nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒12‒06
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Path-Breakers: How Does Women's Political Participation Respond to Electoral Success? By Bhalotra, Sonia R.; Clots-Figueras, Irma; Iyer, Lakshmi
  2. Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents By Dmitry Veselov
  3. Manipulated voters in competitive election campaigns By Kemal K?vanc Akoz; Cemal Eren Arbatli
  4. Institutional interactions and economic growth: The joint effects of property rights, veto players and democratic capital By Justesen, Mogens K.; Kurrild-Klitgaard, Peter
  5. Gender quotas and the quality of politicians By Audinga Baltrunaite; Piera Bello; Alessandra Casarico; Paola Profeta
  6. The dynamics of public investment under persistent electoral advantage By Marina Azzimonti
  7. Decentralization, Vertical Fiscal Imbalance, and Political Selection By Massimo Bordignon; Matteo Gamalerio; Gilberto Turati
  8. Election Fraud and Post-Election Conflict: Evidence from the Philippines By Benjamin Crost; Joseph H. Felter; Hani Mansour; Daniel I. Rees
  9. Political institutions and income (re-)distribution: Evidence from developed economies By Feld, Lars P.; Schnellenbach, Jan
  10. Polarized business cycles By Marina Azzimonti
  11. Ability of greens and supergreens to influence environmental regulations By Lenka Wildnerova
  12. Regional Variations in Attitudes Towards Refugees: Evidence from Great Britain By Stephen Drinkwater; Heaven Crawley; Rukhsana Kauser
  13. Coalition Formation in a Legislative Voting Game By Christiansen, N.; Georganas, S.; Kagel, J. H.
  14. Political Risk Guarantees and Capital Flows: The Role of Bilateral Investment Treaties By Mina, Wasseem

  1. By: Bhalotra, Sonia R. (University of Essex); Clots-Figueras, Irma (Universidad Carlos III de Madrid); Iyer, Lakshmi (Harvard Business School)
    Abstract: This paper analyzes the effect of a woman's electoral victory on women's subsequent political participation. Using the regression discontinuity afforded by close elections between women and men in India's state elections, we find that a woman winning office leads to a large and significant increase in the share of female candidates from major political parties in the subsequent election. This stems mainly from an increased probability that previous women candidates contest again, an important margin in India where a substantial number of incumbents do not contest re-election. There is no significant entry of new female candidates, no change in female or male voter turnout and no spillover effects to neighboring areas. Further analysis points to a reduction in party bias against women candidates as the main mechanism driving the observed increase in women's candidacy.
    Keywords: candidacy, gender, politics, India
    JEL: J16 J71 P16
    Date: 2013–11
  2. By: Dmitry Veselov (National Research University Higher School of Economics, Laboratory of Macroeconomic Analysis)
    Abstract: We consider the problem of finding sufficient conditions for political support of liberal, growth-enhancing policy in a quality-ladders model with heterogeneous agents differing in their endowment of wealth and skills. The policy set is two-dimensional: Agents vote for the level of redistribution as well as for the level of entry barriers preventing the creation of more efficient firms. We show that under the majority voting rule there are three possible stable political outcomes: full redistribution, low redistribution and low barriers for entry (“liberal” order), high redistribution and high barriers for entry (“corporatism”). We show that key variables determining the political outcome are the expected gain from technological adoption, the ratio of total profits to total wages, and the skewness of human capital distribution.
    Keywords: economic systems, political barriers for growth, majority voting, quality-ladders model, wealth inequality, talent inequality, economic growth
    JEL: O33 P16 P48
    Date: 2013
  3. By: Kemal K?vanc Akoz (Department of Economics, New York University, 19 W. 4th Street, 6FL, New York, NY 10012); Cemal Eren Arbatli (Department of Economics, National Research University-Higher School of Economics, 26 Shabolovka Street, Building 3, 3116A, Moscow, Russia)
    Abstract: We provide a game-theoretical model of manipulative election campaigns with two political candidates and a continuum of Bayesian voters. Voters are uncertain about candidate positions, which are exogenously given and lie on a unidimensional policy space. Candidates take unobservable, costly actions to manipulate a campaign signal that would otherwise be fully informative about a candidate’s distance from voters relative to the other candidate. We show that if the candidates differ in campaigning efficiency, and voters receive the manipulated signal with an individual, random noise, then the cost-efficient candidate wins the election even if she is more distant from the electorate than her opponent is. In contrast to the existing election campaign models that do not support information manipulation in equilibrium, our paper rationalizes misleading political advertising and suggests that limits on campaign spending may potentially improve the quality of information available to the electorate
    Keywords: Hidden actions, election campaigns, manipulation, propaganda, bias.
