nep-pol New Economics Papers
on Positive Political Economics
Issue of 2015‒12‒01
twenty-one papers chosen by
Eugene Beaulieu
University of Calgary

  1. Religious Riots and Electoral Politics in India By Iyer, Sriya; Shrivastava, Anand
  2. Compulsory Voting, Turnout, and Government Spending: Evidence from Austria By Mitchell Hoffman; Gianmarco León; Maria Lombardi
  3. Electoral fraud and voter turnout By Vardan, Baghdasaryan; Giovanna, Iannantuoni; Valeria, Maggian
  4. The political economy of climate policy By Robert C. Schmidt
  5. Competence vs. Loyalty: Political survival and electoral fraud in Russia’s regions 2000–2012 By Koenig, Christoph
  6. Fighting for votes: theory and evidence on the causes of electoral violence By Olivier Sterck
  7. The chicken or the egg: An experimental study of democracy survival, income, and inequality By Dmitry Ryvkin; Anastasia Semykina
  8. The Political Fallout of Chernobyl: Evidence from West-German Elections By Koenig, Christoph
  9. Terrorism and Employment: Evidence from Successful and Failed Terror Attacks By Brodeur, Abel
  10. Loose Cannons – War Veterans and the Erosion of Democracy in Weimar Germany By Koenig, Christophauthor-workplace-Name: Department of Economics University of Warwick
  11. Finding your right (or left) partner to merge By Benjamin Bruns; Ronny Freier; Abel Schumann
  13. The Political Economy of Preferential Trade Arrangements: An Empirical Investigation By Giovanni Facchini; Peri Silva; Gerald Willmann
  14. Politico-economic Regimes and Attitudes: Female Workers under State-socialism By Pamela Campa; Michel Serafinelli
  15. The Influence of Political Competition on the Efficiency of the Regional Executives in Russia By Yuriy O. Gaivoronskiy
  16. Spanish land reform in the 1930s: economic necessity or political opportunism? By Joan R. Roses
  17. Future-biased government By Francisco M. Gonzalez; Itziar Lazkano; Sjak A. Smulders
  18. A theory of media self-silence By Ascensión Andina Díaz; José A. García-Martínez
  19. Spanish Land Reform in the 1930s: Economic Necessity or Political Opportunism? By Juan Carmona; Joan R. RosŽs; James Simpson
  20. Citizen Participation in Governmental Decision Making in Japan: A Review By Anjula Gurtoo
  21. Vote with their donations : An explanation about crowding-in of government provision of public goods By Ryo Ishida

  1. By: Iyer, Sriya (University of Cambridge); Shrivastava, Anand (University of Cambridge)
    Abstract: The effect of ethnic violence on electoral results provides useful insights into voter behaviour in democratic societies. Religious riots have claimed more than 14,000 lives in India since 1950. We study the effect of Hindu-Muslim riots on election results in India. We combine data on riots, which have been geo-coded, with electoral data on state legislature elections and control variables on demographics and public goods provision to construct a unique panel data set for 16 large states in India over a 21 year period from 1981-2001. We suggest a new instrument that draws upon the random variation in the day of the week that important Hindu festivals fall on in each year, as set by a lunar calendar. The probability of a riot increases if a Hindu festival falls on a Friday, the holy day for Muslims. This allows us to isolate the causal effect of riots on electoral results. We also correct for under-reporting of riots and how they affect electoral outcomes in nearby districts. We find that riots occurring in the year preceding an election increases the vote share of the Bharatiya Janata Party by 5 to 7 percentage points in the election.
    Keywords: religion, elections, riots, India
    JEL: Z12 D72 D74
    Date: 2015–11
  2. By: Mitchell Hoffman; Gianmarco León; Maria Lombardi
    Abstract: We study a unique quasi-experiment in Austria, where compulsory voting laws are changed across Austria's nine states at different times. Analyzing all state and national elections since World War II, we show that compulsory voting laws with mild sanctions decreased abstention by roughly 50%. However, we find no evidence that this change in turnout affected government spending patterns (in levels or composition) or the political equilibrium. Individual-level data on turnout and political preferences suggest these results occur because individuals swayed to vote due to compulsory voting are more likely to be non-partisan, have low interest in politics, and are uninformed.
