nep-pol New Economics Papers
on Positive Political Economics
Issue of 2015‒01‒14
twenty-two papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting for Direct Democracy: Evidence from a Unique Popular Initiative in Bavaria By Felix Arnold; Ronny Freier; Magdalena Pallauf; David Stadelmann
  2. Religiosity And Political Participation In Contemporary Russia: A Quantitative Analysis By Anna Y. Kulkova
  3. Shaping voting intentions: An experimental study on the role of information in the Scottish independence referendum By Davide Morisi
  4. Voting in general elections on single day and in single phase By Varma, Vijaya Krushna Varma
  5. Generalized Comparative Statics for Political Economy Models By Dotti, Valerio
  6. State of the States: Serving Welfare Recipients in a Post-Recessionary Fiscal and Political Environment By Elizabeth Laird; Michelle Derr; Julia Lyskawa
  7. On the Religion-Public Policy Correlation By Soldatos, Gerasimos T.
  8. Gender Quotas in Single-Member District Electoral Systems By Skye Christensen; Gabrielle Bardall
  9. Globalization and Political Structure By Gino Gancia
  10. Trust in American Government: Longitudinal Measurement Equivalence in the ANES, 1964-2008 By Dmitriy Poznyak; Bart Meuleman; Koen Abts; George F. Bishop
  11. Large-scale Transformations of Socio-economic Institutions By Esther Ademmer; Joscha Beckmann; Rainer Schweickert
  12. The political economy of certificates for land use in Germany: Experimental evidence By Bizer, Kilian; Henger, Ralph; Meub, Lukas; Proeger, Till
  13. How can political trust be built after civil wars? : lessons from post-conflict Sierra Leone By Wong P-H.
  14. Political Uncertainty and Household Savings By Aaberge, Rolf; Liu, Kai; Zhu, Yu
  15. When Is Voting Optimal? By Ben-Yashar, Ruth; Danziger, Leif
  16. Remittances and Governance: Does the Government Free Ride? By Durga P. Gautam
  17. Corruption Markets: An Analytical Framework For Assessing Anti-Corruption Campaigns By Varvara M. Vasileva; Anton N. Vorobyev
  18. Has the War between the Rent Seekers Escalated? By Russell S. Sobel; Joshua C. Hall
  19. Independence Referendums: Who Should Vote and Who Should be Offered Citizenship? By Rainer Bauböck
  20. Trade Policy Preferences and Cross-Regional Differences: Evidence from individual-level data of Japan By ITO Banri; MUKUNOKI Hiroshi; TOMIURA Eiichi; WAKASUGI Ryuhei
  21. Central Banks Voting Records, Financial Crisis and Future Monetary Policy By Roman Horváth; Júlia Jonášová
  22. Indicators Of Corruption In Public Procurement: The Example Of Russian Regions By Anna Balsevich; Elena Podkolzina

  1. By: Felix Arnold; Ronny Freier; Magdalena Pallauf; David Stadelmann
    Abstract: We analyze a constitutional change in the German State of Bavaria where citizens, not politicians, granted themselves more say in politics at the local level through a constitutional initiative at the state level. This institutional setting allows us to focus on revealed preferences for direct democracy and to identify factors which explain this preference. Empirical results suggests support for direct democracy is rather related to dissatisfaction with representative democracy in general than with an elected governing party.
    Keywords: Direct democracy, Voting, Initiative, Parties
    JEL: D72 H70
    Date: 2014
  2. By: Anna Y. Kulkova (National Research University Higher School of Economics)
    Abstract: The paper argues that religiosity is one of the potential determinants of political participation in Russia. A complex model of religiosity is applied, which treats individual religiosity as both belonging to religious tradition and religious behavior, while political participation includes voting, attending demonstrations, signing petitions and participating in electoral campaigns. The aim of this research is to identify whether there is a difference in political participation between religious and non-religious Russians, and between followers of different religious traditions and atheists. Secondly, it is important to explore which of the measurements of religiosity, religious tradition or religious behavior have the most powerful effect on Russians’ political participation. The data for the statistical analysis is from the European Social Survey (6th round), which includes representatives of major religious traditions in Russia.
    Keywords: political participation, religion and politics, religiosity, political behavior, political activism.
