nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒02‒04
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Red versus Blue: Do Political Dimensions Influence the Investment Preferences of State Pension Funds? By Andreas Hoepner; Lisa Schopohl;
  2. Television and voting in Catalonia By Ivan Mauricio Duran
  3. Transparency in Parliamentary Voting By Benesch, Christine; Bütler, Monika; Hofer, Katharina E.
  4. Compliance, Informality and contributive pensions By Marie-Louise Leroux; Dario Maldonado; Pierre Pestieau
  5. Information and Crime Perceptions: Evidence from a Natural Experiment By Nicola Mastrorocco; Luigi Minale
  6. Who Runs the International System? Power and the Staffing of the United Nations Secretariat - Working Paper 376 By Paul Novosad and Eric Werker
  7. The political economy of food price policy:A synthesis By Derrill D. Watson II
  8. Cashing in on Mining: The Political Economy of Mining Regulations and Fiscal Policy Practices in India. By Chakraborty, Lekha; Garg, Shatakshi; Singh, Gurpreet
  9. Collective Action Abroad: How Foreign Investors Organize Evidence from Foreign Business Associations In the Russian Federation By Michael Rochlitz
  10. Do Big Governments Promote Trade Liberalization? A Long-Term Analysis of 18 OECD Countries, 1975-2000 By Federico Podestà
  11. How are Foreign Policy Decisions Made in China? By Linda Jakobson and Ryan Manuel
  12. Political Origins and Implications of the Economic Crisis in Russia By Sergei Guriev
  13. Does globalization promote civil war? An empirical research By Roberto Ezcurra; Beatriz Manotas

  1. By: Andreas Hoepner (ICMA Centre, Henley Business School, University of Reading;); Lisa Schopohl (ICMA Centre, Henley Business School, University of Reading;);
    Abstract: Studying the equity holdings of 31 U.S. state pension funds, we find evidence that the political leaning of their members and political pressures by state politicians impact funds’ investment decisions. State pension funds from states with Democratic leaning members tend to tilt their portfolios more strongly towards companies that perform well on environmental, social and governance (ESG) issues, as compared to their Republican counterparts. This tendency is especially strong if the majority of the state government are Democrats. State pension funds intensify their ESG investing when their members’ political leaning changes from Republican to Democratic, and vice versa, suggesting that these funds align their ESG investment approach with the political leaning of their members. Finally, we find that the state pension funds in our sample neither under- nor outperform on their politically-motivated ESG holdings, implying that their ESG preferences are unlikely financially-driven.
    Keywords: ESG, political pressures, political values, portfolio decisions, state pension funds, SRI
    Date: 2015–05
  2. By: Ivan Mauricio Duran (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: To what extent can be electoral results in Catalonia explained by the exposure of individuals to television? This paper sheds light on this question by looking into the effect of TV3 on two distinguished political outcomes in the 1984 Catalan Parliamentary election. The outcomes of interest are voter turnout and the vote share of Convergència i Unió (CiU), one of the strongest political forces in Catalonia who has mainly driven the channel since its creation. We resort to a natural experiment based on the geographically differentiated expansion of TV3 in Catalonia. Using a Difference-in-Differences Kernel matching method, we found that the introduction of TV3 caused an increase both in the voter turnout and the CiU vote share in the 1984 Catalan parliamentary elections.
    Keywords: Media, Elections, Voting behaviour, Natural experiment, Difference-in-Differences
    JEL: L82 D72 C99
    Date: 2016–01
  3. By: Benesch, Christine; Bütler, Monika; Hofer, Katharina E.
    Abstract: We use a change in the voting procedures of one of the two chambers of the Swiss parliament to explore how transparency affects the voting behavior of its members. Until 2013, the Council of States (Ständerat) had voted by a show of hands. While publicly observable at the time of the vote, legislators' decisions could only be verified ex post through the time-consuming screening of online videos. In 2014, halfway through the legislative period, the chamber switched to electronic voting. Since then, the individual votes of legislators have become more transparent and observable as their votes are now recorded electronically and, in some cases, published online. Our analysis is based on individual voting behavior in all final passage votes during the 2011-2015 legislative period. In a difference-in-difference framework, the larger chamber, the National Council (Nationalrat), serves as a control group. Not only have the voting procedures of the National Council remained unchanged since 2007 but also the legislative texts on which both chambers vote are the same. This unique framework makes it possible to estimate the causal effects of voting procedures on legislators' choices. Since the voting system reform, members of the Council of States are significantly less likely to deviate from their party line. Our results reflect the increased observability of legislators' votes and the greater conformity pressure exerted by political parties, as easier monitoring enables them to enforce discipline among their members.