    Keywords: compulsory voting, fiscal policy, incentives to vote
    JEL: H10 D72 P16
    Date: 2015–08
  3. By: Vardan, Baghdasaryan; Giovanna, Iannantuoni; Valeria, Maggian
    Abstract: In this paper we experimentally investigate the consequences of electoral fraud on voter turnout. The experiment is based on a strategic binary voting model where voters decide whether to cast a costly vote in favour of their preferred candidate or to abstain. Minority candidate can illicitly influence the electoral process by applying ballot box stuffing. In the experiment we implement two different framings: we compare voter turnout in a neutral environment and with framed instructions to explicitly replicate elections. This approach enables to both test the model's predictions and to estimate framing effects of voting and fraud. Comparison of experimental results with theoretical predictions reveals over-voting, which is exac- erbated when fraud is applied. Moreover, turnout increases with moderate level of fraud. However, with more extensive electoral fraud, theoretical predictions are not matched. Voters fail to recognize that the existence of a relatively larger number of "agents" voting with certainty considerably decreases the benefits of voting. Importantly, framing matters, as revealed by the higher turnout of those in the majority group, against which the fraud is applied. Finally, individual level regression analysis provides evidences of strategic voting.
    Keywords: Laboratory experiment, Framing, Voting, Ballot rigging and Voter turnout
    JEL: D72 C52 C91 C92
    Date: 2015–11–25
  4. By: Robert C. Schmidt (Humboldt-Universitaet zu Berlin)
    Abstract: This paper analyzes the political economy of climate policy in a simple framework with asymmetric information between voters and politicians. Two parties are engaged in electoral competition and announce policy platforms. An environmental catastrophe (e.g., a tipping point in the climate system) is approaching with some probability that depends on the state of nature. Climate policy can reduce this probability. Each party receives a private signal about the true state of nature, whereas voters possess little information and only know the prior probability distribution. We analyze under what conditions parties can reveal their private signals truthfully to the voters under electoral competition, and when the implemented policy is optimal, given the available information.
    Keywords: electoral competition, signaling, climate catastrophe, voting, intuitive criterion
    JEL: D72 D83 Q54
    Date: 2015–10–08
  5. By: Koenig, Christoph (Department of Economics University of Warwick)
    Abstract: Election fraud is a pervasive feature of autocracies but often only serves lower-tier officials to cast signals of loyalty or competence to the central government in order to pursue their own interests. How much such personal interests matter for electoral fraud under autocracy has however not been studied so far. In this paper, I exploit a radical policy change in Russia which allowed the president to replace governors of the country’s 89 regions at his own will. As a result, federal elections after December 2004 were organised by two types of governors: one was handpicked by the president, the other one elected before the law change and re-appointed. Even though both types faced removal in case of bad results, the need to signal loyalty was much lower for the first type. In order to estimate the e.ect of handpicked governors on electoral fraud, I use a diff-in-diff framework over 7 federal elections between 2000 and 2012. For this time period, I use results from about 95,000 voting stations to construct a new indicator of suspicious votes for each region and election. I show that this indicator correlates strongly with incidents of reported fraud. My baseline estimates show that in territories with a handpicked governor the share of suspicious votes decreased on average by more than 10 percentage points and dropped even further if the region’s economy had done well over the past legislature. These findings suggest that governors have less need to use rigging as a signal once loyalty is assured unless faced with circumstances raising doubts about their competence.
    JEL: P16 P26 D72 D73
    Date: 2015
  6. By: Olivier Sterck
    Abstract: Electoral violence is widespread in developing countries. However, its causes are poorly understood. I present a theoretical model of electoral competition in which electoral violence is more likely to emerge if (1) the electoral bases of leading parties are of similar size, implying that political competition is tight, and (2) polarization between violent supporters of leading parties is high. The relative importance of these two conditions varies with the type of electoral violence (e.g. clashes, intimidation or murders). The predictions of the model are tested and validated using a unique dataset on electoral violence during the 2010 elections in Burundi. I compare the incidence of electoral violence between neighboring municipalities, relying on the fact that neighboring municipalities more likely to have similar unobserved characteristics. In line with the theoretical model, I find that a one-standard-deviation increase in political competition induces a 35 to 66% increase in the predicted number of violent episodes. A one-standard-deviation increase in ex-rebels’ polarization induces a 40 to 50% increase in the predicted number of violent episodes.
    Keywords: Electoral violence; Polarization; Political competition; Demobilization; Burundi
    JEL: D74 H56 O12 O17 O55
    Date: 2015
  7. By: Dmitry Ryvkin (Department of Economics, Florida State University); Anastasia Semykina (Department of Economics, Florida State University)
    Abstract: Many empirical studies investigate the relationships between economic development, inequality, and democracy survival; however, establishing causal links with naturally occurring cross-country data is problematic. We address this question in a laboratory experiment, where in democracy citizens can invest in profitable projects and vote on income taxation. In the alternative regime -- autocracy -- efficient investment levels and equitable redistribution are implemented exogenously, but there is a risk of resources being partially expropriated. Citizens can voluntarily switch from democracy to autocracy by a majority vote, which mimics recent historical examples, where voters voluntarily delegate political powers to an autocrat in exchange for a promise of high taxation and redistribution. We find that the likelihood of democracy breakdown increases with the degree of inequality but does not vary with productivity. The link between productivity and democracy survival depends critically on the degree of sophistication of the median voter.
