nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒10‒22
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. So Closed: Political Selection in Proportional Systems By Vincenzo Galasso; Tommaso Nannicini
  2. Political institutions behind good governance By Raffaella SANTOLINI; David BARTOLINI
  3. The Political Economy of Growth, Inequality, the Size and Composition of Government Spending By Klaus Schmidt-Hebbel; José Carlos Tello
  4. Political transition in a small open economy: Retracing the economic trail of South Africa’s long walk to democracy By Biniam E. Bedasso
  5. Corruption in Committees: An Experimental Study of Information Aggregation through Voting By Rebecca Morton; Jean-Robert Tyran
  6. Citizen Candidates and Voting Over Incentive-Compatible Nonlinear Income Tax Schedules By Craig Brett; John A Weymark
  7. Simple Markovian Equilibria in Dynamic Spatial Legislative Bargaining By Jan Zapal
  8. Who Runs the International System? Power and the Staffing of the United Nations Secretariat By Paul Novosad; Eric Werker
  10. Better Feared than Loved: Reputations and the Motives for Conflict By Long, Iain W.

  1. By: Vincenzo Galasso; Tommaso Nannicini
    Abstract: We analyze political selection in a closed list proportional system where parties have strong gate-keeping power, which they use as an instrument to pursue votes. Parties face a trade-off between selecting loyal candidates or experts, who are highly valued by the voters and thus increase the probability of winning the election. Voters can be rational or behavioral. The former care about the quality mix of the elected candidates in the winning party, and hence about the ordering on the party list. The latter only concentrate on the quality type of the candidates in the top positions of the party list. Our theoretical model shows that to persuade rational voters parties optimally allocate loyalists to safe seats and experts to uncertain positions. Persuading behavioral voters instead requires to position the experts visibly on top of the electoral list. Our empirical analysis, which uses data from the 2013 National election in Italy—held under closed list proportional representation—and from independent pre-electoral polls, is overall supportive of voters’ rational behavior. Loyalists (i.e., party officers or former members of Parliament who mostly voted along party lines) are overrepresented in safe positions, and, within both safe and uncertain positions, they are ranked higher in the list. JEL codes: D72, D78, P16. Keywords: political selection, electoral rule, closed party lists.
    Date: 2014
  2. By: Raffaella SANTOLINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); David BARTOLINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: The present work looks at the role of political institutions - political regimes and electoral rules - in determining the performance of the government to define and implement sound policies for the economy. The results of the empirical investigation on a panel of 80 democracies over the period 1996-2011, show an important impact of the political regime on the performance of the government - the presidential regimes reduces the quality of the government -, while electoral rules do not matter. However, the analysis shows that the interaction between political regimes and electoral rules plays a crucial role for the quality of the government. In particular, a presidential regime improves the government performance when associated with a majoritarian rule, while worsens it when combined with a proportional rule.
    Keywords: electoral rule, government eectiveness, political system, regulatory quality
    JEL: D72 H11
    Date: 2014–09
  3. By: Klaus Schmidt-Hebbel (Universidad Catolica de Chile); José Carlos Tello (Departamento de Economía de la PUC del Perú)
    Abstract: This paper develops a dynamic general-equilibrium political-economy model for the optimal size and composition of public spending. An analytical solution is derived from majority voting for three government spending categories: public consumption goods and transfers (valued by households), as well as productive government services (complementing private capital in an endogenous-growth technology). Inequality is re ected by a discrete distribution of innitely-lived agents that dier by their initial capital holdings. In contrast to the previous literature that derives monotonic (typically negative) relations between inequality and growth in one-dimensional voting environments, this paper establishes conditions, in an environment of multi-dimensional voting, under which a non-monotonic, inverted U-shape relation between inequality and growth is obtained. This more general result { that inequality and growth could be negatively or positively related { could be consistent with the ambiguous or inconclusive results documented in the empirical literature on the inequality-growth nexus. The paper also shows that the political-economy equilibrium obtained under multi-dimensional voting for the initial period is time-consistent. JEL Classification-JEL: D72, E62, H11, H31
    Keywords: Desigualdad, crecimiento endógeno, votación multidimensional, impuesto endógeno.
    Date: 2014
  4. By: Biniam E. Bedasso
    Abstract: This paper seeks to offer an economic explanation for the emergence of democracy in societies with high income inequality and narrow middle-class such as Apartheid South Africa. The presence of a credible threat of capital flight is shown to render democracy less unpleasant to the elites by making future tax concessions possible. However, inequality should be sufficiently low for the poor to have enough incentive to concede less redistribution to avoid capital flight. The development of the finance sector in South Africa in the later years of Apartheid made the exit option a major part of the democratic bargain.
    Keywords: democratization, capital mobility, inequality, South Africa, Africa
    JEL: P16 O55
    Date: 2014
  5. By: Rebecca Morton (Department of Politics, New York University); Jean-Robert Tyran (Department of Economics, Copenhagen University)
    Abstract: We investigate experimentally the effects of corrupt experts on information aggregation in committees. We find that non-experts are significantly less likely to delegate through abstention when there is a probability that experts are corrupt. Such decreased abstention, when the probability of corrupt experts is low, actually increases information efficiency in committee decision-making. However, if the probability of corrupt experts is large, the effect is not sufficient to offset the mechanical effect of decreased information efficiency due to corrupt experts. Our results demonstrate that the norm of “letting the expert decide” in committee voting is influenced by the probability of corrupt experts, and that influence can have, to a limited extent, a positive effect on information efficiency.
