nep-pol New Economics Papers
on Positive Political Economics
Issue of 2015‒12‒28
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voter Preferences and Political Change: Evidence from Shale Booms By Viktar Fedaseyeu; Erik Gilje; Philip E. Strahan
  2. Political capitalism: The interaction between income inequality, economic freedom and democracy By Krieger, Tim; Meierrieks, Daniel
  3. The Political Legacy of Entertainment TV By Ruben Durante; Paolo Pinotti; Andrea Tesei
  4. Globalization and Its (Dis-)Content: Trade Shocks and Voting Behavior By Christian Dippel; Robert Gold; Stephan Heblich
  5. Why did the Democrats Lose the South? Bringing New Data to an Old Debate By Ilyana Kuziemko; Ebonya Washington
  6. Insiders and Outsiders: Local Ethnic Politics and Public Goods Provision By Kaivan Munshi; Mark Rosenzweig
  7. On discounting and voting in a simple growth model By Borissov, Kirill; Pakhnin, Mikhail; Puppe, Clemens
  8. Political conflicts over European integration: rejection or ambivalence? By Kristel Jacquier
  9. Electoral Effects of Public Sector Austerity Efforts in the United Kingdom 1900-2015 By Rozana Himaz
  10. Consistent collective decisions under majorities based on difference of votes By Mostapha Diss; Patrizia Pérez-Asurmendi
  11. Democratic Rulemaking By John M. de Figueiredo; Edward H. Stiglitz
  12. The Political Economy of Government Debt By Alberto Alesina; Andrea Passalacqua
  13. Political Turnover and the Stock Performance of SOEs in China By Wang, Danli; Chong, Terence Tai Leung
  14. Political Self-Serving Bias and Redistribution By Bruno Deffains; Romain Espinosa; Christian Thoeni
  15. Democracy and Globalization Are not Prerequisites for Higher Income: A Cross Country Analysis By Toshihiko HAYASHI
  16. The political economy of land grabbing By Krieger, Tim; Leroch, Martin

  1. By: Viktar Fedaseyeu; Erik Gilje; Philip E. Strahan
    Abstract: Local interests change sharply after the energy booms that began in 2003, when hydraulic fracturing spurred extraction of formerly uneconomic oil and gas reserves. Support for conservative interests rises and Republican political candidates gain votes after booms, leading to a near doubling in the probability of a change in incumbency. All of this change occurs at the expense of Democrats. Voting records of U.S. House members from boom districts become sharply more conservative across a wide range of issues, including issues unrelated to energy policy. At the level of the individual, marginal candidates skew their voting behavior somewhat toward more conservative causes, but generally not enough to maintain power. Thus, even when the stakes are high and politicians risk losing power, ideology trumps ambition.
    JEL: P16
    Date: 2015–12
  2. By: Krieger, Tim; Meierrieks, Daniel
    Abstract: In this contribution we study the relationship between income inequality and economic freedom for a panel of 100 countries for the 1971-2010 period. From a panel causality study we find that income inequality has a negative causal effect on economic freedom, while causation does not run in the opposite direction. We argue that the negative effect of inequality on economic liberty is due to the elite's political power stemming from its disproportionate control over a country's economic resources. The elite uses this power to curtail economic freedom to defend its economic interests by discouraging innovation, competition and protecting its rents. Running a series of dynamic panel estimations, we show that the negative effect of income inequality on economic freedom is robust to different sets of controls and estimation techniques. Finally, we show that the dynamics of the inequality-freedom nexus are to some extent conditional upon a country's political regime. When inequality is low, democracies enjoy comparatively higher levels of economic liberty, in line with the interests of a large middle-class. By contrast, economic freedom is lower in democracies (compared to strongly autocratic regimes with the same income distribution) when inequality is high. We argue that the latter finding corresponds to a system of political capitalism or captured democracy, where a powerful economic elite cooperates with politicians and bureaucrats for their mutual benefit.
