nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒11‒22
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Guns and votes By Laurent Bouton; Paola Conconi; Francisco Pino; Maurizio Zanardi
  2. The Power of Religious Organizations in Human Decision Processes: Analyzing Voting Behavior By Benno Torgler; Davis Stadelmann; Marco Portmann
  3. The Political intergenerational welfare state: A Unified framework By Monisankar Bishnu; Min Wang
  4. Women political leaders, corruption and learning: Evidence from a large public program in India By Farzana Afridi; Vegard Iversen; M.R. Sharan
  5. Mafia in the ballot box By Giuseppe De Feo; Giacomo De Luca
  6. Campaigning in Direct Democracies: Initiative Petition Signing, Voter Turnout, and Acceptance By Jaronicki, Katharina
  7. The political economy of pricing and capacity decisions for congestible local public goods in a federal state. By De Borger, Bruno; Proost, Stef
  8. When does cooperation win and why? Political cycles and participation in international environmental agreements By Antoine CAZALS; Alexandre Sauquet
  9. The Influence of Direct Democracy on the Shadow Economy By Désirée Teobaldelli; Friedrich Schneider
  10. When are private standards more stringent than public standards?. By Vandemoortele, Thijs; Deconinck, Koen
  11. Political Parties and Trade Unions in Cyprus By Yiannos Katsourides
  12. Political Trust, Corruption and Ratings of the IMF and the World Bank By Breen, Michael; Gillanders, Robert
  13. The political economy of financial systems: Evidence from suffrage reforms in the last two centuries. By Degryse, Hans; Lambert, Thomas; Schwienbacher, Armin

  1. By: Laurent Bouton; Paola Conconi; Francisco Pino; Maurizio Zanardi
    Abstract: Why are U.S. congressmen reluctant to support gun control regulations, despite the fact that most Americans are in favor of them? We argue that re-election motives can help explain why politicians often take a pro-gun stance against the interests of the majority of the electorate. We describe a model in which an incumbent politician must decide on a primary issue, which is more important to a majority of voters, and a secondary issue, which a minority cares more intensely about. We derive conditions under which the politician, when approaching re-election, will pander towards the interests of the minority on the secondary issue. To assess the evidence, we exploit the staggered structure of the U.S. Senate in which one third of members face re-election every two years and examine senators' voting behavior on gun control. In line with the model's predictions, we obtain three main results: senators are more likely to vote pro gun when they are closer to facing re-election; this behavior is driven by Democratic senators, who "flip flop" on gun control; election proximity has no impact on the voting behavior of senators who are retiring or hold safe seats.
    Date: 2013
  2. By: Benno Torgler; Davis Stadelmann; Marco Portmann
    Abstract: In Switzerland, two key church institutions – the Conference of Swiss Bishops (CSB) and the Federation of Protestant Churches (FPC) – make public recommendations on how to vote for certain referenda. We leverage this unique situation to directly measure religious organizations' power to shape human decision making. We employ an objective measure of voters' commitment to their religious organization to determine whether they are more likely to vote in line with this organization’s recommendations. We find that voting recommendations do indeed matter, implying that even in a secularized world, religion plays a crucial role in voting decisions.
    Keywords: Power, religion, voting, referenda, trust, rules of thumb
    JEL: D03 D72 D83 H70
    Date: 2013–11–18
  3. By: Monisankar Bishnu (Indian Statistical Institute, New Delhi); Min Wang (Peking University)
    Abstract: We provide a complete characterization of intergenerational welfare state with education and pension under probabilistic voting where voters internalize the general equilibrium effects materializing in their life-span. We show that as public education is introduced in the economy through the political process of voting, it always increases (reduces) the accumulation of human capital (physical capital), but strikingly, has no effect on the political equilibrium of PAYG social security tax. On the other hand, the introduction of a politically determined PAYG social security most defnitely reduces physical capital accumulation, however it will reduce the human capital accumulation if only if the public education is already present in the economy. Otherwise, it may lead to an increase in the human capital accumulation. We also demonstrate that the general equilibrium effects are crucial to sustain the social security program, and explain why the presence of PAYG social security may not provide su› cient incentive for public investment in education. Finally, we show that the simultaneous arrangement of public education and pension can increase the long-run growth if and only if the relative political weight of the old is small so that the pension program is thin, which makes the result of Boldrin and Montes (2005) study conditional on the intergenerational distribution of voting power in our political economy setup.
