nep-pol New Economics Papers
on Positive Political Economics
Issue of 2015‒07‒25
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political Selection and the Concentration of Political Power By Andreas Grunewald; Emanuel Hansen; Gert Poenitzsch
  2. Electoral rules and political selection : theory and evidence from a field experiment in Afghanistan By Beath,Andrew; Christia,Fotini; Egorov,Georgy; Enikolopov,Ruben
  3. Suspiciously Timed Trade Disputes By Paola Conconi; David R. DeRemer; Georg Kirchsteiger; Lorenzo Trimarchi; Maurizio Zanardi
  4. Clueless Politicians By Christopher Cotton; Cheng Li
  5. Democratic Responsiveness in the European Union: the Case of the Council By Christopher Wratil
  6. Corruption and Tax Evasion: Reflections on Greek Tragedy By Anastasia Litina; Theodore Palivos
  7. Promoting democracy in fragile states : insights from a field experiment in Liberia By Mvukiyehe,Eric; Samii,Cyrus Dara
  8. Can Firms with Political Connections Borrow More Than Those Without? Evidence from firm-level data for Indonesia By FU Jiangtao; SHIMAMOTO Daichi; TODO Yasuyuki
  9. Competing for Attention By Cotton, Christopher
  10. Forecasting Elections: Do Prediction Markets Tells Us Anything More than the Polls? By Davis, Brent
  11. Political Demography of Russia. Politics and State Government By Jack A. Goldstone; Shulgin, Sergey; Arkhangelskiy, Vladimir; Korotaev, Andrey; Zinkina, Yulia; Novikov, Kirill; Pustovalov, Denis

  1. By: Andreas Grunewald; Emanuel Hansen; Gert Poenitzsch
    Abstract: This paper studies the effects of power-concentrating institutions on the quality of political selection, i.e., the voters' capacity to identify and empower well-suited politicians. In our model, candidates are heterogeneous in two unobservable quality aspects: ability and public-spiritedness. As voters can only base their ballots on the candidates' binding policy proposals, low-quality candidates face incentives to mimic their high-quality counterparts and a selection problem arises. We nd that powerconcentrating institutions amplify this selection problem as they increase electoral stakes and thus the incentives for mimicking. However, they also allocate more political power to the voters' preferred candidate. As a consequence, the optimal institutional setting depends on the con ict of interest between voters and candidates. The larger the con ict of interest, the smaller is the level of power concentration that maximizes voter welfare. A complete concentration of power in the hands of the election winner is optimal if and only if the con ict of interest is small.
    Keywords: Elections, Constitutional Design, Selection, Asymmetric Information
    JEL: D72 D82 H11
    Date: 2015–04
  2. By: Beath,Andrew; Christia,Fotini; Egorov,Georgy; Enikolopov,Ruben
    Abstract: Voters commonly face a choice between competent candidates and those with policy preferences similar to their own. This paper explores how electoral rules, such as district magnitude, mediate this trade-off and affect the composition of representative bodies and policy outcomes. The paper shows formally that anticipation of bargaining over policy causes voters in elections with multiple single-member districts to prefer candidates with polarized policy positions over more competent candidates. Results from a unique field experiment in Afghanistan are consistent with these predictions. Specifically, representatives elected in elections with a single multi-member district are better educated and exhibit less extreme policy preferences.
    Keywords: Parliamentary Government,E-Government,Housing&Human Habitats,Social Accountability
    Date: 2015–07–13
  3. By: Paola Conconi (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles and Centre for Economic Policy Research (CEPR)); David R. DeRemer (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Georg Kirchsteiger (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles also CEPR, CESifo and VCEE); Lorenzo Trimarchi (European Center for Advanced Research in Economics and Statistics (ECARES) Université Libre de Bruxelles); Maurizio Zanardi (Lancaster University Management School)
    Abstract: This paper shows that electoral incentives affect the occurrence of trade disputes. Focusing on WTO disputes filed by the United States during the 1995-2012 period, we show that U.S. presidents are more likely to initiate a dispute in the year preceding their re-election date. Moreover, disputes filed by the U.S. tend to target industries that are important to swing states in the presidential election. To explain these regularities, we develop a theoretical model in which an incumbent can file a trade dispute to appeal to voters motivated by reciprocity. The incumbent's ability to initiate a dispute during the re-election campaign provides an advantage over the challenger, who cannot commit to file the dispute if elected. If voters' ideological preferences are not too strong in favor of either candidate, the incumbent will file a trade dispute to increase his re-election chances.
    Keywords: trade disputes, elections, reciprocity
    JEL: F13 D72 D78 D63
    Date: 2015–05
  4. By: Christopher Cotton (Queen's University); Cheng Li (Mississippi State University)
    Abstract: We develop a model of policymaking in which a politician decides how much expertise to acquire or how informed to become about issues before interest groups engage in monetary lobbying. For a range of issues, the policymaker prefers to remain clueless about the merits of reform, even when acquiring expertise or better information is costless. Such a strategy leads to intense lobbying competition and larger political contributions. We identify a novel benefit of campaign finance reform, showing how contribution limits decrease the incentives that policymakers have to remain uninformed or ignorant of the issues on which they vote.