    Keywords: Voting; Parliament; Transparency; Parties; Party discipline; Principal agent theory
    JEL: D72 D80 L88
    Date: 2016–02
  4. By: Marie-Louise Leroux; Dario Maldonado; Pierre Pestieau
    Abstract: We consider a political economy model in which agents have the possibility to hide part of their earnings in order to avoid taxation. Taxation is exclusively used to finance a pension system. If the pension system is implemented, agents in their old age receive a benefit which includes both a Bismarkian and a Beveridgian component. We show that in the absence of compliance costs, agents are indifferent to the tax rate level as in response, they can perfectly adapt their level of compliance. The public pension system is found to be at least partially contributory in order to increase compliance and thus to increase the tax base. When compliance costs are introduced, perfect substitutability between compliance and taxation breaks down. Depending on the relative returns from public pensions and private savings as well as on the elasticity of compliance to income, we obtain that the preferred tax rate should be increasing or decreasing in income. The majority voting tax rate is more likely to be positive when the median income is low and when the return from public pensions dominates that of private savings. The level of the Bismarkian pillar will now be chosen so as to account for increased political support, for increased direct redistribution toward the worst-off agent, and increased tax base.
    Keywords: Compliance costs, Majority Voting, Public Pensions, Tax Evasion
    JEL: H55 I13 D91
    Date: 2015
  5. By: Nicola Mastrorocco (London School of Economics); Luigi Minale (Universidad Carlos III de Madrid)
    Abstract: This paper investigates the influence of media on the beliefs and perceptions individuals hold, with a focus on crime perceptions. We study the case of Italy, where the majority of television channels have been under the influence of the former Prime Minister Silvio Berlusconi for more than a decade. First, we document that these channels systematically over represent crime news compared to others. We then test if individuals revise their perceptions about crime when exposure to news programs broadcast by a specific group of partisan channels is reduced. In order to identify the causal effect we exploit a natural experiment in the Italian television market where the staggered introduction of the digital TV signal led to a drastic drop in the viewing shares of the channels above. Combining unique data on each channel’s crime news coverage and prime-time viewing shares, we find that reduced exposure to crime related news decreased concerns about crime, an effect that is mainly driven by older individuals who, on average, watch more television and use alternative sources of information (such as Internet, radio and newspapers) less frequently. Finally, we show that this change in crime perceptions is likely to have important implications for voting behaviour.
    Keywords: information, mass media, persuasion, crime perceptions
    JEL: D72 D83 K42 L82
    Date: 2016–01
  6. By: Paul Novosad and Eric Werker
    Abstract: National governments frequently pull strings to get their citizens appointed to senior positions in international institutions. We examine, over a 60 year period, the nationalities of the most senior positions in the United Nations Secretariat, ostensibly the world's most representative international institution. The results indicate which nations are successful in this zero-sum game, and what national characteristics correlate with power in international institutions. The most overrepresented countries are small, rich democracies like the Nordic countries. Statistically, democracy, investment in diplomacy, and economic/military power are predictors of senior positions--even after controlling for the U.N. staffing mandate of competence and integrity. National control over the United Nations is remarkably sticky; however the in influence of the United States has diminished as US ideology has shifted away from its early allies. In spite of the decline in US influence, the Secretariat remains pro-American relative to the world at large.
    Keywords: United Nations, international institutions
    JEL: F5 F53 F59
    Date: 2014–09
  7. By: Derrill D. Watson II
    Abstract: This paper identifies eight political economy factors that influenced governments. policy choices during the most recent global food price crisis. To explain the variety of responses and the policy failures, a framework is proposed that locates policies along the twin dimensions of unitary vs. fragmented decision-making processes and social welfare maximizing vs. selfinterested policy goals. Policies are favoured that maintain government legitimacy and produce private benefits for the best-connected stakeholders. Policy interventions were frequently ad hoc and delayed because of lack of market information, conflicts among fragmented government agencies in all governments, and extended deliberations among competing stakeholder groups.
    Keywords: political economy, food prices, public choice, rent-seeking
  8. By: Chakraborty, Lekha (National Institute of Public Finance and Policy); Garg, Shatakshi (National Institute of Public Finance and Policy); Singh, Gurpreet (National Institute of Public Finance and Policy)
    Abstract: Against the backdrop of the recent Mines and Minerals Development and Regulation (MMDR) Amendment Bill 2015, this paper examines the political economy of State-business relations in mining sector, in the two newly-formed States in India, Chhattisgarh and Jharkhand. It is important to note that the two States have low income despite being resource-rich.. Analyzing the legal fiats (State Reorganisation Acts and Fiscal Responsibility Acts), it was revealed that the formation of new States has not created any distinct fiscal agency in the extractive sector. The States - both parent and the new States - have adjusted their deficits to conform to the fiscal rules (FRBM Act) stipulated by the Centre; and these States have revenue surplus - not deficits - ex-post to the enactment of fiscal rules. The new States have insignificant share of mining proceeds in their State exchequer, around 10 per cent of the revenue receipts. Though nebulous estimates from fresh mining e-auction proceeds are on board, ambiguity remains how the newlygenerated fiscal space would resolve resource curse. The use of fiscal proceeds from mining is difficult to map as it is not yet earmarked for redressing socio-economic inequalities of mining districts. However, the new MMDR Bill 2015 stipulates that District Mineral Fund (DMF) would be created in mining districts to link the proceeds to human development. Despite the data paucity, based on our analysis we caution that the road map of forthcoming DMF to plough back a portion of royalty and fresh e-auction mining proceeds exclusively to the mining districts may exacerbate spatial inequalities.