    Keywords: democracy breakdown, economic productivity, inequality, voting, experiment
    JEL: D72 P48 C92
    Date: 2015–11
  8. By: Koenig, Christoph (Department of Economics University of Warwick)
    Abstract: I study the effect of a formative experience on political beliefs in a distant country. This paper looks at the Chernobyl nuclear disaster of April 1986 and voters’ response in West Germany. The analysis uses a di.-in-di. estimation which exploits variation in proximity to the nearest nuclear power plant (NPP) across 301 counties. Proximity is used as proxy for the shock from perceived risk of a nuclear accident. Using data over almost 40 years and 11 elections, my results indicate that living closer to an NPP benefited the explicitly anti- and pro-nuclear parties, the Greens and the Conservatives. The findings are persistent and robust to the inclusion of several socioeconomic controls as well as checks for the validity of the identifying assumptions. The gains of the Greens are similar across social groups and in line with home-voter effects. The effect of proximity on the conservatives increases with education and the number of adolescents in their impressionable years. I argue that this can be explained by political belief formation and di.erences in assessing the economic benefits from nuclear power over the actual risk of an accident. Using variation in the scheduling of subsequent state elections, I can also show that the pro-nuclear response was stronger in counties which did not vote in the immediate aftermath of Chernobyl and thus had more time for a rational electoral choice.
    JEL: P16 D72 N54 H41 Q48
    Date: 2015
  9. By: Brodeur, Abel (University of Ottawa)
    Abstract: This paper examines the economic consequences of terror attacks and the channels through which terrorism affects local economies. I rely on an exhaustive list of terror attacks over the period 1970-2013 in the U.S. and exploit the inherent randomness in the success or failure of terror attacks to identify the economic impacts of terrorism. The findings suggest that successful attacks, in comparison to failed attacks, reduce the number of jobs in targeted counties by approximately 5% in the year the attack takes place. The effects fade away after 2 years and I find no evidence that neighboring counties suffer from the successful attack. Analyzing the channels, I find suggestive evidence that the decrease in the physical capital stock of a county partially explains the temporary reduction in jobs. I also focus on economic attitudes and political preferences since these preferences have been shown to be related to economic outcomes. The results suggest that successful attacks decrease temporarily vote share for Democrat candidates in gubernatorial elections and bring a leftward shift in attitudes in targeted counties.
    Keywords: crime, terrorism, growth, preferences, voting behavior
    JEL: D72 D74 C13 P16
    Date: 2015–11
  10. By: Koenig, Christophauthor-workplace-Name: Department of Economics University of Warwick
    Abstract: I study the effect of war participation on the rise of right-wing parties in Inter-war Germany. After the democratisation and surrender of Germany in 1918, 8m German soldiers of WWI were demobilised. I argue that defeat made veterans particularly sceptical about the new democratic state. Their return undermined support for democratic parties from the very beginning and facilitated the reversion to autocratic rule 15 years later. In order to quantify this effect, I construct the first disaggregated estimates of German WWI veterans since official army records were destroyed. I combine this data with a new panel of voting results from 1881 to 1933. Diff-in-Diff estimates show that war participation had a strong positive effect on support for the right-wing at the expense of socialist parties. A one standard deviation increase in veteran inflow shifted vote shares to the right by more than 2 percentage points. An IV strategy based on draft exemption rules substantiates my findings. The effect of veterans on voting is highly persistent and strongest in working class areas. Gains for the right-wing, however, are only observed after a period of Communist insurgencies. I provide suggestive evidence that veterans must have picked up especially anti- Communist sentiments after defeat, injected these into the working class and in this way eroded the future of the young democracy.
    JEL: P16 N44 P26 D74 D72 H56
    Date: 2015
  11. By: Benjamin Bruns (Humboldt-Universitaet zu Berlin, DIW); Ronny Freier (Freie Universitaet Berlin, DIW); Abel Schumann (Stockholm School of Economics)
    Abstract: We study political determinants of municipality amalgamations during a boundary reform in the German state of Brandenburg, which reduced the number of municipalities from 1,489 to 421. The analysis is conducted using data on the political decision makers as well as fiscal and socio-economic variables for the municipalities. We ask whether party representation in the town council influences the merger decision. To identify the effect, we follow a dual approach and make use of different stages in the reform process. First, municipalities were initially free to choose partners. In a later phase of the reform the state legislature forced municipalities to amalgamate. We can, thus, compare voluntary to forced units. Second, we simulate potential mergers from the map of municipalities and compare voluntary mergers to those simulated units. Both approaches show that political representation matters significantly during the voluntary stage of the merger reform.