    Keywords: Education, Social security, Probabilistic voting, Markov Perfect Equilibrium, Endogenous growth
    JEL: E6 H3 H52 H55 D90
    Date: 2013–05
  4. By: Farzana Afridi (Indian Statistical Institute, New Delhi); Vegard Iversen (Institute for Development Policy and Management, University of Manchester); M.R. Sharan (Jameel Poverty Action Lab, South Asia)
    Abstract: We use the nation-wide policy of randomly allocating village council headships to women to identify the impact of female political leadership on the governance of projects implemented under the National Rural Employment Guarantee Act in India. Using primary survey data, we find more program inefficiencies and leakages in village councils reserved for women heads: political and administrative inexperience make such councils more vulnerable to bureaucratic capture. When using a panel of audit reports, governance improves as female leaders accumulate experience. These results suggest that female political leadership may generate gains in governance but only after the initial, gendered disadvantages recede. Our findings highlight capacity building as necessary for bolstering the effectiveness of political quotas for women.
    Keywords: political reservations, gender, NREGA, India
    JEL: P26 I38
    Date: 2013–01
  5. By: Giuseppe De Feo (: Department of Economics and Management, University of Pavia); Giacomo De Luca (University of York)
    Abstract: We study the impact of organized crime on electoral competition. Assuming that the mafia is able to bring votes to the supported party in exchange of money, we show that (i) the strongest party is willing to pay the highest price to secure mafia services; (ii) the volume of electoral trade with the mafia increases with political competition and with the efficiency of the mafia. Studying in detail parliamentary elections in Sicily for the period 1946- 1992, we document the significant support given by the Sicilian Mafia to the Christian Democratic party, starting at least from the 1970s. This is consistent with our theoretical predictions, as political competition became much tighter during the 1970s and the Sicilian mafia experienced an extensive centralization process towards the end of the 1960s, which increased substantially its control of the territory. We also provide evidence that in exchange for its electoral support the mafia got economic advantages for its activities in the construction industry.
    Keywords: electoral competition, mafia, Cosa Nostra, electoral fraud
    JEL: D72 K42 H42
    Date: 2013–11
  6. By: Jaronicki, Katharina
    Abstract: This paper investigates whether petition signing campaigns for popular initiatives constitute a partisan campaigning instrument by revealing potentially relevant information to the signer which increases the benefit from voting or reduces its cost. The analysis is based on the complete sample of Swiss federal initiatives between 1978 and 2000 with aggregate voting data at state level. The results suggest that initiatives collecting many signatures yield higher approval rates at the polls. Petition signing is, however, not significantly related to turnout, and is dominated by initiative-specific characteristics. To show that the relation between signatures collected and acceptance reflects a causal campaigning effect, several approaches are pursued to control for voter preferences which potentially could drive both signatures and acceptance rates. This research relates to turnout and voting literature in general, and to campaigning and voter motivation more specifically. Further, it extends a small stream of literature analyzing signature collection for initiatives.
    Keywords: Direct democracy, Initiatives, Signatures, Campaigning, Turnout, Voting, Information
    JEL: D72 D80
    Date: 2013–11
  7. By: De Borger, Bruno; Proost, Stef
    Abstract: This paper studies the political economy of pricing and investment for excludable and congestible public goods in a federal state. Currently, we observe a wide variety of practices, ranging from federal gasoline taxes and road investment to the local supply of -- and sometimes free access to -- libraries, parking spaces and public swimming pools. The two-region model we develop allows for spill-overs between regions, it takes into account congestion, and it captures both heterogeneity between and within regions. Regional decisions are taken by majority voting; decisions at the federal level are taken either according to the principle of a minimum winning coalition or through cooperative bargaining. We have the following results. First, when users form the majority in at least one region, decentralized decision making performs certainly better than centralized decision making if spill-overs are not too large. Centralized decisions may yield higher welfare than decentralization only if users have a large majority and the infrastructure in a given region is intensively used by both local and outside users. Second, if non-users form a majority in both regions, centralized and decentralized decision making yield the same socially undesirable outcome, with prices that are much too high. Third, both bargaining and imposing uniform price restrictions across regions improve the performance of centralized decisions. Fourth, the performance of decentralized supply is strongly enhanced by local self-financing rules; it prevents potential exploitation of users within regions. Self-financing rules at the central level are not necessarily welfare-improving. Finally, the results of this paper contribute to a better understanding of actual policy-making.