    Keywords: Political economy ; Regulations ; Mining ; Industrial Policy ; Fiscal Space ; Inequality ; Human development
    JEL: H5 I3 L5 O2 Q3
    Date: 2016–01
  9. By: Michael Rochlitz (National Research University Higher School of Economics)
    Abstract: What role can collective action by foreign investors play in an environment characterized by incomplete institutions? We study this question by looking on foreign business associations in the Russian Federation. By interviewing 17 foreign business associations and conducting an online survey of their member firms, we find that business associations play an important welfare-enhancing role in providing a series of support and informational services. However, they do not play a significant role in lobbying the collective interests of their member firms, especially in the current political context in Russia where since the start of the Ukraine crisis the business community seems to have suffered a general loss of influence on political decision making
    Keywords: collective action; business associations; lobbying
    JEL: D71 D72
    Date: 2016
  10. By: Federico Podestà
    Abstract: This paper investigates the relationship between state intervention and trade policy in selected OECD countries over recent decades. It starts from the general hypothesis that big governments promote trade liberalization, whereas small ones limit it. It does so on the basis of the assumption that the pre-existing internal compensation can be employed as a functional equivalent of trade restrictions in protecting the social segments, such as low-skilled workers, most damaged by trade exposure. Moreover, since the political processes underlying the nexus between interventionism and trade restrictions need a quite long period of time to modify and to exert their effects on public policy, such a nexus is examined from a long-term perspective. In this regard, two issues are addressed. The first concerns the hypothesis and the consequent testing, via a battery of error-correction models, of the existence of a long-term equilibrium relationship. Specifically, if government intervention is employed before and as a substitute for trade policy, one should expect that they flow together over time to maintain a certain protective balance. Consequently, any deviation of internal protection would be corrected over time as the protectionism returns to its long-run equilibrium relationship with government intervention. The second issue regards an increasing weakening of the negative nexus between interventionism and trade policy associated with the structural decrease in low-skilled workers. Error correction models for separate time periods and yearly repeated cross-section regressions have made it possible to evidence this progressive weakening.
    Keywords: Trade liberalization, Government intervention, Long-term equilibrium, Compensation Hypothesis
    Date: 2016–01
  11. By: Linda Jakobson and Ryan Manuel
    Abstract: The growing number of actors involved in China's international activities has led to fractured authority in foreign policy decision-making. Actors vie for the attention of senior officials to promote their interests on any specific issue. As a result, decision making is often a slow process; there are multiple channels of information, and actors appeal to public opinion to support their claims. Since 2012, Xi Jinping has taken charge of all foreign policy related decision-making bodies in what appears to be an attempt to improve coordination of interest groups. A slight shift to a more personified foreign policy than during the Hu or Jiang eras has also taken place. In this paper, we describe how foreign policy decisions should be made in China according to formal rules; next, we take into account the reality of how the Chinese political system deals with China's evolving international role. We conclude by assessing the risks of fragmentation, on the one hand, and Xi's efforts to recentralise foreign policy, on the other hand.
    Keywords: Chinese foreign policy, Xi Jinping administration, foreign policy decision-making, Chinese foreign policy actors, Chinese political system, Chinese political fragmentation
    Date: 2016–02–02
  12. By: Sergei Guriev (Département d'économie)
    Abstract: In this paper Sergei Guriev focuses on the postcrisis slowdown, which mushroomed into the current crisis. The goal is to explain the origins of the slowdown, understand its political implications, and analyze its interaction with the 2014 crisis in Crimea and eastern Ukraine.
    Keywords: Russian economic cirsis; Russian economic performance; Political implications of the russian stagnation
    Date: 2015–05
  13. By: Roberto Ezcurra (Departamento de Economía-UPNA); Beatriz Manotas (Departamento de Economía-UPNA)
    Abstract: This paper investigates the empirical relationship between globalization and in-trastate con ict in a sample of 160 countries over the period 1970-2009. To that end, we use a measure of globalization that distinguishes the social and political dimensions of integration from the economic dimension, thus allowing us to adopt a broader perspective than in most of existing studies and examine the e ect of these three distinct aspects of globalization on civil violence. The results of the paper show that the degree of integration with the rest of the world contributes signi cantly to increasing the incidence of civil wars, in direct contrast to arguments which defend that globalization has the bene cial e ect of deterring internal armed con icts. In particular, the dimension of globalization that most robustly relates with internal con ict is economic integration. Our ndings are not a ected by the inclusion of additional explanatory variables in the analysis, or by changes in the de nition of civil war. Likewise, the relationship observed between the degree of integration and civil violence does not seem to be driven by countries located in the most con ictive regions in the world.
    Keywords: globalization civil war
    Date: 2015

This nep-pol issue is ©2016 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.