nep-pol New Economics Papers
on Positive Political Economics
Issue of 2014‒12‒24
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting in Legislative Elections Under Plurality Rule By Hughes, Niall E
  2. Information, Media and Elections: Incentives for Media Capture By Serena Marianna Drufuca
  3. The Closed Primaries versus the Top-two Primary By Pablo Amorós; M. Socorro Puy; Ricardo Martínez
  4. Gender Quotas and Women’s Political Leadership By Z. O’Brien, Diana; Rickne, Johanna
  5. Does the African middle class defend democracy? Evidence from Kenya By Cheeseman, Nic
  6. Are there political cycles hidden inside government expenditures? By Vítor Castro; Rodrigo Martins
  7. Incumbency Advantage in Non-Democracies By Egorov, Georgy; Sonin, Konstantin
  8. Electoral effects on the composition of public spending and revenue: evidence from a large panel of countries By Atsuyoshi Morozumi; Francisco José Veiga; Linda Gonçalves Veiga
  9. Elite capture of democratic politics: the role of social identity By David Juárez-Luna; Christian Ghiglino
  10. Politically Sustainable Probabilistic Minority Targeting By De Donder, Philippe; Peluso, Eugenio
  11. The structure of fi…nes in the light of political competition By Éric Langlais; Marie Obidzinski
  12. The political economy determinants of economic growth in Malawi By Jonathan Said; Khwima Singini
  13. Demographic transition and political stability: Does corruption matter? By Mohammad Reza Farzanegan; Stefan Witthuhn
  14. Inefficiency in fiscal policy: A political economy of the Laffer curve By Yutaro Hatta
  15. Political Inclusivity and the Aspirations of Young Constituents: Identifying the Effects of a National Empowerment Policy By Stephen D. O'Connell

  1. By: Hughes, Niall E (Department of Economics, University of Warwick)
    Abstract: Conventional models of single district plurality elections show that with three parties anything can happen - extreme policies can win regardless of voter preferences. I show that when when single district elections are used to fill a legislature we get back to a world where the median voter matters. An extreme policy will generally only come about if it is preferred by the median voter in a majority of districts, while the mere existence of a centrist party can lead to moderate outcomes even if the party itself wins few seats. Furthermore, I show that while standard single district elections always have misaligned voting i.e. some voters do not vote for their preferred choice, equilibria of the legislative election exist with no misaligned voting in any district. Finally, I show that when parties are impatient, a fixed rule on how legislative bargaining occurs will lead to more coalition governments, while uncertainty will favour single party governments. Key words: Strategic Voting; Legislative Elections; Duverger’s Law; Plurality Rule; Polarization; Poisson Games JEL classification: C71; C72; D71; D72; D78
    Date: 2014
  2. By: Serena Marianna Drufuca
    Abstract: Media play an essential role in democracy by making available valuable information for electoral decisions. In a framework of political economy of mass media, I inquiry the possibility of capture by rent-seeking o cers in a heterogeneous electoral environment. This allow me to discuss when relevant information is traded, when government captures media and what e ect this has on political outcomes. I nd media capture to be a pervasive phenomenon which implies minimum costs on politicians' side. However, incentives to corruption decrease if the possibility of being detected is introduced, leading to a more intermediate result with respect to the one obtained by Besley and Prat (2006). I show that information is a fundamental element for electoral choices and that any attempt to increase quality of news and to reduce information's costs can have positive e ects on the selection of politicians.
