nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒06‒25
eighteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Liberals, Socialists, and pork-barrel politics in Greece. By Andrés Rodríguez-Pose; Yannis Psycharis; Vassilis Tselios
  2. Politico-Economic Regimes And Attitudes: Female Workers Under State-Socialism By Pamela Campa; Michel Serafinelli
  3. Affirmative action policy in developing countries Lessons learned and a way forward By Elizabeth Kaletski; Nishith Prakash
  4. Intergenerational Correlations of Extreme Right-Wing Party Preferences and Attitudes toward Immigration By Alexandra Avdeenko; Thomas Siedler
  5. Shades of red and blue: Political ideology and sustainable development By Toke S. Aidt; Vítor Castro; Rodrigo Martins
  6. Oil discoveries and democracy By Tania Masi; Roberto Ricciuti
  7. Does the Median Voter or Special Interests Determine State Highway Expenditures? Recent Evidence By Joshua Hall; Shree Baba Pokharel
  8. Does 'Being Chosen' to Lead Induce Non-Selfish Behavior? Experimental Evidence on Reciprocity By Drazen, Allan; Ozbay, Erkut
  9. Towards a political economy framework for wind power : Does China break the mould? By Michael Davidson; Fredrich Kahrl; Valerie Karplus
  10. Growth and Extremism By Markus Brueckner; Hans Peter Gruener
  11. Institutional differences across resource-based economies By Utku Teksoz; Katerina Kalcheva
  12. Internal Violence Index: a composite and quantitative measure of internal violence and crime in developing countries By Sosso FEINDOUNO; Michaël GOUJON; Laurent WAGNER
  13. Decisiveness, Peace, and Inequality in Games of Conflict By Juan A. Lacomba; Francisco M. Lagos; Ernesto Reuben; Frans Van Winden
  14. War and peace: why is political stability pivotal for economic growth of OIC countries? By Uddin, Md Akther; Masih, Mansur
  15. Information and Preferences for Public Spending: Evidence from Representative Survey Experiments By Lergetporer, Philipp; Schwerdt, Guido; Werner, Katharina; Woessmann, Ludger
  16. Grand corruption in Burundi: a collective action problem which poses major challenges for governance reforms By Rufyikiri, Gervais
  17. Endogenous Competence and a Limit to the Condorcet Jury Theorem By Bryan McCannon; Paul Walker
  18. Employment Status and Support for Wartime Violence: Evidence from the Iraq War By Andrew C. Shaver

  1. By: Andrés Rodríguez-Pose; Yannis Psycharis; Vassilis Tselios
    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: Public investment, pork-barrel politics, elections, regional policy, Greece.
    JEL: P16 R1 R12 R42 R58 H54
    Date: 2016–06
  2. By: Pamela Campa; Michel Serafinelli
    Abstract: This paper investigates the extent to which attitudes are affected by political regimes and government policies. We focus on female attitudes toward work and gender-role attitudes in the population at large, which have been shown to have significant effects on labor market outcomes. We exploit the imposition of state-socialist regimes across Central and Eastern Europe, and their efforts to promote womenÕs economic inclusion, for both instrumental and ideological reasons, presenting evidence from two different datasets. First, we take advantage of the German partition into East and West after 1945 and unique access to restricted information on place of residence to implement a spatial regression discontinuity design. We find more positive attitudes toward work in the sample of East German women. We also find evidence that increased female access to higher education and fulltime employment, arguably two of the very few positive aspects of living under state-socialism, may have served as channels for regime influence. Second, we employ a difference-in-differences strategy that compares attitudes formed in Central and Eastern European countries (CEECs) and Western European Countries (WECs), before and after the imposition of state socialism in CEECs. Gender-role attitudes formed in CEECs during the state socialist period appear to be significantly less traditional than those formed in WECs.
