nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒08‒20
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. A Model of Two-stage Electoral Competition with Strategic Voters By Shino Takayama
  2. Does Forced Voting Result in Political Polarization? By Fernanda L L de Leon; Renata Rizzi
  3. The 2014 EP Elections: A Victory for European Democracy? A Report on the LEQS Annual Event 2014 By Eri Bertsou
  4. Political Booms, Financial Crises By Helios Herrera; Guillermo Ordoñez; Christoph Trebesch
  5. On the Political Economy of Guest Worker Programs in Agriculture By Rickard, Bradley J.
  6. Providing global public goods: Electoral delegation and cooperation By Martin G. Kocher; Fanagfang Tan; Jing Yu
  7. The Political Intergenerational Welfare State By Bishnu, Monisankar; Wang, Min
  8. Democratic representation and religion. Differences and convergences between the European Parliament and the US House of Representatives By François Foret
  9. A Replication of "The Political Determinants of Federal Expenditure at the State Level" (Public Choice, 2005) By Stratford Douglas; W. Robert Reed
  10. Superstars in politics: the role of the media in the rise and success of Junichiro Koizumi By Eiji Yamamura; Fabio Sabatini
  11. Habemus Papam? Polarization and Conflict in the Papal States By Pino, Francisco J.; Vidal-Robert, Jordi
  12. Political settlement dynamics in a limited-access order: The case of Bangladesh By Mirza Hassan
  13. Is Democracy Eluding Sub-Saharan Africa? By Carolyn Chisadza and Manoel Bittencourt
  14. Natural Resources, Decentralization, and Risk Sharing: Can resource booms unify nations? By Fidel Perez-Sebastian; Ohad Raveh

  1. By: Shino Takayama (School of Economics, The University of Queensland)
    Abstract: This paper proposes a two-party spatial model of policy and valence issues for office-seeking candidates who face a two-stage electoral process with strategic voters. We study how the difference in valences among candidates affects the equilibrium outcomes when voters are strategic and candidates consider their winning chances in general and primary elections. Our results indicate that compared with the case of just maximizing her party median voters expected payoff, a forward-looking challenger chooses a more moderate policy so that she can appeal to the general population, and that the winning probability in the general election for the winning candidate in the primary election increases because of the more moderate policy promise that she chooses. The model is analytically tractable, and provides a vehicle for answering normative questions about holding primary elections. Finally, we provide empirical predictions on primaries and the roles of valences in elections.
    Date: 2014–07–21
  2. By: Fernanda L L de Leon (University of East Anglia); Renata Rizzi (Universidad de Sao Paulo)
    Abstract: This paper estimates effects of exposure to compulsory voting on individuals' political preferences, through a regression discontinuity framework. These results are important to understand effects of a voting system transition. The identification comes from Brazil's dual voting system: voluntary and compulsory. Using self-collected data, we find that compulsory voting legislation has sizeable effects on individuals' political preferences, making them more likely to identify with a political party, to become extreme oriented and to move to the left.
    Date: 2014–08
  3. By: Eri Bertsou
    Abstract: In the run up to the 2014 European Parliament elections, the new Spitzenkandidaten process and European-wide party campaigns fuelled expectations of strengthening democratic processes in Europe. At the same time, the anticipated surge of support for anti-establishment and Eurosceptic parties caused concerns among political scientists. This paper summarises and critically reviews the contributions presented at the LEQS Annual Event The 2014 EP Elections: A Victory for European Democracy? held on the 2nd of June 2014, a week after the final European elections results were announced. The panel discussed the implications of election results for democracy in the European Union and its Member States. The panelists were Dr Sara Hagemann, Dr Mareike Kleine and Professor Iain Begg from the LSE’s European Institute and the event was chaired by Professor Maurice Fraser.
