nep-pol New Economics Papers
on Positive Political Economics
Issue of 2013‒12‒20
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Decision making in politics and economics: 5. 2013 election to German Bundestag and direct democracy By Tangian, Andranik S.
  2. Is Information Power? Using Mobile Phones and Free Newspapers during an Election in Mozambique By Jenny Aker, Paul Collier, Pedro C. Vicente
  3. O Poder das Alianças no Congresso Nacional Brasileiro: Votação de Vetos Presidenciais e de Emendas Constitucionais By Masili, Gustavo
  4. One Mandarin Benefits the Whole Clan: Hometown Favoritism in an Authoritarian Regime By Quoc-Anh Do; Kieu-Trang Nguyen; Anh N. Tran
  5. Isolated Capital Cities, Accountability and Corruption: Evidence from US States By Quoc-Anh Do; Filipe R. Campante
  6. Ghost-House Busters: The Electoral Response to a Large Anti Tax Evasion Program By Casaburi, Lorenzo; Troiano, Ugo
  7. Triple-acyclicity in majorities based on difference in support By Llamazares, Bonifacio; Pérez-Asurmendi, Patrizia
  8. Political instability and economic growth: Evidence from two decades of transition in CEE By Gurgul, Henryk; Lach, Łukasz
  9. Global Markets, Global Citizens, and Global Governance in the 21st Century By Nancy Birdsall, Christian Meyer, Alexis Sowa
  10. Public and private management of renewable resources: Who gains, who loses? By Quaas, Martin F.; Stoeven, Max T.
  11. Risky business : political instability and greenfield foreign direct investment in the Arab world By Burger, Martijn; Ianchovichina, Elena; Rijkers, Bob
  12. Economía política de la distribución del ingreso rural en Chile durante la decadencia de la Hacienda, 1935-1971 By Javier Rodríguez Weber
  13. Unanimity overruled: Majority voting and the burden of history By Nehring, Klaus; Pivato, Marcus; Puppe, Clemens
  14. The Condorcet set: Majority voting over interconnected propositions By Nehring, Klaus; Pivato, Marcus; Puppe, Clemens
  15. Fighting African corruption when existing corruption-control levels matter in a dynamic cultural setting By Asongu , Simplice A

  1. By: Tangian, Andranik S.
    Abstract: The outcomes of the 2013 German Bundestag (federal parliament) election are analyzed from the viewpoint of direct democracy. For this purpose, the party positions on 36 topical issues are compared with the results of public opinion polls, and the party and coalition indices of popularity (the average percentage of the population represented) and universality (frequency in representing a majority) are constructed. It is shown that the 2013 election winner, the union of two conservative parties CDU/CSU with their 41.6% of the votes, is the least representative among the four parties eligible for parliament seats (with > 5% of the votes). The most representative among the eligible ones is the left party, DIE LINKE, which received only 8.6% of the votes. It is concluded that voters are not very consistent with their own political profiles, disregard party manifestos, and are likely driven by political traditions, even if outdated, or by personal images of politicians. Moreover, the actual practice of coalition formation further aggravates the low representativeness of the parliament. Thereby it is shown that representative democracy, as it is, guarantees no adequate representation of public opinion, even in Germany with its multiparty system and strong socialdemocratic traditions. To bridge the gap between representative and direct democracies, an alternative election procedure is proposed. For illustration, it is hypothetically applied to redistribute the Bundestag seats to increase its representativeness. --
    Keywords: representative democracy,direct democracy,elections,coalitions,theory of voting,mathematical theory of democracy,indices of popularity and universality
    JEL: D71
    Date: 2013
  2. By: Jenny Aker, Paul Collier, Pedro C. Vicente
    Abstract: Incumbent politicians in African countries have been cementing their positions in recent elections. That was the case of the Mozambican election of 2009, where the ruling party secured 75 percent of the vote, amid low participation and clear challenges of political accountability. We conducted a field experiment implemented nationwide based on three interventions providing information to voters and calling for their participation in the elections: an SMS civic education campaign centered on the elections, an SMS hotline to which citizens were able to report electoral misconduct, and the distribution of a free newspaper door-to-door focusing on voter education. We measure the effects of these treatments by looking at official electoral results, a behavioral measure of political participation, reports by electoral observers, and surveys. We find a clear positive effect of all treatments on voter turnout, close to five percentage points. Some treatments benefitted incumbents. We also have evidence that the distribution of the free newspaper led to more accountability-based participation and to a decrease in the incidence of electoral problems. All treatments increased information but caused diverse effects on perceptions about politics.