    Keywords: income inequality,economic freedom,democratic institutions,political capitalism,middle-class,captured democracy
    JEL: D31 D72
    Date: 2015
  3. By: Ruben Durante (Sciences Po and CEPR); Paolo Pinotti (Bocconi University and DONDENA Center); Andrea Tesei (Queen Mary University of London and CEP (LSE))
    Abstract: We investigate the political impact of entertainment television in Italy over the past thirty years by exploiting the staggered introduction of Silvio Berlusconi's commercial TV network, Mediaset, in the early 1980s. We find that individuals in municipalities that had access to Mediaset prior to 1985 - when the network only featured light entertainment programs - were significantly more likely to vote for Berlusconi's party in 1994, when he first ran for office. This effect persists for almost two decades and five elections, and is especially pronounced for heavy TV viewers, namely the very young and the old. We relate the extreme persistence of the effect to the relative incidence of these age groups in the voting population, and explore different mechanisms through which early exposure to entertainment content may have influenced their political attitudes.
    Keywords: Television, Entertainment, Voting, Political participation, Italy
    JEL: L82 D72 Z13
    Date: 2015–12
  4. By: Christian Dippel; Robert Gold; Stephan Heblich
    Abstract: We identify the causal effect of trade-integration with China and Eastern Europe on voting in Germany from 1987 to 2009. Looking at the entire political spectrum, we find that only extreme-right parties respond significantly to trade integration. Their vote share increases with import competition and decreases with export access opportunities. We unpack mechanisms using reduced form evidence and a causal mediation analysis. Two-thirds of the total effect of trade integration on voting appears to be driven by observable labor market adjustments, primarily changes in manufacturing employment. These results are mirrored in an individual-level analysis in the German Socioeconomic Panel.
    JEL: D72 F16 J2
    Date: 2015–12
  5. By: Ilyana Kuziemko; Ebonya Washington
    Abstract: After generations of loyalty, Southern whites left the Democratic party en masse in the second half of the twentieth century. To what extent did Democrats' 1960s Civil Rights initiatives trigger this exodus, versus Southern economic development, rising political polarization or other trends that made the party unattractive to Southern whites? The lack of data on racial attitudes and political preferences spanning the 1960s Civil Rights era has hampered research on this central question of American political economy. We uncover and employ such data, drawn from Gallup surveys dating back to 1958. From 1958 to 1961, conservative racial views strongly predict Democratic identification among Southern whites, a correlation that disappears after President Kennedy introduces sweeping Civil Rights legislation in 1963. We find that defection among racially conservative whites explains all (three-fourths) of the decline in relative white Southern Democratic identification between 1958 and 1980 (2000). We offer corroborating quantitative analysis—drawn from sources such as Gallup questions on presidential approval and hypothetical presidential match-ups as well as textual analysis of newspapers—for the central role of racial views in explaining white Southern dealignment from the Democrats as far back as the 1940s.
    JEL: D72 H23 J15 N92
    Date: 2015–11
  6. By: Kaivan Munshi; Mark Rosenzweig
    Abstract: We examine the role of ethnic politics at the local level in supplying public goods within a framework that incorporates two sides to ethnic groups: an inclusionary side associated with internal cooperation and an exclusionary side associated with the disregard for others. The inclusionary aspect of ethnic politics results in the selection of more able political representatives who exert more effort, resulting in an increased supply of non-excludable public goods. The exclusionary aspect of ethnic politics results in the capture of targetable public resources by insiders; i.e. the representative's own group, at the expense of outsiders. Using newly available Indian data, covering all the major states over three election terms at the most local (ward) level, we provide empirical evidence that is consistent with both sides of ethnic politics. Counterfactual simulations using structural estimates of the model are used to quantify the impact of alternative policies that, based on our theory and the empirical results, are expected to increase the supply of public goods.
