nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒10‒18
twenty-one papers chosen by
Eugene Beaulieu
University of Calgary

  1. Advertising Competition in Presidential Elections By Gordon, Brett R.; Hartmann, Wesley R.
  2. Voters are rational By Janne Tukiainen; Teemu Lyytikäinen
  3. Do Polls Create Momentum in Political Campaigns? By Denter, Philipp; Sisak, Dana
  4. Markovian Elections By Jean Guillaume Forand; John Duggan
  5. Incumbency Advantage in Irish Elections: A Regression Discontinuity Analysis By Paul Redmond; John Regan
  6. Political Cycles in Public Expenditure: Butter vs Guns By Bove, Vincenzo; Efthyvoulou, Georgios
  7. Some further estimations for: Voting and economic factors in French elections for the European Parliament By Antoine Auberger
  8. Roads or Schools? Political Budget Cycles with different types of voters. By Lopez Uribe, Maria del Pilar
  9. Imperfectly informed voters and strategic extremism By Enriqueta Aragones; Dimitrios Xefteris
  10. Russian Peasants and Politicians: The Political Economy of Local Agricultural Support in Nizhnii Novgorod Province, 1864-1914 By Steven Nafziger
  11. A Dynamic Duverger's Law By Jean Guillaume Forand; Vikram Maheshri
  12. Partisan News before Fox: Newspaper Partisanship and Partisan Polarization, 1881-1972 By Groeling, Tim; Baum, Matthew
  13. Policy uncertainty, irreversibility, and cross-border flows of capital By Brandon Julio; Youngsuk Yook
  14. Codifications of complete preorders that are compatible with Mahalanobis disconsensus measures By Rodríguez Alcantud, José Carlos; de Andrés Calle, Rocío; González-Arteaga, Teresa
  15. The Geo-Politics of Foreign Aid and Transnational Terrorism By Azam, Jean-Paul; Thelen, Véronique
  16. The Theory of Interhybridity: Socio-political Dimensions and Migration By Aliu, Armando
  17. Unresponsive and Unpersuaded: The Unintended Consequences of Voter Persuasion Efforts By Bailey, Michael; Hopkins, Daniel J.; Rogers, Todd
  18. Radio and the rise of the Nazis in prewar Germany By Adena, Maja; Enikolopov, Ruben; Petrova, Maria; Santarosa, Veronica; Zhuravskaya, Ekaterina
  19. Do Single-Party and Coalition Governments Differ in their Economic Outcomes? Evidence from Finnish Municipalities By Meriläinen; Jaakko
  20. Optimal Voting Rules By Gershkov, Alex; Moldovanu, Benny; Shi, Xianwen
  21. Mind the Gap: An Annotated Overview of Datasets in the Study of Institutions and Conflict in Divided Societies By Nadine Ansorg; Matthias Basedau; Felix Haass; Julia Strasheim

  1. By: Gordon, Brett R. (Columbia University); Hartmann, Wesley R. (Stanford University)
    Abstract: Presidential candidates choose advertising strategically across markets based on each state's potential to tip the election. The winner-take-all rules in the Electoral College concentrate advertising in battleground states, ignoring most voters. We estimate an equilibrium model of competition between candidates to evaluate advertising and voting outcomes. In a direct vote counterfactual, all states receive positive advertising and both expenditures and turnout increase. Although states' political preferences drive competition in the Electoral College, candidates focus on cheap advertising targets in a direct vote. Simulations removing advertising price variation suggest a direct vote. Simulations removing advertising price variation suggest a direct vote spreads political attention uniformly across markets with diverse preferences.
    JEL: D72 L10 M37
    Date: 2013–08
  2. By: Janne Tukiainen; Teemu Lyytikäinen
    Abstract: We test whether voters are rational in the sense that their decision to vote depends on its expected impact on the election outcomes. By using exogenous variation in pivotal probabilities that arise at population thresholds determining council sizes in Finnish municipal elections, we provide the first causal evidence on this rational voting hypothesis. We find statistically significant, economically relevant and robust effects of crossing the threshold on turnout. Furthermore, we use a novel instrumental variables design to show that the changes in the pivotal probabilities rather than simultaneous changes in available candidates drive the results. Thus, the rational voter exists.
