nep-pol New Economics Papers
on Positive Political Economics
Issue of 2015‒03‒22
seventeen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Policy Polarization and Strategic Candidacy in Elections under the Alternative Vote Rule. By Arnaud Dellis; Mandar Oak; Alexandre Gauthier-Belzile
  2. Social interactions in voting behavior: distinguishing between strategic voting and the bandwagon effect By Evrenk, Haldun; Sher, Chien-Yuan
  3. Does direct democracy foster efficient policies? An experimental investigation of costly initiatives By Seebauer, Michael
  4. Turnout and polarization under alternative electoral systems By Konstantinos Matakos; Orestis Troumpounis; Dimitrios Xefteris
  5. The Role of Lawyer-Legislators in Shaping the Law: Evidence from Voting Behavior on Tort Reforms By Matter, Ulrich; Stutzer, Alois
  6. Providing global public goods: Electoral delegation and cooperation By Martin G. Kocher; Fangfang Tan; Jing Yu
  7. Are We Playing the Same Game? The Economic Effects of Constitutions Depend on the Degree of Institutionalization By Mariano Tommasi; Germán Caruso; Carlos Scartascini
  8. XX Knesset Elections: What these parties stand for, really? By Konstantin Yanovskiy; Ilia Zatcovetsky; Asya Entov
  9. Targeted Campaign Competition, Loyal Voters, and Supermajorities By Pierre C. Boyer; Kai A. Konrad
  10. Making Democracy Work: The Effects of Social Capital and Elections on Public Goods in China By Nancy Qian
  11. Regional Trade Agreements and Cross-Border Lobbying: Empirical Evidence from the Canada-US Free Trade Agreement Negotiations By Andrey Stoyanov
  12. Political Stability and Democratic Governance. A Panel Data Analysis. By Georgiou, Militiades N.; Kyriazis, Nicholas; Economou, Emmanouel/Marios/Lazaros
  13. Voting by conforminy By Bernardo Moreno; María del Pino Ramos-Sosa
  14. Resolving intertemporal conflicts: Economics vs. Politics By Antony Millner; Geoffrey Heal
  15. Capital Flows and Domestic and International Order: Trilemmas from Macroeconomics to Political Economy and International Relations By Michael Bordo; Harold James
  16. What do women want? Female suffrage and the size of government By Claudio Bravo-Ortega; Nicolas A. Eterovic; Valentina Paredes
  17. Balance of power and the propensity of conflict By Luisa Herbst; Kai A. Konrad; Florian Morath

  1. By: Arnaud Dellis (Universite Laval and CIRPEE); Mandar Oak (School of Economics, University of Adelaide); Alexandre Gauthier-Belzile (Universite Laval and CIRPEE)
    Abstract: We use the citizen-candidate model to study electoral outcomes under the Alternative Vote rule, a voting method often proposed as a replacement to the prevalent Plurality rule. We show that, like the Plurality rule, the Alternative Vote rule deters multiple candidate clusters and the presence of candidates at more than two positions. Moreover, the Alternative Vote rule tends to support less policy polarization than the Plurality rule. These results stand in contrast to those obtained under other proposed voting rules, Approval Voting in particular, which are prone to candidate clustering and, as a result, can support greater policy polarization vis-Ã -vis the Plurality rule.
    Keywords: Alternative Vote rule; Instant Runoff Voting; Citizen-candidate model; Endogenous candidacy; policy polarization
    JEL: C72 D72 D78
    Date: 2015–02
  2. By: Evrenk, Haldun; Sher, Chien-Yuan
    Abstract: Prior studies of strategic voting in multi-party elections potentially overestimate the extent of it by counting erroneously votes cast under different motivations as strategic votes. We propose a method that corrects some of this overestimation by distinguishing between strategic voting (voting for a candidate other than the most preferred one to reduce the likelihood of an election victory by a third candidate that is disliked even more) and the votes cast under the ‘bandwagon effect’ (voting for the expected winner instead of the most preferred party to conform to the majority or to be on the winning side). Our method follows from the observation that a vote cannot be strategic unless the voter believes that it will affect the outcome of the election with a non-zero probability, while a vote cast under the bandwagon effect requires no such belief. Employing survey data that include the respondent’s assessment of the importance of his vote, we illustrate this method by estimating the extent of strategic voting in the 2005 UK general election. The estimated extent of strategic voting (4.22%) is strictly less than self-reported strategic voting (6.94%), but the discrepancy cannot be attributed in a statistically significant way to the bandwagon effect, suggesting that motivations other than those identified in the literature may be at work.
