nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒06‒18
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Liberals, Socialists, and pork-barrel politics in Greece By Psycharis, Yannis; Rodríguez-Pose, Andrés; Tselios, Vassilis
  2. Immigration to the U.S.: A problem for the Republicans or the Democrats? By A.-M. Mayda; G. Peri; W. Steingress
  3. Nash on a rotary : two theorems with implications for electoral politics By Basu,Kaushik; Mitra,Tapan
  4. The political economy of energy innovation By Shouro Dasgupta,; Enrica De Cian; Elena Verdolini
  5. The Political Economy of Public Sector Absence: Experimental Evidence from Pakistan By Callen, Michael; Gulzar, Saad; Hasanain, Ali; Khan, Muhammad Yasir
  6. Shades of red and blue: Political ideology and sustainable development By Toke S Aidt; Vitor Castro; Rodrigo Martins;
  7. The Political Economy of Underfunded Municipal Pension Plans By Jeffrey Brinkman; Daniele Coen-Pirani; Holger Sieg
  8. Political Regimes and Stock Market Performance in Africa By Simplice Asongu; Jacinta C. Nwachukwu
  9. Why parliament now decides on war: tracing the growth of the parliamentary prerogative through Syria, Libya and Iraq By James Strong
  10. Strategic behavior of private entrepreneurs in China: Collective action, representative claims, and connective action By Heberer, Thomas
  11. Essays in political economy and resource economic : A macroeconomic approach By Rodriguez Acosta, Mauricio
  12. Global trends in the political economy of smart grids: A tailored perspective on .smart. for grids in transition By Cherrelle Eid; Rudi Hakvoort; Martin de Jong1
  13. Climate change policy and power sector reform in Mexico under the .golden age of gas. By José Maria Valenzuela; Isabel Studer
  14. The political economy of clean energy transitions at sub-national level Understanding the role of international climate regimes in energy policy in two Brazilian states By Jose de Oliveira; Celio Andrade
  15. How Brexit affects European Union power distribution By László Á. Kóczy
  16. Trade Policy of South-East Asia By Volovik, Nadezhda

  1. By: Psycharis, Yannis; Rodríguez-Pose, Andrés; Tselios, Vassilis
    Abstract: This paper analyses the role of pork-barrel politics in the allocation of public investment expenditures in Greece. It proposes a model which explicitly relates the allocation of public investment to electoral results using a unique dataset covering the period from the restoration of democracy in 1974 until 2009, just before the Great Recession that radically transformed the political panorama of the country. The analysis includes ten legislative periods marked by governments of the two parties that dominated the political arena in Greece: the Liberal and the Socialist Party. The results show that Socialist and re-elected governments applied more expansionary fiscal policies relative to Liberals. The two main parties also used different tactics when it came to pork-barrelling: while the Socialists when in government rewarded/groomed their electoral fiefs, the Liberals invested in areas controlled by the opposition to win over new votes or seats.
    Keywords: elections; Greece; pork-barrel politics; Public investment; regional policy
    JEL: H54 P16 R1 R12 R42 R58
    Date: 2016–06
  2. By: A.-M. Mayda; G. Peri; W. Steingress
    Abstract: This article studies the impact of immigration on the share of votes to the Republican and Democratic Party in US elections between 1994 and 2012. Our analysis is based on the variation across states and years and addresses the issue of endogeneity of immigrant flows using a set of instruments that leverage distance from country of origin and historical settlements of foreign-born to obtain a proxy for supply-driven immigration flows. Pooling all elections, immigration to the U.S. had a negative average impact on the vote share to the Republican Party. This is consistent with the typical view of political analysts in the U.S. However, this average effect – mainly detectable in House elections – has two components. When the growth of the immigrant population is due to an increase in naturalized migrants, the effect on Republican vote is clearly negative. Yet, when the share of non-citizen migrants in the population increases and their share in the state population is large – making immigration a salient policy issue – the impact on the Republican vote share is positive. These results are consistent with stronger voting preferences of naturalized immigrants for the Democratic Party relative to native voters, but also with native voters' political preferences shifting towards the Republican Party in places with high immigration of non-citizens. In our estimates, the second effect is only significant when immigrants are a large portion of the local population.