    JEL: Z
    Date: 2014
  3. By: Davide Morisi
    Abstract: In a context of expanded media choice, understanding how voters select and interpret information to make voting decisions acquires substantial relevance. Drawing on former research in political psy-chology and political behaviour, the present study explores how provision of information affects voting intentions in the context of the Scottish independence referendum, by adopting a between-subjects experimental design. Results show that provision of information a) reduces indecision about how to vote, especially when subjects are able to select the arguments to read; b) increases the likelihood to vote Yes, especially when subjects are confronted with a balanced set of arguments; c) interacts with individual-level elements and increases the likelihood to vote Yes especially among those who are more politically active and more emotionally involved in the issue of independence. Provision of information also slightly increases the likelihood to vote No, but this occurs in general only when subjects are able to select the arguments to read and only in a very few cases. At the the-oretical level, results provide further evidence supporting the mechanism of selective exposure and the so-called ‘prior attitude effect’, but highlight the need to interpret these mechanisms within a broader framework which takes into account individual-level mediating factors.
    Date: 2014–09–05
  4. By: Varma, Vijaya Krushna Varma
    Abstract: This expanded banking system will help the Election Commission conduct voting in General elections on single day and in single phase. All elections from panchayats to Parliament can be conducted with the help of expanded banking system with minimum cost and without rigging and impersonate voting.
    Keywords: elections; politics
    JEL: H1 H10
    Date: 2014–02–10
  5. By: Dotti, Valerio
    Abstract: The Median Voter Theorem is an extremely popular result in Political Economy that holds only if the policy space is unidimensional. This assumption restricts its use to a class of very simple problems. In most applications in the literature this implied an oversimplification of the problem studied, which is one of the possible explanations for the lack of empirical support for several predictions derived with this tool. In this paper I show that under suitable restrictions on individual preferences a Median Voter Theorem can be derived even if the policy space is multidimensional and I derive the comparative statics of the resulting model induced by a change in the pivotal voter. I show that this tool can invalidate the predictions of the Meltzer-Richard model of size of goverment and that it can be useful to study other Political Economy problems that cannot be analyzed using the traditional framework, including games in which players have a richer strategy set than the policy vector to be chosen.
    Keywords: median voter, multidimensionality, monotone comparative statics
    JEL: C71 D71 D78
    Date: 2014–12–17
  6. By: Elizabeth Laird; Michelle Derr; Julia Lyskawa
    Keywords: Welfare Recipients, Post-Recessinary Fiscal, Political Environment, Family Support
    JEL: I
    Date: 2013–11–07
  7. By: Soldatos, Gerasimos T.
    Abstract: The interplay between religious and political authorities has been commonplace and study subject of political science. The interplay between politics and economics has been commonplace too, and the focus of political economy. That is, politics emerges as the link between religious and economic matters. This paper tries to rationalize analytically this link between religion and resource allocation through the religion-public policy correlation. It is found out that such a correlation is welfare-enhancing unless fanaticism forces society to choose between Pareto efficiency under a fundamentalist minority dictatorial rule on the one hand, and the broader socioeconomic aspirations of the majority of people on the other. Yet, fundamentalism is expected to subside in the long-run to the extent fanaticism is the result of an emotional outburst.
    Keywords: Resource allocation, Public policy, Religion
    JEL: D7 H4 Z12
    Date: 2014
  8. By: Skye Christensen; Gabrielle Bardall
    Abstract: Conventional knowledge on the effectiveness of gender quotas for enhancing women’s political participation has, to date, been unanimous on the superiority of quotas in proportional representation (PR) systems. Yet this view overlooks the many possible alternatives to implementing gender quotas in single-member district (SMD) systems. This paper studies gender quotas (or temporary special measures, TSMs) in SMD electoral systems. Drawing on case examples from Uganda, France, India and elsewhere, we refute the myth of the incompatibility of quotas in SMDs. Our research investigates and presents multiple ways in which quotas can be successfully implemented in SMDs.
    Keywords: Gender quotas, temporary special measures (TSMs), single-member districts, electoral systems, France, India, Uganda.
    Date: 2014–12
  9. By: Gino Gancia (CREI)
    Abstract: Globalization is rapidly changing economic borders and yet political borders change only slowly. In this paper we study the nature and consequences of this growing mismatch. We show that globalization requires a political structure that redistributes power away from the centralized jurisdictions or states and towards a new set of overlapping jurisdictions that are both larger and smaller than existing states. Our theory suggests that globalization provides a simple yet powerful explanation for the rise of large nation-states followed by the creation of international authorities (such as the EU) together with a process of political fragmentation within states.