    Keywords: voting behavior, social interactions, strategic voting, bandwagon effects, multi-party competition.
    JEL: D71 D72 D84
    Date: 2015–01–01
  3. By: Seebauer, Michael
    Abstract: This study investigates the effects of the provision of costly initiatives on policy efficiency in a laboratory experiment where a policy setter implements a status quo affecting the utility of the constituency. I vary treatments regarding the political institution (either purely representative or direct democracy where the status quo may be contested by the costly proposal of an alternative) and the appointment of the policy setter (either random or by election). In accordance to theoretical predictions, the experimental data reveal a substantial indirect effect of direct democracy inducing higher efficiency levels by serving as a credible threat towards the policy setter without actually being used. Moreover, the initiative impedes excessive candidate competition during elections reducing campaign costs and thus increasing overall efficiency. In contrast to theoretical predictions, the initiative is actually employed frequently, so there is also a sizeable direct effect of the initiative. However, this effect is generally overcompensated by the costs induced by the process.
    Keywords: Direct Democracy,Policy Decision,Efficiency,Laboratory Experiment
    JEL: D72 D61 C92
    Date: 2015
  4. By: Konstantinos Matakos; Orestis Troumpounis; Dimitrios Xefteris
    Abstract: We present a formal model of electoral competition where parties' platforms are endogenously chosen and depend on the degree of the electoral rule disproportionality. We first show that proportional electoral systems generate centrifugal forces that increase candidate differentiation. This in turn implies that more proportional systems are associated with lower levels of abstention from indifference. This two step theoretical prediction of the effect of electoral systems on turnout is then empirically validated even when we jointly control for the prevailing pivotality and party-system size hypotheses. Thus, our work highlights an additional link in the proportionality-turnout nexus.
    JEL: C23 C26 D02 D72
    Date: 2014
  5. By: Matter, Ulrich (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: Attorneys elected to the US Congress and to US state legislatures are systematically less likely to vote in favor of tort reforms that restrict tort litigation, but more likely to support bills that extend tort law than legislators with a different professional background. This finding is based on the analysis of 64 roll call votes at the federal and state level between 1995 and 2014. It holds when controlling for legislators' ideology and is particularly strong for term-limited lawyer-legislators. The empirical regularity is consistent with the hypothesis that lawyer-legislators, at least in part, pursue their private interests when voting on tort issues. Our results highlight the relevance of legislators' identities and individual professional interests for economic policy making.
    Keywords: lawyers, legislatures, rent-seeking, tort law, tort reform, voting behavior
    JEL: D72 K13
    Date: 2015–02
  6. By: Martin G. Kocher; Fangfang Tan; Jing Yu
    Abstract: This paper experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects a delegate who can freely decide on each group member’s contribution to the global public good. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the selfish benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by theory – quite to the opposite, other-regarding preferences and a re-election incentives guarantee that delegates assign equal contributions for all group members. It is driven by conditional cooperation of delegates across groups. Since the source of the resulting inefficiency is the polycentric nature of global public goods provision together with other-regarding preferences, we use the term P-inefficiency to describe our finding.
    Keywords: Global Public Goods, Delegation, Cooperation, Experiment
    JEL: C92 D72 H41
    Date: 2014–07
  7. By: Mariano Tommasi (Department of Economics, Universidad de San Andres); Germán Caruso (Banco Mundial); Carlos Scartascini (Banco Interamericano de Desarrollo)
    Abstract: This paper addresses an important source of variation within democracies – the degree of institutionalization. The concept of institutionalization describes the extent to which politics takes place, and is believed to take place, via formal political institutions. Countries vary in their degree of institutionalization, hence, in the degree to which political actors pursue their goals via conventional politics or via “alternative political technologies”. This paper postulates that if politics is conducted largely outside of formal channels, the structure of the formal channels should not matter much as a determinant of policy outcomes. To address this issue this paper proposes a new index of institutionalization and with it revisits seminal work regarding the impact of constitutions on public spending. The findings show that the effect of constitutional rules on policy outcomes is conditional on the degree of institutionalization.