    Keywords: gender-role attitudes, state-socialism, Central and Eastern Europe
    Date: 2016–06
  3. By: Elizabeth Kaletski; Nishith Prakash
    Abstract: There are several countries who have responded to concerns regarding historically disadvantaged groups, particularly ethnic and racial minorities and women, with not only anti-discrimination legislation, but also affirmative action policies. Although these policies are seemingly well intentioned, there continues to be little consensus about their actual impact.This paper seeks to examine the current state of the literature on one specific affirmative action policy, political reservation in India. The Indian constitution mandates seats be reserved at various levels of government for political representation of Scheduled Castes, Scheduled Tribes and women.This paper discusses the existing inequalities across these groups, along with the basic theory behind political reservation in fixing these inequalities, while also recognizing that theory provides many channels through which affirmative action policy can impact a variety of outcomes. Thus we turn to the vast empirical literature on the topic to shed light on what can be learned from the Indian context and how future policy can be reformed and shaped based on these experiences.
    Keywords: Minorities
    Date: 2016
  4. By: Alexandra Avdeenko; Thomas Siedler
    Abstract: This study analyzes the importance of parental socialization on the development of children’s far right-wing preferences and attitudes towards immigration. Using longitudinal data from Germany, our intergenerational estimates suggest that the strongest and most important predictor for young people’s right-wing extremism are parents’ right-wing extremist attitudes. While intergenerational associations in attitudes towards immigration are equally high for sons and daughters, we find a positive intergenerational transmission of right-wing extremist party affinity for sons, but not for daughters. Compared to the intergenerational correlation of other party affinities, the high association between fathers’ and sons’ right-wing extremist attitudes is particularly striking.
    Keywords: political preferences, extremism, gender differences, longitudinal data, intergenerational links
    JEL: C23 D72 J62 P16
    Date: 2016
  5. By: Toke S. Aidt (Faculty of Economics, University of Cambridge, U.K.); 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: 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
  6. By: Tania Masi; Roberto Ricciuti
    Abstract: We evaluate the effect of natural resources on political regimes. We use the synthetic control method to compare evolution of the democracy level of countries affected by giant oil discoveries with the weighted democracy level of countries that do not incur the same event and have similar pre-event characteristics. Focusing on 12 countries affected by the peak of oil discovery from the 1970s, we find that the exogenous variation in oil endowment does not have the same effect on all countries. In most of cases, the event has a negative effect in the long run, but countries with a high level of democracy in the pre-event period are not affected by the peak of oil discoveries. These results support heterogeneity and non-linearities claimed in the more recent theoretical literature.
    Keywords: people with disabilities, paid employment, basic education, Ghana
    Date: 2016
  7. By: Joshua Hall (West Virginia University, Department of Economics); Shree Baba Pokharel (West Virginia University, Department of Economics)
    Abstract: Using cross-sectional data from fifty states of the United States and the District of Columbia for two different time periods, this paper examines the degree to which special interests or the median voter determines state highway expenditures. In addition to finding that previous estimates of the determinants of state highway expenditures are robust, we find that that special interests that were important in 1984 were no longer significant nearly 20 years later. Like the previous literature, we conclude that the reduced form median voter model performs well in explaining state highway expenditures.
    Keywords: median voter model, special interests, highway expenditures
    JEL: H41 H49 H60 H72 H76
    Date: 2016–06
  8. By: Drazen, Allan; Ozbay, Erkut
    Abstract: We present experimental evidence that policies chosen by leaders depend on whether they were elected or appointed. Consistent with previous studies of the "dictator game" , we find that unitary policymakers do not always act selfishly, that is, choose a policy that maximizes their own payoffs. However, the way in which one became the leader matters. Leaders who are elected are significantly more likely to choose a policy not equal to their "type" than leaders who are appointed. Elected leaders who act non-selfishly will favor the voter rather than the losing candidate, while appointed leaders show no tendency to favor the voter over the losing candidate. Our results provide support for the view that non-selfish behavior of leaders reflects a reciprocity motive. They also show that candidates do not simply implement their own preferences once in office, as suggested by the basic citizen-candidate model.