    Keywords: European Parliament; European elections; participation; European Commission
    Date: 2014–07–07
  4. By: Helios Herrera (Department of Applied Economics, HEC); Guillermo Ordoñez (Department of Economics, University of Pennsylvania and NBER); Christoph Trebesch (Department of Economics, University of Munich and CESifo)
    Abstract: We show that political booms, measured by the rise in governments’ popularity, predict financial crises above and beyond other better-known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We show that governments in emerging economies are more concerned about their reputation and tend to ride the short-term popularity benefits of weak credit booms rather than implementing politically costly corrective policies that would help prevent potential crises. We provide evidence of the relevance of this reputation mechanism.
    Keywords: Credit Booms, Reputation, Financial Crises, Political Popularity, Emerging Markets
    JEL: D81 D82 E44 E51 E58 G01 N10 N20
    Date: 2014–07–23
  5. By: Rickard, Bradley J.
    Keywords: Labor and Human Capital, Political Economy,
    Date: 2014
  6. By: Martin G. Kocher; Fanagfang Tan; Jing Yu
    Abstract: This paper experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects a delegate who can freely decide on each group member's contribution (including the contribution of herself) to the global public good. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by the theory - quite to the opposite, other-regarding preferences and a re-election incentives guarantee that delegates assign equal contributions for all group members. Since the source of the resulting inefficiency is the polycentric nature of global public goods provision together with other-regarding preferences, we use the term P-inefficiency to describe our finding.
    Keywords: Global Public Goods, Delegation, Cooperation, Experiment
    JEL: C92 D72 H41
    Date: 2014–08–01
  7. By: Bishnu, Monisankar; Wang, Min
    Abstract: This paper characterizes an intergenerational welfare state with endogenous education and pension choice under general equilibrium-probabilistic voting. We show that politically implementing public education program always increases the future human capital, but this higher future human capital would not help support a more generous social security in the future. The effect of implementing PAYG social security on education however crucially depends on the sources of funding for education investment. Establishing PAYG pension program depresses investment in public education. However if the source of funding for education investment is private, in both the cases when pension is the only instrument or when public pension and public education are implemented together as a package, there can be an improvement in education investment if and only if the political influence of the old is limited and so the size of the PAYG social security is small. A substantially thick pension scheme which results from a heavy influence of the old in the political process spoils the mutual benefits.
    Keywords: education; Markov perfect equilibrium; Pension; Probabilistic voting; Endogenous growth
    JEL: D90 E6 H3 H52 H55
    Date: 2014–08–01
  8. By: François Foret
    Abstract: It is common to oppose a secular Europe to a religious America. As representatives of cultural diversity and popular sovereignty, Parliaments are the best illustrations of mutual arrangements between politics and religion. Little data is available on religion at the EP, in contrast to the rich scholarship on the Congress. Relying on the first survey of its kind on members of the European Parliament (MEPs), the article analyses what they believe and what they do with these beliefs. The purpose is to understand how religion interacts with representation and political socialization of MEPs within and outside the assembly. The American House of Representatives is used as a reference case study. Overall, there are significant differences between European and American legislators, mainly due to their distinct social, cultural, political and institutional environments. However, several common logics may also be seen at work, suggesting that the EU is not as exceptional as is often thought.
    Keywords: Religion, European Union, US, parliamentary politics, European Parliament
    Date: 2014–05
  9. By: Stratford Douglas (West Virginia University, College of Business and Economics); W. Robert Reed (University of Canterbury, Department of Economics and Finance)
    Abstract: This paper replicates and analyses a study by Hoover and Pecorino (2005) on federal spending in US states. H&P followed on path-breaking research by Atlas et al. (1995) in which evidence was claimed in favour of the "small state effect;" namely, that since every state is represented by two senators, small states have a disproportionate influence relative to their population size. Using H&P's data, we both replicate their results, and demonstrate strong support for the small state effect when we formally test their predictions. The contribution of this study is that we demonstrate that this empirical support vanishes when we (i) employ cluster robust standard errors rather than conventional OLS standard errors, and (ii) include a variable for population growth as suggested in a recent study by Larcinese et al. (2013). Our results lead us to conclude that there is no evidence to support the hypothesis of a "small state effect."