    Keywords: lobbying, strategic ignorance, campaign finance, rent seeking
    JEL: C72 D72
    Date: 2015–07
  5. By: Christopher Wratil
    Abstract: Governments’ responsiveness to citizens’ preferences is a key assessment criterion of democratic quality. This paper assesses responsiveness to public opinion in European Union politics with the example of governments’ position-taking in the Council of the EU. The analysis demonstrates that governments’ willingness to adopt negotiation positions that reflect public opinion systematically varies with their electoral incentives flowing from domestic arenas. Governments behave responsive in EU legislative negotiations if they face majoritarian electoral systems at home, when elections are imminent, and when parties or EU-related events trigger the public salience of integration. These findings have important implications for the debate on the EU’s democratic deficit and our understanding of democratic responsiveness outside the national political arena.
    Keywords: responsiveness, public opinion, European Union, multidimensional, democratic deficit
    Date: 2015–06
  6. By: Anastasia Litina (University of Luxembourg); Theodore Palivos (Athens University of Economics and Business)
    Abstract: We provide empirical support and a theoretical explanation for the vicious circle of political corruption and tax evasion in which countries often fall into. We address this issue in the context of a model with two distinct groups of agents: citizens and politicians. Citizens decide the fraction of their income for which they evade taxes. Politicians decide the fraction of the public budget that they peculate. We show that multiple self-fulfilling equilibria with different levels of corruption can emerge based on the existence of strategic complementarities, indicating that “corruption” may corrupt. Furthermore, we find that standard deterrence policies cannot eliminate the multiplicity of equilibria. Instead, policies that impose a strong moral cost on tax evaders and corrupt politicians can lead to a unique equilibrium.
    Keywords: Corruption; Tax Evasion; Multiple Equilibria; Social Stigma
    JEL: D73 E62 H26
    Date: 2015–06
  7. By: Mvukiyehe,Eric; Samii,Cyrus Dara
    Abstract: A field experiment in rural Liberia is used to study democratic participation in fragile states. Fragile states are marked by political fragmentation, local patronage systems, and voter vulnerability. To understand the effects of such conditions on democratic expression through elections, the experiment introduced new forms of interaction between rural citizens and third-party actors: (i) civic education and town hall workshops directed by non-governmental organizations in communities over nine months and (ii) security committees that brought rural community representatives into monthly exchange with United Nations peacekeepers. Civic education workshops increased enthusiasm for electoral participation, produced a coordinated shift from parochial to national candidates, and increased willingness to report on manipulation. A program combining the two interactions had similar effects. The security committees had negligible effects. Barriers to political information and voter coordination appear to be important but resolvable problems for elections in fragile states.
    Date: 2015–07–15
  8. By: FU Jiangtao; SHIMAMOTO Daichi; TODO Yasuyuki
    Abstract: Using unique firm-level data for manufacturing sectors in Indonesia, we examine how political and economic connections of firms affect their access to finance. We identify the political connections of a particular firm by whether the government owns its shares, whether politicians are on its board of directors, and whether its highly-ranked manager knows any politician personally. We find that politically connected firms are more likely to be able to borrow from state-owned banks. Moreover, being connected to the government raises the probability of being able to borrow as much as needed without any credit constraint. The financial benefit from political connections is more prominent for small and medium enterprises (SMEs) than for large firms. Furthermore, the benefit mostly comes from personal connections with politicians, rather than more formal connections as measured by government ownership or politicians on the boards of directors.
    Date: 2015–07
  9. By: Cotton, Christopher
    Abstract: We develop a model of lobbying in which a time and resource constrained policymaker first chooses which policy proposals to learn about, before choosing which to implement. The policymaker reviews the proposals of the interest groups who provide the highest contributions. We study how policy outcomes and contributions depend on policymaker constraints and the design of the "Contest for Attention." Among other results, awarding attention to the highest contributors generally guarantees the first best policy outcome. It can also lead to the highest possible contributions, suggesting that a policymaker may not need to sacrifice policy in order to maximize contributions.
    Keywords: All-pay auction, contest, signaling, handicapped contest, political access, lobbying
    JEL: D44 D72 D78 D82
    Date: 2015–06
  10. By: Davis, Brent
    Abstract: Election forecasting is an expanding domain within political science, moving from the outer edges (as a novelty pursued by a few ‘quants’) toward the mainstream of the discipline. Amongst the most high profile of election forecasting techniques are prediction markets and vote-intention polls. While the weight of scholarly opinion appears to favour prediction markets over polls for election forecasting, there remain challengers and critics. This article joins with the challengers and the critics, looking at whether this ‘horse race’ competition between election forecasting approaches is valid. Using data from the 2013 Australian federal election, we conclude such comparisons-of-forecasts are misplaced in the Australian context, as prediction markets and vote-intention polls appear to be independent of each other given information from one appears to have no impact on the other.
    Keywords: voting behaviour/ choice; election forecasting
    JEL: C00 C20
    Date: 2015–07
  11. By: Jack A. Goldstone (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Shulgin, Sergey (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Arkhangelskiy, Vladimir (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Korotaev, Andrey (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Zinkina, Yulia (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Novikov, Kirill (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Pustovalov, Denis (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: The paper considers the demographic processes of the Russian Federation, government regulation of demographic processes and their social and economic consequences. The work analyzed the impact of public policies to support the birth rate and assess its effectiveness, with studied problems associated with estimating excess mortality of young working age, and studied problems associated with migration sentiments on the example of the Vladimir region.
    Keywords: demography, migration, Russia
    Date: 2015–05

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