nep-pol New Economics Papers
on All new papers
Issue of 2014‒09‒08
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Politics under the Weather: Droughts, Parties and Electoral Outcomes By Paulo Bastos; Sebastian Miller
  2. Can Institutions Cure Clientelism? Assessing the Impact of the Australian Ballot in Brazil By Daniel Gingerich
  3. Measuring the Political Economy of Tax Lawmaking: A Methodology and Evidence from Argentina By Javier Alvaredo; Alejandro Bonvecchi; Ernesto Calvo; Maximiliano Castillo; Juan Carlos Gomez
  4. The Brazilian Electoral Panel Studies (BEPS): Brazilian Public Opinion in the 2010 Presidential Elections By Barry Ames; Fabiana Machado; Lucio Renno; David Samuels; Amy Smith; Cesar Zucco
  5. Antidumping echoing By Chrysostomos Tabakis; Maurizio Zanardi
  6. Are Environmental Taxes Affected by Legislatures` Ideological Positions? By Sebastian Miller; Mauricio Vela
  7. The Economic Effects of Constitutions: Do Budget Institutions Make Forms of Government More Alike? By Martin Ardanaz; Carlos Scartascini
  8. Tax Reforms in Latin America in an Era of Democracy By Diego Focanti; Mark Hallerberg; Carlos Scartascini
  9. Attitudes Towards Gender Equality And Perception Of Democracy In The Arab World By Veronica Kostenko; Pavel Kuzmichev; Eduard Ponarin
  10. Get Rid of Unanimity: The Superiority of Majority Rule with Veto Power By Laurent Bouton; Aniol Llorente-Saguer; Fr�d�ric Malherbe
  11. Institutions for Effective Business-Government Collaboration: Micro Mechanisms and Macro Politics in Latin America By Ben Ross Schneider
  12. The Debt Brake in the Eyes of the German Population By Bernd Hayo; Florian Neumeier
  13. Ideology and Taxation in Latin America By Ernesto H. Stein; Lorena Caro
  14. Are We All Playing the Same Game? The Economic Effects of Constitutions Depend on the Degree of Institutionalization By German Caruso; Carlos Scartascini; Mariano Tommasi
  15. Natural Resource Production, Corruption, and Expropriation By Ramin Dadasov; Carsten Hefeker; Oliver Lorz

  1. By: Paulo Bastos; Sebastian Miller
    Abstract: The increased occurrence of extreme weather conditions leading to drought is a key development challenge. This paper studies how these extreme events interact with the political process at the local level using rich administrative data for drought declarations and mayoral elections in Brazil. While accounting for current and historical rainfall patterns, the paper finds that that: i) municipalities led by a mayor affiliated with the President’s party are more likely to receive formal drought declarations prior to the municipal election; and ii) receiving a drought declaration reinforces the electoral advantage of incumbent mayors running for reelection. These results are robust to the inclusion of a rich set of controls for municipal attributes.
    JEL: D72 Q54
    Date: 2013–10
  2. By: Daniel Gingerich
    Abstract: This paper examines how the adoption of the Australian ballot (AB), and ipso facto, the transition from the nominal to effective secret vote, shaped the nature of party politics in Brazil. Engaging the literature on political clientelism, the impact of the AB on three outcomes is studied: 1) the ideological leanings of voters at the ballot box; 2) the degree of electoral control enjoyed by local vote brokers; and 3) the capacity of citizens to effectively participate in the electoral process. In order to get leverage on these issues, the paper utilizes an original dataset -painstakingly assembled from regional electoral archives- which contains municipal-level vote returns for federal deputy and senate contests during the period before and after the AB's introduction in Brazil (1958-1962). The dataset exploits the fact that the AB was introduced at different times in different states and for different offices in the country, thereby creating an unprecedented opportunity to assess the impact of this institution. Using a triple difference-in-difference procedure, the study finds that the AB: 1) shifted the ideological balance of power from Right to Left; 2) did not greatly weaken the hand of vote brokers; and 3) greatly increased the proportion of wasted votes cast in elections.