    Keywords: mass media; information acquisition; media capture; elections; incumbency advantage
    JEL: L82 D72 D73 D81 H10
    Date: 2014
  3. By: Pablo Amorós (Department of Economic Theory, Universidad de M‡laga); M. Socorro Puy (Department of Economic Theory, Universidad de M‡laga); Ricardo Martínez (Department of Economics, Universidad Carlos III de Madrid)
    Abstract: The top-two primary is the new primary system passed in several states of the US that creates a single ballot in which the top two vote getters pass to the general election. Primary elections induce a sequential game with three stages: the candidate-entry stage, the primary election stage, and the general election. We analyze the electoral winner in equilibrium of the top-two primaries versus the traditional closed party primaries in terms of the Condorcet Consistency criterion, when voters and candidates are strategic. We show that up to four potential candidates (with no more than two democrats and no more than two republicans), the top-two system generally elects the median voter?s most preferred candidate. On the contrary, with the closed party primaries, extreme candidates can be elected even when the median voter prefers the moderated counterpart. When there are more potential candidates, the closed primaries system does not show, in general, any other di¤erent deviation. The top-two system then shows every type of deviation from the Condorcet Consistency criterion: it can elect an extreme candidate when the median voter prefers the moderated counterpart, or it can elect a democratic candidate when the median voter?s most preferred candidate is republican (or the other way around).
    Keywords: Closed primaries; Open primaries; Top-two primary; Citizen-candidate; Strategic Voting; Sequential voting. Condorcet consistency
    JEL: C72 D72
    Date: 2014–11
  4. By: Z. O’Brien, Diana (Department of Political Science at Indiana University); Rickne, Johanna (Uppsala Center for Labor Studies)
    Abstract: Though more than 100 countries have adopted gender quotas, the impacts of these reforms on women’s political leadership remain largely unknown. We exploit a quasi-experiment—a zipper quota imposed by the Swedish Social Democratic national party on municipal party groups—to examine quotas’ effect on women’s selection and survival as leaders within their parties. We find that those municipalities where the quota had a larger impact became more likely to appoint female leaders, but not more likely to support the reelection of women to the post. Extending this analysis, we show that the quota increased the number of qualified female candidates without increasing the diversity among women within the group. These results lend support to the notion that quotas may have an acceleration effect on women’s representation in leadership posts and help dispel the myth that quotas trade short-term gains in women’s descriptive representation for long-term exclusion from political power.
    Keywords: gender quotas; political leadership; party leaders; political careers; electoral reforms; women and politics; subnational politics
    JEL: G34 G38 J20 J48
    Date: 2014–11–28
  5. By: Cheeseman, Nic
    Abstract: Barrington Moore.s famous line .no bourgeoisie, no democracy. is one of the most quoted claims in political science. But has the rise of the African middle class promoted democratic consolidation? This paper uses the case of Kenya to investigate the attit
    Keywords: middle class, democracy, elections, democratization, Kenya, Africa
    Date: 2014
  6. By: Vítor Castro (Faculty of Economics, University of Coimbra, and Economic Policies Research Unit (NIPE)); Rodrigo Martins (Faculty of Economics, University of Coimbra and Group for Monetary and Fiscal Studies (GEMF))
    Abstract: This paper examines the presence of political cycles inside the Portuguese governments’ aggregate expenditures by using annual data for 10 expenditure components. The results indicate that the choice of the expenditure components to be increased during election periods by Portuguese governments generally relates to more visible items such as general public services, social protection and health care.
    Keywords: Political Budget Cycles; Portugal; Elections; Fiscal Policy
    JEL: H72 D72 D78
    Date: 2014
  7. By: Egorov, Georgy; Sonin, Konstantin
    Abstract: In elections that take place in a less-than-perfect democracy, incumbency advantages are different from those in mature democracies. The incumbent can prevent credible challengers from running, organize vote fraud, or even physically eliminate the main opponents. At the same time, formally winning the election does not guarantee staying in power. We present a unified model of elections and mass protests, where the purpose of competitive elections is to reveal information about the relative popularity of the incumbent and the opposition. Citizens are heterogenous in their attitudes toward the dictator and these individual preferences serve as private signals about the aggregate distribution of preferences; this ensures a unique equilibrium for any information the incumbent may reveal. We show that the most competent/popular dictators run in competitive elections, mediocre ones prevent credible opponents from running or cancel elections, and the least competent ones use outright repressions. A strong opposition makes competitive elections more likely, but also increases the probability of repression. A totalitarian regime, where repression is cheaper, will have more repression, but even in the absence of repression, competitive elections will be rarer. A crueler, say military, regime, where protesting is costly, makes repression less likely and, surprisingly, competitive elections more likely.
