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on Positive Political Economics |
| By: | Vítor Castro (Faculty of Economics, University of Coimbra and Economic Policies Research Unit (NIPE)); Rodrigo Martins (Faculty of Economics, University of Coimbra and Group for Monetary and Fiscal Studies (GEMF)) |
| Abstract: | This paper analyses the impact of elections on the dynamics of human development in a panel of 82 countries over the period 1980-2013. The incidence of partisan and political support effects is also taken into account. A GMM estimator is employed in the empirical analysis and the results point out to the presence of an electoral cycle in the growth rate of human development. Majority governments also influence it, but no clear evidence is found regarding partisan effects. The electoral cycles have proved to be stronger in non-OECD countries, in countries with less frequent elections, with lower levels of income and human development, in presidential and non-plurality systems and in proportional representation regimes. They have also become more intense in this millennium. |
| Keywords: | Human development; Political cycles; Elections; Panel data models. |
| JEL: | C33 D72 I31 O15 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:6/2016&r=pol |
| By: | Rafael Hortala-Vallve; Hannes Mueller |
| Abstract: | We present a formal model of intra-party politics to explain candidate selection within political parties. We think of parties as heterogeneous groups of individuals who aim to implement a set of policies but who differ in their priorities. When party heterogeneity is too great, parties are in danger of splitting into smaller yet more homogeneous political groups. In this context we argue that primaries can have a unifying role if the party elite cannot commit to policy concessions. Our model shows how three factors interact to create incentives for the adoption of primary elections, namely (1) the alignment in the preferred policies of various factions within a party, (2) the relative weight of each of these factions and (3) the electoral system. We discuss the existing empirical literature and demonstrate how existing studies can be improved in light of our theoretical predictions to provide a new, structured perspective on the adoption of primary elections. |
| Keywords: | political parties; primaries; candidate selection |
| JEL: | D71 D72 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62019&r=pol |
| By: | Maria Chiara Morandini (Centre d'Economie de la Sorbonne) |
| Abstract: | This paper presents an explanatory analysis of the political economy of recent labour market reforms recently implemented in Italy. Analysing preferences for a general reduction in employment protection through 2011-13 ITANES survey data, results are partially in line with the insider-outsider theory: self-employed, retired people, managers, craft business and shop owners are in favour of such institutional change as are retired that are not concerned by this kind of reform. Support from “outsiders”, unemployed and atypical workers did not strongly emerge. Ideologically, positive opinions are widespread among right-wing voters whilst people feeling chose to trade unions oppose it. Geographically, consensus is greather in the industrialised North-East of the country. Comparing our results with findings on voting behaviour in 2013, we advance the hypothesis that the current incumbents' political strategy is not as paradoxical as it seems. At odds with the idea of socialist parties defending “insiders” unionised workers and in line with a generalised detachment between the working class and socialist parties, both the main leftist and centrist parties in the ruling coalition are in fact gaining consensus among the social groups that are the most favourable to labour market flexibilisation, making these policy consistent with an attempt to please these constituencies |
| Keywords: | labour market reforms; public preferences; survey analysis; italian capitalism |
| JEL: | P16 J08 D72 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:16023&r=pol |
| By: | Che, Yi; Lu, Yi; Pierce, Justin R.; Schott, Peter K.; Tao, Zhigang |
| Abstract: | This paper examines the impact of trade liberalization on U.S. Congressional elections. We find that U.S. counties subject to greater competition from China via a change in U.S. trade policy exhibit relative increases in turnout, the share of votes cast for Democrats and the probability that the county is represented by a Democrat. We find that these changes are consistent with Democrats in office being more likely than Republicans to support legislation limiting import competition or favoring economic assistance. |
| Keywords: | China ; Voting ; Elections ; Import Competition ; Normal Trade Relations ; World Trade Organization |
| JEL: | F13 F16 D72 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2016-39&r=pol |
| By: | Subham Kailthya (Department of Economics, University of Reading); Uma Kambhampati (Department of Economics, University of Reading) |