    Keywords: voter education, political economy, cell phones, newspapers, randomized experiment, field experiment, Mozambique, Africa
    JEL: D72 O55 P16
    Date: 2013–06
  3. By: Masili, Gustavo
    Abstract: For any political party wishing to keep the governance of the country, it is crucial to understand the power that each of the other parties can bring to its coalition. This evaluation helps to understand the bargaining power of each party individually. Furthermore, it allows a party to evaluate alternative alliances that may require less counterparts and that offers more power. This paper presents the historical evolution of the theory of voting power and an analysis of the voting power of each of the Brazilian parties, as well as some strategic alliances, for both the Chamber of Deputies and the Senate.
    Keywords: Voting Power, Political Parties, Alliances; Legislative Behavior.
    JEL: C72 D72 D74
    Date: 2013–12
  4. By: Quoc-Anh Do (Département d'économie); Kieu-Trang Nguyen (London School of Economics); Anh N. Tran (Indiana University Bloomington)
    Abstract: Although patronage politics in democracies has been studied extensively, it is less understood in undemocratic regimes, where a large proportion of the world's population resides. To fill this gap, our paper studies how government officials in authoritarian Vietnam direct public resources toward their hometowns. We manually collect an exhaustive panel dataset of political promotions of officials from 2000 to 2010 and estimate their impact on public infrastructure in their rural hometowns. We obtain three main results. First, promotions of officials improve a wide range of infrastructure in their hometowns, including roads, markets, schools, radio stations, clean water and irrigation. This favoritism is pervasive among officials across different ranks, even among those without budget authority, suggesting informal channels of influence. Second, in contrast to pork-barrel politics in democratic parliaments, elected legislators have no power to exercise favoritism. Third, only home communes receive favors, while larger and more politically important home districts do not. This suggests that favoritism is likely motivated by officials’ social preferences for their hometowns rather than by political considerations.
    Date: 2013–03
  5. By: Quoc-Anh Do (Département d'économie); Filipe R. Campante (Harvard University)
    Abstract: We show that isolated capital cities are robustly associated with greater levels of corruption across US states, in line with the view that this isolation reduces accountability, and in contrast with the alternative hypothesis that it might forestall political capture. We then provide direct evidence that the spatial distribution of population relative to the capital affects different accountability mechanisms over state politics: newspaper coverage, voter knowledge and information, and turnout. We also find evidence against the capture hypothesis: isolated capitals are associated with more money in state-level campaigns. Finally, we show that isolation is linked with worse public good provision.
    Date: 2013–03
  6. By: Casaburi, Lorenzo; Troiano, Ugo
    Abstract: The incentives of political agents to enforce tax collection are key determinants of the levels of compliance. We study the electoral response to the Ghost Buildings program, a nationwide anti-tax evasion policy in Italy that used innovative monitoring technologies to target buildings hidden from tax authorities. Two million buildings were registered as a result of the program. Our difference-in-differences identification strategy exploits both variation across towns in the ex-ante program scope to increase enforcement as well as administrative data on actual building registrations. Local incumbents experience an increase in their reelection likelihood as a consequence of the policy. In addition, these political returns are higher in areas with lower tax evasion tolerance and with higher speed of public good provision, implying complementarity among enforcement policies, the underlying tax culture, and government efficiency.
