nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒09‒29
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political Reforms and Food Security By Pieters, Hannah; Curzi, Daniele; Olper, Alessandro; Swinnen, Jo
  2. Some Political Issues Confronting World Agriculture By Poleman, Thomas T.
  3. Political Institutions and Corruption:An Experimental Examination of the "Right to Recall" By Sarah Mansour; Vjollca Sadiraj; Sally Wallace
  4. The Political Economy of European Integration By Enrico Spolaore
  5. The political economy of public transport pricing and supply decisions By Bruno DE BORGER; Stefan PROOST
  6. Do Criminal Representatives Hinder or Improve Constituency Outcomes? Evidence from India By Nishith Prakash; Marc Rockmore
  7. Diminished-Dimensional Political Economy By Ronald M. Harstad; Reinhard Selten
  8. Unanimity in Attribute-Based Preference Domains By Sidartha Gordon
  9. Kinky choices, dictators and split might. A non-cooperative model for household consumption and labor supply By Jan BOONE; Karen VAN DER WIEL; Arthur VAN SOEST; Frederic VERMEULEN
  10. Trade Unions In An Emerging Economy: The Case Of South Africa By Haroon Bhorat; Karmen Naidoo; Derek Yu
  11. Does the WTO Help Member States Clean Up? By Susan Ariel Aaronson; M. Rodwan Abouharb

  1. By: Pieters, Hannah; Curzi, Daniele; Olper, Alessandro; Swinnen, Jo
    Abstract: This paper studies the effect of a political regime transition on food security and more specifically on child mortality. Using a new estimation approach, the Synthetic Control Method, we find that a political reform towards a democracy does not systematically reduce child mortality. Of the 33 country case studies, we find a significant and positive relation between food security and political reforms for 4 countries, while for the remaining 29 countries no impact was found. These results are in contrast with the results from the traditional difference-in-difference estimations
    Keywords: food security, political reform, synthetic control method, Health Economics and Policy, Labor and Human Capital, Political Economy, I18, O15, P16,
    Date: 2014
  2. By: Poleman, Thomas T.
    Keywords: Agricultural Finance, Political Economy,
  3. By: Sarah Mansour; Vjollca Sadiraj; Sally Wallace
    Abstract: Countries around the world are concerned with corruption as it potentially undermines confidence in government and may reduce the efficiency of public goods provision. While there has been a significant amount of research devoted to identifying the causes of corruption there has been little empirical research on the impact of political institutions on corruption. Given that many nascent governments are establishing new political systems, the time is right for understanding the role that political institutions may play in enhancing or mitigating corruption. This paper uses a series of laboratory experiments to examine the impact of the right to recall government officials' on the level of government corruption. We find experimental evidence suggesting that such an institution can decrease the level of corruption in government through the increased accountability it imposes on elected politicians, and equity of the system, in terms of income distribution, may also be enhanced.
    Keywords: Political economy, corruption, transition economies, experiment, public goods
    Date: 2014–09
  4. By: Enrico Spolaore
    Abstract: This chapter discusses the process of European institutional integration from a political-economy perspective, linking the long-standing political debate on the nature of the European project to the recent economic literature on political integration and disintegration. First, we introduce the fundamental trade-off between economies of scale associated with larger political unions and the costs from sharing public goods and policies among more heterogeneous populations, and examine the implications of the trade-off for European integration. Second, we describe the two main political theories of European integration-intergovernmentalism and functionalism- and argue that both theories capture important aspects of European integration, but that neither view provides a complete and realistic interpretation of the process. Finally, we critically discuss the successes and limitations of the actual process of European institutional integration, from its beginnings after World War II to the current crisis.
    Date: 2014
  5. By: Bruno DE BORGER; Stefan PROOST
    Abstract: This paper studies the political economy of public transport pricing and quality decisions in urban areas. We consider a hypothetical two-region federation. In each region there is a demand for public transport and for car use, and the group mainly using public transport may be a majority or minority in the region; moreover, part of the users of both the public transport system and the road network may come from outside the region. In this setting, we compare regional and federal decision making on public transport fares and supply characteristics. Under regional decision-making we find that, first, the political process may result in very low public transport fares, even if car owners are a large majority of the population. The fare preferred by car owners is increasing in the toll on car use. Cost recovery always improves with the share of outside users. Second, imposing a zero deficit constraint on regional public transport operators implements the second-best welfare optimum, independent of whether car owners or non-car owners have the political majority. Third, compared to centralized decision making, decentralized decision making leads to higher fares and better cost recovery. Our findings are consistent with the lack of opposition to very large public transport subsidies in Europe, and they provide a potential explanation for the tendency towards decentralization of public transport policy-making observed in many countries over the last decades.
