nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒10‒25
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political budget cycles and the organization of political parties By Hanusch, Marek; Keefer, Philip
  2. Promises, promises : vote-buying and the electoral mobilization strategies of non-credible politicians By Hanusch, Marek; Keefer, Philip
  3. Imperfectly Informed Voters and Strategic Extremism By Enriqueta Aragonès; Dimitrios Xefteris
  4. Do More Educated Leaders Raise Citizens' Education? By Diaz-Serrano, Luis; Pérez, Jessica
  5. Identification and estimation of preference distributions when voters are ideological By Antonio Merlo; Aureo de Paula
  6. The Effect of Public Policies on Consumers' Preferences: Lessons from the French Automobile Market By D'Haultfoeuille, Xavier; Durrmeyer, Isis; Février, Philippe
  7. Political Economics of External Sovereign Defaults By Carolina Achury; Christos Koulovatianos; John Tsoukalas
  8. Neo-Liberalism and Protest in West Bengal: An Analysis through the Media lens By Bandhyopadhyay, Tirthankar; Dinda, Soumyananda
  9. Incumbency Advantage in an Electoral Contest By Tuvana Pastine; Ivan Pastine; Matthew T. Cole
  10. Regional Variations in Attitudes Towards Refugees: Evidence from Great Britain By Crawley, Heaven; Drinkwater, Stephen; Kauser, Rukhsana
  11. The Political Economy of British Columbia's Carbon Tax By Kathryn Harrison

  1. By: Hanusch, Marek; Keefer, Philip
    Abstract: This paper introduces a new explanation for political budget cycles: politicians have stronger incentives to increase spending around elections in the presence of younger political parties. Previous research has shown that political budget cycles are larger when voters are uninformed about politician characteristics and when politicians are less credible. The effects of party age can be traced to organizational differences between younger and older parties that also affect voter information and politician credibility. Parties organized around particular individuals, rather than around policy labels or a party machine, are less likely to survive the departure of party leaders, to adopt organizational attributes that promote voter information and political credibility, and to limit political budget cycles. Previous research has also shown larger political budget cycles in younger democracies. Evidence presented here indicates that party age accounts for this effect.
    Keywords: Civic Participation and Corporate Governance,Politics and Government,Political Systems and Analysis,Public Sector Expenditure Policy,Consumption
    Date: 2013–10–01
  2. By: Hanusch, Marek; Keefer, Philip
    Abstract: Vote-buying is pervasive, but not everywhere. What explains significant variations across countries in the greater use of pre-electoral transfers to mobilize voters relative to the use of pre-electoral promises of post-electoral transfers? This paper explicitly models the trade-offs that politicians incur when they decide between mobilizing support with vote-buying or promises of post-electoral benefits. Politicians rely more on vote-buying when they are less credible, target vote-buying to those who do not believe their political promises, and only buy votes from those who would have received post-electoral transfers in a world of full political credibility. The enforcement of a prohibition on vote-buying reduces the welfare of those targeted with vote-buying, but improves the welfare of all other groups in society.
    Keywords: Politics and Government,Civic Participation and Corporate Governance,Wages, Compensation&Benefits,Political Systems and Analysis,State Owned Enterprise Reform
    Date: 2013–10–01
  3. By: Enriqueta Aragonès; Dimitrios Xefteris
    Abstract: We analyze a unidimensional model of two-candidate electoral competition where voters have imperfect 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 advantage 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
  4. By: Diaz-Serrano, Luis (Universitat Rovira i Virgili); Pérez, Jessica (Universitat Rovira i Virgili)
    Abstract: This paper looks at the contribution of political leaders to enhance citizens' education and investigate how the educational attainment of the population is affected while a leader with higher education remains in office. For this purpose, we consider educational transitions of political leaders in office and find that the educational attainment of population increases when a more educated leader remains in office. Furthermore, we also observe that the educational attainment of the population is negatively impacted when a country transitions from an educated leader to a less educated one. This result may help to explain the previous finding that more educated political leaders favor economic growth.