    Keywords: Elections, Immigration, Republican Party, Citizenship.
    JEL: F22 J61
    Date: 2016
  3. By: Basu,Kaushik; Mitra,Tapan
    Abstract: The paper provides a complete characterization of Nash equilibria for games in which n candidates choose a strategy in the form of a platform, each from a circle of feasible platforms, with the aim of maximizing the stretch of the circle from where the candidate?s platform will receive support from the voters. Using this characterization, it is shown that if the sum of all players? payoffs is 1, the Nash equilibrium payoff of each player in an arbitrary Nash equilibrium must be restricted to the interval [1/2(n ? 1), 2/(n + 1)]. This implies that in an election with four candidates, a candidate who is attracting less than one-sixth of the voters can do better by changing his or her strategy.
    Keywords: ICT Economics,Economic Theory&Research,Common Property Resource Development,Coastal and Marine Environment,Disease Control&Prevention
    Date: 2016–06–08
  4. By: Shouro Dasgupta,; Enrica De Cian; Elena Verdolini
    Abstract: This paper empirically investigates the effects of environmental policy, institutions, political orientation, and lobbying on energy innovation and finds that they significantly affect the incentives to innovate and create cleaner energy efficient technologies. We conclude that political economy factors may act as barriers even in the presence of stringent environmental policy, implying that, to move towards a greener economy, countries should combine environmental policy with a general strengthening of institutional quality, consider the influence of government's political orientation on environmental policies, and the implications of the size of energy intensive sectors in the economy.
    Keywords: energy innovation, environmental policy, patents, political economy
    Date: 2016
  5. By: Callen, Michael; Gulzar, Saad; Hasanain, Ali; Khan, Muhammad Yasir
    Abstract: This paper presents evidence that one cause of absenteeism in the public sector is that government jobs are handed out as patronage. First, politicians routinely interfere when bureaucrats sanction absent doctors, and doctors are more absent in uncompetitive constituencies and when connected to politicians. Next, we find that the effects of two experimental interventions to address absence are attenuated in uncompetitive constituencies and for connected doctors. The first is a smartphone monitoring technology that nearly doubles inspection rates, and the second, representing the first experiment on the effects of providing data to policymakers, channels real time information on doctor absence.
    Keywords: Absence; Corruption; Data in Policymaking; Information Communication Technology; patronage; Political Competition; Political Connections
    JEL: D72 D73
    Date: 2016–06
  6. By: Toke S Aidt; Vitor Castro; Rodrigo Martins;
    Abstract: We study the effect of political ideology on sustainable development, measured as investment in genuine wealth, in a dynamic panel of 79 countries between 1981 and 2013. We find that a switch from a left-wing or centrist government to a right-wing government has a robust positive and statistically significant effect on investment in genuine wealth. We find no evidence of opportunistic cycles in these investments.
    Keywords: Sustainable development, Political ideology; Genuine investment
    JEL: C23 D72 I31 O15
    Date: 2016–06–03
  7. By: Jeffrey Brinkman; Daniele Coen-Pirani; Holger Sieg
    Abstract: This paper analyzes the determinants of underfunding of local government's pension funds using a politico-economic overlapping generations model. We show that a binding downpayment constraint in the housing market dampens capitalization of future taxes into current land prices. Thus, a local government's pension funding policy matters for land prices and the utility of young households. Underfunding arises in equilibrium if the pension funding policy is set by the old generation. Young households instead favor a policy of full funding. Empirical results based on cross-city comparisons in the magnitude of unfunded liabilities are consistent with the predictions of the model.
