nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒07‒02
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Internet and Voting in the Web 2.0 Era: Evidence from a Local Broadband Policy By Samuele Poy; Simone Schüller
  2. Policy and Politics: Trade Adjustment Assistance in the Crossfire By Lainez, Christopher; Matschke, Xenia; Yotov, Yoto
  3. A Structural Model of Electoral Accountability By Aruoba, Boragan; Drazen, Allan; Vlaicu, Razvan
  4. Voting Behavior on Carbon Pollution from Power Plants By Joshua Hall; Elham Erfanian; Caleb Stair
  5. Does Partisan Conflict Deter FDI Inflows to the US? By Marina Azzimonti
  6. Does Emigration Delay Political Change? Evidence from Italy during the Great Recession By Massimo Anelli; Giovanni Peri
  7. The Political Economy of Public Sector Absence: Experimental Evidence from Pakistan By Michael Callen; Saad Gulzar; Syed Ali Hasanain; Yasir Khan
  8. Plague, Politics, and Pogroms: The Black Death, Rule of Law, and the persecution of Jews in the Holy Roman Empire By Finley, Theresa; Koyama, Mark
  9. The Challenge of Public Capabilities for Successful Productive Development Policies: Hopeless Task or Pragmatic Program? By Jorge Cornick; Eduardo Fernández-Arias; Ernesto H. Stein
  10. Information and Preferences for Public Spending: Evidence from Representative Survey Experiments By Philipp Lergetporer; Guido Schwerdt; Katharina Werner; Ludger Woessmann
  11. How Brexit affects European Union power distribution By Laszlo A. Koczy
  12. Natural resource revenues and public investment in resource-rich economies in subSaharan Africa By Amin Karimu; George Adu; George Marbuah; Justice Tei Mensah; Franklin Amuakwa-Mensah

  1. By: Samuele Poy; Simone Schüller
    Abstract: This article analyzes the impact of a local broadband expansion policy on electoral turnout and party vote share. We exploit a unique policy intervention involving staged broadband infrastructure installation across rural municipalities in the Province of Trento (Italy), thus generating a source of exogenous (spatial and temporal) variation in the provision of advanced broadband technology (ADSL2+). Using a difference-in-differences strategy, we find positive effects of broadband availability on overall electoral turnout at national parliamentary elections. Party vote share analysis shows significant shifts across the ideological spectrum. These shifts, however, are likely transitory rather than persistent. Placebo estimations support a causal interpretation of our results. We provide further evidence that broadband availability is linked to actual adoption in that the broadband policy increased overall Internet and broadband take-up among private households.
    Keywords: Higher Broadband Internet, Political Participation, Voting Behavior, Quasi-Natural Experiment
    JEL: D72 L82 L86
    Date: 2016–06
  2. By: Lainez, Christopher (School of Economics Drexel University); Matschke, Xenia (University of Trier); Yotov, Yoto (School of Economics Drexel University)
    Abstract: The United States introduced Federal Trade Adjustment Assistance (TAA) as part of the 1962 Trade Expansion Act to dampen the adverse impact of increased trade on workers. Applications to receive TAA require approval from the Department of Labor. Guided by the technical criteria used by the U.S. government in the official TAA certification process, we capitalize on a rich multi-dimensional panel dataset to quantify the effects of political influence on the TAA certification decision. We find that political factors such as party affiliation of the President, voting outcomes at the state level, and whether a petition was certified in an election year influence the TAA certification outcome. Those effects remain even when including a wide array of controls and a rich set of fixed effects.
    Keywords: trade adjustment assistance; political economy; trade protection
    JEL: F13 F14 F16
    Date: 2015–12–26
  3. By: Aruoba, Boragan; Drazen, Allan; Vlaicu, Razvan
    Abstract: This paper proposes a structural approach to measuring the effects of electoral accountability. We estimate a political agency model with imperfect information in order to identify and quantify discipline and selection effects, using data on U.S. governors. We find that the possibility of reelection provides a significant incentive for incumbents to exert effort, that is, a disciplining effect. We also find a positive but weaker selection effect. According to our model, the widely-used two-term regime improves voter welfare by 4:2% compared to a one-term regime. JEL
    Keywords: discipline; elections; maximum likelihood; political agency; selection; structural estimation
    JEL: C57 D72 D73 H70
    Date: 2016–06
  4. By: Joshua Hall (West Virginia University, Department of Economics); Elham Erfanian (West Virginia University, Agricultural and Natural Resource Economics); Caleb Stair (West Virginia University, Agricultural and Natural Resource Economics)
    Abstract: Environmental regulation is a polarizing issue. In 2014, a bill came to a vote in the U.S. House of Representatives that would limit the powers of the Environmental Protection Agency. This empirical note identifies the characteristics that influenced the voting behavior of House Representatives on this bill. Political party, educational background, the location quotient of the mining industry in the representative’s state, and the amount of emissions in the Representative’s state are considered. A member’s political party is the primary factor influencing voting behavior but the location quotient of the mining industry also plays an important role.