    Keywords: political leaders, primary education, school achievement, political institutions
    JEL: I21 I25 I28
    Date: 2013–09
  5. By: Antonio Merlo; Aureo de Paula (Institute for Fiscal Studies and University College London)
    Abstract: This paper studies the nonparametric identification and estimation of voters' preferences when voters are ideological. We establish that voter preference distributions and other parameters of interest can be identified from aggregate electoral data. We also show that these objects can be consistently estimated and illustrate our analysis by performing an actual estimation using data from the 1999 European Parliament elections.
    Date: 2013–10
  6. By: D'Haultfoeuille, Xavier; Durrmeyer, Isis; Février, Philippe
    Abstract: In this paper, we investigate whether French consumers have modified their preferences towards environmentally-friendly vehicles between 2003 and 2008. We estimate a model of demand for automobiles incorporating both consumers' heterogeneity and CO2 emissions of the vehicles. Our results show that there has been a shift in preferences towards low-emitting cars, with an average increase of 367 euros of the willingness to pay for a reduction of 10 grams of carbon dioxide per kilometer. We also stress a large heterogeneity in the evolution of preferences between consumers. Rich and young people are more sensitive to environmental issues, and our results are in line with votes for the green party at the presidential elections. We relate these changes with two environmental policies that were introduced at these times, namely the obligation of indicating energy labels by the end of 2005 and a feebate based on CO2 emissions of new vehicles in 2008. Our results suggest that such policies have been efficient tools to shift consumers utility towards environmentally-friendly goods, the shift in preferences accounting for 20% of the overall decrease in average CO2 emissions of new cars on the period.
    Keywords: environmental policy; consumers' preferences; CO2 emissions; automobiles
    JEL: D12 H23 L62 Q51
    Date: 2013–10–10
  7. By: Carolina Achury (Exeter School of Business, University of Exeter); Christos Koulovatianos (CREA, University of Luxembourg); John Tsoukalas (Department of Economics, University of Glasgow)
    Abstract: We study how excessive debt-GDP ratios affect political sustainability of prudent fiscal policy in country members of a monetary union. We develop a model with free choice of distinct rent-seeking groups to cooperate (or not) in providing public goods, in seeking rents, and in austere debt issuing through international markets. Noncooperation of rent-seeking groups on fiscal prudence triggers collective fiscal impatience: fiscal debt is issued excessively because each group expropriates extra rents before other groups do so, too. Such collective fiscal impatience leads to a vicious circle of high international interest rates and external-debt default. Our calibration suggests that debt-GDP ratios below 137% foster cooperation among rent-seeking groups, which avoids collective fiscal impatience and default. Our analysis helps in understanding the politicoeconomic sustainability of sovereign rescue packages, emphasizing the need for fiscal targets and for possible debt haircuts.
    Keywords: sovereign debt, rent seeking, world interest rates, international lending, incentive compatibility, tragedy of the commons, EU crisis
    JEL: H63 F34 F36 E44 E43 D72
    Date: 2013
  8. By: Bandhyopadhyay, Tirthankar; Dinda, Soumyananda
    Abstract: Neo-liberalism is revival of liberalism that is radically dismantling the state and sifting power to the private sector. People favour welfare state and oppose any move against it. This paper attempts to gauge the protest in West Bengal against neo-liberalism. The recent protest in West Bengal that led to the electoral defeat of the Left Front is not only about land acquisition and loss of livelihood. Instead, it goes to the core of over three decades of left rule and raises serious questions about the policies adopted by the Left Front governments. This paper demonstrates that land reform and decentralisation of rural power, through institutions of local government, consolidated the authority of the CPI-M in the state but were detrimental to capital formation, necessary for industrialisation. Lack of adequate capital forced the left leadership to lure private investors to cope with the instability caused by increased aspiration in a globalised set up coupled with technological innovation. This being paradoxical to the political doctrine of the left resulted in a tension in the midst of an already unstable situation caused by economic stagnation and lack of adequate job creation in the state. The actions of the government to ward off the protests raise moral questions as to whether the CPI-M has the authority to claim to be representing the poor.
