nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒07‒09
sixteen 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. Returns to Office in National and Local Politics By Kotakorpi, Kaisa; Poutvaara, Panu; Terviö, Marko
  3. Internet and Voting in the Web 2.0 Era: Evidence from a Local Broadband Policy By Poy, Samuele; Schüller, Simone
  4. Do Nonpartisan Programmatic Policies Have Partisan Electoral Effects? Evidence from Two Large Scale Randomized Experiments By Kosuke Imai; Gary King; Carlos Velasco Rivera
  5. Information on the ballot, voter satisfaction and election turnout By Sajons, Christoph
  6. The Political Economy of Public Debt: A Laboratory Study By Battaglini, Marco; Nunnari, Salvatore; Palfrey, Thomas R
  7. Ethnic Favoritism: An Axiom of Politics? By De Luca, Giacomo; Hodler, Roland; Raschky, Paul A.; Valsecchi, Michele
  8. Is Partisan Alignment Electorally Rewarding? Evidence from Village Council Elections in India By Dey, Subhasish; Sen, Kunal
  9. The Marginal Voter's Curse By Helios Herrera; Aniol Llorente-Saguer; Joseph C. McMurray
  10. Methodology of the RAND 2016 Presidential Election Panel Survey (PEPS) By Pollard, Michael; Mendelsohn, Joshua
  11. The Mediterranean Refugees Crisis and Extreme Right Parties: Evidence from Greece By Sekeris, Petros; Vasilakis, Chrysovalantis
  12. Is the Threat of Foreign Aid Withdrawal an Effective Deterrent to Political Oppression? Evidence from 53 African Countries By Simplice Asongu; Jacinta C. Nwachukwu
  13. The Political Economy of Underfunded Municipal Pension By Brinkman, Jeffrey; Coen-Pirani, Daniele; Sieg, Holger
  14. Precision-Guided or Blunt? The Effects of US Economic Sanctions on Human Rights By Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
  15. Environmental Protection for Sale: Strategic Green Industrial Policy and Climate Finance By Fischer, Carolyn
  16. Endogenous Leadership in a Federal Transfer Game By Sengupta, Bodhisattva

  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: Kotakorpi, Kaisa (University of Turku); Poutvaara, Panu (University of Munich); Terviö, Marko (Aalto University)
    Abstract: We estimate the effect of getting elected on future income development of political candidates. We present a bootstrap approach for measuring electoral closeness, which can be used to implement a regression discontinuity design in any electoral system. We apply the method to the Finnish proportional open list system. Being elected to parliament increases annual earnings initially by €20,000, and getting elected to a municipal council by €1,000. The returns to office for parliamentarians accrue mainly through higher wages during the time in office. Our results imply that the returns to office may be large even in the absence of corruption.
    Keywords: returns to office, elections, regression discontinuity
    JEL: D72 J45
    Date: 2016–06
  3. By: Poy, Samuele (Università Cattolica del Sacro Cuore); Schüller, Simone (CESifo)
    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: broadband internet, political participation, voting behavior, quasi-natural experiment
    JEL: D72 L82 L86
    Date: 2016–06
  4. By: Kosuke Imai; Gary King; Carlos Velasco Rivera
    Abstract: A vast literature demonstrates that voters around the world who benefit from their governments' discretionary spending cast ballots for the incumbent party in larger proportions than those not receiving funds. But surprisingly, and contrary to most theories of political accountability, the evidence seems to indicate that voters also reward incumbent parties for implementing ``programmatic'' spending legislation, passed with support from all major parties, and over which incumbents have no discretion. Why voters would attribute responsibility when none exists is unclear, as is why minority party legislators would approve of legislation that will cost them votes. We address this puzzle with one of the largest randomized social experiments ever, resulting in clear rejection of the claim that programmatic policies greatly increase voter support for incumbents. We also reanalyze the study cited as claiming the strongest support for the electoral effects of programmatic policies, which is also a very large scale randomized experiment. We show that its key results vanish after correcting either a simple coding error affecting only two observations or highly unconventional data analysis procedures (or both). We also discuss how these consistent empirical results from the only two probative experiments on this question may be reconciled with several observational and theoretical studies touching on similar questions in other contexts.
    Date: 2016–01
  5. By: Sajons, Christoph
    Abstract: If voters do not perceive meaningful differences between parties and candidates, they tend to stay at home or choose by other factors like style or likability. This study examines whether including different kinds of information about the candidates on the ballot affects the satisfaction and turnout of voters in low-profile elections in which most candidates are unknown and party-identification cannot be used to distinguish them. This case often appears in election systems with either intra-party primaries or open lists, in particular at lower institutional levels. The empirical analysis is based on an experimental exit-poll of voters at local elections in two German states in 2014 in which respondents faced a hypothetical election with different information treatments. The main results are: (1) More information on the ballot increases voter satisfaction, but the marginal effect is decreasing. (2) Profession information is particularly useful for voters. (3) This translates directly into a greater willingness to take part in the hypothetical election ('turnout'), especially for individuals unsatisfied with the real election system. (4) The last result can be confirmed with aggregate turnout data of German local elections after reunification.