    Keywords: Local government elections; Rational voting hypothesis; Regression discontinuity design
    JEL: D72 C29
    Date: 2013–09–27
  3. By: Denter, Philipp; Sisak, Dana
    Abstract: We explore how public opinion polls affect candidates' campaign spending in political competition. Generally, polls lead to (more) asymmetric behavior. Under a majority rule there always exists an equilibrium in which the initially more popular candidate invests more in the campaign and thereby increases her lead in expectation: polls create momentum. When campaigning is very effective and the race is very close, a second type of equilibrium may exist: the trailing candidate outspends and overtakes his opponent. Regardless of the type of equilibrium, polls have a tendency to decrease expected total campaigning expenditures by amplifying ex-ante asymmetries between candidates and thus defusing competition. When candidates care also for their vote share in addition to having the majority, candidates' incentives crucially depend on the distribution of voters' candidate preferences.
    Keywords: Polls, political campaigns, feedback, momentum
    JEL: D02 D72 D74 D83
    Date: 2013–10
  4. By: Jean Guillaume Forand (Department of Economics, University of Waterloo); John Duggan (Department of Economics, University of Rochester)
    Abstract: We establish existence and continuity properties of equilibria in a model of dynamic elections with a discrete (countable) state space and general policies and preferences. We provide conditions under which there is a representative voter in each state, and we give characterization results in terms of the equilibria of an associated “representative voting game.” When the conditions for these results are not met, we provide examples that uncover new classes of dynamic political failures.
    JEL: C62 C73 D72
    Date: 2013–10
  5. By: Paul Redmond (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); John Regan
    Abstract: Ireland provides an interesting setting for the study of incumbency advantage. Its electoral system creates incentives for political candidates to cultivate a loyal, personal following and the rate of incumbent re-election is one of the highest in the world. This paper exploits the quasi-experimental features of the system of proportional representation with a single transferable vote (PR-STV) to estimate incumbency advantage in Ireland’s lower house of parliament. In very close elections, where there is a narrow margin of victory, it is likely that bare winners are comparable in their unobservable characteristics to bare losers. Regression discontinuity design (RDD) identifies the causal effect of incumbency by comparing the subsequent electoral outcomes of bare winners and losers. The analysis indicates that incumbency causes an eighteen percentage point increase in the probability that a candidate is successful in a subsequent election. We show that Ireland’s multi-party, multi-candidate system is particularly suited to the application of the RDD methodology.
    Keywords: incumbency advantage, regression discontinuity, non-parametric, Irish elections, proportional representation
    JEL: C21 D72
    Date: 2013
  6. By: Bove, Vincenzo (University of Essex); Efthyvoulou, Georgios (University of Sheffield)
    Abstract: This paper investigates how the timing of elections and government ideological motivations influence the dynamics of social and military expenditure in a panel of 22 OECD countries over the period 1988-2008. Three basic results emerge: First, governments tend to bias outlays towards social expenditure and away from military expenditure at election times. Second, membership in the NATO alliance affects the timing of election-driven military spending manipulations. Third, partisan distinctions are clearly discernible but differ between the two types of expenditure: while certain categories of social expenditure are higher during left administrations, military expenditure are higher during right administrations.
    Keywords: elections; partisanship; social expenditure; military expenditure
    JEL: C33 D72 H53 H56 P16
    Date: 2013–10–09
  7. By: Antoine Auberger (IRGEI - Institut de Recherche sur la Gouvernance et l'Economie des Institutions - Université Paris II - Panthéon-Assas)
    Abstract: The purpose of this note is to complete the estimates made in Auberger (2012) for French presidential elections. We study the influence of the local unemployment on the vote for French presidential elections. We build another variable taking into account the responsibility of the incumbent President for the economic situation after a cohabitation period. We also make estimates for the second-round vote of French presidential elections (without the 2002 French presidential election or with an estimated vote for this election). We show that over the 1988-2007 period (without 2002), it is not necessary to take into account the influence of cohabitation periods on the responsibility of the government in relation to the economic situation.
