nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒11‒22
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Evolution of the Russian Political Party System under the Influence of Social Conformity: 1993-2011 By Coleman, Stephen
  2. Electoral involvement and appreciation for democracy under a compulsory voting rule By Acuña, Andrés
  3. Strategic voting in proportional representation systems By Stan Veuger; Tim Ganser
  4. Sequential Voting and Agenda Manipulation By Salvador Barberà; Anke Geber
  5. Do Election Results Affect the Value of Politically Connected Firms? - The Effect of the Schroeder-Merkel Change of Government on German Prime Standard Firms By Elmar A. Janssen
  6. Political Origins of the Japan Overseas Cooperation Volunteers, 1960–1965: Why the State Sends Young Volunteers Abroad By Okabe, Yasunobu
  7. Legitimacy and the Cost of Government By Berggren, Niclas; Bjørnskov, Christian; Lipka, David
  8. Backward Induction in the Wild: Evidence from the U.S. Senate By Spenkuch, Jörg

  1. By: Coleman, Stephen
    Abstract: The Russian political party system has developed through a tumultuous era, progressing from extreme fragmentation to a smaller, more stable number of parties. Much of this change was engineered by elites and especially by President Putin, leading to the question of whether the result is a normal party system by traditional Western standards or just a tool of the government. By means of a predictive mathematical model, the analysis shows that the party system indeed has grown strong popular roots with a great impact on the overall distribution of votes among the parties. This is caused by the pervasive but unconscious effect of social conformity on voters.
    Keywords: Russia; political parties; voting; mathematical model; social conformity; unconscious behavior
    JEL: C1 C51 D72 D87 P3
    Date: 2014–10
  2. By: Acuña, Andrés
    Abstract: This paper proposes a theoretical model for the decision of voter registration, which recovers the classical notion that democracy is a public good. The solution of the citizen's problem implies three types of Nash equilibrium (null, partial, and full enrollment), where the real cost for voter enrollment and appreciation for democracy are the key variables. In the partial-enrollment equilibrium, the citizens' democratic valuation has a threshold that encourages a free-rider behavior even when the homogeneous-citizens assumption is not met. In turn, a policy maker could avoid this threat of representativeness crisis by setting an optimal enrollment cost that depends on electorate size and citizens' heterogeneity. Finally, an empirical model is outlined from the policy maker's problem, which is coherent with classical literature on voting behavior.
    Keywords: electoral engagement, compulsory voting, voting behavior
    JEL: D72
    Date: 2013–10
  3. By: Stan Veuger (American Enterprise Institute); Tim Ganser (American Enterprise Institute)
    Abstract: We propose a model of voter decision-making in proportional representation systems: ultra-rational strategic voters construct expectations of coalitions and policy outcomes based on expected seat distributions and vote to maximize their expected utility from the implemented policy.
    Keywords: voting, proportional representation
    JEL: A
    Date: 2014–02
  4. By: Salvador Barberà; Anke Geber
    Abstract: We provide characterizations of the set of outcomes that can be achieved by agenda manipulation for two prominent sequential voting procedures, the amendment and the successive procedure. Tournaments and super-majority voting with arbitrary quota q are special cases of the general sequential voting games we consider. We show that when using the same quota, both procedures are non-manipulable on the same set of preference profiles, and that the size of this set is maximized under simple majority. However, if the set of attainable outcomes is not single-valued, then the successive procedure is more vulnerable towards manipulation than the amendment procedure. We also show that there exists no quota which uniformly minimizes the scope of manipulation, once this becomes possible.
    Keywords: sequential voting, agendas, manipulation
    JEL: C72 D02 D71 D72
    Date: 2014–08
  5. By: Elmar A. Janssen (University of Paderborn)
    Abstract: This study applies event study methodology to the outcomes of the 2005 election of the German Bundestag. Results are compared to those of Goldman, Rocholl and So (2009) who found that following the 2000 presidential election in the US, value effects were positive for firms connected to the Republicans and significantly different from the negative ones of firms connected to the Democrats. The present study shows that, contrary to expectations, political connections had little impact on the value of politically connected corporations among the companies listed at the DAX, MDAX, SDAX or TecDAX. The key results of this study are: First, there is a significantly smaller fraction of politically connected firms in Germany than in the US. Second, following the start of the exploratory talk and the inauguration of the new government, politically connected companies generate about 0.7 and 1.2 percent higher abnormal returns, respectively. Finally, while there is no significant impact of the election results on the returns of companies with political connections with respect to other different characteristics, there is slight support that connections to the federal parliament are more valuable than those to the state parliaments. The different reactions of the US and the German Stock Market are likely to occur due to the different corporate governance systems. Nearly all identified political connections in the present study are based on memberships on the supervisory board which duties are to give advice and control.