    JEL: E6 H3 H7 R5
    Date: 2016–06
  8. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University)
    Abstract: This paper assesses the effect of political institutions on stock market performance in 14 African countries for which stock market data is available for the period 1990-2010. The estimation technique used is a Two-Stage-Least Squares Instrumental Variable methodology. Political regime channels of democracy, polity and autocracy are instrumented with legal-origins, religious-legacies, income-levels and press-freedom qualities to account for stock market performance dynamics of capitalization, value traded, turnover and number of listed companies. The findings show that countries with democratic regimes enjoy higher levels of financial market development compared to their counterparts with autocratic inclinations. As a policy implication, the role of sound political institutions has important effects on both the degree of competition for public office and the quality of public offices that favour stock market development on the African continent.
    Keywords: Financial Markets; Government Policy; Development
    JEL: G10 G18 G28 P16 P43
    Date: 2016–01
  9. By: James Strong
    Abstract: Research Highlights and Abstract: Precedents set in debates over Iraq, Libya and Syria established a new parliamentary prerogative, that MPs must vote before military action can legitimately be launched. Tony Blair conceded the Iraq vote to shore up Labour back-bench support, because he was convinced he would win, and because he was unwilling to change course regardless. David Cameron allowed a vote on Libya because he believed parliament should have a say, because UN support meant he was certain to win, and to gain plaudits for not being Blair. Cameron then had to allow a vote on Syria despite its greater political sensitivity. He mishandled the vote, and lost, and felt constrained to pull out of mooted military action. Collectively these three precedents comprise a new constitutional convention, which will constrain the executive in future whether the law is formally changed or not. Parliament now decides when Britain goes to war. The vote against military intervention in Syria on 29 August 2013 upheld a new parliamentary prerogative that gradually developed through debates over earlier actions in Iraq and Libya. While the academic community and much of the British political elite continue to focus on the free rein granted to prime ministers by the historic royal prerogative, this article argues it is critically constrained by its parliamentary counterpart. It traces the way political conditions, individual policymaker preferences, and the conventional nature of the unwritten British constitution allowed parliament to insert itself into the policymaking process without the consent of successive governments. It concludes that MPs will in future expect the right to vote on proposals to deploy the armed forces overseas, and that the legitimacy of military action will depend on the government winning such a vote.
    Keywords: foreign policy; military action; parliament; royal prerogative
    JEL: P33
    Date: 2015
  10. By: Heberer, Thomas
    Abstract: This paper starts out from James C. Scott's seminal book "Weapons of the Weak" dealing with everyday forms of collective action by private entrepreneurs. It raises the question by what kind of formal and informal mechanisms Chinese entrepreneurs exert political influence in order to protect or enforce their interests. The author explored two aspects: First, the way in which private entrepreneurs in China act in a collective manner, i. e. as a strategic group; and second, how collective action by private entrepreneurs is altering both political structures and the institutional setting of the political system and what effect this is having on stabilization of the system as a whole. In addition, this paper examines patterns of formal and informal representation of private entrepreneurs in Chinese politics. The author contends that as Chinese entrepreneurs increasingly turn to patterns of collective action they are developing into a coherent group with a broad range of strategies aimed at safeguarding their interests, and that in so doing they are playing a salient role as system stabilizers.
    Keywords: private entrepreneurs as strategic groups,political strategies and corporate political action,collective action,connective action,lobbying,weapons of the rich,everyday forms of policy influence
    Date: 2016
  11. By: Rodriguez Acosta, Mauricio (Tilburg University, School of Economics and Management)
    Abstract: This dissertation consists of four chapters in Political Economy and Resource Economics from a macroeconomic perspective. This collection of works emphasizes the endogenous nature of institutions and their importance for economic development. The four chapters revolve around two central questions: 1. Why do inefficient institutions emerge and persist over time? And, 2. What are the dynamic consequences of inefficient institutions? The first two chapters investigate these two central questions with the use of political economy models in which agents have unequal access to economic resources and political power. The first chapter focuses on the endogenous emergence of public law enforcement during the process of economic development, and the role of law enforcement in the protection of property rights. The second chapter concentrates on the cohesiveness of institutions, and its effect on the provision of productive public services and the inter-temporal redistribution of political power and economic rents. The last two chapters of the dissertation direct their attention to the consequences of imperfectly protected---yet evolving---property rights, on the dynamic management of non-renewable natural resources. The third chapter investigates how the imperfect protection of property rights, over the remaining stock of a non-renewable resource and the revenues from exploiting it, affect the pace of depletion of the resource. The last chapter analyzes the effects of a mitigable risk of expropriation on the pace of depletion of a non-renewable resource and the investment in capacity to exploit it.
