nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒10‒11
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Local representation and strategic voting: evidence from electoral boundary reforms By Tuukka Saarimaa; Janne Tukiainen
  2. Left, Right, Left: Income, Learning and Political Dynamics By John Morrow; Michael Carter
  3. Tax limits and local democracy By Federico Revelli
  4. BASIC effect on global climate governance. Power changes and regime shifts By Pierre Berthaud; Tancrède Voituriez
  5. The government’s role in government-owned banks By Shen, Chung-Hua; Hasan, Iftekhar; Lin , Chih-Yung
  6. “准官员”的晋升机制:来自中国央企的证据 By Yang, Ruilong; Wang, Yuan; Nie, Huihua
  7. Risky institutions: political regimes and the cost of public borrowing in early modern Italy By Chilosi, David
  8. Homevoters vs. leasevoters: a spatial analysis of airport effects By Gabriel M. Ahlfeldt; Wolfgang Maennig

  1. By: Tuukka Saarimaa (Government Institute for Economic Research VATT); Janne Tukiainen (Government Institute for Economic Research VATT & Helsinki Center of Economic Research (HECER))
    Abstract: We use Finnish local election voting data to analyze whether voters value local representation and act strategically to guarantee it. To identify such preferences and behavior, we exploit municipal mergers as natural experiments, which increase the number of candidates and parties available to voters and intensify political competition. Using difference-in-differences strategy, we find that voters in merged municipalities start to concentrate their votes to local candidates despite the larger choice set, whereas the vote distributions in the municipalities that did not merge remain the same. Moreover, the concentration effect is clearly larger in municipalities that are less likely to gain local representation in the post-merger councils. We also find that the effect increases both as the geographical distance and income heterogeneity between merging municipalities increases. We interpret these results as evidence of both preferences for local representation and strategic voting.
    Keywords: Electoral boundary reform, local representation, municipality mergers, strategic voting
    JEL: C21 C23 D72 H73 H77
    Date: 2013
  2. By: John Morrow; Michael Carter
    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, modeling voters’ ideologically charged beliefs about income dynamics shows 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.
    JEL: D31 D72 D83 P16
    Date: 2013–10
  3. By: Federico Revelli (University of Torino)
    Abstract: Based on a theoretical model where state limits on local government policy elicit a move from private value (position issue) to common value (valence issue) voting, I exploit exogenous variation in tax limitation rules in over 7,000 Italian municipalities during the 2000s to show that fiscal restraints provoke a fall in voter turnout and number of mayor candidates, and a rise in elected mayors’ valence proxy and win margins. The evidence is compatible with the hypothesis of hierarchical tax limitations fading the ideological stakes of local elections and favoring valence-based party line crossing, thus questioning the influential accountability postulate of the fiscal decentralization lore.
    Keywords: Local elections, voter turnout, tax and expenditure limitations, fiscal decentralization
    JEL: D72 H77 C23
    Date: 2013
  4. By: Pierre Berthaud (CREG - Centre de recherche en économie de Grenoble - Université Pierre-Mendès-France - Grenoble II : EA4625); Tancrède Voituriez (MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Centre de coopération internationale en recherche agronomique pour le développement [CIRAD] : UMR99 - Institut de recherche pour le développement [IRD] - IAMM - Institut national de la recherche agronomique (INRA) : UR1110)
    Abstract: In this paper we address the issue of the indeterminacy of climate change negotiations and examine the role played by the BASIC countries (Brazil, South Africa, India and China) in this indeterminacy. Mobilising the analytical tools of international political economy (IPE), we show that changes in the distribution of power over the last 20 years explain the indeterminacy of negotiation outcomes far more than changes in political preferences, which have remained fairly stable.
    Keywords: climate change ; sustainable development ; international political economy ; international negotiation ; South Africa ; Brazil ; China ; India
    Date: 2013–07–09
  5. By: Shen, Chung-Hua (National Taiwan University and Southwest Chiao Tung University); Hasan, Iftekhar (Fordham University and Bank of Finland); Lin , Chih-Yung (National Taichung University of Science and Technology)
    Abstract: In this study, we reinvestigate the question of whether government banks are inferior to private banks. We use cross country data from 1993 to 2007 to trace the different types of government banks. These types comprise banks that acquire distressed banks, normal banks, or no banks at all. Contrary to common belief, the evidence shows that unless government banks are required to purchase a distressed bank because of political factors (the government’s role), their performances are at par with that of private banks. This fact particularly holds true in countries with poor records on political rights and governance.
    Keywords: government banks; political factor; government role; merger; distressed bank; institutional factor
    JEL: C23 G21 G28 G34
    Date: 2013–08–16
  6. By: Yang, Ruilong; Wang, Yuan; Nie, Huihua
    Abstract: Using political mobility data for 189 leaders from China’s central state-owned enterprise (CSOEs) in 2008-2011, for the first time this paper investigates the mechanism of political turnover for leaders as quasi-government officers in CSOEs. We find that: (1) the likelihood of promotion of these leaders increases with their economic performance measured as growth rate of operating revenue, while the likelihood of demotion decreases with their economic performance; (2) these leaders with CCP central committee member have higher probability of promotion than their counterpart; (3) these leaders with Ph.D. degree have higher probability of promotion than their counterpart; (4) compared to growth rate of operating revenue, growth rate of maintaining and increasing the value of state capital has no significant effect on promotion; (5) the compensation linked to position in CSOEs has no impact on leaders’ promotion, which indicates that leaders in CSOEs look more likely government officials rather than professional managers.
    Keywords: state-owned enterprise, promotion, government officer, economic performance, guangxi
    JEL: D86 J63 M51
    Date: 2012–04–01
  7. By: Chilosi, David
    Abstract: This paper tests whether and how political regimes influenced the cost of public borrowing by comparatively and quantitatively examining a newly compiled dataset on public annuities in early modern Italy. The analysis finds that overall political regimes mattered a lot, but there were important differences across their dimensions. Fiscal centralisation, particularly in the eighteenth century, was not associated with significant decreases in the interest rates. Jurisdictional fragmentation was on the whole the most important variable, with feudalism and to a lesser extent clerical influence significantly increasing the cost of borrowing. Constitution al representation was even more important than jurisdictional fragmentation within republics, but a republican constitution had an ambivalent effect: while it decreased the risk of default it could also lead to an increase in interest rates, depending on the specific institutional setting, contingency and path-dependency.
    JEL: N0 E6
    Date: 2013–05
  8. By: Gabriel M. Ahlfeldt (London School of Economics and Political Science (LSE) & Spatial Economics Research Centre (SERC)); Wolfgang Maennig (University of Hamburg)
    Abstract: We use a public referendum on a new air traffic concept in Berlin, Germany as a natural experiment to analyze how the interaction of tenure and capitalization effects shapes the outcome of direct democracy processes. We distinguish between homevoters, i.e., voters who are homeowners, and leasevoters, i.e., voters who lease their homes. We expect the former to be more likely to support or op-pose initiatives that positively or negatively affect the amenity value of a neighborhood because some of the related benefits or costs of the latter are neutralized by adjustments in market rents (capitalization). Our empirical results are in line with our theoretical expectations and imply that public votes on local public goods do not necessarily reflect the spatial distribution of welfare effects in mixed-tenure environments.
    Keywords: Referendum, homevoters, leasevoters, NIMBYism, rents, noise, airports, Berlin
    JEL: D61 D62 H41 H71 L83 I18 R41 R58
    Date: 2013

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