nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒02‒23
eleven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Incomplete information, proportional representation and strategic voting By Orestis Troumpounis; Dimitrios Xefteris
  2. Structural power in comparative political economy: perspectives from policy formulation in Latin America By Tasha Fairfield
  3. Putting the Demos Back Into the Concept of Democratic Quality By Mayne, Quinton; Geissel, Brigitte
  4. Identifying Ideology: Experimental Evidence on Anti-Americanism in Pakistan By Bursztyn, Leonardo; Callen, Michael; Ferman, Bruno; Gulzar, Saad; Hasanain, Ali; Yuchtman, Noam
  5. A Good Turn Deserves Another: Political Stability, Corruption and Corruption-Control By Asongu, Simplice; Nwachukwu, Jacinta
  6. Capital Taxation under Political Constraints By Scheuer, Florian; Wolitzky, Alexander
  7. Raising the Price of Talk: An Experimental Analysis of Transparent Leadership By Daniel Houser; David M. Levy; Kail Padgitt; Sandra J. Peart; Erte Xiao
  8. Domestic political competition and pro-cyclical import protection By James Lake; Maia K. Linask
  9. Political Factors of the Cuts and Surges in Government Spending: The Effects on Old Market Democracies and Post-Communist Countries By Sergey Zhavoronkov; Konstantin Yanovskiy; Kirill Rodionov
  10. Grabbing the 'clean slate' : The politics of the intersection of land grabbing, disasters and climate change By Uson, M.
  11. Multicandidate Elections: Aggregate Uncertainty in the Laboratory By Laurent Bouton; Micael Castanheira De Moura; A. Llorente-Saguer

  1. By: Orestis Troumpounis; Dimitrios Xefteris
    Abstract: We introduce incomplete information to a multiparty election under proportional representation: each voter knows her preferences and votes strategically to maximize her payoffs, but is uncertain about the number and the preferences of the other voters. Parties are assumed to be purely office motivated and, hence, the resulting governments are always minimum winning. In this framework we prove a) generic existence of equilibria where only two parties receive a positive fraction of the votes and therefore lead to single party governments and b) generic inexistence of equilibria that lead to coalition governments. That is, contrary to common wisdom, a proportional rule is found not to promote sincere voting and to be favorable towards single party governments. The existence of two-party equilibria that lead to single party governments is robust to parties having ideological concerns.
    Keywords: Proportional elections, strategic voters, incomplete information, Duverger's Hypothesis, Poisson games, Gamson's Law
    JEL: D72
    Date: 2015
  2. By: Tasha Fairfield
    Abstract: Structural power is a critical variable that merits more extensive and more explicit attention in Latin American political economy and in comparative politics more broadly. Assessing structural power in conjunction with its counterpart, instrumental power, can provide strong leverage for explaining variation in policy outcomes that affect business interests. However, structural power must be carefully defined and operationalized in order to capture its core attributes and nuances. This task requires wedding the concept’s “structural” underpinnings with policymakers’ perceptions and anticipated reactions. Moreover, the relationship between structural power and instrumental power must be carefully theorized. While these concepts encompass distinct channels through which business exerts influence, the two types of power may be mutually reinforcing. I argue that business interests shape policy outcomes when either their structural power or their instrumental power is strong, yet business influence will be more extensive and more consistent when structural power and instrumental power are both strong. However, electoral incentives, and more importantly, popular mobilization, can counteract business power. I illustrate these theoretical points with a case study of Chile’s 2014 tax reform proposal, a major policy initiative with important distributive consequences that received international press attention.
    Keywords: business power; taxation; Chile
    JEL: J1
    Date: 2015
  3. By: Mayne, Quinton; Geissel, Brigitte
    Abstract: In this paper, we argue that the concept of democratic quality consists of two necessary, but independently insufficient, components. The first is an opportunity-structure component, which includes the institutional and structural opportunities that allow for democratic rule. The second is a citizen component, which refers to the ways in which citizens can and do breathe life into existing institutional opportunities for democratic rule. Based on work from political theory we show how different ontologies or models of democracy place different demands on citizens as much as they do on institutions. We demonstrate the need for quality-of-democracy research to engage with work in political behavior and political psychology, from which it has traditionally been disconnected. In doing so, we provide a parsimonious analytic framework for a theory-driven selection of indicators related to three key citizen dispositions: namely, democratic commitments, political capacities, and political participation. The paper ends with a brief discussion of important implications of our argument for the future study of democratic quality.
    Date: 2016
  4. By: Bursztyn, Leonardo; Callen, Michael; Ferman, Bruno; Gulzar, Saad; Hasanain, Ali; Yuchtman, Noam
    Abstract: Identifying the role of intrinsic, ideological motivation in political behavior is confounded by agents' consequential aims and social concerns. We present results from two experiments that implement a methodology isolating Pakistani men's intrinsic motives for expressing anti-American ideology, in a context with clearly-specified financial costs, but minimal consequential or social considerations. Over one-quarter of subjects forgo around one-fifth of a day's wage to avoid anonymously checking a box indicating gratitude toward the U.S. government, thus revealing anti-Americanism. We find that ideological expression responds to financial and social incentives, and that measured ideology predicts membership in a major anti-American political party.