| Abstract: | The public provision of healthcare is common in democracies. Yet very little is known as to how political-economic factors are related to healthcare service delivery. In this paper, we examine the role of electoral participation and political competition in affecting healthcare service delivery at the sub-national level in India. However, examining this issue is less than straightforward for many reasons: first, systematic biases in health perceptions and priming of the electorate to ambient health means that existing health conditions affect expectations of the electorate from the government regarding healthcare provision; secondly, elected leaders favor providing more visible public goods vis-a-vis less visible ones to increase their chances of electoral success. And third, weak enforcement mechanisms perpetuate conditions conducive to rent-seeking. All these factors, create conditions for the presence of multiple equilibria in public provision. A least squares approach that focuses on the conditional mean alone misses this important point. We therefore employ a quantile regression method that examines the impact of political-economic factors at different points along the conditional distribution to yield a more comprehensive picture. We find signiffcant differences in the impact of political-economic variables along the conditional distributions of healthcare access and system capacity variables. Our results are also consistent with the 'visibility-effect' hypothesis in public provision: elected leaders respond differently to political-market characteristics when the public good is more, rather than less, visible. We find that health care access improves with greater electoral participation and diminishes with political competition whereas, it is the opposite for system capacity. The combined effect however limits access and increases provision of system capacity. |
| Keywords: | local government spending, healthcare, quantile regressions, India |
| Date: | 2016–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2016-05&r=pol |
| By: | Maria Chiaria Morandini (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This paper presents an explanatory analysis of the political economy of recent labour market reforms recently implemented in Italy. Analysing preferences for a general reduction in employment protection through 2011-13 ITANES survey data, results are partially in line with the insider-outsider theory: self-employed, retired people, managers, craft business and shop owners are in favour of such institutional change as are retired that are not concerned by this kind of reform. Support from “outsiders”, unemployed and atypical workers did not strongly emerge. Ideologically, positive opinions are widespread among right-wing voters whilst people feeling chose to trade unions oppose it. Geographically, consensus is greather in the industrialised North-East of the country. Comparing our results with findings on voting behaviour in 2013, we advance the hypothesis that the current incumbents' political strategy is not as paradoxical as it seems. At odds with the idea of socialist parties defending “insiders” unionised workers and in line with a generalised detachment between the working class and socialist parties, both the main leftist and centrist parties in the ruling coalition are in fact gaining consensus among the social groups that are the most favourable to labour market flexibilisation, making these policy consistent with an attempt to please these constituencies. |
| Keywords: | labour market reforms,public preferences,survey analysis,italian capitalism |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01306097&r=pol |
| By: | Galasso, Vincenzo; Nannicini, Tommaso |
| Abstract: | This paper investigates the differential response of male and female voters to compet-itive persuasion in political campaigns. We implemented a survey experiment during the (mixed gender) electoral race for mayor in Milan (2011), and a field experiment during the (same gender) electoral race for mayor in Cava de' Tirreni (2015). In both cases, a sample of eligible voters was randomly divided into three groups. Two were exposed to either a positive or a negative campaign by one of the opponents. The third-control-group received no electoral information. In Milan, the campaigns were administered online and consisted of a bundle of advertising tools (videos, texts, slogans). In Cava de' Tirreni, we implemented a large scale door-to-door campaign in collaboration with one of the candidates, randomizing positive vs. negative messages. In both experiments, stark gender differences emerge. Females vote more for the opponent and less for the incumbent when they are exposed to the opponent's positive campaign. Exactly the opposite occurs for males. These gender differences cannot be accounted for by gender identification with the candidate, ideology, or other observable attributes of the voters. |
| Keywords: | competitive persuasion.; gender di erences; political campaigns; randomized controlled trials |