    Keywords: information cues,voter satisfaction,turnout,electoral systems,profession
    JEL: D72 H79 P16
    Date: 2016
  6. By: Battaglini, Marco; Nunnari, Salvatore; Palfrey, Thomas R
    Abstract: This paper reports the results from a laboratory experiment designed to study political distortions in the accumulation of public debt. A legislature bargains over the levels of a public good and of district specific transfers in two periods. The legislature can issue or purchase risk-free bonds in the first period and the level of public debt creates a dynamic linkage across policymaking periods. In line with the theoretical predictions, we find that public policies are inefficient and efficiency is increasing in the size of the majority requirement, with higher investment in public goods and lower debt associated with larger majority requirements. Also in line with the theory, we find that debt is lower when the probability of a negative shock to the economy in the second period is higher, evidence that debt is used to smooth consumption.
    Keywords: laboratory experiment; public debt
    JEL: H63 H72
    Date: 2016–06
  7. By: De Luca, Giacomo; Hodler, Roland; Raschky, Paul A.; Valsecchi, Michele
    Abstract: We investigate the prevalence and determinants of ethnic favoritism, i.e., preferential public policies targeted at the political leader's ethnic group. We are the first to study ethnic favoritism in a global sample and to use a broad measure - nighttime light intensity -- that allows capturing the distributive effects of a wide range of policies. We construct two panel datasets with several thousand ethnographic regions from around 140 multi-ethnic countries and annual observations from 1992 to 2013. We find robust evidence for ethnic favoritism: ethnographic regions enjoy 7%-10% more intense nighttime light and 2%-3% higher GDP when being the current political leader's ethnic homeland. We further document that ethnic favoritism is a global phenomenon prevalent both within and outside of Africa; that economic development and better political institutions have at best weak effects on ethnic favoritism; that ethnic favoritism is partly motivated by electoral concerns and extends to linguistically close groups; and that ethnic favoritism does not contribute to sustainable development.
    Keywords: elections; Ethnic favoritism; institutions; political leaders
    JEL: D72 J15 O43 R11
    Date: 2016–06
  8. By: Dey, Subhasish (University of Manchester); Sen, Kunal (University of Manchester)
    Abstract: Do ruling parties positively discriminate in favour of their own constituencies in allocating public resources? If they do, do they gain electorally in engaging in such a practice? This paper tests whether partisan alignment exists in the allocation of funds for India's largest social protection programme, the National Rural Employment Guarantee Scheme (NREGS) in the state of West Bengal in India, and whether incumbent local governments (village councils) gain electorally in the practice of partisan alignment. Using a quasi-experimental research design, we find that the village council level ruling-party spends significantly more in its own party constituencies as compared to opponent constituencies. We also find strong evidence of electoral rewards in the practice of partisan alignment. However, we find that the results differ between the two main ruling political parties at the village council level in the state.
    Keywords: National Rural Employment Guarantee Scheme, partisan alignment feedback effect, fuzzy regression discontinuity design
    JEL: H53 I38
    Date: 2016–06
  9. By: Helios Herrera (University of Warwick); Aniol Llorente-Saguer (Queen Mary University of London); Joseph C. McMurray (Brigham Young University)
    Abstract: This paper proposes a rational model of voter participation by generalizing a common-value model of costless voting to include not just pivotal voting but also marginal voting incentives. A new strategic incentive for abstention arises in that case, to avoid the marginal voter's curse of pushing the policy outcome in the wrong direction. The marginal voter's curse presents a larger disincentive for voting than the swing voter's curse. Moreover, marginal motivations are shown to dominate pivotal motivations in large elections. Model predictions are confirmed in a laboratory experiment and applied in a comparative analysis of electoral rules.
    Keywords: Turnout, Information aggregation, Underdog effect, Experiment
    JEL: C72 C92 D70
    Date: 2016–06
  10. By: Pollard, Michael; Mendelsohn, Joshua
    Abstract: The RAND 2016 Presidential Election Panel Survey (PEPS) uses the American Life Panel (ALP) to study voting intentions, public opinion, and voter behavior. The ALP is a scientifically recruited internet panel. Using the ALP allows us to contact the same people over time to study the evolution of their voting intentions, behavior and opinions. Furthermore, we follow previous RAND election polling by asking respondents about their voting intentions in probabilistic terms (percent chance), which improves forecasts. This document provides a detailed description of our methodology.
