nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒06‒28
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Quantifying the Value of a Political Connection: The Case of Presidential Elections in Colombia By Daniel Vaughan
  2. A fractionally cointegrated VAR analysis of economic voting and political support By Maggie E.C. Jones; Morten Ørregaard Nielsen; Michal Ksawery Popiel
  3. Corporate Influence and Political Corruption: Lessons from Stock Market Reactions to Political Events By Jeffrey Milyo
  4. Campaign Spending and Electoral Competition: Towards More Policy Relevant Research By Jeffrey Milyo
  5. Essays on India’s Political Economy     By Singh, Nirvikar
  6. Radio's impact on preferences for patronage benefits By Keefer, Philip; Khemani, Stuti
  7. Bases, Bullets and Ballots: the Effect of U.S. Military Aid on Political Conflict in Colombia By Oeindrila Dube; Suresh Naidu
  8. Youth bulges, insurrections, and politico-economic institutions By Apolte, Thomas
  9. Promoting Competition or Helping Less-Endowed? An Experiment on Collective Institutional Choices under Intra-Group Inequality By Kamei, Kenju
  10. Measuring Public Corruption in the United States: Evidence from Administrative Records of Federal Prosecutions By Jeffrey Milyo; Adriana Cordis

  1. By: Daniel Vaughan
    Abstract: Using a novel biographical database including all Presidents and presidential candidates in Colombia for the period 1833-2010 I show that the value of a political connection can be quantified in terms of the votes transferred within a political network. I consider three types of political networks depending on whether links are created by a cabinet or foreign service appointment and a family connection. I find that a one standard deviation increase in votes received by connections generates a maximum gain of three-fourths of a standard deviation. I also reject for the presence of network endogeneity that may bias the estimates.
    Keywords: Political Networks, Political Dynasties, Economic and Political History, Colombia, Elites
    JEL: D85 P16 D72 N46 O54
    Date: 2013–11
  2. By: Maggie E.C. Jones (Queen's University); Morten Ørregaard Nielsen (Queen's University and CREATES); Michal Ksawery Popiel (Queen's University)
    Abstract: We use a fractionally cointegrated vector autoregressive model to examine the relationship between Canadian political support and macroeconomic conditions. This model is well suited for the analysis because it allows multiple fractional time series and admits simple asymptotic inference for the model parameters and tests of the hypotheses of interest. In the long-run equilibrium, we find that support for the Progressive Conservative Party was higher during good economic times, i.e. periods of high interest rates and low unemployment, while support for the Liberal Party was higher during bad economic times, i.e. periods of low interest rates and high unemployment. We also test and reject the notion that party support is driven only by relative (to the United States) economic performance. Indeed, our findings suggest that US macroeconomic variables do not enter the long-run equilibrium of Canadian economic voting (political opinion poll support) at all.
    Keywords: Economic voting, fractional cointegration, political economy, vector autoregressive model
    JEL: C32 D72
    Date: 2014–06
  3. By: Jeffrey Milyo (Department of Economics, University of Missouri-Columbia)
    Abstract: Stock market reactions to political events demonstrate that the value of some firms is strongly affected by which party controls political power. However, contrary to common perception, event studies do not indicate that the ability to make unlimited political contributions or expenditures enhances a firm's value. Instead, geographic and personal connections to political actors matter more for firms' bottom line, although there is some evidence that personal connections may be rented via professional lobbying.
    Keywords: Campaign Contributions, Corruption, Event Studies, Lobbying
    JEL: D7 H0 K0 L2
    Date: 2013–12–30
  4. By: Jeffrey Milyo (Department of Economics, University of Missouri-Columbia)
    Abstract: There is a long-standing scholarly literature on the electoral effects of campaign spending; nevertheless, the academic research offers only limited guidance for policy makers interested in campaign finance reform. In part, this is because existing studies have focused narrowly on some vexing statistical issues, while ignoring many others. But it is also because political scientists have not devoted enough effort conducting evaluation studies of how regulatory policies impact the intermediate goal of competition, let alone the ultimate policy goals of reduced corruption, increased citizen participation and improved public policy. Consequently, there is a great need for updated and improved analyses of the treatment effect of campaign spending on political competition in a variety of electoral contexts, but an even greater need for the application of modern evaluation methods to the more basic question of whether campaign finance reforms "work" as advertised.
    Keywords: campaign spending, political competition, campaign finance reform
    JEL: D72 D78
    Date: 2013–09–05
  5. By: Singh, Nirvikar
    Abstract: This is a collection of essays written for the Financial Express, an Indian financial daily. The common theme of these essays, which cover a period of almost four years, from September 2010 to June 2014, is the issue of governance in India, and how politics combines with societal and institutional structures to shape the quality of governance. The essays discuss corruption, citizenship, effective delivery of public goods and services, taxation and the evolution of democracy at different levels of the Indian polity. The collection begins with the corruption surrounding the Commonwealth Games, and ends with the implications of India’s recent, potentially path-breaking general election. 