    JEL: C72 D72 D82 D84
    Date: 2013
  4. By: Justesen, Mogens K.; Kurrild-Klitgaard, Peter
    Abstract: We investigate the possible interaction effects that the extent of property rights protection and separation of powers in a political system have on economic growth. Using analysis of panel data from more than countries over the period 1970-2010 we find that the growth effects of property rights increase when political power is divided among more veto players. When distinguishing between institutional veto players (political institutions) and partisan veto players (fractionalization among political parties), we further find that the growth effects of property rights are driven mainly by checks on the chief executive (in bicameral systems) and primarily found in countries with large stocks of democratic capital.
    Keywords: Economic growth; institutions; property rights; veto players; democracy.
    JEL: D72 E02 O17 O43 P14 P16 P17 P48
    Date: 2013–11
  5. By: Audinga Baltrunaite; Piera Bello; Alessandra Casarico; Paola Profeta
    Abstract: We analyze the effects of the introduction of gender quotas in candidate lists on the quality of elected politicians, as measured by the average number of years of education. We consider an Italian law which introduced gender quotas in local elections in 1993, and was abolished in 1995. As not all municipalities went through elections during this period, we identify two groups of municipalities and use a Difference in differences estimation. We find that gender quotas are associated with an increase in the quality of elected politicians, with the effect ranging from 0.12 to 0.24 years of education. This effect is due not only to the higher number of elected women, who are on average more educated than men, but also to the lower number of low-educated elected men. The positive effect on quality is confirmed when we measure the latter with alternative indicators, it persists in the long run and it is robust to controlling for political ideology and political competition.
    Date: 2013–10
  6. By: Marina Azzimonti
    Abstract: This paper studies the effects of asymmetries in re-election probabilities across parties on public policy and their subsequent propagation to the economy. The struggle between groups that disagree on targeted public spending (e.g., pork) results in governments being endogenously short-sighted: Systematic underinvestment in infrastructure and overspending on targeted goods arise, above and beyond what is observed in symmetric environments. Because the party enjoying an electoral advantage is less short-sighted, it devotes a larger proportion of revenues to productive investment. Hence, political turnover induces economic fluctuations in an otherwise deterministic environment. I characterize analytically the longrun distribution of allocations and show that output increases with electoral advantage, despite the fact that governments expand. Volatility is non-monotonic in electoral advantage and is an additional source of inefficiency. Using panel data from US states I confirm these findings.
    Keywords: Public investments
    Date: 2013
  7. By: Massimo Bordignon (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Matteo Gamalerio (University of Warwick); Gilberto Turati (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche, Università di Torino)
    Abstract: In a career-concern model of politics with endogenous candidacy and different types of politicians, following a decentralization reform, politicians with different skills are elected in municipalities characterized by different levels of autonomous resources. As an effect, consumer welfare increases only, or mainly, in richer municipalities. We test these predictions by exploiting the differentiated reduction in Vertical Fiscal Imbalance in Italian municipalities, due to the strong difference in the tax base, following the decentralization reforms of the '90s. Results strongly support our predictions and are robust to several alternative stories.
    Keywords: decentralization, vertical fiscal imbalance, quality of politicians
    JEL: D72 D78
    Date: 2013–11
  8. By: Benjamin Crost (University of Colorado Denver); Joseph H. Felter (Center for International Security and Cooperation, Stanford University); Hani Mansour (University of Colorado Denver); Daniel I. Rees (University of Colorado Denver)
    Abstract: Previous studies have documented a positive association between election fraud and the intensity of civil conflict. It is not clear, however, whether this association is causal or due to unobserved institutional and cultural factors. This paper examines the relationship between election fraud and post-election violence in the 2007 Philippine mayoral elections. Using the density test developed by McCrary (2008), we find evidence that incumbents were able to win tightly contested elections through fraud. In addition, we show that narrow incumbent victories were associated with an increase in post-election casualties, which is consistent with the hypothesis that election fraud causes conflict. We conduct several robustness tests and find no evidence that incumbent victories increased violence for reasons unrelated to fraud.