    Keywords: Small state effect, Representation, US Senate, Replication study
    JEL: H1 H5 C1
    Date: 2014
  10. By: Eiji Yamamura; Fabio Sabatini
    Abstract: This paper explores the role of mass media in people perceptions of charismatic leaders, focusing on the case of Junichiro Koizumi, Prime Minister of Japan from 2001 to 2006. Using survey data collected immediately after his 2005 landslide electoral victory, this study empirically assesses the influence of television and newspapers on support for Koizumi and for the most distinctive policy action he announced during his campaign, the privatization of the postal service.
    Date: 2014–07
  11. By: Pino, Francisco J. (Université Libre de Bruxelles); Vidal-Robert, Jordi (University of Warwick and CAGE)
    Abstract: We study the effect of divisions within the elite on the probability of internal conflict in the Papal States between 1295 and 1846. We assemble a new database using information on cardinals that participated in conclaves during this period, and construct measures of polarization and fractionalization based on the cardinals’ places of birth. The deaths of popes and cardinals provide plausible exogenous variation in the timing of the conclave and the composition of the College of Cardinals, which we exploit to analyze the causal effect of a divided conclave on conflict. We find that an increase of one standard deviation in our measure of polarization raised the likelihood of internal conflict by between 2 and 3 percent in a given year and by up to 15 percent in a given papacy. The effect is largest in the initial years after the conclave, to gradually vanish over time. Cardinals’ influence on the politics of the Papal States decreased after reforms introduced between 1586 and 1588. Our measure of religious productivity, however, is negatively and significantly linked to polarization in the post-reform period. These reforms were successful in shifting the effect of divisions among the elite of one of the largest and oldest organizations from violent conflict to religious matters.
    Keywords: Papal States, polarization, cardinals
    Date: 2014
  12. By: Mirza Hassan
    Abstract: This study explores the dynamics of the elite political settlement in Bangladesh during the last two decades (1991-2012), as well as its impact on economic development and political development, understood here as the process of maintaining a stable balance between state building, rule of law consolidation, and democratisation (Fukuyama, 2011). The concept of political settlement is crucial for understanding the dominant social order in Bangladesh: the disaggregation of the country's limited-access order into three distinct political settlements with different dynamics of elite interaction –competitive politics, economic realm, and social provision– provides a conceptually sound interpretation of the so-called 'Bangladeshi paradox' of high growth and pro-poor policy without 'good' governance. By focusing on the various equilibria conditions for elite strategy, this paper also begins to explore the conditions necessary for Bangladesh to transition into a more open social order.
    Date: 2013
  13. By: Carolyn Chisadza and Manoel Bittencourt
    Abstract: This paper analyses the modernisation hypothesis in the sub-Saharan African region. Using a sample of 48 countries from 1960 to 2010 and dynamic panel data analysis, we find a significant and negative relationship between income and democracy, an indication that the hypothesis may not hold in the region. We also investigate further by distinguishing between exogenous and endogenous democracy. The former explains whether external factors, such as the end of the Cold War, as well as regional influence, play a role in the process of democratisation in sub-Saharan Africa. Results indicate that the end of the Cold War has a significant influence on the democratisation process probably because of the pro-democracy policies advocated by international organisations, while regional organisations play no significant role in the region. We also obtain significant results for democracy when we proxy for international organisations with an IMF programme variable.
    Keywords: Democracy, Sub-Saharan Africa
    JEL: O10 O55 P16
    Date: 2014
  14. By: Fidel Perez-Sebastian; Ohad Raveh
    Abstract: Previous studies imply that a positive regional fiscal shock, such as a resource boom, strengthens the desire for separation. In this paper we present a new and opposite perspective. We construct a model of endogenous fiscal decentralization that builds on two key notions: a trade-off between risk sharing and heterogeneoity, and a positive association between resource booms and risk. The model shows that a resource windfall causes the nation to centralize as a mechanism to share risk. In addition, we provide cross country empirical evidence for the main hypotheses. Specifically, we find that resource booms: (i) decrease the level of fiscal decentralization, primarily through the risk sharing channel, and (ii) have no effect on political decentralization.
    Keywords: Natural Resources, decentralization, risk sharing
    JEL: H77 Q33
    Date: 2014

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