    Keywords: Vote functions ; French elections ; European Parliament ; Election forecasting ; Local unemployment
    Date: 2013–09–12
  8. By: Lopez Uribe, Maria del Pilar
    Abstract: Using a new Colombian data set (1830-2000), we analyze how changes in the electoral legislation with regard to the characteristics of voters (in terms of education and income levels) has affected fiscal policy in electoral times. In line with economic theory, we show that after the law was reformed in 1936 the composition of the expenditure shifted towards social spending (like education, health, and welfare benefits) but there was decreased spending on infrastructure and investment projects (like roads). Consistent with the literature, we also find: 1.The timing and the size of the political budget cycles changed after 1936 and 2.After 1936 there was a shift in the funding mechanisms from indirect tax revenues to more debt.
    Keywords: Political Budget Cycles, Expenditure composition, Revenue composition, Elections, Colombia
    JEL: D72 D78 E62 H61
    Date: 2013
  9. By: Enriqueta Aragones; Dimitrios Xefteris
    Abstract: We analyze a unidimensional model of two-candidate electoral competition where voters have im- perfect information about the candidates' policy proposals, that is, voters cannot observe the exact policy proposals of the candidates but only which candidate offers the most leftist/rightist platform. We assume that candidates are purely office motivated and that one candidate enjoys a valence advan- tage over the other. We characterize the unique Sequential Equilibrium in very-weakly undominated strategies of the game. In this equilibrium the behavior of the two candidates tends to maximum extremism, due to the voters' lack of information. But it may converge or diverge depending on the size of the advantage. For small values of the advantage candidates converge to the extreme policy most preferred by the median and for large values of the advantage candidates strategies diverge: each candidate specializes in a different extreme policy. These results are robust to the introduction of a proportion of well informed voters. In this case the degree of extremism decreases when the voters become more informed.
    Keywords: Downsian model; imperfect information; advantaged candidate; maximum differentiation
    JEL: D72
    Date: 2013–10–14
  10. By: Steven Nafziger (Department of Economics, Williams College)
    Abstract: This paper explores the local political economy of early agronomic efforts in Tsarist Russia by undertaking a two-part analysis of the role of the zemstvo – a 19th century institution of local self-government – in improving local agricultural conditions. First, we investigate the agronomic activities of various levels of government in Russia over the last fifty years of the Tsarist era. After discussing the relatively limited role played by the central ministries and peasant institutions of self-government, we follow Nafziger (2011) in undertaking a qualitative and cross-district empirical analysis of how variation in economic conditions and the political structure of the zemstvo assemblies may have motivated zemstvo expenditures on agriculture. This exercise finds evidence suggesting that the peasantry – the population most likely affected by agronomic efforts – had an influence on the policies of the zemstvo, despite rarely holding majority positions in the assemblies. To explore the mechanisms underlying these results, we turn to a case study of agricultural development and zemstvo policies in Nizhnii Novgorod province. We draw on archival records, contemporary publications, and newspaper accounts to document these factors, both at the provincial level and for one relatively non-agricultural district (Semenov). Our findings suggest that the policy preferences of the local elites and of leaders of the executive committees of the institution likely mattered more than the composition of the zemstvo assembly for the resulting outcomes. By shedding light on the political mechanisms behind local public support for agronomic efforts, this chapter makes an initial step towards a fuller account of the early stages of Russia’s agrarian transformation.
    Keywords: Russia, agronomy, political economy, agriculture
    JEL: N33 N43 N53 O13 H41 H72
    Date: 2013–01
  11. By: Jean Guillaume Forand (Department of Economics, University of Waterloo); Vikram Maheshri (Department of Economics, University of Houston)
    Abstract: Electoral systems promote strategic voting and aect party systems. Duverger (1951) proposed that plurality rule leads to bi-partyism and proportional representation leads to multi-partyism. We show that in a dynamic setting, these static eects also lead to a higher option value for existing minor parties under plurality rule, so their incentive to exit the party system is mitigated by their future benets from continued participation. The predictions of our model are consistent with multiple cross-sectional predictions on the comparative number of parties under plurality rule and proportional representation. In particular, there could be more parties under plurality rule than under proportional representation at any point in time. However, our model makes a unique time-series prediction: the number of parties under plurality rule should be less variable than under proportional representation. We provide extensive empirical evidence in support of these results.