    Keywords: Business, Social and Behavioral Sciences, India, governance, corruption, leadership, elections, democracy, politics
    Date: 2014–06–01
  6. By: Keefer, Philip; Khemani, Stuti
    Abstract: Citizens in developing countries support politicians who provide patronage or clientelist benefits, such as government jobs and gifts at the time of elections. Can access to mass media that broadcasts public interest messages shift citizens'preferences for such benefits? This paper examines the impact of community radio on responses to novel survey vignettes that make an explicit trade-off between political promises of jobs for a few versus public services for all. The impact of community radio is identified through a natural experiment in the media market in northern Benin, which yields exogenous variation in access across villages. Respondents in villages with greater radio access are less likely to express support for patronage jobs that come at the expense of public health or education. Gift-giving is not necessarily traded off against public services; correspondingly, radio access does not reduce preferences for candidates who give gifts. The pattern of results is consistent with a particular mechanism for radio's impact: increasing citizens'demand for broadly delivered health and education and thereby shaping their preferences for clientelist candidates.
    Keywords: Health Monitoring&Evaluation,Education For All,Population Policies,Housing&Human Habitats,E-Business
    Date: 2014–06–01
  7. By: Oeindrila Dube; Suresh Naidu
    Abstract: Does foreign military assistance strengthen or further weaken fragile states facing internal conflict? Aid may strengthen the state by bolstering its repressive capacity vis-à-vis armed non-state actors, or weaken it if resources are diverted to these very groups. We examine how U.S. military aid affects political violence in Colombia. We exploit the allocation of U.S. military aid to Colombian military bases, and compare how aid affects municipalities with and without bases. We use an instrument based on worldwide increases in U.S. military aid (excluding Latin America). We find that U.S. military assistance leads to differential increases in attacks by paramilitaries, but has no effect on guerrilla attacks. Aid also results in more paramilitary (but not guerrilla) homicides during election years, particularly in politically competitive municipalities. The findings suggest that foreign military assistance may strengthen armed non-state actors, undermining domestic political institutions.
    JEL: H56 O54
    Date: 2014–06
  8. By: Apolte, Thomas
    Abstract: We develop a simple model of an insurrection market based on a kleptocratic politico-economic institutional setting, within which a certain government elite holds both all central government position and all productive assets. The kleptocratic setting provokes the appearance of insurrection entrepreneurs that are called the revolutionary elite and that aim at redistributing wealth away from the government elite. To that end, the revolutionary elite hires insurrection activists and compensates them in cash or in kind. We integrate the youth bulge measured by the relative youth cohort size into the insurrection market by defining certain youth-specific characteristics that influence relative productivities on the insurrection market as compared to an official labor market. We find that, apart from certain spontaneous outbreaks of violence or riots, youth bulges alone are not a good predictor for political violence. Moreover, deliberate insurrection activities that aim at changing political and economic power positions are affected by youth bulges only when related to certain politico-economic institutional settings, from which kleptocracies may be the most vulnerable. --
    Keywords: youth bulges,insurrections,political economy of revolutions
    JEL: H56 J10 J22 P16
    Date: 2014
  9. By: Kamei, Kenju
    Abstract: Unequally-distributed resources, whether people’s income or competence, are ubiquitous in our real world. Whether to promote competition or to lead to a more equal environment is often in question in societies or organizations. With heterogeneous endowments, we let subjects collectively choose whether to have a competitive lottery contest - where only one individual in a group wins and receives an award, generating a greater income inequality - or to have a public good that benefits the less-endowed to a greater degree. Our data indicates that highly-endowed individuals contribute little when the public good is selected. The majority of subjects, however, vote in favor of having a public good, contrary to the standard theory predictions. In addition, a belief elicitation task shows that they expect payoffs to be more equally distributed under the public good regime than under the contest regime. Moreover, the subjects’ preferences between the two regimes are little affected by their risk attitudes or the size of awards in competition. These suggest that people’s institutional choices are driven more by their income inequality-averse preferences.
    Keywords: heterogeneity, experiment, cooperation, competition, public goods, inequality
    JEL: C92 D63 D70 D72 H4
    Date: 2014–06–20
  10. By: Jeffrey Milyo (Department of Economics, University of Missouri-Columbia); Adriana Cordis
    Abstract: A growing empirical literature examines the causes and consequences of public corruption in the United States; however, most of these studies measure corruption using data on federal convictions that is of dubious quality and provenance. We document these concerns and describe an alternative data source that provides more reliable and detailed information on corruption prosecutions and convictions by type of state official and even by lead charge. We employ these data to construct a taxonomy of public corruption that dispels some popular and academic misconceptions. Our findings call into question the lessons from previous empirical research; earlier studies of the causes and consequences of corruption in the states should be re-examined with more appropriate measures of corruption convictions.
    Keywords: corruption, disaster assistance, FEMA
    JEL: H5 D7
    Date: 2013–12–23

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