    Date: 2014
  10. By: Dmitriy Poznyak; Bart Meuleman; Koen Abts; George F. Bishop
    Abstract: For over 50 years (1958–2012) the American National Election Studies (ANES) survey has been measuring citizens’ evaluations of the trustworthiness of the “government in Washingtonâ€â€”an indicator that has been widely used to monitor the dynamics of political trust in the US over time. However, a critical assumption in using attitudinal constructs for longitudinal research is that the meaning-and-interpretation of such items should be comparable across groups of respondents at any one point in time and across samples over time.
    Keywords: Political trust, ANES, Measurement equivalence, Comparability, Multigroup confirmatory factor analysis, Structural equation modeling
    JEL: C
    Date: 2014–09–01
  11. By: Esther Ademmer; Joscha Beckmann; Rainer Schweickert
    Abstract: We explain economic growth by both politics, i.e. government activity including spending as well as regulation, and institutional quality and its interaction with politics. This extends previous work on institution building in transition by looking at its impact and, at the same time, considering endogeneity problems. While intially planned in two stages, the modified approach is able to integrate the arguments developed in the cluster approach on varieties of capitalism and their potential explanatory power for economic growth. As forseen for the second stage, we estimate the determinants of transition based on the exogenous components of institution building only as well as on other factors, especially welfare policies. This approach also allows to integrate various measures of income or well-being as soon as panel data becomes available.
    Keywords: Economic strategy, Institutional reforms, Political economy of policy reform
    JEL: F15 H50 P10 P20
    Date: 2014–12
  12. By: Bizer, Kilian; Henger, Ralph; Meub, Lukas; Proeger, Till
    Abstract: Certificate trading schemes have been discussed as a cost-efficient means of reducing land use in Germany by capping and reallocating permissions to conduct building projects. However, in contrast to the established cap & trade systems for emissions, reputation-seeking politicians would be in charge of buying and trading certificates - an aspect not considered to date. We thus present a laboratory experiment that captures politician´s incentives connected to electoral cycles in a cap & trade scheme for land use, whereby tradable certificates are auctioned and grandfathered in equal shares. We find the cap & trade system to be efficient at large, yet there are several politically relevant distortions that are aggravated by self-serving incentives. Prices show high volatility, initially by far exceed fair values and are substantially biased by the endowment effect. Further, the timing and location of land use projects and the heterogeneity in income across municipalities are sensitive to the specifics of the system and politicians´ interests. We thus identify potential problems to a cap & trade system for land use that could substantially reduce both its assumed superior efficiency and its political feasibility.
    Keywords: economic experiment,land use,municipal actors,political business cycle,tradable certificates
    JEL: C91 Q58
    Date: 2014
  13. By: Wong P-H. (UNU-MERIT)
    Abstract: Liberal peacebuilding has received a considerable amount of criticism in the recent peacebuilding and state building literature. Critics of the liberal approach argue that electoral democracy is a foreign-imposed institution, which often does not enjoy public acceptance and legitimacy as local institutions do. Post-conflict Sierra Leone has undergone a similar struggle when the Local Government Act was introduced in 2004. Under the new law, much power enjoyed by chiefs was transferred to the elected local councillors. While traditional chiefdom governance was blamed to be one of the institutional drivers of the civil war, this customary authority is highly respected and the reform was resisted by many local people. Nevertheless, the new system produces some positive development outcomes and the country has remained largely peaceful. Against this backdrop, this paper investigates the channels through which trust in a poorly trusted government body can be developed. Based on survey data from Sierra Leone, my statistical analysis examines three mechanisms through which political trust can be built improved public services, clean administration, and responsive governance. It is found that local governments which are willing to listen and respond to their people are more likely to be trusted by the public.