    JEL: D72 K N4 N46 O17
    Date: 2013–09
  3. By: Javier Alvaredo; Alejandro Bonvecchi; Ernesto Calvo; Maximiliano Castillo; Juan Carlos Gomez
    Abstract: Although recent research has shed new light on the political determinants and economic consequences of tax lawmaking, existing analyses rely on coarse data measuring political aggregates. Consequently, little is known about the political processes determining how tax legislation is written or their effect on the nature of tax reforms. This paper therefore develops a methodology to examine how Congress edits the content of tax legislation by measuring the ways Deputies, Senators, Presidents, and Ministers propose and amend such legislation. The Legislative Substance Scale proposed here measures the distance between a bill’s original position and the actual outcome of the legislative process by comparing the differences in content according to coding of the main tax policy dimensions. The scale is used to build the first systematic database of tax lawmaking in Argentina, and to describe its general patterns of authorship, approval and substantive content across presidencies in the current democratic period.
    JEL: D78 H20 H77
    Date: 2013–12
  4. By: Barry Ames; Fabiana Machado; Lucio Renno; David Samuels; Amy Smith; Cesar Zucco
    Abstract: This report presents sample characteristics and summary statistics from the Brazilian Electoral Panel Study (BEPS) project. The survey, composed of three waves, was conducted in Brazil in 2010, a presidential election year, and is composed of 4,611 interviews with 2,669 voting-age Brazilians.
    Date: 2013–04
  5. By: Chrysostomos Tabakis; Maurizio Zanardi
    Abstract: This paper examines the determinants of “echoing†in antidumping (AD) cases (i.e., different countries sequentially imposing AD measures on the same product from the same exporter). We develop a dynamic game in which two competing importers can choose to impose an AD duty on a third exporting country in one of two periods, if at all. Assuming that governments are politically motivated (favoring their import competing industries), we find that a country imposes an AD duty in the first (second) period independently of the other country’s actions if its political-economy parameter is “very high†(“highâ€). Instead, it never introduces AD measures when its political-economy parameter is below a critical “low†threshold. Echoing occurs for intermediate values of the political-economy parameter: a country chooses to impose an AD duty in the second period if and only if the competing importer has done so in the first period. Using a novel AD dataset, we document that echoing is a common practice among both traditional and new users of AD. In line with the conclusions of the theoretical model, the econometric results show that AD measures are more likely to be introduced in response to other countries’ measures when governments care to some extent, but not too much, about their import-competing industries. Thus, this paper shows that countries’ political-economy-driven trade policies are interdependent and should not be analyzed in isolation.
    Date: 2014
  6. By: Sebastian Miller; Mauricio Vela
    Abstract: Environmental taxes have been discussed as one of the main mechanisms to deal with environmental problems. Nonetheless, instruments of this type have rarely been implemented, and the adoption of new or higher environmental taxes has faced resistance in some countries. The purpose of this work is to identify one possible political answer to why adoption of environmental taxes varies. One explanation is that legislatures’ ideological position affects the degree of usage of taxes generally and environmental taxes in particular. For example, right-wing parties tend to be less associated with environmental concerns and more associated with lower government intervention. This paper presents evidence that reflects this relationship, showing the positive association of more left-wing legislatures with higher levels of environmental taxation. A panel of data for 37 developed and developing countries over 16 years is used considering the percentage of total revenue from environmentally related taxes, the ratio of this revenue to total energy use and tax levels in industry and household sectors. The results show that most of these impacts involve environmentally related taxes in the industry sector. Proportional representation electoral systems and high seat concentration by few parties appear to be necessary conditions for the negative relation of right-wing ideology with environmental taxes.