    Keywords: tax evasion, public economics, political economics
    JEL: D72 E62 H26
    Date: 2013–12–12
  7. By: Llamazares, Bonifacio; Pérez-Asurmendi, Patrizia
    Abstract: In this paper we study to what extent majorities based on difference in support leads to triple-acyclic collective decisions. These majorities, which take into account voters' intensities of preference between pairs of alternatives through reciprocal preference relations, require to the winner alternative to exceed the support for the other alternative in a difference fixed before the election. Depending on that difference, i.e., on the threshold of support, and on some requirements on the individual rationality of the voters, we provide necessary and sufficient conditions for avoiding cycles of three alternatives on the collective decision.
    Keywords: Triple-acyclicity; Majorities based on difference in support; Reciprocal preference relations; Voting systems.
    JEL: D7
    Date: 2013
  8. By: Gurgul, Henryk; Lach, Łukasz
    Abstract: This paper examines the nexus between political instability and economic growth in 10 CEE countries in transition in the period 1990-2009. Our results support the contention that political instability defined as a propensity for government change had a negative impact on growth. On the other hand, there was no causality in the opposite direction. A sensitivity analysis based on the application of a few hundred different variants of the initial econometric model confirmed the abovementioned findings only in the case where major government changes were applied to the definition of political instability.
    Keywords: political instability, economic growth, CEE transition economies
    JEL: O1 O10 O4 O40
    Date: 2013
  9. By: Nancy Birdsall, Christian Meyer, Alexis Sowa
    Abstract: The politics, rules, and institutions of cooperation among nations have not kept up with the demands from global citizens for changes in the global political order. Whether norms and policies can make the global politics of managing the global economy more effective, more legitimate, and more responsive to the needs of the bottom half of the world’s population, for whom life remains harsh, remains to be seen. There is some cause for optimism, however: citizens everywhere are becoming more aware of and active in seeking changes in the global norms and rules that could make the global system and the global economy fairer—in processes if not outcomes—and less environmentally harmful.
    Keywords: global economic governance, role of citizens, citizen activism, public opinion, global middle class, international financial institutions, World Bank, IMF, United Nations, income inequality, climate change, global public goods, political legitimacy
    JEL: F02 D31 D63 H87
    Date: 2013–06
  10. By: Quaas, Martin F.; Stoeven, Max T.
    Abstract: Renewable resources provide society with resource rent and surpluses for resource users (the processing industry, consumers) and owners of production factors (capital and labor employed in resource harvesting). We show that resource users and factor owners may favor inefficiently high harvest rates up to open-access levels. This may explain why public resource management is often very inefficient. We further show that privatizing inefficiently managed resources would cause losses for resource users and factor owners, unless (a) the stock is severely depleted and (b) the discount rate is low. We quantify our results for the Northeast Arctic Cod fishery --
    Keywords: resource rent,consumer surplus,worker surplus,distribution,political economy
    JEL: Q28 D33 D72 Q57
    Date: 2013
  11. By: Burger, Martijn; Ianchovichina, Elena; Rijkers, Bob
    Abstract: Which foreign direct investments are most affected by political instability? Analysis of quarterly greenfield investment flows into countries in the Middle East and North Africa from 2003 to 2012 shows that adverse political shocks are associated with significantly reduced investment inflows in the non-resource tradable sectors. By contrast, investments in natural resource sectors and non-tradable activities appear insensitive to such shocks. Consistent with these patterns, the significant reduction in investment inflows in Arab Spring affected economies was starkest in the non-resource manufacturing sector. Political instability is thus associated with increased reliance on non-tradables and aggravated resource dependence. Conversely, how intensified political instability affects aggregate foreign direct investment is critically contingent on the initial sector composition of these flows.
    Keywords: E-Business,Debt Markets,Emerging Markets,Investment and Investment Climate,Energy Production and Transportation
    Date: 2013–12–01
  12. By: Javier Rodríguez Weber (Programa de Historia Económica y Social, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: Between 1930 and 1970 in Chile, the hacienda system, the most durable institution in Chilean history, underwent decay. As is to be expected, this process resulted in several social and political conflicts in the countryside. One aspect remains unexplored: its impact on real wages and agricultural income distribution. The main purpose of this paper is to present new evidence on wages and income inequality in the Chilean agricultural sector between 1935 and 1971. The paper also discusses some hypotheses about the political economy mechanisms that lead to the tendencies observed.