    Keywords: corporate governance, two tier system, political connectedness, firm value, event study
    JEL: J53 G14 G34 G38 L14
    Date: 2014–07
  6. By: Okabe, Yasunobu
    Abstract: This paper examines the political origins of the Japan Overseas Cooperation Volunteers (JOCV) through the lens of two research questions: (1) Why did the Japanese government undertake the JOCV project in 1965? and (2) Why did the project pursue multifaceted objectives –technical assistance, international friendship, and youth development? These questions are important for two reasons. First, as the country was struggling economically, experiencing domestic turmoil, and vulnerable to international conflict, it is surprising that the government would begin sending young volunteers to developing countries. Second, the JOCV’s objectives are inconsistent with each other, and therefore their coexistencerequires further examination. Using a multi-level analysis strategy, we explore international and domestic factors. The analysis of international structures focused on the Japan-US relationship and the Cold War in Asia, and proved that two factors motivated the Japanese government to create the JOCV: Prime Minister Ikeda’s desire to approach economic development in Southeast Asia; and the US government’s demand that Japan take some action regarding the US goal of expanding the idea of the Peace Corps. Our inquiry into the domestic structures focused on youth problems such as unemployment in rural areas, the anti-Security Treaty movement, and rising crime in cities. We have discussed that leaders of youth associations and young members of the governing Liberal Democratic Party (LDP) considered overseas voluntary service like the Kennedy’s Peace Corps as a potential solution to these problems. The analysis of agential factors sheds lights on the policy-making. There was disagreement between actors over the definition of the new project. While a coalition of youth associations and young members of the LDP advocated an overseas voluntary service project, the Ministry of Foreign Affairs (MOFA) insisted on dispatching experts rather than volunteers. Eventually, the two sides reached a compromise: the JOCV would be defined as a project providing both technical assistance and youth volunteers; and it should be managedunder the supervision of MOFA.Finally, this study demonstrates that when the state sends young volunteers abroad, external ideas and political actors’ concern for youth development matter. It also implies that state-sponsored volunteering can be defined as a hybrid of the state project and individual activities, which neither realism nor constructivism in international politics can solely explain.
    Keywords: Japan Overseas Cooperation Volunteers (JOCV) , youth associations , Liberal Democoratic Party(LDP) , Ministry of Foreign Affars , policy-making process
    Date: 2014–03–28
  7. By: Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Bjørnskov, Christian (Department of Economics and Business); Lipka, David (School of International Relations and Diplomacy)
    Abstract: While previous research documents a negative relationship between government size and economic growth, suggesting an economic cost of big government, a given government size generally affects growth differently in different countries. As a possible explanation of this differential effect, we explore whether perceived government legitimacy (measured by satisfaction with the way democracy works) influences how a certain government size affects growth. On the positive side, a legitimate government may “get away” with being big since legitimacy can affect people’s behavioral response to, and therefore the economic growth cost of, taxation and government expenditures. On the negative side, legitimacy may make voters less prone to acquire information, which in turn facilitates interest-group oriented or populist policies that harm growth. A panel-data analysis of up to 30 developed countries, in which two different measures of the size of government are interacted with government legitimacy, reveals that legitimacy exacerbates a negative growth effect of government size in the long run. This could be interpreted as governments taking advantage of legitimacy in order to secure short-term support at a long-term cost to the economy.
    Keywords: Legitimacy; Economic growth; Size of government; Confidence; Trust
    JEL: E62 H11 H20 O43 Z13
    Date: 2014–10–30
  8. By: Spenkuch, Jörg
    Abstract: Backward induction is a cornerstone of modern game theory. Yet, laboratory experiments consistently show that subjects fail to properly backward induct. Whether these findings generalize to other, real-world settings remains an open question. This paper develops a simple model of sequential voting in the U.S. Senate that allows for a straightforward test of the null hypothesis of myopic play. Exploiting quasi-random variation in the alphabetical composition of the Senate and, therefore, the order in which Senators get to cast their votes, the evidence suggests that agents do rely on backward reasoning. At the same time, Senators' backward induction prowess appears to be quite limited. In particular, there is no evidence of Senators reasoning backwards on the first several hundred roll call votes in which they participate.
    Keywords: backward induction; voting; U.S. Senate
    JEL: D0 D01 D03 D72
    Date: 2014–09–22

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