    JEL: H11 H4 H41 H42 O1
    Date: 2015–11
  7. By: Borissov, Kirill; Pakhnin, Mikhail; Puppe, Clemens
    Abstract: In dynamic resource allocation models, the non-existence of voting equilibria is a generic phenomenon due to the multi-dimensionality of the choice space even with agents heterogeneous only in their discount factors. Nevertheless, at each point of time there may exist a "median voter" whose preferred instantaneous consumption rate is supported by a majority of agents. Based on this observation, we propose an institutional setup ("intertemporal majority voting") in a Ramsey-type growth model with common consumption and heterogeneous agents, and show that it provides a microfoundation of the choice of the optimal consumption stream of the median agent. While the corresponding intertemporal consumption stream is in general not a Condorcet winner among all feasible paths, its induced instantaneous consumption rate receives a majority at each point in time in the proposed intertemporal majority voting procedure. We also provide a characterization of balanced-growth and steady-state voting equilibria in the case in which agents may differ not only in their time preference, but also in their instantaneous utility functions.
    Keywords: collective choice,common-pool resource,economic growth,heterogeneous agents,median voter theorem
    JEL: D11 D71 D91 O13 O43
    Date: 2015
  8. By: Kristel Jacquier (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We use survey data from ISSP 2013 to explore how conflicts over European integration interact with the dimensions of contestation that structure politics in five EU countries. Multinomial estimates allow the distinction between support, rejection and ambivalence vis-à-vis the EI. The empirical analysis shows that ambivalence and rejection of the European Union have the same determinants. We find that far-right political ideology is the only robust predictor of genuine anti-EU attitudes.
    Keywords: survey analysis,European integration,political parties
    Date: 2015–10
  9. By: Rozana Himaz
    Abstract: Abstract: This paper investigates empirically whether large expenditure cuts and revenue rises that were the result of deliberate political efforts towards being austere had an impact on electoral outcomes in the UK using data from 1900 to 2015. The main electoral outcomes considered are the change in ruling party ideology and the margin of victory faced by the incumbent at the general election, in terms of seats secured. The paper finds that large cuts in spending and large rises in revenue significantly increases the chance of a government changing. However, the loss in seats were significantly higher for the incumbent compared to the winning partly only when large spending cuts were pursued rather than revenue increases during the incumbent's tenure in office. We also find that voters are sensitive to particular types of spending cuts, such as cuts in social security. These results are contrary to those in Alesina (2013) using OECD data for 19 countries from 1975-2008, and several other papers in the empirical literature that found no significant correlation between fiscal adjustment and electoral looses
    Keywords: Fiscal austerity, electoral outcomes, United Kingdom
    JEL: H2 H3 H5
    Date: 2015–12–16
  10. By: Mostapha Diss (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France); Patrizia Pérez-Asurmendi (Grupo de investigacion PRESAD, Universidad de Valladolid, Avda. Valle de Esgueva 6,47011, Valladolid, Spain & Grupo de investigacion SEED, Universidad Publica de Navarra, Campus de Arrosadia,31006, Pamplona, Spain.)
    Abstract: The main criticism to the aggregation of individual preferences under majority rules refers to the possibility of reaching inconsistent collective decisions from the election process. In these cases, the collective preference includes cycles and even could prevent the election of any alternative as the collective choice. The likelihood of consistent outcomes under a class of majority rules constitutes the aim of this paper. Specifically, we focus on majority rules that require certain consensus in individual preferences to declare an alternative as the winner. Under majorities based on difference of votes, the requirement asks to the winner alternative to obtain a difference in votes with respect to the loser alternative taking into account that individuals are endowed with weak preference orderings. Same requirement is asked to the restriction of these rules to individual linear preferences.
    Keywords: Majorities based on difference of votes, Probability, Transitivity, Triple-acyclicity.
    JEL: D70 D71
    Date: 2015
  11. By: John M. de Figueiredo; Edward H. Stiglitz
    Abstract: This paper examines to what extent agency rulemaking is democratic. It reviews theories of administrative rulemaking in light of two normative benchmarks: a “democratic” benchmark based on voter preferences, and a “republican” benchmark based on the preferences of elected representatives. It then evaluates how the empirical evidence lines up in light of these two approaches. The paper concludes with a discussion of avenues for future research.