    JEL: C73 D72
    Date: 2013–10
  12. By: Groeling, Tim (University of CA, Los Angeles); Baum, Matthew (Harvard University)
    Abstract: How do partisan media affect polarization and partisanship? The rise of Fox News, MSNBC, and hyper-partisan outlets online gives this question fresh salience, but in this paper, we argue that the question is actually not new: prior to the broadcast era, newspapers dominated American mass communication. Many of these were identified as supporting one party over the other in their news coverage. While scholars have studied the composition and impact of the partisan press during their 19th-century height, the political impact of the gradual decline of these partisan papers remains relatively under-examined. The unnoted vitality and endurance of partisan newspapers (which constituted a majority of American newspapers until the 1960s) represents a huge hole in our understanding of how parties communicate. As a consequence of this omission, scholars have ignored a potentially vital contributing factor to changing patterns of partisan voting. In this paper, we examine both the degree and influence of partisanship in historical newspapers. We begin by content analyzing news coverage in the Los Angeles Times from 1885-1986 and the Atlanta Constitution from 1869-1945. To avoid problems of selection bias and the absence of a neutral baseline of coverage in the coded news, we focus on a subset of partisan news for which we have access to neutral coverage of a full population of potential stories: the obituaries of U.S. Senators. By coding whether and how the papers covered the deaths of these partisans over time, we are able to systematically test for bias. We then collect information on newspaper editorial stances from Editor and Publisher's Annual Yearbook to examine the impact of newspaper partisanship on voting patterns in presidential elections from 1932-92. Specifically, we test whether the proportion of partisan news outlets in a given media market explains changes in the rate of polarized voting.
    Date: 2013–10
  13. By: Brandon Julio; Youngsuk Yook
    Abstract: We examine the effects of government policy uncertainty on cross-border capital flows. FDI flows from US companies to foreign affiliates drop significantly during the period just before an election. The election effect for FDI is larger than election cycles in domestic investment. The electoral patterns in FDI flows are more pronounced in countries with higher propensities for policy reversals and when election outcomes are more uncertain. Our identification strategy compares variation in different types of capital flows into the same country around the timing of national elections. The electoral cycles are present in relatively irreversible FDI flows but not in foreign portfolio investment flows, suggesting a likely causal link from political uncertainty to and capital flows.
    Date: 2013
  14. By: Rodríguez Alcantud, José Carlos; de Andrés Calle, Rocío; González-Arteaga, Teresa
    Abstract: We introduce the use of the Mahalanobis distance for the analysis of the cohesiveness of a group of linear orders or complete preorders. We prove that arbitrary codifications of the preferences are incompatible with this formulation, while affine transformations permit to compare profiles on the basis of such a proposal. This measure seems especially fit for the cases where the alternatives are correlated, e.g., committee selection when the candidates are affiliated to political parties.
    Keywords: Complete preorders, Mahalanobis disconsensus measure, codification
    JEL: D71
    Date: 2013–09–24
  15. By: Azam, Jean-Paul; Thelen, Véronique
    Abstract: This paper reviews some findings by Azam and Thelen (2008, 2010, 2012) that illustrate how foreign aid is used by rich countries to purchase the services of recipient governments with a view to protect or promote their economic and political interests. In particular, these findings show that foreign aid is effective at controlling the number of transnational terrorist attacks coming from the recipient countries, while it is not so regarding the number of attacks in the host countries. In contrast, they show that military intervention, as captured by the presence of US soldiers on the ground is counter-productive, as it increases the number of terrorist attacks both by source country and by host country.