    Keywords: Citizen-Candidate; Dictator Game; leaders; Reciprocity
    JEL: C91 D64 D72
    Date: 2016–06
  9. By: Michael Davidson; Fredrich Kahrl; Valerie Karplus
    Abstract: We propose a general taxonomy of the political economy challenges to wind power development and integration, highlighting the implications in terms of actors, interests, and risks. Applying this framework to three functions in China.s electricity sector.planning and project approval, generator cost recovery, and balancing area coordination.we find evidence of challenges common across countries with significant wind investments, despite institutional and industry characteristics that are unique to China.We argue that resolving these political economy challenges is as important to facilitating the role of wind and other renewable energies in a low carbon energy transition as providing dedicated technical and policy support. China is no exception.
    Keywords: Renewable energy sources
    Date: 2016
  10. By: Markus Brueckner; Hans Peter Gruener
    Abstract: We argue that the growth rate, but not the level of aggregate income, affects the support for political extremism. In our model extreme parties offer benefits to a subset of the population; and there exists uncertainty over whether the same subset of individuals will receive these benefits in the future. Based on a panel of 16 European countries, our empirical analysis shows that lower growth rates are associated with a significant increase in right-wing extremism. We do not find a systematic effect on left-wing extremism. Uncertainty over what group will have incomes expropriated in the future may explain these results.
    Keywords: Economic Growth, Political Extremism
    JEL: O40 O52 P16
    Date: 2016–06
  11. By: Utku Teksoz; Katerina Kalcheva
    Abstract: To predict economic success and failure, academics and policymakers alike are interested in the differences in institutional structures across natural resource-based economies. This paper uses a political economy framework to examine the effect of institutional variables on per capita Gross-Domestic-Product in resource-rich economies. After controlling for institutions, natural resource rents cease to have a negative impact on long-term growth. Institutions in resource-based economies foster economic growth when voice and accountability are in place; broad-based rule of law is enforced with secure property rights, and control of corruption; and when government effectiveness, regulatory quality, and political stability are positively perceived.
    Keywords: institutions, growth, political power, rents, property rights, resource-based economies
    Date: 2016
  12. By: Sosso FEINDOUNO (Ferdi); Michaël GOUJON (Université d'Auvergne); Laurent WAGNER (Ferdi)
    Abstract: We have created a new index, the Internal Violence Index (IVI), which aims to compare the amount of violence at the country level for 130 developing countries. The IVI is a composite indicator composed of four clusters - internal armed conflict, criminality, terrorism, and political violence. It is based on quantitative variables only, in contrast to the existing subjective indicators of fragility.
    Keywords: Internally displaced people, Terrorism, Criminality, Conflict, Fragility
    JEL: F5 C82
    Date: 2016–04
  13. By: Juan A. Lacomba (Department of Economic Theory and Economic History, University of Granada.); Francisco M. Lagos (Department of Economic Theory and Economic History, University of Granada.); Ernesto Reuben (Columbia University.); Frans Van Winden (University of Amsterdam.)
    Abstract: In this paper, we study two games of conflict characterized by unequal access to productive resources and finitely repeated interaction. In the Noisy Conflict game, the winner of the conflict is randomly determined depending on a players’ relative conflict expenditures. In the Decisive Conflict game, the winner of the conflict is simply the player who spends more on conflict. By comparing behavior in the two games, we evaluate the effect that “decisiveness” has on the allocation of productive resources to conflict, the resulting inequality in the players’ final wealth, and the likelihood that players from long-lasting peaceful relations..
    Keywords: conflict; decisiveness; inequality; peace; rent seeking
    JEL: D72 D74 C92
    Date: 2016–05–30
  14. By: Uddin, Md Akther; Masih, Mansur
    Abstract: Since the end of World War II, Muslim countries have been plagued by sixteen major wars, many coups, political, religious and ethnic insurgency, and revolutions. While many developing countries in southeast Asia have emerged as developed economy in this time period, in spite of having sufficient natural resources, most of the Muslim countries are still fighting with higher inflation, unemployment, poverty, inequality, poor healthcare, illiteracy, and rampant corruption. This paper studies how political stability affects growth in OIC countries by using relatively advanced dynamic GMM and simultaneous quantile regression. It is found that political stability has significant positive effect on growth. The impact of political stability on economic growth is more important for lower income countries than higher income countries. Most of the low to mid income oil dependent OIC countries suffer from chronic misery, higher inflation and persistent unemployment, which has significant negative effect on growth. Oil revenue plays a major role in economic growth for both OIC and Non-OIC oil dependent developing countries. The importance of political stability, economic diversification and macroeconomic stability has been restated with policy recommendations for oil dependent developing countries in general and OIC countries in particular.