    JEL: K0 K23
    Date: 2015–11
  12. By: Alberto Alesina; Andrea Passalacqua
    Abstract: This paper critically reviews the literature which explains why and under which circumstances governments accumulate more debt than it would be consistent with optimal fiscal policy. We also discuss numerical rules or institutional designs which might lead to a moderation of these distortions.
    JEL: E62
    Date: 2015–12
  13. By: Wang, Danli; Chong, Terence Tai Leung
    Abstract: This paper analyses the reasons behind the long-term underperformance of China's stock market. We argue that the price growth of local state-owned enterprises (SOEs) is hindered by the control of state shares by local cadres, who often sell the shares below market prices during their time in office. Our empirical analysis reveals that political turnover of prefectural Party Secretary has a significantly negative impact on the selling of state-owned shares and the price growth of local state-owned enterprises, while there is no such impact on private enterprises and state-owned enterprises controlled by the central government.
    Keywords: Political turnover; State-owned enterprises; Local cadres.
    JEL: G1 O1 P2
    Date: 2015–11–05
  14. By: Bruno Deffains; Romain Espinosa; Christian Thoeni
    Abstract: We explore the impact of the self-serving bias on the supply and demand for redistribution. We present results from an experiment in which participants decide on redistribution after performing a real effort task. Dependent on individual performance, participants are divided into two groups, successful and unsuccessful. Participants' success is exogenously determined, because they are randomly assigned to either a hard or easy task. However, because participants are not told which task they were assigned to, there is ambiguity as to whether success or failure should be attributed to internal or external factors. Participants take two redistribution decisions. First, they choose a supply of redistribution in a situation where no personal interests are at stake. Second, they choose a redistributive system behind a veil of ignorance. Our results confirm and expand previous findings on the self-serving bias: successful participants are more likely to attribute their success to their effort rather than luck, and they opt for less redistribution. Unsuccessful participants tend to attribute their failure to external factors and opt for more redistribution. We demonstrate that the self-serving bias contributes to a polarization of the views on redistribution.
    Keywords: Redistribution, self-serving bias, experimental, veil of ignorance, polarization
    Date: 2015
  15. By: Toshihiko HAYASHI (Asia Pacific Institute of Research)
    Abstract: This paper reports results from a cross country econometric analyses over 150 countries pertaining to possible correlation between per capita GDP and democracy, corruption, globalization and human development indices. Our findings include 1) of the four indices, the human development index has the strongest influence on per capita GDP and its growth, 2) fighting corruption pays as higher levels of cleanliness and transparency tend to raise per capita GDP, but less so in lower income economies, 3) the globalization index does not show any significant correlation with per capita GDP, and 4) the democracy index is not significantly correlated with per capita GDP or growth. but in some country it can hinder growth. The moral of our investigation is that economic growth does not automatically lead to better democracy, and higher per capita income does not warrant higher level of democracy. Democracy is not a means to higher income, but rather, it is an independent value in itself.
    Keywords: per capita GDP, Democracy, Corruption, Globalization, Human Development
    JEL: C21 P51
    Date: 2015–12
  16. By: Krieger, Tim; Leroch, Martin
    Abstract: "Land grabbing" or, less emotionally charged, large-scale land acquisitions (LSLA), which occur mainly in the Global South, have become the center of a heated political and academic debate. So far, economists have mostly abstained from this debate. This may possibly be explained by the fact that they view these kind of deals in land property primarily as an opportunity for improved local economic development in poor countries. Arguably, foreign investors are then assumed to be able to utilize arable, but mostly idle land more efficiently than locals (cf., e.g., Deininger/Byerlee, 2011). At the same time, critics (mostly from other disciplines) claim that these very land deals have highly detrimental effects on local populations, especially smallholders, as neither governments nor international investors typically care much about these people’s interests and do not honor their often informal land-use rights (cf., e.g., Cotula, 2011). They claim that this may then endanger the local people’s livelihoods. [...]
    Date: 2015

This nep-pol issue is ©2015 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.