    Keywords: municipality mergers, political decision makers, probit analysis, geospatial analysis
    JEL: H10 H11 H77
    Date: 2015–04–10
  12. By: Jihan SHANABLI (Romanian Academy - National Institute of Economic Research, Bucharest, Romania)
    Abstract: The paper constitutes a contribution to the research area dedicated to the relationship between political regimes and economic growth. The main focus will be on the way politics influences the economic evolution and development of a country. The premise is that political institutions play an essential role due to the fact that they have the potential to relax the constraints imposed over the economic structure and not only. The three basic dimensions used in constructing the paper are the degree of political freedom, the level of political stability and the level of political security.
    Keywords: economic growth, political regime, political business cycles
    JEL: H11 E32
    Date: 2014–01
  13. By: Giovanni Facchini; Peri Silva; Gerald Willmann
    Abstract: In this paper, we develop a political economy model to study the decision of representative democracies to join a preferential trading arrangement (PTA), distinguishing between free trade areas (FTA) and customs unions (CU). Our theoretical analysis suggests that income inequality and bilateral trade imbalances are important factors in determining the formation of PTAs, while it points out that differences in the production structure among prospective member countries is an important factor in determining whether a CU or an FTA will emerge in equilibrium. Our empirical analysis, covering a sample of 124 countries over the period 1950-2000, lends strong support for the predictions of the model.
    Keywords: Free Trade Areas, Customs Unions, Trade Imbalances, Income Inequality
    Date: 2015
  14. By: Pamela Campa; Michel Serafinelli
    Abstract: This paper investigates the extent to which attitudes are affected by political regimes and government policies, and the channels of influence. We focus on gender-role attitudes and female attitudes toward work, exploiting the imposition of state-socialist regimes across Central and Eastern Europe, and the fact that the new regimes encouraged women's employment, for both ideological and instrumental reasons. We use two different identification strategies and datasets. First, we take advantage of the German partition into East and West after 1945 and restricted-access information on place of residence to execute a spatial regression discontinuity design. We find more positive attitudes toward work in the sample of women who used to live in East Germany. In terms of channels, we find evidence that the experience of employment, arguably one of the very few positive aspects of living under state-socialism in East Germany, changed women's attitudes. We do not find similar evidence for the role of propaganda. Second, we employ a difference-in-differences strategy that compares attitudes formed in Central and Eastern European countries (CEECs) and Western European Countries (WECs), before and after the imposition of state socialism in CEECs. Gender-role attitudes formed in CEECs during the state socialist period appear to be significantly less traditional than those formed in WECs. Overall, our study addresses previous identification and data limitations and finds that attitudes are profoundly affected by politico-economic regimes.
    Keywords: gender-role attitudes, attitudes towards work, state-socialism, Central and Eastern Europe, spatial regression discontinuity design
    JEL: Z10 P51 J16
    Date: 2015–11–26
  15. By: Yuriy O. Gaivoronskiy (National Research University Higher School of Economics)
    Abstract: The research is dedicated to the analysis of the relation between political competition that measured as the sum total of the electorate competition and the consolidation of the elite, as well as of the effectiveness of the fulfillment of the social and economic responsibilities of the regional authorities. The results of the analysis show that though the influence of the political competition within hybrid Russian regional political regimes is significant, it lacks some definite direction, as well as shows itself very selectively (mostly in health service and budgetary management) and is based upon weak social links, which is quite typical for partly institutionalized feedback and socio-political control channels
    Keywords: political competition, subnational political regimes, efficiency, Russian regions.
    JEL: D72
    Date: 2015
  16. By: Joan R. Roses
    Abstract: Spanish land reform, involving the break-up of the large southern estates, was a central issue during the first decades of the twentieth century. This paper uses new provincial data on landless workers, land prices and agrarian wages to consider if government intervention was needed because of the failure of the free action of markets to redistribute land. Our evidence shows that the relative number of landless workers decreased significantly from 1860 to 1930 before the approval of the 1932 Land Reform. This was due to two interrelated market forces: the falling ratio between land prices and rural wages, which made land cheaper for landless workers to rent and buy land plots, and structural change that drained rural population from the countryside. Given that rural markets did not restrict access to land, the government-initiated land redistribution had no clear-cut economic justification.