    JEL: H23 P16 Q58
    Date: 2013–09
  7. By: Martin Ardanaz; Carlos Scartascini
    Abstract: According to an influential theoretical argument, presidential systems tend to present smaller governments because the separation between those who decide the size of the fiscal purse and those who allocate it creates incentives for lower public expenditures. In practice, forms of government vary greatly, and budget institutions -the rules according to which budgets are drafted, approved, and implemented- are one (of many) drivers of such variation. This paper argues that under more hierarchical budget rules, presidential and parliamentary systems generate a similar incentive structure for the executive branch in shaping the size of government. This hypothesis is tested on a broad cross-section of countries, presidentialism is found to have a negative impact on government size only when executive discretion in the budget process is low (that is, in a context of separation of powers). However, the negative effect of presidentialism on expenditures vanishes or is even reversed when the executive`s discretion over the budget process is higher. Hence, budget institutions that impose restrictions on the legislature`s ability to amend budget proposals can make political regimes look more alike in terms of fiscal outcomes.
    JEL: D72 D78 H61
    Date: 2013–08
  8. By: Diego Focanti; Mark Hallerberg; Carlos Scartascini
    Abstract: The literature on taxes and public finance generally focuses on revenues, an easily observable and generally available variable, as the observable measure of tax policy. Still, revenues depend on many determinants other than the political will and policy objectives of the government. It is therefore important, when studying the politics of taxation, to evaluate specific changes to the tax code such as rates, bases and exemptions. With the underlying goal of exploring the political process and the determinants of tax policy, this paper compiles a novel and highly comprehensive database of tax reforms for Latin America between 1990 and 2004. The paper present a description of the database as well as the stylized facts of tax reforms in Latin America. Examples of the database’s uses are discussed, as is motivation for future research.
    JEL: D72 H2 K34
    Date: 2013–12
  9. By: Veronica Kostenko (National Research University Higher School of Economics); Pavel Kuzmichev (National Research University Higher School of Economics); Eduard Ponarin (National Research University Higher School of Economics)
    Abstract: This paper analyzes the relationship between support of democracy and attitudes to human rights: in particular, support for gender equality in the countries covered by the first wave of the Arab Barometer project. We used cluster analysis and negative binomial regression modeling to show that, unlike in most countries of the world, the correlation between support of democracy and gender equality is very low in Arab countries. There is a group of people in the region who support both democracy and gender equality, but they are a small group (about 17% of the population) of elderly and middle-aged people characterized by higher education and social status. A substantial number of poorly educated males express support for democracy, but not for gender equality. Many people (especially young males aged 25–35 in 2007) are against both gender equality and democracy. Younger people tend to be both better educated and more conservative - those belonging to the 25–34 age group are the most patriarchal in their gender attitudes. Controlling for age, education still has a positive effect on gender equality attitudes. Nevertheless, this phenomenon probably means that there are two simultaneous processes going on in the Middle East. On the one hand, people are becoming more educated, urbanized etc., which means the continuation of modernization. On the other hand, we observed a certain retrogression of social values.
    Keywords: modernization, Arab Barometer, democracy, gender equality, patriarchal values, Islam
    JEL: E11
    Date: 2014
  10. By: Laurent Bouton (Georgetown University and NBER); Aniol Llorente-Saguer (Queen Mary University of London); Fr�d�ric Malherbe (London Business School)
    Abstract: A group of agents wants to reform the status quo if and only if this is Pareto improving. Agents have private information and may have common or private objectives, which creates a tension between information aggregation and minority protection. We analyze a simple voting system - majority rule with veto power (Veto) - that essentially resolves this tension, for it combines the advantageous properties of both majority and unanimity rules. We argue that our results shed new light on the evolution of voting rules in the EU institutions and could help to inform debates about policy reforms in cases such as juries in the US.