    Keywords: Inequality, wages, Chile, Hacienda system, agriculture
    JEL: D31 D72 O13 O15 O54 P48
    Date: 2013–09
  13. By: Nehring, Klaus; Pivato, Marcus; Puppe, Clemens
    Abstract: Sequential majority voting over interconnected binary propositions can lead to the overruling of unanimous consensus. We characterize, within the general framework of judgement aggregation, under what circumstances this happens for some sequence of the voting process. It turns out that the class of aggregation spaces for which this difficulty arises is very large, including the aggregation of preference orderings over at least four alternatives, the aggregation of equivalence relations over at least four objects, resource allocation problems, and most committee selection problems. We also ask whether it is possible to design respect for unanimity by choosing appropriate decision sequences. Remarkably, while this is not possible in general, it can be accomplished in interesting special cases. Adapting and generalizing a classic result by Shepsle and Weingast, we show that respect for unanimity can indeed be thus guaranteed in case of the aggregation of weak orderings, strict orderings and equivalence relations. --
    Date: 2013
  14. By: Nehring, Klaus; Pivato, Marcus; Puppe, Clemens
    Abstract: Judgement aggregation is a model of social choice in which the space of social alternatives is the set of consistent evaluations (views) on a family of logically interconnected propositions, or yes/no-issues. Yet, simply complying with the majority opinion in each issue often yields a logically inconsistent collection of judgements. Thus, we consider the Condorcet set: the set of logically consistent views which agree with the majority on a maximal set of issues. The elements of this set are exactly those that can be obtained through sequential majority voting, according to which issues are sequentially decided by simple majority unless earlier choices logically force the opposite decision. We investigate the size and structure of the Condorcet set - and hence the properties of sequential majority voting - for several important classes of judgement aggregation problems. While the Condorcet set verifies McKelvey's (1979) celebrated chaos theorem in a number of contexts, in others it is shown to be very regular and well-behaved. --
    Date: 2013
  15. By: Asongu , Simplice A
    Abstract: Purpose – This paper assesses the determinants of corruption-control with freedom dynamics (economic, political, press and trade), government quality and a plethora of socio-economic factors in 46 African countries using updated data. Design/methodology/approach – A quantile regression approach is employed while controlling for the unobserved heterogeneity. Principal component analysis is also used to reduce the dimensions of highly correlated variables. Findings – With the legal origin fundamental characteristic, the following findings have been established. (1) While political freedom increases corruption-control (CC) in a bottom quantile of English common law countries, there is no such evidence in their French civil law counterparts. (2) Government quality consistently improves CC across all quantiles in English common law countries but fails to exert the same effect in middle quantiles of French civil law countries. (3) Economic freedom ameliorates CC only in common law countries with low existing CC levels (bottom quantiles). (4) We find no significant evidence of a positive ‘press freedom’-CC nexus and having the status of Low income English common law (French civil law) countries decreases (increases) CC. From a religious domination scenario, we also find the following. (1) Political and trade freedoms only reduce CC in Christian dominated countries while press freedom has a mitigation effect in both religious cultures (though more consistent across quantiles of Christian-oriented countries). (2) Government quality is more pro-CC in Christian than in Muslim-dominated countries. (3) While economic freedom has a scanty negative nexus with CC in Christian-oriented countries, the effect is positive in their Muslim-dominated counterparts. (4) Having a low-income status in countries with Christian common law tradition improves CC. Originality/value – We complement the literature on the fight against corruption in Africa by employing recently documented additional factors that should be considered in corruption studies.
    Keywords: Corruption; Freedom; Government quality; Quantile regression; Africa
    JEL: C10 H10 K10 O10 O55
    Date: 2013–09

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