    Date: 2013–09–21
  16. By: Aliu, Armando
    Abstract: The Western Balkans integration within the EU has started a legal process which is the rejection of former communist legal/political approaches and the transformation of former communist institutions. Indeed, the EU agenda has brought vertical/horizontal integration and Europeanization of national institutions (i.e. shifting power to the EU institutions and international authorities). At this point, it is very crucial to emphasize the fact that the Western Balkans as a whole region has currently an image that includes characteristics of both the Soviet socialism and the European democracy. The EU foreign policies and enlargement strategy for Western Balkans have significant effects on four core factors (i.e. Schengen visa regulations, remittances, asylum and migration as an aggregate process). The convergence/divergence of EU member states’ priorities for migration policies regulate and even shape directly the migration dynamics in migrant sender countries. From this standpoint, the research explores how main migration factors are influenced by political and judicial factors such as; rule of law and democracy score, the economic liberation score, political and human rights, civil society score and citizenship rights in Western Balkan countries. The proposal of interhybridity explores how the hybridization of state and non-state actors within home and host countries can solve labor migration-related problems. The economical and sociopolitical labor-migration model of Basu (2009) is overlapping with the multidimensional empirical framework of interhybridity. Indisputably, hybrid model (i.e. collaboration state and non-state actors) has a catalyst role in terms of balancing social problems and civil society needs. Paradigmatically, it is better to perceive the hybrid model as a combination of communicative and strategic action that means the reciprocal recognition within the model is precondition for significant functionality. This will shape social and industrial relations with moral meanings of communication. --
    Keywords: Interhybridity,Migration,Politics,Western Balkans
    JEL: F22 A1 P4 P48 C1 F5 P3 J6 J61 C8 J5 J53
    Date: 2013–01–29
  17. By: Bailey, Michael (Georgetown University); Hopkins, Daniel J. (Georgetown University); Rogers, Todd (Harvard University)
    Abstract: Can randomized experiments at the individual level help assess the persuasive effects of campaign tactics? In the contemporary U.S., vote choice is not observable, so one promising research design involves randomizing appeals and then using a survey to measure vote intentions. Here, we analyze one such field experiment conducted during the 2008 presidential election in which 56,000 registered voters were assigned to persuasion in person, by phone, and/or by mail. Persuasive appeals by canvassers had two unintended consequences. First, they reduced responsiveness to the follow-up survey, lowering the response rate sharply among infrequent voters. Second, various statistical methods to address the resulting biases converge on a counterintuitive conclusion: the persuasive canvassing reduced candidate support. Our results allow us to rule out even small effects in the intended direction and illustrate the backlash that attempts at inter-personal persuasion can engender.
    Date: 2013–09
  18. By: Adena, Maja; Enikolopov, Ruben; Petrova, Maria; Santarosa, Veronica; Zhuravskaya, Ekaterina
    Abstract: How far can the media protect or undermine democratic institutions in unconsolidated democracies, and how persuasive can they be in ensuring public support for dictator's policies? We study this question in the context of Germany between 1929 and 1939. Using geographical and temporal variation in radio availability, we show that radio had a significant negative effect on the Nazi electoral support between 1929 and 1932, when political news were slanted against Nazi party. This effect was reversed in just 5 weeks following Hitler's appointment as chancellor and the transfer of control of the radio to the Nazis. Pro-Nazi radio propaganda caused higher vote for the Nazis in March 1933 election. After full consolidation of power, radio propaganda helped the Nazis to enroll new party members and encouraged denunciations of Jews and other open expressions of anti-Semitism. The effect of Nazi propaganda was not uniform. Depending on listeners' priors about the message, propaganda could be very effective or could backfire. Nazi radio was most effective in places where anti- Semitism was historically high and had a negative effect on the support for anti-Semitic policies in places with historically low anti-Semitism. -- Inwieweit können die Medien zum Schutz oder zur Untergrabung ungefestigter