    Keywords: Ideology; Political Expression; Political Participation; Revealed Preference Measurement
    JEL: C90 D03 P16
    Date: 2016–02
  5. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: We build on existing literature and contemporary challenges to African development to assess the role of political stability in fighting corruption and boosting corruption-control in 53 African countries for the period 1996-2010. We postulate that on the one hand, an atmosphere of political instability should increase the confidence of impunity owing to less corruption-control. On the other hand, in the absence such impunity from corruption, political instability further fuels corruption. Our findings validate both hypotheses. Hence, contrary to a stream of the literature, we establish causal evidence of a positive (negative) nexus between political stability/no violence and corruption-control (corruption). The empirical evidence is based on Generalized Methods of Moments. The findings are robust to contemporary and non-contemporary quantile regressions. The political stability estimates are consistently significant with decreasing (increasing) magnitudes throughout the conditional distributions of corruption (corruption-control). In other words, the positive responsiveness of corruption-control to political stability is an increasing function of corruption-control while the negative responsiveness of corruption to political stability is a decreasing function of corruption. Simply put: a good turn deserves another.
    Keywords: Fragility; Corruption; Conflicts; Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2015–09
  6. By: Scheuer, Florian; Wolitzky, Alexander
    Abstract: This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough political coalition supports reform; thus, sustainable policies are those that will continue to attract enough political support in the future. We find that optimal marginal capital taxes are either progressive or U-shaped, so that savings are subsidized for the poor and/or the middle class but are taxed for the rich. U-shaped capital taxes always emerge when the salient reform threat consists of radically redistributing capital and individuals' political behavior is purely determined by economic motives.
    Keywords: Coalition Formation; Inequality; Tax Reforms; Wealth Taxation
    JEL: D3 D6 D9 E6 H2 P5
    Date: 2015–02
  7. By: Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); David M. Levy (Center for the Study of Public Choice and Department of Economics, George Mason University); Kail Padgitt (Tax Foundation); Sandra J. Peart (University of Richmond); Erte Xiao (Department of Social and Decision Sciences Carnegie Mellon University)
    Abstract: Does transparent leadership promote cooperative groups? We address this issue using a public goods experiment with exogenously selected leaders who are able to send non-binding contribution suggestions to the group. To investigate the effect of transparency in this setting we vary the ease with which a leader’s actions are known by the group. We find leaders’ suggestions encourage cooperation in all treatments, but that both leaders and their group members are more likely to follow leaders’ recommendations when institutions are transparent so that non-leaders can easily see what the leader does. Consequently, transparency leads to significantly more cooperation, higher group earnings and reduced variation in contributions among group members. Length: 46
    Keywords: experimental economics
    Date: 2014–06
  8. By: James Lake (Southern Methodist University); Maia K. Linask (University of Richmond)
    Abstract: Governments, especially in developing countries, routinely practice binding overhang (i.e. setting applied tariffs below binding WTO commitments) and frequently move applied tariffs for given products up and down over the business cycle. Moreover, applied tariffs are pro-cyclical in developing countries. We explain this phenomenon using a dynamic theory of lobbying between domestic interest groups. Applied tariffs are pro-cyclical when high-tariff interests (e.g. import-competing industries) capture the government: these groups concede lower tariffs to low-tariff interest groups (e.g. exporting firms or firms using imported inputs) during recessions because recessions lower the opportunity cost of lobbying and thereby generate stronger lobbying threats.
    Keywords: Binding overhang, lobbying, tariff bindings, applied tariffs
    JEL: C73 D72 F13
    Date: 2015–02
  9. By: Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Konstantin Yanovskiy (Gaidar Institute for Economic Policy); Kirill Rodionov (Financial research Institute, RF Finance Ministry)
    Abstract: The paper is based on the comparative analysis of the episodes of Surges and cuts in spending (old and some new market democracies). We tried to explain surges and cuts by some broadly discussed in the literature factors affecting governments' abilities to balance the budget (such as territorial separatism, the long run domination of the left- or right-wing parties; left or right-wing government etc). Much attention is paid to the phenomenon of universal suffrage, which caused rise to power modern left-wing parties and strong special interest groups within the bureaucracy. Our analysis reaches the following conclusions: First, most political factors are time and case sensitive; however, those factors that depend on universal suffrage consistent throughout all periods and countries. Second, a severe crisis usually opens the window of opportunity that is necessary to cut public expenditure, while the favorable economic conditions stimulate spikes in government spending. Third, the most effective way to curb the instability of public finance is to form a political coalition of nationalists and free market supporters.
    Keywords: Separatism, political competition, budget deficit, universal suffrage, window of opportunity
    JEL: D72 D78 H11 H62 N40
    Date: 2015
  10. By: Uson, M.
    Abstract: Land grabs in the wake of a disaster are nothing new. However this phenomenon gains certain particularities and interest when it happens within the current context of climate change policy initiatives and the global land rush. This nexus produces a new set of political processes containing new actors and alliances, legitimizations, and mechanisms of dispossession that set off a different pace for land grabs. This study explores this nexus which has the potential to swiftly reboot spatial, institutional and political land arrangements in poor communities on a large scale, globally. The gap in the scholarly literature found in the disaster – global land rush – climate change nexus was examined from the perspective of a local community devastated by the 2013 super typhoon Haiyan in central Philippines. Using a political economy lens, the study revealed that along with the dynamics of the structural and institutional environment, the interaction between the pro-reform social and state actors determines the nature, pace, extent and trajectory of the land struggle. The ‘state-society interactive’ approach highlights the political agency of both the state and social actors, particularly how they exercise their autonomy and capacity, and maximize channels within and external to the state to advance their claim. How the interplay of different institutions of climate change mitigation, land grabs and disasters interacts with the political processes of current land grabs is the focus of this study.
    Keywords: land grabs, climate change, disasters, Philippines, small islands
    Date: 2015–02–11
  11. By: Laurent Bouton; Micael Castanheira De Moura; A. Llorente-Saguer

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