    Keywords: Bureaucracy; Administrative Processes in Public Organizations; Corruption; Structure, Scope, and Performance of Government; Public Goods;
    JEL: D73 H11 H41
    Date: 2014
  14. By: Aaberge, Rolf (Statistics Norway); Liu, Kai (Norwegian School of Economics); Zhu, Yu (University of Dundee)
    Abstract: Despite macroeconomic evidence pointing to a negative aggregate consumption response due to political uncertainty, few papers have used microeconomic panel data to analyze how households adjust their consumption after an uncertainty shock. We study household savings and expenditure adjustment from an unexpected, large-scale and rapidly evolving political shock that occurred largely in May 1989 in Beijing, China. Using monthly micro panel data, we present evidence that a surge in political uncertainty resulted in significant temporary increases in savings among urban households in China. Households responded mainly by reducing semi-durable expenditure and frequency of major durable adjustment. The uncertainty effect is more pronounced among older, wealthier, and more socially advantaged households. We interpret our findings using existing models of precautionary behavior. By focusing on time variation in uncertainty, our identification strategy avoids many of the potential problems in empirical studies of precautionary savings such as self-selection and life-cycle effects.
    Keywords: China, household savings, political uncertainty
    JEL: D91 J3 E21
    Date: 2014–12
  15. By: Ben-Yashar, Ruth (Bar-Ilan University); Danziger, Leif (Ben Gurion University)
    Abstract: We consider a framework where the optimal decision rule determining the collective choice depends in a simple way on the decision makers' posterior probabilities of a particular state of nature. Nevertheless, voting is generally an inefficient way to make collective choices and this paper sheds light on the relationship between the optimal decision rule and voting mechanisms. The paper derives the conditions under which the optimal decision rule is equivalent to some well-known voting procedure (weighted supermajority, weighted majority, and simple majority) and shows that these are very stringent. The paper also considers more general voting procedures, as for example allowing for abstentions, and shows that the conditions for reaching the optimal collective choice remain very stringent.
    Keywords: voting rule, common goal, collective choice
    JEL: D70 D71
    Date: 2014–12
  16. By: Durga P. Gautam (West Virginia University, College of Business and Economics)
    Abstract: Through what channel and to what extent does the inflow of remittances affect the quality of governance in the recipient countries? Recent studies suggest that a rise in remittances reduces public goods provision. Scholars generally agree that remittances increase consumption expenditure of the recipient households. This implicit positive correlation between remittances and the ratio of household to government consumption indicates an increasing share of private goods in household consumption. The decreasing share of public goods, on the other hand, tends to reduce households0 incentives to monitor and hold the government accountable. As a result, the external benefits generated by household consumption induce the government to substitute the provision of public goods for remittances, thereby raising the scope of expected benefits for a rational government official from illegitimate transactions with a private partner. Using recently advanced kernel regression methods, we find that remittances lead to higher corruption and poor governance in countries with higher private consumption. These results provide supports for the ongoing global efforts to redirect remittance flows from household consumption toward productive investments.
    Keywords: remittances, corruption, institutions, nonparametric regression, public goods, consumption
    JEL: F24 D73 C14 H3 E6
    Date: 2014–12
  17. By: Varvara M. Vasileva (National Research University Higher School of Economics); Anton N. Vorobyev (National Research University Higher School of Economics)
    Abstract: Assuming that there is a “missing factor” in the modern corruption studies, authors develop a new conceptual approach to the study of corruption and effectiveness of anti-corruption regulations in the public service. This “missing factor” is a “corruption market”, particularly, its size, type and nature. Conflict of interest regulations aim at controlling key channels of corruption behavior, and corruption market in its turn determines prevailing channels of existing corruption behavior. Misidentification of corruption market’s type is the main reason for the failure of anti-corruption policies, no matter how new and effective models are imported. Corruption market’s size is defined as the number and average price of corruption deal. The nature of corruption market depends on the side, capable of setting the final price of corruption deal. Resulting from institutional characteristics of public administration, corruption markets are either seller’s or buyer’s markets. Seller’s corruption markets are sensible to ethic regulations of public service, and the only effective way of tackling buyer’s corruption markets are “cut-red-tape” reforms and introduction of compliance-based regulation of conflict of interest. Type of corruption market encompasses 3 dimensions: quality of institutions, scope of regulations and degree of regulations. Basing on the introduced model, authors identify and analyze 8 types of existing corruption markets. Each type of corruption market has its own transformational dynamics and, consequently, own opportunities for anti-corruption policies. A new conceptual model of corruption market evolution is introduced in the article. Transformations of corruption markets depend on several factors. The key factors are personalization of political regime, “new public management” reforms of public administration, populist policies and creation of rentier states, and set up of the Welfare State
    Keywords: corruption market, corruption deal, quality of institutions, scope of regulations, degree of regulations, conflict of interest, public service, patronage networks, seller’s market, buyer’s market, demand and supply of corruption
    Date: 2014
  18. By: Russell S. Sobel (The Citadel, School of Business); Joshua C. Hall (West Virginia University, College of Business and Economics)
    Abstract: Vedder and Gallaway (1991) develop and test a unique theory about the interactions between the levels of spending captured by rent-seeking interest groups. They hypothesize that initially rent seekers cooperate in ways that expand government spending and rents. At some point, however, groups can only expand their rents at the expense of other rent-seekers and that this relationship will strengthen over time. In this brief note, we update their empirical model 20 years into the future and find their prediction was accurate. The relationship is now stronger and more states have moved into the negative range.