    Date: 2016–01
  11. By: Sekeris, Petros; Vasilakis, Chrysovalantis
    Abstract: This paper exploits the effect of massive refugees flows to the Greek islands on natives' political attitudes. Our results show a significant effect of refugees' presence on xenophobia. This outcome is robust under FE estimates and IV strategies. Furthermore the particular context of our study and the timing of the elections allow us to dismiss anti-immigration votes being casted for different motives than purely xenophobic reactions.
    Keywords: Immigration, refugee crisis, voting
    JEL: F22 J61
    Date: 2016–06–27
  12. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Coventry University)
    Abstract: This study complements existing literature on the aid-institutions nexus by focusing on political rights, aid volatilities and the post-Berlin Wall period. The findings show that while foreign aid does not have a significant effect on political rights, foreign aid volatilities do mitigate democracy in recipient countries. Such volatilities could be used by populist parties to promote a neocolonial agenda, instill nationalistic sentiments and consolidate their grip on power. This is especially the case when donors are asking for standards that majority of the population do not want and political leaders are unwilling to implement them. The empirical evidence is based on 53 African countries for the period 1996-2010. As a main policy implication, creating uncertainties in foreign aid for political rights enhancement in African countries may achieve the opposite results. Other implications are discussed including the need for an ‘After Washington consensus’.
    Keywords: Uncertainty; Foreign aid; Political Rights; Development; Africa
    JEL: C53 F35 F47 O11 O55
    Date: 2016–01
  13. By: Brinkman, Jeffrey (Federal Reserve Bank of Philadelphia); Coen-Pirani, Daniele (University of Pittsburgh); Sieg, Holger (University of Pennsylvania and NBER)
    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 down payment 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.
    Keywords: Unfunded Liabilities; Political Economy; Land Prices; Capitalization
    JEL: E6 H3 H7 R5
    Date: 2016–05–27
  14. By: Jerg Gutmann; Matthias Neuenkirch; Florian Neumeier
    Abstract: We use endogenous treatment-regression models to estimate the causal average treatment effect of US economic sanctions on four types of human rights. In contrast to previous studies, we find no support for adverse effects of sanctions on economic rights, political and civil rights, and basic human rights. With respect to women’s rights, our findings even indicate a positive relationship. Emancipatory rights are, on average, strengthened when a country faces sanctions by the US. Our findings are robust when applying various changes to the empirical specification. Most importantly, this study provides strong evidence that the endogeneity of treatment assignment must be modelled when the consequences of sanctions are studied empirically.
    Keywords: Democratization, Discrimination, Economic Sanctions, Endogenous Treatment Model, Human Rights, Interventionism, Protectionism, Repression, United States
    JEL: F51 F52 F53 K10 K11 P14 P16 P26
    Date: 2016
  15. By: Fischer, Carolyn (Resources for the Future)
    Abstract: Industrial policy has long been criticized as subject to protectionist interests; accordingly, subsidies to domestic producers face disciplines under World Trade Organization agreements, without exceptions for environmental purposes. Now green industrial policy is gaining popularity as governments search for low-carbon solutions that also provide jobs at home. The strategic trade literature has largely ignored the issue of market failures related to green goods. I consider the market for a new environmental good (such as low-carbon technology) whose downstream consumption provides external benefits (such as reduced emissions). Governments may have some preference for supporting domestic production, such as by interest-group lobbying, introducing a political distortion in their objective function. I examine the national incentives and global rationales for offering production (upstream) and deployment (downstream) subsidies in producer countries, allowing that some of the downstream market may lie in nonregulating third-party countries. Restraints on upstream subsidies erode global welfare when environmental externalities are large enough relative to political distortions. Climate finance is an effective alternative if political distortions are large and governments do not undervalue carbon costs. Numerical simulations of the case of renewable energy indicate that a modest social cost of carbon can imply benefits from allowing upstream subsidies.
    Keywords: Green Industrial Policy, Emissions Leakage, Externalities, International Trade, Renewable Energy, Subsidies
    JEL: F13 F18 H21 Q5
    Date: 2016–04–14
  16. By: Sengupta, Bodhisattva
    Abstract: The paper explores the issue of leadership in central transfer within a federation. In a federal country, provinces, in anticipation of the ultimate federal bailout, may spend more than what is optimal. Such behaviour creates negative fiscal externalities and harms the central government. To counter such tendencies, it is suggested by policymakers that central authority should always be a first mover in the transfer game: once the grant (presumably formulaic) is dispensed, it should refrain from any ex post transfer. In spite of such recommendations, central governments, in almost all countries, chooses to be the second mover from time to time. We explore the conditions, other than the familiar political economy arguments, under which the central government optimally chooses to be the second mover. The key determinants of the first or second mover advantages in such situations is the nature of spillover effects of public goods between the two tiers of government
    Keywords: Federalism, Transfer Game, First and Second Mover Advantages
    JEL: H77
    Date: 2016–06–09

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