    Keywords: Information aggregation, Voting, Asymmetric information, Swing voter's curse
    JEL: C92 D71 D72 D81 D82
    Date: 2014–09–07
  6. By: Craig Brett (Mount Allison University); John A Weymark (Vanderbilt University)
    Abstract: Majority voting over the nonlinear tax schedules proposed by a continuum of citizen candidates is considered. The analysis extends the finite-individual model of Röell (unpublished manuscript, 2012). Each candidate proposes the tax schedule that is utility maximal for him subject to budget and incentive constraints. Each of these schedules is a combination of the maxi-min and maxi-max schedules along with a region of bunching in a neighborhood of the proposer's type. Techniques introduced by Vincent and Mason (1967, NASA Contractor Report CR-744) are used to identify the bunching region. As in Röell's model, it is shown that individual preferences over these schedules are single-peaked, so the median voter theorem applies. In the majority rule equilibrium, marginal tax rates are negative for low-skilled individuals and positive for high-skilled individuals except at the endpoints of the skill distribution where they are typically zero.
    Keywords: bunching, citizen candidates, ironing, majority voting, nonlinear income taxation
    JEL: H2 D7
    Date: 2014–09–26
  7. By: Jan Zapal
    Abstract: The paper proves, by construction, the existence of Markovian equilibria in a model of dynamic spatial legislative bargaining. Players bargain over policies in an infinite horizon. In each period, a majority vote takes place between the proposal of a randomly selected player and the status-quo, the policy last enacted. This determines the policy outcome that carries over as the status-quo in the following period; the status-quo is endogenous. Proposer recognition probabilities are constant and discount factors are homogeneous. The construction relies on simple strategies determined by strategic bliss points computed by the algorithm we provide. A strategic bliss point is the policy maximizing the dynamic utility of a player with ample bargaining power. Relative to a bliss point, the static utility ideal, a strategic bliss point is a moderate policy. Moderation is strategic and germane to the dynamic environment; players moderate in order to constrain the future proposals of opponents. Moderation is a strategic substitute; when a player's opponents do moderate, she does not, and when they do not moderate, she does. We prove that the simple strategies induced by the strategic bliss points computed by the algorithm deliver a Stationary Markov Perfect equilibrium. Thus we prove its existence in a large class of symmetric games with more than three players and (possibly with slight adjustment) in any three-player game. Because the algorithm constructs all equilibria in simple strategies, we provide their general characterization, and we show their generic uniqueness. Finally, we analyse how the degree of moderation changes with changes in the model parameters, and we discuss the dynamics of the equilibrium policies.
    Keywords: dynamic decision-making; endogenous status-quo; spatial bargaining; legislative bargaining;
    JEL: C73 C78 D74 D78
    Date: 2014–08
  8. By: Paul Novosad (Dartmouth College); Eric Werker (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: National governments frequently pull strings to get their citizens appointed to senior positions in international institutions. We examine, over a 60 year period, the nationalities of the most senior positions in the United Nations Secretariat, ostensibly the world's most representative international institution. The results indicate which nations are successful in this zero-sum game, and what national characteristics correlate with power in international institutions. The most overrepresented countries are small, rich democracies like the Nordic countries. Statistically, democracy, investment in diplomacy, and economic/military power are predictors of senior positions?even after controlling for the U.N. staffing mandate of competence and integrity. National control over the United Nations is remarkably sticky; however the influence of the United States has diminished as U.S. ideology has shifted away from its early allies. In spite of the decline in U.S. influence, the Secretariat remains pro-American relative to the world at large.
    Date: 2014–08
  9. By: Anca-Cristina GRECEA (National Intelligence Academy „Mihai Viteazul”)
    Abstract: Beyond the legal and organizational analyses and solutions of the parliamentary control over the security sector, as they are established and supported, by the Centre of Geneva for the Democratic Control of the Armed Forces, the subjective issues, as resulted from the practice and context of the effective exertion of this control, completes the analysis frame of this phenomenon and offers additional possibilities of interpretation and generation of improvement solutions in the field.The evolutions of the security concept in the last years, as well as the increase of prevention and combat measureas of the actual risks and threats on the security environment resulted in the perception among the communities, and sometimes certitudes, that certain fundamental rights and freedoms have been affected, which generated political and diplomatic reactions as never before. Thus, the manifestation context of the democratic control over the institutions in the national security system has become a topic for analysis and public debate of maximum interest, generating perspectives about reconsidering the specific instruments of it.Given the context, the investigation of the MPs’ opinion and the interdisciplinary interpretation of the data obtained may prove to be viable solutions, not only for a deeper knowledge on the phenomenon studied, but especially for the establishment of certain ways of strengthening the parliamentary control mechanisms, adapted to the political and social issues at a time and more easily to be accepted by those appointed to promote and implement them
    Keywords: democratic control, MPs’perception, national security, scientific research
    Date: 2013–11
  10. By: Long, Iain W. (Cardiff Business School)
    Abstract: Throughout history, victory in conflict has created fearsome reputations. With it, the victor ensures greater allegiance of the wider population, increasing their rents at the expense of their enemy. Such reputational concerns generate two motives for conflict. When only victory or defeat is informative, the less scary party may attack to show that they are tougher than expected. If the occurrence of conflict also conveys information, the scarier party is more likely to attack. By failing to do so, the population would perceive them as weak and switch loyalties anyway. In this case, conflict arises to save face.
    Keywords: Conflict; Reputations
    JEL: D74 C73 D83 F51 H56
    Date: 2014–10

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