    Keywords: constitutions, institutions
    Date: 2014–12
  8. By: Konstantin Yanovskiy (Gaidar Institute for Economic Policy); Ilia Zatcovetsky (Samuel Neaman Institute for Advanced Studies in Science and Technology); Asya Entov (Ariel University of Samaria)
    Abstract: In the paper we provide short review of the main Israeli parties' positions on the key issues. The set of "key issues" is our choice and contains Judicial (legal system) reform, Judea and Samaria status, 2nd amendment right and self-defense, Taxation / spending etc. We provide formal classification of Left and Right parties to test the following hypotheses. Rightist parties' position are less stable and less consistent. The positions' analysis provide some evidences of higher consistency of Leftists' parties position in the Israel and poor ability of Right parties to keep promises. This phenomena explained by general factors (Universal Suffrage gradually pushes voter to the Lefts) and local factors. Real power of elected, accountable bodies in the Israel is significantly less and power of self-reproducing court system, public media and governmental bureaucracy higher than in majority old democracies.
    Keywords: political platform, consistent position, Right-Left cleavages, pure public goods
    JEL: D72 D73
    Date: 2014
  9. By: Pierre C. Boyer; Kai A. Konrad
    Abstract: We consider a two-candidate campaign competition in majoritarian systems with many voters. Some voters are loyal, some can be influenced by campaign spending. Own loyalty with respect to a candidate is the voter's private information. Candidates simultaneously choose their campaign budgets and how to allocate them among the voters. We show that a candidate who has a group of loyal voters wins with a higher probability, but chooses the same expected budget size as the rival candidate. The equilibrium distributions of campaign spending target all voters equally in expectation, but target some voters more than others ex post.
    Keywords: Campaign competition, vote buying, supermajorities, targeting, flexible budgets, asymmetric information.
    JEL: D72 D78 D82
    Date: 2014–08
  10. By: Nancy Qian (Yale University)
    Abstract: This study investigates the extent to which pre-existing social (civic) capital interacts with village elections in determining government provision of local public goods. We collect a unique survey to document the presence of voluntary and social organizations and the history of electoral reforms in China. We exploit the staggered timing in the introduction of elections to estimate the interaction eect of the introduction of village elections and social capital on government-provided public goods. The results show that social capital signicantly enhances the eect of elections. We rule out alternative explanations and provide suggestive evidence for the mechanisms driving our results.
    Date: 2014
  11. By: Andrey Stoyanov (York University, Department of Economics, Faculty of Liberal Arts and Professional Studies)
    Abstract: This paper documents participation of special interest groups in negotiations of the Canada-US Free Trade Agreement. Using data on the tari§ reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tari§ reduction paths in both countries: phase-out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.
    Keywords: Free Trade Agreements, Lobbying, Trade policy, Canada-US FTA
    JEL: F13 F14 F15 D72
    Date: 2015–03–11
  12. By: Georgiou, Militiades N.; Kyriazis, Nicholas; Economou, Emmanouel/Marios/Lazaros
    Abstract: In the present paper we undertake to link democracy with a set of indicators for economic freedom and financial crises, using panel data analysis. The sample covers annually the period 2000-2012 for the EU, the USA and Japan. The results point out, that political stability is positively related to the set of economic freedom indicators and negatively to financial crises, because greater economic freedom influences positively investment and economic growth, while financial crises, which lead to austerity policies, which again lead to recession-depression, increases dissatisfaction of citizens with the working of democracy (Georgiou, 2011) and thus, to the rise of extremist parties. Our findings support the idea that democratic stability is linked to economic stability and growth and vice-versa.
    Keywords: Democracy, economic freedom, financial crisis, panel data analysis.