Demokratien beitragen? Und inwieweit können sie Unterstützung für die Politik des Diktators generieren? Wir analysieren diese Fragen im Kontext der Weimarer Republik ab 1929 und des NS-Regimes bis 1939. Die voranschreitende technische Entwicklung dieser Zeit erlaubt uns die geografische und zeitliche Veränderung der Radioempfangsqualität für Identifikationszwecke zu nutzen. In der Zeit zwischen 1929 und 1932, in der das Rundfunkprogramm pro-demokratisch und gegen die NSDAP ausgerichtet war, hatte das Radio einen signifikant negativen Einfluss auf die Wahlergebnisse der NSDAP. Dieser Effekt wurde bereits 5 Wochen nach der Ernennung Hitlers zum Kanzler und der Kontrollübernahme über das Rundfunkprogramm umgekehrt. Die intensive NS-Propaganda im Radio während dieser Zeit bewirkte einen Stimmenzuwachs für die NSDAP bei den Reichstagswahlen in März 1933. Nachdem die Nazis ihre Macht konsolidiert hatten, trug die Rundfunkpropaganda messbar zu vermehrten Parteieintritten und zur Zustimmung der Bevölkerung bei der Denunziation von Juden und zu anderen Formen des offenen Antisemitismus bei. Dennoch war der Einfluss der NS-Propaganda nicht uniform. Je nach Voreingenommenheit der Zuhörer konnte die Propaganda sehr effektiv oder aber kontraproduktiv sein. Das NS-Radio war am effektivsten in Orten mit historisch hohem Antisemitismus und hatte einen negativen Effekt auf die Unterstützung der antisemitischen Politik in Orten mit historisch niedrigem Antisemitismus.
    Keywords: anti-semitism,dictatorship,media,Nazis,propaganda,unconsolidated democracy
    JEL: D72 L82 N74
    Date: 2013
  19. By: Meriläinen; Jaakko
    Abstract: Even though Finland has proportional elections, single-party control in Finnish local councils is not uncommon contrary to what one might expect. The largest party holds more than half of the seats in every third Finnish local council and is thus likely to govern alone. This study investigates whether single-party and coalition governed municipalities differ in their economic outcomes. Common pool models predict that when there is a governing coalition, all the parties aim to target some spending at their core constituents, while costs are shared equally across all parties. This would mean that coalition governments result in higher spending. Using data from 445 Finnish municipalities for the years 1980?2010, I provide causal evidence that is consistent with the predictions of common pool models. Estimates suggest that single-party control decreases total expenditures and revenues by around 200?300 euros per capita. I also analyze the effect in several areas of spending and revenues, but do not find any clear results. I exploit close elections as a source of exogenous variation using a regression discontinuity design (RDD) approach tailored for proportional elections.
    Keywords: single-party control, coalition governments, common pool problem, municipal elections, proportional system, regression discontinuity design
    JEL: H72 H71 R50
    Date: 2013–10–07
  20. By: Gershkov, Alex; Moldovanu, Benny; Shi, Xianwen
    Abstract: We study dominant strategy incentive compatible (DIC) and deterministic mechanisms in a social choice setting with several alternatives. The agents are privately informed about their preferences, and have single-crossing utility functions. Monetary transfers are not feasible. We use an equivalence between deterministic, DIC mechanisms and generalized median voter schemes to construct the constrained-efficient, optimal mechanism for an utilitarian planner. Optimal schemes for other welfare criteria such as, say, a Rawlsian maximin can be analogously obtained.
    Date: 2013–08–07
  21. By: Nadine Ansorg (GIGA German Institute of Global and Area Studies); Matthias Basedau (GIGA German Institute of Global and Area Studies); Felix Haass (GIGA German Institute of Global and Area Studies); Julia Strasheim (GIGA German Institute of Global and Area Studies)
    Abstract: This paper engages in a systematic overview of the existing datasets on institutions, conflict and peace, as well as divisions and diversity. This overview indicates that an enormous amount of data is unevenly distributed across different issue areas. There is a lack of data capturing specific sets of political institutions (e.g., centripetalism), dynamic changes in a country’s relational demographics across identity groups, the ethnicization of political institutions (especially in the security sector), and security sector reform. Many datasets suffer from missing data and an alarming dearth of transparency. Our paper concludes with suggestions for yet unexplored research questions and avenues for further data collection.
    Keywords: xxx
    Date: 2013–09

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