    Date: 2014–06
  6. By: Nishith Prakash (University of Connecticut); Marc Rockmore (Clark University)
    Abstract: The recent increase in the number of criminally accused politicians elected to state assemblies has caused much furor in India. Despite the potentially important consequences and the widely divergent views, the implications of their elections to state legislative assemblies on constituency-level economic performance are unknown. Using a regression discontinuity design and data on the intensity of night lights in satellite imagery at the constituency level, our results suggest that the cost of electing criminally accused politicians on measures of economic activity is quite large. Using estimates of the elasticity of GDP to light, we find that the election of criminally accused candidates lead to roughly 5 percent lower GDP growth per year on average. These estimated costs increase for candidates with serious accusations, multiple accusations, and accusations regarding financial crimes. Our result survives variety of robustness checks.
    Keywords: Growth, Indian Politicians, Information disclosure, Regression Discontinuity, India
    JEL: D72 D73 O40 O12
    Date: 2014–08
  7. By: Ronald M. Harstad (Department of Economics, University of Missouri-Columbia); Reinhard Selten
    Abstract: Economists' policy advice is based on models of responses by a variety of economic entities to policy adoptions. There is compelling evidence that these entities do not optimize in at all the fashion that mainstream economics assumes. Rather, they limit decision-making to solving problems of much smaller dimensionality. We consider how political economy goes awry when ignoring diminished dimensionality, and some research avenues opened up by this realization.
    Keywords: political economy, policy advice, problem complexity, dimensionality
    JEL: D6 B41 H42 H11
    Date: 2014–08–06
  8. By: Sidartha Gordon (Département d'économie)
    Abstract: We provide several characterizations of unanimity decision rules, in a public choice model where preferences are constrained by attributes possessed by the alternatives (Nehring and Puppe, 2007a,b). Solidarity conditions require that when some parameters of the economy change, the agents whose parameters are kept fixed either all weakly lose or they all weakly win. Population-monotonicity (Thomson, 1983a,b) applies to the arrival and departure of agents, while replacement-domination (Moulin,1987) applies to changes in preferences. We show that either solidarity property is compatible with voter-sovereignty and strategy-proofness if and only if the attribute space is quasi-median (Nehring, 2004), and with Pareto-efficiency if and only if the attribute space is a tree. Each of these combinations characterizes unanimity.
    Keywords: Solidarity, Population-monotonicity, Replacement-domination, Unanimity, Strategy-proofness, Attribute-based Domains, Generalized Single-Peaked Domains.
    Date: 2014–09
  9. By: Jan BOONE; Karen VAN DER WIEL; Arthur VAN SOEST; Frederic VERMEULEN
    Abstract: We model consumption and labor supply behavior of a couple in a non-cooperative setting. Using minimal assumptions, we prove that demand for public goods is characterized by three regimes. It is either determined by the preferences of one of the partners only (Husband Dictatorship or Wife Dictatorship), or by both spouses’ preferences, in which case each partner’s influence depends on the relative wage rates (Split Might). The model is illustrated empirically using a sample drawn from the Consumer Expenditure Survey (CEX) where expenditures on children’s goods are a public good in both spouses’ preferences. It turns out that the spending pattern reflects the husband’s preferences in about 54% of the couples in our sample. Still, in an important minority of the households (about 45%), the wife acts as a dictator. Somewhat less than 1% of the couples is characterized by a split might regime.
    Date: 2014–07
  10. By: Haroon Bhorat; Karmen Naidoo; Derek Yu (Development Policy Research Unit; Director and Professor)
    Abstract: This paper provides a historical overview of the South African trade union movement, followed by a brief discussion of the labour market legislation and institutions formed since 1994. Thereafter, a detailed evaluation of the impact of trade unions, legislation, and institutions on labour market outcomes in South Africa is provided, and it is found that despite a long history, trade union membership levels, their impact on average wage levels, and their pursuit of strike action, has resulted in relatively benign economic impacts within country and relative to other economies around the world. The political-economy effects shaping the country’s employment relations are then discussed.
    Keywords: Trade unions, labour market efficiency, wage premium, strikes, political economy, South Africa
    JEL: F50 J30 J51 J52
    Date: 2014–07
  11. By: Susan Ariel Aaronson (Department of Economics/Institute for International Economic Policy, George Washington University); M. Rodwan Abouharb (University London College)
    Abstract: The WTO says nothing about corruption. This paper uses qualitative and quantitative analysis to examine whether the GATT/WTO, without deliberate intent, helps nations improve governance and fight corruption. Under GATT/WTO rules, policymakers are obligated to act in an evenhanded manner, to facilitate transparent trade-related policymaking and to provide due process to such policymaking by allowing individuals to comment on and challenge trade related regulations before they are adopted. Evenhandedness, access to information, and due process are anticorruption counterweights. We hypothesized that we would see both qualitative and quantitative evidence of improvement in these government metrics among developing country WTO members, especially during the accession process. However, that is not what we found; instead our data shows members gradually improve governance.
    Date: 2014–07

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