    JEL: C23 E10 N40
    Date: 2015–03–15
  13. By: Bernardo Moreno (Department of Economic Theory, Universidad de Málaga); María del Pino Ramos-Sosa (Department of Economic Theory, Universidad de Málaga)
    Abstract: A group of agents has to decide whether to accept or reject a proposal. Agents vote in favor or against the proposal and, if the number of agents in favor is greater to certain quota, the proposal is accepted. The \textit{socially optimal decision} is the one adopted when all agents vote truthfully. Conformist agents vote based not only on their opinion but also on the vote of other agents. Independent agents only care about their opinion. If all agents are conformists and vote simultaneously, for any quota there are undominated Nash equilibria where the socially optimal decision is not obtained. Next, we provide the number of independents needed for the socially optimal decision to be obtained in any equilibria. It depends on the total number of agents, the quota and the conformity measure. If agents vote sequentially, the socially optimal decision is obtained in any subgame perfect Nash equilibrium.
    Keywords: Basque-Elections; Conformity; Voting; Independent agents
    JEL: D71
    Date: 2015–03
  14. By: Antony Millner; Geoffrey Heal
    Abstract: Intertemporal conflicts occur when a group of agents with heterogeneous time preferences must make a collective decision about how to manage a common asset. How should this be done? We examine two methods – an `Economics’ approach that seeks to implement efficient allocations, and a `Politics’ approach in which agents vote over consumption plans. We compare these methods by varying two characteristics of the problem: are agents’ preferences known or are they hidden information, and can they commit to intertemporal collective plans or not? We show that if commitment is possible the Economics approach always Pareto dominates the Politics approach, in both full and hidden information scenarios. By contrast, without commitment the group may be better off if the Politics approach is adopted. We investigate when Politics trumps Economics analytically, and then apply our model to a survey of economists’ views on the appropriate pure rate of time preference for project appraisal. For a wide range of model parameters, and under both full and hidden information, the Politics approach is supported by a majority of agents, and leads to higher group welfare.
    Date: 2014–11
  15. By: Michael Bordo; Harold James
    Abstract: This paper explains the problem of adjustment to the challenges of globalization in terms of the logic underpinning four distinct policy constraints or trilemmas, and their interrelationship, and in particular the disturbances that arise from capital flows. The analysis of a policy trilemma was developed first as a diagnosis of exchange rate problems (the incompatibility of free capital flows with monetary policy autonomy and a fixed exchange rate regime); but the approach can be extended. The second trilemma we describe is the incompatibility between financial stability, capital mobility and fixed exchange rates. The third example extends the analysis to politics, and looks at the strains in reconciling democratic politics with monetary autonomy and capital movements. Finally we examine the security aspect and look at the interactions of democracy with capital flows and international order. The trilemmas in short depict the way that domestic monetary, financial, economic and political systems are interconnected with the international. They can be described as the impossible policy choices at the heart of globalization. Frequently, the trilemmas conjure up countervailing anti-globalization tendencies and trends.
    JEL: E4 E6 N1
    Date: 2015–03
  16. By: Claudio Bravo-Ortega; Nicolas A. Eterovic; Valentina Paredes
    Abstract: The scanty economic literature has attributed to female voting part of the increase in government expenditure and social government expenditure over the XXth century. This finding results puzzling considering that the political science literature has documented that women tended to be more conservative and right wing supporters over the first half of the XXth century across a wide set of developed and developing countries. We argue that current estimates on this relationship are afflicted by strong endogeneity bias. Using data for 46 countries we find that the introduction of female suffrage did not increased in average the social and total government expenditure. In our estimates we use a novel instrument set related to the diffusion of female suffrage across the globe. Further, research should focus on the determinants of women preferences across the political spectrum in order to understand the also documented movement of women towards the left that has occurred in some countries after the eighties, well after the introduction of female suffrage.
    Date: 2014–03
  17. By: Luisa Herbst; Kai A. Konrad; Florian Morath
    Abstract: We study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of conflict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of conflict is higher if power is more imbalanced. Even though endogenous bargaining outcomes reflect the players unequal fighting strengths, strategic uncertainty causes outcomes to be most efficient when power is balanced. In turn, the importance of exogenous mediation proposals depends on the balance of power.
    Keywords: Conflict, balance of power, contest, bargaining, Nash demand game, conflict resolution, asymmetries, experiment
    JEL: C78 C91 D72 D74
    Date: 2014–07

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