    Keywords: land markets; structural change; land prices; landless peasants
    JEL: N53 N54 Q15
    Date: 2015–11
  17. By: Francisco M. Gonzalez (Department of Economics, University of Waterloo); Itziar Lazkano (University of Wisconsin-Milwaukee); Sjak A. Smulders (Tilburg University)
    Abstract: We argue that governments are future biased when they aggregate the preferences of overlapping generations. Future bias, which involves preference reversals favoring future over current consumption, explains why governments legislate old-age transfers at the expense of capital accumulation and growth, even if generations are altruistic.
    JEL: D71 D72 H55
    Date: 2015–10
  18. By: Ascensión Andina Díaz (Departamento de Teoría e Historia Económica, Universidad de Málaga); José A. García-Martínez (Departamento de Estudios Económicos y Financieros, Universidad Miguel Hernández)
    Abstract: This paper proposes a theory of media self-silence. The argument is that news organizations have the power to raise public concern and so affect the probability that there is ex-post verification of the true state of the world. Built on the literature of career concerns, we consider a newspaper that seeks to maximize its reputation for high quality. Our results predict more media silence, the higher the prior expectations on the quality of the firm, the greater the probability of ex-post verification, and the higher the power of the newspaper to lead public opinion. We also obtain that the greater the social influence of a news organization, the stricter the firm's vetting process for stories is. Last, competition reduces media silence.
    Keywords: Feedback power; reputation; quality; competition; media silence
    JEL: D72 D82
    Date: 2015–05
  19. By: Juan Carmona (Universidad Carlos III de Madrid); Joan R. RosŽs (London School of Economics); James Simpson (Universidad Carlos III de Madrid)
    Abstract: Spanish land reform, involving the break-up of the large southern estates, was a central issue during the first decades of the twentieth century. This paper uses new provincial data on landless workers, land prices and agrarian wages to consider if government intervention was needed because of the failure of the free action of markets to redistribute land. Our evidence shows that the relative number of landless workers decreased significantly from 1860 to 1930 before the approval of the 1932 Land Reform. This was due to two interrelated market forces: the falling ratio between land prices and rural wages, which made land cheaper for landless workers to rent and buy land plots, and structural change that drained rural population from the countryside. Given that rural markets did not restrict access to land, the government-initiated land redistribution had no clear-cut economic justification.
    Keywords: land markets, structural change, land prices, landless peasants
    JEL: N54 N53 Q15
    Date: 2015–11
  20. By: Anjula Gurtoo (Ghana Statistical Service, Economic Statistics Division, Ghana)
    Abstract: Over the past decade citizens have become much more involved in several aspects of policy-making and governance. Public participation in decision-making is seen to generate more accountability, better performance, strengthening of democracy, and counters the influence of powerful dominant groups. The trend is increasing worldwide, and in Japan as well. In this paper we review the nature of public participation in Japan, with the aim to understand the dynamics and nuances of participation in a country with a distinct cultural heritage. A total of 36 papers specific to public participation in Japan (versus volunteerism) are reviewed, from five English publication databases. We acknowledge several meaningful and relevant articles published only in Japanese may have got missed in the review. The paper, therefore, may not be a comprehensive representation of the dynamics of participation in Japan. Nevertheless, the paper does provide cross sectional data of various types of situations faced by the Japanese citizens and the administration, and is one of the first reviews to explore the nature and dynamics of public participation in Japan.
    Date: 2015–10
  21. By: Ryo Ishida (Visiting Scholar, Policy Research Institute, Ministry of Finance,Japan)
    Abstract: This paper considers a mechanism where providers of public goods reflect donorsf preferences for public goods. When asking individuals and private companies to contribute for a certain public good, it is widely known that the total contributions result in under-provision. Among the many countermeasures for this problem, some fundraisers adopt a measure to reflect large donorsf preferences for the characteristics of public goods. In such a case, private contribution is enhanced because there is additional incentive to donate. We formalized such a measure theoretically and proved that this measure surely enhances private contributions. Moreover, we find that government direct subsidy may not only crowd-out but also even crowd-in private contribution under this framework. If fundraisers reflect the major donorsf preference, the influence of onefs donation is leveraged by government direct provision. This element enhances private contributions. If this effect dominates the innate crowding-out effect, government direct subsidy may enhance private contribution. This mechanism is a novel explanation for both crowding-out and crowding-in under an identical framework.
    Keywords: private provision, public goods, crowding out, crowding in, voting
    JEL: H23 H41 H44
    Date: 2015–10

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