    Keywords: EPA regulations; carbon emissions; fossil fuel-fired; electric utility generating
    JEL: H7 Q4 Q58
    Date: 2016–06
  5. By: Marina Azzimonti
    Abstract: I analyze the effects of political uncertainty on foreign direct investment flows to the US using a novel indicator, the partisan conflict index (PCI). Partisan conflict is relevant for the evolution of cross-border capital flows because the expected returns on investment projects are less predictable when the timing, size, and composition of fiscal policy is uncertain. The partisan conflict index tracks the evolution of political disagreement among policymakers as reported by the media. Using aggregate quarterly data from 1985 to 2015, I show that an innovation of the PCI is associated with a significant decline in FDI flows to the US. The magnitude of the effect is similar when disaggregated data from a panel of parent countries is considered instead.
    JEL: E62 F21 F3 H3
    Date: 2016–06
  6. By: Massimo Anelli; Giovanni Peri
    Abstract: Mobility within the European Union (EU) brings great opportunities and large overall benefits. Economically stagnant areas, however, may be deprived of talent through emigration, which may harm dynamism and delay political, and economic, change. A significant episode of emigration took place between 2010 and 2014 from Italy following the deep economic recession beginning in 2008 that hit most acutely countries in the southern EU. This period coincided with significant political change in Italy. Combining administrative data on Italian citizens who reside abroad and data on characteristics of city councils, city mayors and local vote, we analyze whether emigration reduced political change. The sudden emigration wave interacted with the pre-existing networks of emigration from Italian municipalities allow us to construct a proxy for emigration that is municipality-specific and independent of local political and economic trends. Using this proxy as an instrument, we find that municipalities with larger emigration rates had smaller shares of young, college educated and women among local politicians. They were also more likely to have had municipal councils dismissed due to inefficiency or corruption, a larger share of vote for status-quo-supporting parties and lower political participation. Migration was also associated with lower firm creation.
    JEL: H7 J61
    Date: 2016–06
  7. By: Michael Callen; Saad Gulzar; Syed Ali Hasanain; Yasir Khan
    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.
    JEL: D02 D72 D73
    Date: 2016–06
  8. By: Finley, Theresa; Koyama, Mark
    Abstract: This paper explores the institutional determinants of persecution by studying the intensity of the Black Death pogroms in the Holy Roman Empire. Political fragmentation exacerbated competition for the rents generated by Jewish moneylending. This competition made Jewish communities vulnerable during periods of crisis. We test this hypothesis using data on the intensity of pogroms. In line with our model, we find that communities governed by Archbishoprics, Bishoprics, and Imperial Free Cities experienced more intense and violent persecutions than did those governed by the emperor or by secular princes. We discuss the implications that this has for the enforcement of the rule of law in weak states.
    Keywords: Black Death, Political Fragmentation, Legal Fragmentation, State Capacity, Jewish History, Persecution
    JEL: K00 N13 N43
    Date: 2016–06–19
  9. By: Jorge Cornick; Eduardo Fernández-Arias; Ernesto H. Stein
    Abstract: This paper discusses the organizational structure and technical, operational and political capabilities required for successful productive development policies (PDPs). It also discusses how countries can match their PDPs to existing capabilities, as well as expand their capabilities in the long run. The specific difficulties associated with PDPs are also discussed.
    Keywords: Productive Development Policies, Corporate Governance, Policy design, Public Policy, Best practices, Innovation agencies, Monitoring & Evaluation, Industrial Policy, Political Institutions, policy design, Productive Development Policies
    JEL: O25 H11 H10 L50
    Date: 2016–03
  10. By: Philipp Lergetporer (Ifo Institute, University of Munich, Germany; CESifo); Guido Schwerdt (Department of Economics, University of Konstanz, Germany; CESifo, IZA); Katharina Werner (Ifo Institute, University of Munich, Germany); Ludger Woessmann (Ifo Institute, University of Munich, Germany; CESifo, IZA, and CAGE)
    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: 2016–05–31
  11. By: Laszlo A. Koczy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Keleti Faculty of Business and Management 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 European 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' powers 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, qualified majority voting, power index, a priori voting power, demographics
    JEL: C71 D72
    Date: 2016–05
  12. By: Amin Karimu; George Adu; George Marbuah; Justice Tei Mensah; Franklin Amuakwa-Mensah
    Abstract: The general policy prescription for resource-rich countries is that, for sustainable consumption, a greater percentage of the windfall from resource rents should be channelled into accumulating foreign assets such as a sovereign public fund as done in Norway and other developed but resource-rich countries. This might not be a correct policy prescription for resource-rich sub-Saharan African (SSA) countries, where public capital is very low to support the needed economic growth. In such countries, rents from resources serve as opportunity to scale-up the needed public capital. Using panel data for the period 1990.2013, we find in line with the scaling-up hypothesis that resource rents significantly increase public investment in SSA and that this tends to depend on the quality of political institutions. We also find evidence of a positive effect of public investment on economic growth, which also depends on the level of resource rents. Using some of the components of public investment, such as health and education expenditure, we find a negative effect of resource rents, suggesting among other things that public spending of resource rents is directed more to other infrastructure investments.
    Keywords: public investment, resource rents, growth, political institutions, sub-Saharan Africa
    Date: 2016

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