| JEL: | D72 J16 M37 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11238&r=pol |
| By: | Stefan Eichler; T. Plaga |
| Abstract: | This paper analyzes the link between political factors and sovereign bond holdings of US investors in 60 countries over the 2003-2013 period. We find that, in general, US investors hold more bonds in countries with few political constraints on the government. Moreover, US investors respond to increased uncertainty around major elections by reducing government bond holdings. These effects are particularly significant in democratic regimes and countries with sound institutions, which enable effective implementation of fiscal consolidation measures or economic reforms. |
| Keywords: | government bond portfolio; political factors; Treasury International Capital data; PPML, |
| JEL: | G11 G15 G18 H11 H63 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:iwh:dispap:14-16&r=pol |
| By: | Qianqian, Shao; Maarten, J. Punt; Justus, Wesseler |
| Abstract: | The EU and the US launched negotiations on a Transatlantic Trade and Investment Partnership (TTIP) in July 2013. Among the TTIP aims, there are negotiable terms under which the EU would import more genetically modified (GM) products and change its labeling regulations on GM Organisms (GMOs). This paper discusses a trade agreement of agricultural products between two countries, with different GM regulatory regimes from a political economy perspective. We find the negotiation equilibrium of the GMO Trade Agreement and compare it with a stricter trade policy. We find that if the trade agreement leads to a lenient GM regulation, lobbying intensifies. However, this effect is moderated if there are exports of non-GM products. |
| Keywords: | Political Economy, GMOs, international trade, International Relations/Trade, Political Economy, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212687&r=pol |
| By: | İriş, Doruk; Lee, Jungmin; Tavoni, Alessandro |
| Abstract: | The provision of global public goods, such as climate change mitigation and managing fisheries to avoid overharvesting, requires the coordination of national contributions. The contributions are managed by elected governments who, in turn, are subject to public pressure on the matter. In an experimental setting, we randomly assign subjects into four teams, and ask them to elect a delegate by a secret vote. The elected delegates repeatedly play a one shot public goods game in which the aim is to avoid losses that can ensue if the sum of their contributions falls short of a threshold. Earnings are split evenly among the team members, including the delegate. We find that delegation causes a small reduction in the group contributions. Public pressure, in the form of teammates’ messages to their delegate, has a significant negative effect on contributions, even though the messages are designed to be payoff-inconsequential (i.e., cheap talk). The reason for the latter finding is that delegates tend to focus on the least ambitious suggestion. In other words, they focus on the lower of the two public good contributions preferred by their teammates. This finding is consistent with the prediction of our model, a modified version of regret theory. |
| Keywords: | Delegation, Cooperation, Threshold Public Goods Game, Climate Experiment, Regret Theory, Research Methods/ Statistical Methods, C72, C92, D81, H4, Q54, |
| Date: | 2016–04–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:feemet:234307&r=pol |
| By: | Floris T. Zoutman (NHH Norwegian School of Economics, Norway); Bas Jacobs (Erasmus University Rotterdam, the Netherlands); Egbert L. W. Jongen (CPB Netherlands Bureau for Economic Policy Analysis, The Hague; and Leiden University, the Netherlands) |
| Abstract: | The Netherlands has a unique tradition in which all major Dutch political parties provide CPB Netherlands Bureau for Economic Policy Analysis with highly detailed proposals for the tax-benefit system in every national election. This information allows us to quantitatively measure the redistributive preferences of political parties. For each political party we calculate social welfare weights by income level using the inverse optimal-tax method. We find that all political parties roughly give a higher social welfare weight to the poor than to the rich. Furthermore, left-wing parties attach higher social welfare weights to the poor and lower social welfare weights to the rich than right-wing parties do. However, we also discover two anomalies. First, all political parties give a much higher social welfare weight to middle incomes than to the working and non-working poor. Second, all Dutch political parties attach a slightly negative social welfare weight to the rich by setting top rates beyond the revenue-maximizing 'Laffer' rate. Finally, we detect a strong political status quo, since social welfare weights of all political parties hardly deviate from the welfare weights that are implied by the pre-existing tax-benefit system. We argue that political-economy considerations are key in understanding the political status quo and why middle-income groups are able to lower their tax burdens at the expense of both the low- and high-income groups. |