    Keywords: dictatorship; elections; fraud; non-democratic politics; protests; revolutions; signaling
    JEL: D72 D82 H00
    Date: 2014–09
  8. By: Atsuyoshi Morozumi; Francisco José Veiga; Linda Gonçalves Veiga
    Abstract: This paper examines the effects of elections on central governments’ fiscal policy conducts. We construct a unique database of disaggregated spending and revenue series at the central government level, for a panel of up to 107 countries over the 1975-2010 period. Using this data, we show that under some specific political environments, incumbents generate political budget cycles, predominantly by increasing current, rather than capital, spending and reducing taxes, most often income taxes. However, when democracies are matured, in election years, central governments reallocate their expenditure and revenue components, without changing their total levels. Specifically, they reallocate spending from capital spending to grants to other government units, while reducing income taxes and increasing consumption taxes instead.
    Keywords: Political budget cycles; Spending and revenue composition; Central government; Opportunism
  9. By: David Juárez-Luna; Christian Ghiglino (Division of Economics, CIDE)
    Abstract: In the present paper we uncover a novel mechanism through which a minority can gain a disproportionate power in a perfectly functioning democracy. In our model, a government elected by majority within a two party democracy, decides on a unique redistributive instrument, the tax rate. We show that a minority characterised by a high degree of social identification may, in the presence of ideological motives, influence the policy outcome. In particular, a rise in social identification among the rich minority may be able to reduce the tax rate. Importantly, this may happen even if the minority is more ideological than the majority. Finally, we attempt an explanation of the divide in the tax rate between the US and Europe.
    Keywords: Democracy, Influential elite, Social identity, Tax rate, Redistribution.
    Date: 2014–05
  10. By: De Donder, Philippe; Peluso, Eugenio
    Abstract: We show that a transfer targeting a minority of the population is sustained by majority voting, however small the minority targeted, when the probability to receive the transfer is decreasing and concave in income. We apply our framework to the French social housing program and obtain that empirically observed departures from these assumptions are small enough that a majority of French voters should support a positive size of this program. We also provide a sufficient condition on this probability function under which more targeting results in a lower equilibrium size of the transfer system.
    Keywords: a program for the poor is a poor program; majority voting; paradox of redistribution; social housing in France
    JEL: D72 H53 I38
    Date: 2014–07
  11. By: Éric Langlais; Marie Obidzinski
    Abstract: This paper analyzes the determinants of public law enforcement policies when citizens vote for the timing and level of fi…nes. We consider situations where citizens and politicians disagree on the value of the expected social harm associated with some activities. We fi…nd that citizens vote for act-based (harm-based) sanctions when they expect that social harm is low (resp high). On the other hand, we show that the equilibrium fines may be higher or lower than the optimal one, depending on the difference between politicians and citizens' expectations.
    Keywords: timing of sanction, law enforcement, deterrence, political competition, majority rule.
