in companies is low. People who assert themselves as religious are less favorable toward income equalization. While variation in administration quality does not appear to have an impact on the relationship between religiousness and income equalization preferences, religious people are substantially less supportive of redistribution and government intervention especially if confidence in major companies is high.
    Keywords: Political economy of policy reform, welfare reform, welfare state
    JEL: D74 D78 P35
    Date: 2013–08
  6. By: Spolaore, Enrico (Tufts University); Wacziarg, Romain (UCLA Anderson School of Management)
    Abstract: We examine the empirical relationship between the occurrence of inter-state conflicts and the degree of relatedness between countries, measured by genetic distance. We find that populations that are genetically closer are more prone to go to war with each other, even after controlling for numerous measures of geographic distance and other factors that affect conflict, including measures of trade and democracy. These findings are consistent with a framework in which conflict over rival and excludable goods (such as territory and resources) is more likely among populations that share more similar preferences, and inherit such preferences with variation from their ancestors.
    Keywords: conflicts
    Date: 2013
  7. By: Robin Burgess; Remi Jedwab; Edward Miguel; Ameet Morjaria; Gerard Padro i Miquel
    Abstract: Ethnic favoritism is seen as antithetical to development. This paper provides credible quantifi…cation of the extent of ethnic favoritism using data on road building in Kenyan districts across the 1963-2011 period. Guided by a model it then examines whether the transition in and out of democracy under the same president constrains or exacerbates ethnic favoritism. Across the 1963 to 2011 period, we fi…nd strong evidence of ethnic favoritism: districts that share the ethnicity of the president receive twice as much expenditure on roads and have four times the length of paved roads built. This favoritism disappears during periods of democracy.
    Date: 2013–08
  8. By: Elsayed, Ahmed (Maastricht University); de Grip, Andries (ROA, Maastricht University)
    Abstract: We study the effect that a series of fundamentalist-Islamic terrorist attacks in Europe had on the attitudes of Muslim immigrants in the Netherlands towards integration. Shortly after the attacks, Muslim immigrants' perceived integration, as measured by various indicators, decreased significantly relative to that of non-Muslims immigrants whereas there is no evidence for the existence of a negative trend in the integration of Muslims prior to the terrorist attacks. We further show that terrorism has a particularly negative impact on the integration of the highly educated, employed, and less religious Muslims – those who arguably have a strong potential for integration.
    Keywords: terrorism, integration, Muslim immigrants
    JEL: F22 J15 Z13
    Date: 2013–07

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