    Date: 2013–11
  9. By: Feld, Lars P.; Schnellenbach, Jan
    Abstract: We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-) distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort. --
    Keywords: Redistribution,Formal Institutions,Fiscal Decentralization,Presidential and Parliamentary Regimes,Electoral Systems
    JEL: D31 H22 H11 H50 I38 P50
    Date: 2013
  10. By: Marina Azzimonti
    Abstract: We are motivated by four stylized facts computed for emerging and developed economies: (i) business cycle movements are wider in emerging countries; (ii) economies in emerging countries experience greater economic policy uncertainty; (iii) emerging economies are more polarized and less politically stable; and (iv) economic policy uncertainty is positively related to political polarization. We show that a standard real business cycle (RBC) model augmented to incorporate political polarization, a `polarized business cycle' (PBC) model, is consistent with these facts. Our main hypothesis is that fluctuations in economic variables are not only caused by innovations to productivity, as traditionally assumed in macroeconomic models, but also by shifts in political ideology. Switches between left-wing and right-wing governments generate uncertainty about the returns to private investment, and this affects real economic outcomes. Since emerging economies are more polarized than developed ones, the effects of political turnover are more pronounced. This translates into higher economic policy uncertainty and amplifies business cycles. We derive our results analytically by fully characterizing the long-run distribution of economic and fiscal variables. We then analyze the effect of a permanent increase in polarization on PBCs.
    Keywords: Business cycles ; Economic policy ; Uncertainty
    Date: 2013
  11. By: Lenka Wildnerova (UP1 UFR02 - Université Paris 1, Panthéon-Sorbonne - UFR d'Économie - Université Paris I - Panthéon-Sorbonne - PRES HESAM)
    Abstract: The goal of this paper is to explore the environmental policies introduced by the government that cares about the welfare of its citizens and the contributions from the lobby groups. Our addition to the topic of environmental lobbying is in modeling lobby groups, where we distinguish between local and global pollution. We showed that in some cases, the environmental lobbying might have a negative impact on the tax level, which is not true for the local lobbying. Even more interesting result shows that the presence of supergreens might increase the pollution level in the home country. Our results for the cooperative policies prove that the introduced tax will imply lower global emissions. We demonstrated that the asymmetries in some parameters will reinforce the tax levels in the case of national lobby and supergreens if the asymmetry parameter in the foreign country is larger.
    Keywords: environmental lobbying, lobby groups, pollution tax, emission leakage, large countries, local lobby, supergreens
    Date: 2013–07–05
  12. By: Stephen Drinkwater (Swansey University); Heaven Crawley (Swansea University); Rukhsana Kauser (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: 2013–11
  13. By: Christiansen, N.; Georganas, S.; Kagel, J. H.
    Abstract: We experimentally investigate the Jackson-Moselle (2002) model where legislators bargain over policy proposals and the allocation of private goods. Key comparative static predictions of the model hold as policy proposals shift in the predicted direction with private goods, with the variance in policy outcomes increasing as well. Private goods increase total welfare even after accounting for their cost and help secure legislative compromise. Coalition formations are better characterized by an efficient equal split between coalition partners than the stationary subgame perfect equilibrium prediction.
    Keywords: legislative bargaining; policy decisions; private goods; experiment
    Date: 2013
  14. By: Mina, Wasseem
    Abstract: This paper examines the influence of political risk guarantees of bilateral investment treaties on debt and equity flows using panel data on middle income countries for the period 1984-2011. Adopting system GMM methodology, the paper empirically finds that ratified bilateral investment treaties with OECD countries have a combined positive influence on non-guaranteed debt flows and a direct positive influence on portfolio equity flows. The results highlight the importance of considering political risk guarantees in financial integration, regulation of financial markets and institutions, and capital liberalization.
    Keywords: Political risk guarantees, bilateral investment treaties, capital flows, debt flows, equity flows
    JEL: F21 F34 G15 G18 K33
    Date: 2013–08–30

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