| Keywords: | Inverse optimal-tax method; revealed social preferences; political parties; optimal taxation; income redistribution |
| JEL: | C63 D63 H21 |
| Date: | 2016–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160032&r=pol |
| By: | Gulati, Ashok; Saini, Shweta |
| Keywords: | Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Development, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212713&r=pol |
| By: | Dmitry Ryvkin (Department of Economics, Florida State University); Danila Serra (Department of Economics, Southern Methodist University) |
| Abstract: | We test the effectiveness of an anti-corruption policy that is often discussed among practitioners: an increase in competition among officials providing the same good or service. In particular, we investigate whether an increase in overlapping jurisdictions reduces extortionary corruption, i.e., bribe demands for the provision of services that clients are entitled to receive. We overcome measurement and identification problems by addressing our research question in the laboratory. We conduct an extortionary bribery experiment where clients apply for a license from one of many available offices and officials can demand a bribe on top of the license fee. By manipulating the number of available offices and the size of search costs we are able to assess whether increasing competition reduces extortionary corruption. We find that, if search costs are unaffected, increasing the number of providers may actually increase corruption. In particular, our results show that increasing competition has either no eeffect (if search costs are high) or a positive effect (if search costs are low) on bribe demands. We compare our findings to those obtained in a standard market environment and find evidence of different search behaviors in the two settings. |
| Keywords: | competition, extortionary corruption, experiment |
| JEL: | D73 D49 C91 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2015_10_01&r=pol |
| By: | Yu, Wusheng; Bandara, Jayatilleke S |
| Abstract: | This study evaluates the fiscal and welfare costs of India’s food policy during the 2007-08 global food crisis. India’s domestic grain price stabilization through consumer and producer subsidies and export restrictions is shown to have caused huge fiscal costs and equally large welfare costs, an outcome that is almost always the worst as compared to alternative policy mixes examined. While the most efficient and cost-effective alternatives may not be feasible due to political economy considerations, we argue that there exist some feasible and superior “middle-ground” policy mixes featuring partial relaxations of domestic subsidizations and/or less restrictive border policies. |
| Keywords: | India, food security policy, trade policy, agriculture subsidy, computable general equilibrium, Crop Production/Industries, Food Security and Poverty, International Development, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:211863&r=pol |
| By: | Luis Felipe Zegarra (CENTRUM Católica Graduate Business School) |
| Abstract: | This article analyzes the effects of usury laws in the credit market of Lima in 1825-49. By relying on a sample of more than 1,100 notarized records, the article shows that the repeal of colonial anti-usury laws in early 1833 led to the increase in interest rates and to a greater access to credit. Furthermore, lenders made loans with greater maturities after the repeal of usury laws. |
| Keywords: | Mortgage credit, usury laws, interest rates, access to credit, Latin America |
| JEL: | N2 N26 N46 K1 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:2016-065&r=pol |
| By: | Matthias Morys |
| Abstract: | We add a historical and regional dimension to the debate on the Greek debt crisis. Analysing Greece, Romania, Serbia/Yugoslavia and Bulgaria from political independence to WW II, we find surprising parallels to the present: repeated cycles of entry to and exit from monetary unions, government debt build-up and default, and financial supervision by West European countries. Gold standard membership was more short-lived than in any other part of Europe due to fiscal dominance. Granger causality tests and money growth accounting show that the prevailing pattern of fiscal dominance was only broken under international financial control, when strict conditionality scaled back the treasury’s influence; only then were central banks able to conduct a rule-bound monetary policy and stabilize their exchange-rates. The long-run record of Greece suggests that the perennial economic and political objective of monetary union membership can only be achieved if both monetary and fiscal policy is effectively delegated abroad. |
| Keywords: | fiscal dominance, gold standard, financial supervision, South-East Europe |
| JEL: | N13 N14 N23 N24 E63 F34 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:16/05&r=pol |