    Keywords: Land acquisition, land reform, decentralisation, political doctrine, left leadership, economic stagnation, lack of jobs, intellectual support
    JEL: B51 B52 N60 Z1
    Date: 2013–05–08
  9. By: Tuvana Pastine (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Ivan Pastine (Unviersity College Dublin); Matthew T. Cole (Florida International University)
    Abstract: In a campaign spending contest model, this paper investigates whether the sources of incumbency advantage are able to generate the observed pattern of campaign spending and incumbent re-election rates in US elections and assesses the degree to which campaign finance reform can mitigate the negative repercussions of incumbency advantage. The paper extends the existing literature by allowing the electoral benefit to the candidate’s visibility to be stochastic which is intuitively appealing since one dollar of extra spending should not take a candidate from a certain loser to a certain winner. Officeholders’ ability to generate free media exposure alone is shown to be unable to match empirical regularities. Incumbent’s superior fundraising efficiency is the key to matching the observed patterns. In contrast to previous literature, the model predicts that campaign finance legislation can help reduce the challenger scare-off effect of incumbency advantage.
    Date: 2013
  10. By: Crawley, Heaven (Swansea University); Drinkwater, Stephen (Swansea University); Kauser, Rukhsana (University of Westminster)
    Abstract: This paper examines changes in public attitudes towards refugees across Britain over almost three decades using data from British Social Attitudes Surveys. It therefore covers the period when immigration as a whole has increased and the number of asylum applications reached their highest levels. The data are examined in periods before and after the rise in asylum applications and from a sub-national perspective because of possible differences in attitudes between areas, as well as in levels and types of inward migration. Overall, the British public appear to have become less tolerant towards refugees. This suggests that rising levels of immigration and asylum, a political discourse which positioned asylum as a particular problem in terms of the management of migration flows and accompanying press coverage have resulted in a hardening of opinions. These changes have occurred despite increased educational attainment amongst the British population, which might be expected to result in more liberal attitudes. The sub-national analysis indicates that people living in London and Scotland display the most tolerant views both before and after the increase in immigration and asylum. However, characteristics such as belonging to an ethnic minority group or possessing a degree, which are higher in London, account for a large portion of the regional variations. Controlling for such factors in regression analysis reduces the differentials relative to London, especially in more recent years.
    Keywords: public attitudes, regional variations, immigration, refugees
    JEL: F22 J15 R23
    Date: 2013–09
  11. By: Kathryn Harrison
    Abstract: In July 2008, the Canadian province of British Columbia (BC) launched North America’s first revenue-neutral carbon tax reform. The tax, which applied to all combustion sources of all fossil fuels, was introduced at a rate of CAD 10 per tonne of CO2, with a schedule for annual increases of CAD 5 per tonne of CO2 until the tax reached CAD 30 per tonne of CO2 in 2012. Tax revenues were fully recycled via a combination of corporate and income tax cuts, phased in over time. This paper reviews the political economy of the BC tax in three distinct periods – its origins, its survival in the face of political backlash, and its longer-term prospects... En juillet 2008, la province canadienne de Colombie-Britannique a été la première collectivité d’Amérique du Nord à procéder à une réforme fiscale sans incidence sur les recettes impliquant la mise en place d’une taxe carbone. Le montant de cette taxe frappant l’ensemble des sources de combustion et des énergies fossiles a été fixé dans un premier temps à 10 CAD par tonne de CO2, mais il était prévu dès le départ qu’il augmenterait chaque année de 5 CAD pour atteindre 30 CAD par tonne de CO2 en 2012. Le produit de la taxe carbone a été intégralement recyclé sous forme de baisses progressives de l’impôt sur les sociétés et de l’impôt sur le revenu. Le présent document examine l’économie politique de la taxe instaurée par la Colombie-Britannique en distinguant trois phases : les origines de la taxe, son maintien sur fond de réactions politiques négatives et ses perspectives à plus long terme...
    Keywords: political economy, carbon tax, policy lessons, économie politique, taxe carbone
    JEL: F18 H23 P48 Q38 Q48 Q5 Q58
    Date: 2013–10–08

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