    Date: 2016
  12. By: Cherrelle Eid; Rudi Hakvoort; Martin de Jong1
    Abstract: The global transition towards sustainable, secure, and affordable electricity supply is driving changes in the consumption, production, and transportation of electricity. This paper shows the different policy aims that are promoted with smart grids in Europe, the United States, and China. In all cases, the developments are motivated by the possible improvements in reliability and affordability yielded by smart grids, while sustainability of the electricity sector is not a central motivation.
    Keywords: electricity, regulation, innovation, policy, smart systems.
    Date: 2016
  13. By: José Maria Valenzuela; Isabel Studer
    Abstract: Mexico.s low-carbon technology perspectives show lack of coherence with the rising ambition in climate change commitments, for which Mexico is internationally praised. The comparison of two recent energy reforms, corresponding to two administrations, explains this lack of coherence by, on the one hand, the permanence of a strong climate institutional framework devised as a means to increase energy security and, on the other hand, the political commitment to reduce electricity tariffs through the access to low-priced gas in North America. This paper underscores the political economy trade-offs between the need for a strong climate commitment that provides a stable long-term energy transition pathway and the political and economic short-term benefits derived from low electricity tariffs.
    Keywords: power sector, climate change, renewable energy, natural gas, market reform, energy transition
    Date: 2016
  14. By: Jose de Oliveira; Celio Andrade
    Abstract: This paper examines the political economy aspects, particularly the influence of the Clean Development Mechanism, in clean energy and climate change policies in the states of Bahia and Rio Grande do Sul in Brazil. The different mechanisms for responding to climate change are financing opportunities in some of the .green. industries, but the results show a gap between the initial objectives of global policies and their results.The research identified pitfalls and opportunities for new strategies and mechanisms for boosting clean energy in Brazil and the role that the Clean Development Mechanism and future mechanisms can play in the political economy of clean energy transitions. The paper concludes with a discussion on the lessons learned from experience of the Clean Development Mechanism and its implications for the future of the Paris Agreement.
    Keywords: Climatic changes, Renewable energy sources, Sustainable development
    Date: 2016
  15. By: László Á. Kóczy (Óbuda University)
    Abstract: The possible exit of the United Kingdom from the European Union will have profound economic and political effects. Here we look at a particular aspect, the power distribution in the Council of the Euro- pean Union. Since the Lisbon treaty the exit does not require new negotiations as the success of a voting initiative only depends on the number and total population of the supporting member states. Using the Shapley-Shubik power index we calculate the member states' pow- ers with and without the United Kingdom and update earlier power forecasts using the Eurostat's latest population projections. There is a remarkably sharp relation between population size and the change in power: Brexit increases the largest members', while decreases the smallest ones' powers.
    Keywords: European Union, Council of the European Union, qualifed majority voting, power index, a priori voting power, demographics. JEL Codes: D72, D78, D62
    Date: 2016
  16. By: Volovik, Nadezhda (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Gaidar Institute for Economic Policy)
    Abstract: For Russia, the development of relations with the Association of Southeast Asian Nations (ASEAN) has a special political and economic importance. They are designed to help create favorable conditions for the security of Russia and its most important communications, and for the modernization of the whole region of Eastern Siberia and the Far East. One of the issues of further development of relations of the Russian Federation with the ASEAN countries is that in the business of Russia and the Association of the communities do not have sufficient information about each other, thus allowing the participants of foreign economic activity of relevant information in order to promote Russian exports and investment projects. This paper presents an overview of the foreign trade and trade policy in South-East Asia.
    Keywords: ASEAN, Russia, Eastern Siberia, Far East, trade policy
    Date: 2016–04–14

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