    JEL: D72 D73 H1 K14 K23 K32 K4 Q52 Q53 Q58
    Date: 2014
  12. By: Jonathan Said; Khwima Singini
    Abstract: Since independence Malawi has failed to translate initial periods of economic growth (growth acceleration regimes) into sustained long-term growth (growth maintenance). This paper assesses why this has been the case and what feedback loops have existed between growth, the political settlement and institutions. This is done by assessing Malawi's: (1) deals space – are business-government deals credible and open to many, or not credible and closed? (2) rent space – where do political elites source money for their political objectives? (3) product space – to what extent does Malawi's product base organically spur economic growth? Malawi's long-term growth problem is that the rent space for the political elite remains too heavily tied to the 'powerbroker' business elite that have a low propensity to invest and support exported-oriented reforms. There is relatively little alignment of political rents to 'magicians' (value adders and job creators), rentiers (except mining and cotton) and workhorses (the poor). Developmental interest is increasing, though this comes about in dribs and drabs when politicians want growth, so that support is stop-and-go and lacks the continuity necessary to overcome major structural challenges to structural transformation and growth maintenance. This suggests that the nature of growth going forward will be volatile, with a number of booms and crises in short-term growth. While long-term growth is likely to remain positive, driven by improvements in technology, the financial sector, energy and regional integration, it is unlikely to be strong enough in the next eight years to support the welfare requirements of the burgeoning population so as to allow Malawi to maintain high long-term growth. Altering this route would probably involve the disintegration of Malawi's deeply embedded patronage and clientelist political settlement through the emergence of a developmental dominant party or the easing of political pressures currently caused by a five-year democratic term in which the largest voter group is rural, subsistence farmers, who are too far removed from the government's policy-making process.
    Date: 2014
  13. By: Mohammad Reza Farzanegan (University of Marburg); Stefan Witthuhn (CESifo Munich)
    Abstract: A demographic transition resulting from an increase in the size of the young working age population can be a blessing or a curse for economic performance. We focus on the political stability effects of a larger youth population and hypothesize that corruption matters in this nexus. Using panel data covering the period of 2002–2012 for more than 150 countries, we find a negative interaction effect between the relative size of the youth population (17-25 years old) within the total working age population (15-64 years old) and corruption on political stability. This finding is robust, controlling for country and time fixed effects and a set of control variables that may affect stability. The negative interaction term between corruption and the youth population remains robust when we control for the persistency of political stability and the possible endogeneity of the main variables of interest through dynamic panel data estimations. Our findings shed more light on the political turmoil in the Arab world, with the so-called Arab Spring.
    Keywords: demographic transition, youth population, political stability, corruption
    JEL: D73 D74 E02 H56 J11
    Date: 2014
  14. By: Yutaro Hatta (Graduate School of Economics, Osaka University)
    Abstract: This paper studies investment decisions by economic agents in cases where the tax rate is decided through voting. It will be shown that, in some cases, only a Pareto-dominated tax policy on the wrong side of the Laffer curve is supported under rational expectations. Thus, the governments may collect revenue in an inefficient way. To that end, a quite plausible assumption, the endogeneity of the return on investment, is essential. Therefore this paper warns about the danger of inefficiency in a wide variety of policies. Further, the model predicts that when the inequality in an economy is low, the tax policy on the wrong side is likely to arise.
    Keywords: Political economy; The Laffer curve; Inefficiency in fiscal policies
    JEL: E22 E62 H21
    Date: 2014–12
  15. By: Stephen D. O'Connell (CUNY Graduate School and University Center)
    Abstract: Using two dimensions of exogenous geographic variation in exposure to 1992 reforms that introduced seat quotas for women in local government in India, I find a one percentage-point increase in the school enrollment rate of young women for each additional year of exposure to women leaders. This effect is sizeable given a mean level of exposure of 11 years and pre-policy enrollment rates averaging 80 percent. The use of a border discontinuity identification strategy with nationally representative survey data greatly extends the generalizability of earlier studies. I also show that effects are non-linear in cumulative exposure, appearing only several years after the introduction of reservations. School quality and schooling infrastructure do not appear to be a potential mechanism for the effect to occur; the strongest evidence is that local women leaders changed the educational aspirations of young women and possibly enhanced the support of young women in school. To this end, I provide novel empirical evidence suggesting the media to be one channel for the “role-model effect†to be transmitted.
    Keywords: women, gender gap, education, human capital, political reservations, empowerment, development
    JEL: D13 H11 I21 I22 I24 I25 J16 O10 O12
    Date: 2014–11–13

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