    Keywords: rent-seeking, special interest groups, teacher salaries
    JEL: D72
    Date: 2014–12
  19. By: Rainer Bauböck
    Abstract: In this EUDO CITIZENSHIP Forum Debate, several authors consider the interrelations between eligibility criteria for participation in independence referendum (that may result in the creation of a new independent state) and the determination of putative citizenship ab initio (on day one) of such a state. The kick-off contribution argues for resemblance of an independence referendum franchise and of the initial determination of the citizenry, critically appraising the incongruence between the franchise for the 18 September 2014 Scottish independence referendum, and the blueprint for Scottish citizenship ab initio put forward by the Scottish Government in its 'Scotland's Future' White Paper. Contributors to this debate come from divergent disciplines (law, political science, sociology, philosophy). They reflect on and contest the above claims, both generally and in relation to regional settings including (in addition to Scotland) Catalonia/Spain, Flanders/Belgium, Quebec/Canada, Post-Yugoslavia and Puerto-Rico/USA.
    Keywords: citizenship; referendum; Scotland
    Date: 2014–09–09
  20. By: ITO Banri; MUKUNOKI Hiroshi; TOMIURA Eiichi; WAKASUGI Ryuhei
    Abstract: This study examines the determinants of individuals' preferences for trade policies, using micro data of 10,000 individuals selected from Japan's general population. In particular, we focus on the role of regional factors that influence trade policy preferences, considering the fact that there is a significant difference in preferences among regions. The results of the binary choice model reveal that local characteristics affect people's views on trade policy even after controlling for labor market and non-economic attributes. Specifically, people residing in a region with a high share of agricultural workers are likely to support import restrictions even if they do not engage in agriculture, which is the most protected sector in Japan. Moreover, there is a strong correlation between the probability of supporting the protectionist trade policy and the share of local agricultural workers for people not considering migration, suggesting that inter-regional immobility of workers affects their trade policy preferences.
    Date: 2015–01
  21. By: Roman Horváth (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic; Institute for East and Southeast European Studies, Regensburg, Germany); Júlia Jonášová (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: We examine whether central banks’ voting records help predict the future course of monetary policy in the Czech Republic, Hungary, Poland, Sweden and the United Kingdom, controlling for financial market expectations. Unlike previous research, first, we examine the period of the global financial crisis, characterized by a high level of uncertainty, and second, we examine the predictive power of voting records at longer time horizons, i.e., not only for the next monetary policy meeting. We find that voting records predict the policy rate set at the next meeting in all central banks that are recognized as independent. In some central banks, voting records are found—before, but not during, the financial crisis—to be informative about monetary policy even at more distant time horizons.
    Keywords: voting records, financial crisis, central bank, monetary policy
    JEL: D78 E52 E58
    Date: 2014–12
  22. By: Anna Balsevich (National Research University Higher School of Economics); Elena Podkolzina (National Research University Higher School of Economics)
    Abstract: Corruption is widely spread across the world and is believed to affect economic growth negatively. It is most persistent in the developing countries. Russian economy is not an exception. Significant losses are also reported in public procurement in Russia due to corruption. Unfortunately, to measure corruption is very challenging. In this paper, using the data on procurement in one of the Russian regions as an example, we suggest and discuss different indicators of corruption that might have taken place during the procurement process. We also provide some preliminary estimates of how corruption influences the results of public procurement in this region.
    Keywords: public procurement; corruption;
    JEL: H57 D73
    Date: 2014

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