    Keywords: political stability, economic growth, misery index, oil rent, OIC countries, dynamic GMM, Quantile regression 1Md
    JEL: C58 O11
    Date: 2016–05–31
  15. By: Lergetporer, Philipp (Ifo Institute for Economic Research); Schwerdt, Guido (University of Konstanz); Werner, Katharina (Ifo Institute for Economic Research); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: The electorates' lack of information about the extent of public spending may cause misalignments between voters' preferences and the size of government. We devise a series of representative survey experiments in Germany that randomly provide treatment groups with information on current spending levels. Results show that such information strongly reduces support for public spending in various domains from social security to defense. Data on prior information status on school spending and teacher salaries shows that treatment effects are strongest for those who initially underestimated spending levels, indicating genuine information effects rather than pure priming effects. Information on spending requirements also reduces support for specific education reforms. Preferences on spending across education levels are also malleable to information.
    Keywords: public spending, information, preferences, education spending, survey experiment
    JEL: H11 D83 D72 H52 I22 P16
    Date: 2016–05
  16. By: Rufyikiri, Gervais
    Abstract: This study contributes to understanding the extent of corruption in Burundi, and its consequences for political and economic governance. The last decade, corruption in Burundi was rampant and systemic. It generated political tensions between the state and citizens, it undermined economic development efforts and good governance reforms. Grand corruption involving the ruling party, senior political and administrative officials has induced politicization within the public sector which in turn led to the malfunctioning of anti-corruption institutions, thwarting good governance reforms including the fight against corruption. Corruption is a major factor of instability in Burundi and must be addressed, not as a «principal/agent» problem, but rather as a collective action problem. Some possible actions are proposed in the conclusion.
    Keywords: Burundi, corruption
    Date: 2016–03
  17. By: Bryan McCannon (West Virginia University, Department of Economics); Paul Walker (West Virginia University, Department of Economics)
    Abstract: The seminal contribution, known as the Condorcet Jury Theorem, observes that under a specific set of conditions an increase in the size of a group tasked with making a decision leads to an improvement in the group's ability to make a good decision. An assumption under-appreciated is that the competency of the members of the group is assumed to be exogenous. In numerous applications, members of the group make investments to improve the accuracy of their decision making (e.g. pre-meeting efforts). We consider the collective action problem that arises. We show that if competence is endogenous, then increases in the size of the group encourages free riding. This trades off with the value of information aggregation. Thus, the value of increased group size is muted. Extensions illustrate that if committee members are allowed to exit/not participate, then the equilibrium committee size is reduced. Additionally, (non-decisive supermajority voting rules encourage the investments and, consequently, individual competence.
    Keywords: committee decision making, Condorcet Jury Theorem, endogenous competence, group size, majority voting, supermajority voting
    JEL: D71 D02 H41
    Date: 2016–06
  18. By: Andrew C. Shaver (Princeton University)
    Abstract: The unemployed are often inculpated in the production of violence during conflict. A simple yet common argument describes these individuals as disaffected and inclined to perpetrate affectively motivated violence. A second holds that they are drawn to violent political organizations for lack of better outside options. Yet, evidence in support of a general positive relationship between unemployment and violence during conflict is not established. Drawing from a large body of psychological research, I argue that a basic but important relationship has been overlooked: Loss of employment, rather than rendering individuals angry, increases feelings of depression, anxiety, helplessness, and belief in the power of others. Members of this segment of society are more likely than most to reject the use of violence. Drawing on previously unreleased data from a major, multi-million dollar survey effort carried out during the Iraq war, I uncover evidence that psychological findings carry to conflict settings: unemployed Iraqis were consistently less optimistic than other citizens; displayed diminished perceptions of efficacy; and were much less likely to support the use of violence against Coalition forces.
    JEL: J21 D74 F51
    Date: 2016–05

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