    Date: 2013–09
  8. By: Antoine CAZALS (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Alexandre Sauquet (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Is there a strategically beneficial time for political leaders to make international environmental commitments? Based on the political cycles theory we argue that leaders have incentives to delay costly ratification of international environmental agreements to the post-electoral period. However, the cost of participating in these agreements are often lower for developing countries, and they may benefit from indirect gains, which may make them more prone to ratifying in the pre-electoral period. These hypotheses are empirically assessed by studying the ratification process of 48 global environmental agreements censused in the ENTRI database from 1976 to 1999. We use a duration model in which time is measured on a daily basis, enabling us to precisely identify pre- and post-electoral periods -- a significant challenge in political cycles studies. Our investigation reveals the existence of political ratification cycles that are of substantial magnitude and non-linear over the pre- and post-electoral years.
    Keywords: International Environmental Agreements;Political cycles;Ratification;duration model
    Date: 2013–11–12
  9. By: Désirée Teobaldelli; Friedrich Schneider
    Abstract: We analyze, both theoretically and empirically, the influence of direct democratic institutions on the size and development of shadow economies. Our model suggests that, as the extent of direct democracy increases, implemented fiscal policies more nearly reflect the preferences of citizens and so reduce their incentives to operate in the informal sector. This theory implies a negative relationship between the extent of direct democracy and the size of the country’s shadow economy. We also theorize that direct democracy has a greater effect in reducing the informal sector when the former is at low or intermediate values and when the electoral system is characterized by a larger district magnitude. An empirical investigation of a sample of 57 democracies confirms our model’s predictions.
    Keywords: shadow economy, direct democratic institutions, district magnitude, good governance
    JEL: O17 P16 H11 H26
    Date: 2013–07
  10. By: Vandemoortele, Thijs; Deconinck, Koen
    Abstract: Retailers’ private standards are increasingly important in addressing consumer concerns about safety, quality and social and environmental issues. Empirical evidence shows that these private standards are frequently more stringent than their public counterparts. This article develops a political economy model that may contribute to explaining this stylized fact. We show that if producers exercise their political power to persuade the government to impose a lower public standard, retailers may apply their market power to install a private standard at a higher level than the public one, depending on several factors.
    Keywords: private standards; public standards; politicaal economy;
    Date: 2013–03–25
  11. By: Yiannos Katsourides
    Abstract: The political parties in Cyprus are extremely powerful. They play a dominant role in the public as well as the private sphere, resulting in a civil society that is extremely weak. The article will address two issues. First, it will map the evolution of civil society organisations (CSOs), especially the trade unions, and their relationship with political parties. Trade unions are probably the most important and influential of the CSOs in Cyprus. Second, it will examine the relationship between political parties and trade unions in contemporary Cyprus, focusing on the changing context within which their interaction takes place, the strategies adopted by the two actors and the direction of influence between them. Research and analysis are based on interviews, surveys, party documents and other secondary literature.
    Keywords: Cyprus, political parties, civil society, trade unions, AKEL, DISY, PEO, SEK
    Date: 2013–09
  12. By: Breen, Michael; Gillanders, Robert
    Abstract: There are only a handful of studies that examine public support for the IMF and World Bank. At the individual level, evaluations of the economy feature prominently in these studies. Utilizing data from the Afrobarometer study, we find that evaluations of the economy, ideology and a range of socio-demographic factors including age, gender, employment status, health, education, and living conditions are not significantly related to ratings of effectiveness. Rather, we find that political trust and corruption – two very important concepts in the wider literature on individual level attitudes toward international relations and foreign policy issues – are strongly associated with ratings of effectiveness.
    Keywords: IMF, World Bank, public opinion
    JEL: F5 F53 P16
    Date: 2013–11–11
  13. By: Degryse, Hans; Lambert, Thomas; Schwienbacher, Armin
    Date: 2013

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