    Keywords: Unanimity rule, Veto power, Information aggregation, Pareto criterion, Constructive abstention
    JEL: D70
    Date: 2014–08
  11. By: Ben Ross Schneider
    Abstract: What makes for effective cooperation between government and business in industrial policy? Core research questions on the institutional design of arrangements for business-government interactions focus on three main functions: i) maximizing the benefits of dialogue and information exchange; ii) motivating participation through authoritative allocation; and iii) minimizing unproductive rent seeking. Countries with more experiences of public-private collaboration (PPC) tend to have more pragmatic governments and better organized and informally networked private sectors. Effective cooperation also depends on the macro context, in particular the nature of the political system and the alternative avenues it provides for business politicking, especially through parties, networks and appointments, the media, and campaign finance. Lastly, the structure and strategies of big domestic businesses -mostly diversified, family-owned business groups- affects their preferences and interest in collaborating in industrial policy.
    JEL: D72 L52
    Date: 2013–10
  12. By: Bernd Hayo (University of Marburg); Florian Neumeier (University of Marburg)
    Abstract: In response to the recent sovereign debt crisis, the member states of the European Union agreed to enact balanced budget rules in their national legislation. However, little is known about the public’s opinion of balanced budget rules. To fill this gap, we conducted a survey among 2,000 representatively chosen German citizens. Our findings suggest that 61% of the German population supports the debt brake, whereas only 8% oppose it. However, approval rates differ notably among various subgroups of the population. The debt brake enjoys greater support among high-income earners and among those well-informed about the future costs of deficit spending. People who do not trust politicians would like to see the government’s hands tied even more tightly. Opinions about the debt brake also differ markedly across the supporters of different political parties.
    Keywords: Debt brake; balanced budget rule; European Fiscal Compact; survey; Germany
    JEL: E02 E62 H62 H63
    Date: 2014
  13. By: Ernesto H. Stein; Lorena Caro
    Abstract: This paper examines the impact of ideology on tax revenues in Latin America, using a panel of 17 countries from 1990 to 2010. As a first approach, a fixed- effects model is used to identify the impact of ideology on taxation; left-leaning governments are associated with increases in total tax revenues and income tax revenues of 2. 1 and 1. 3 percent of GDP, respectively. There is no effect on revenues from VAT or social security taxes. To deal with endogeneity problems, an event study and a difference in difference methodology are used to track the behavior of revenues around the time of the shifts to the left. Tax revenues and income tax revenues increase by 1. 5 and 0. 8 percent of GDP when comparing revenues immediately before and after the shift in ideology. The pattern of tax revenues around ideological shifts suggests that the effects are causal.
    JEL: H20 P16
    Date: 2013–05
  14. By: German Caruso; Carlos Scartascini; Mariano Tommasi
    Abstract: The understanding of the economic effect of formal institutional rules has progressed substantially in recent decades. These formal analyses have tended to take for granted that institutional arenas such as Congress are the places where decision-making takes place. That is a good approximation in some cases (such as many developed countries today) but not in others. If countries differ in how institutionalized their policymaking is, it is possible that the impact of formal political rules on policy outcomes might depend on that. This paper explores that hypothesis and finds that some important claims regarding the impact of constitutions on policy outcomes do not hold for countries in which institutionalization is low. The findings suggest the need to develop a broader class of policymaking models in which the degree to which decision-making follows 'the rules' is also endogenized.
    JEL: D72 D73 D78 H20 H60 H62
    Date: 2013–07
  15. By: Ramin Dadasov (University of Berlin); Carsten Hefeker (University of Aachen); Oliver Lorz (University of Aachen)
    Abstract: We develop a formal model that looks at the mutually endogenous determination of foreign direct investments in natural resource-rich countries, the decision of host governments to expropriate these investments, and the level of corruption. Higher resource production makes expropriation more attractive from the perspective of national governments. A low expropriation risk is in turn an important determinant of international investments and is therefore associated with high levels of production. Moreover, resource production leads to high levels of corruption. Our theoretical results are confirmed by estimations of a simultaneous equation model for 50 resource-rich countries in which we endogenize expropriation risk, corruption, and resource production.
    Keywords: Natural resources, hold-up problem, foreign direct investment, corruption.
    JEL: F21 D73 Q38
    Date: 2014

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