nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒08‒14
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. How Multilevel Elite Loyalty Strengthens Electoral Authoritarianism: Evidence from Gubernatorial Elections in Russia By Elena Sirotkina; Svetlana Karandashova
  2. Rising to the occasion? Youth political knowledge and the voting age By Rosenqvist, Olof
  3. The Political Economy of Public Debt: A Laboratory Study By Marco Battaglini; Salvatore Nunnari; Thomas R. Palfrey
  4. Gender Differences in Cooperative Environments? Evidence from the U.S. Congress By Stefano Gagliarducci; M. Daniele Paserman
  5. Dictators Walking the Mogadishu Line: How Men Become Monsters and Monsters Become Men By Shaun Larcom; Mare Sarr; Tim Willems
  6. Do Government Audits Reduce Corruption? Estimating the Impacts of Exposing Corrupt Politicians By Eric Avis; Claudio Ferraz; Frederico Finan
  7. Finders, Keepers? By Niko Jaakkola; Daniel Spiro; Arthur A. van Benthem
  8. Dynamic Behavior and Player Types in Majoritarian Multi-Battle Contests By Alan Gelder; Dan Kovenock
  9. Direct and indirect effects based on difference-in-differences with an application to political preferences following the Vietnam draft lottery By Deuchert, Eva; Huber, Martin; Schelker, Mark
  10. The Political Origin of Home Bias: The Case of Europe By De Marco, Filippo; Macchiavelli, Marco
  11. Measuring Polarization in High-Dimensional Data: Method and Application to Congressional Speech By Matthew Gentzkow; Jesse M. Shapiro; Matt Taddy
  12. Gender and Corruption: The Neglected Role of Culture By Julia Debski; Michael Jetter; Saskia Mösle; David Stadelmann
  13. The economics of state fragmentation: Assessing the economic impact of secession - Addendum By Jo Reynaerts; Jakob Vanschoonbeek
  14. Racism and judicial corruption in the US By Michael Jetter; Alejandro Mesa Osorio

  1. By: Elena Sirotkina (National Research University Higher School of Economics); Svetlana Karandashova (National Research University Higher School of Economics)
    Abstract: Maintain autocratic regimes is widely acknowledged to require elite loyalty. However, does this imply that various elite groups equally contribute to the daily performance of an autocratic regime and to winning elections? Based on empirical evidence of recent gubernatorial elections in Russia we explore the effect of multilevel elite disloyalty on gubernatorial electoral results and voter turnout. Having examined the impact of major regional elites, we find that only conflicts between governors and the mayors of regional capitals hav¬¬e significant and robust negative effect on both electoral turnout and the voting for governor. Encouraging the loyalty of these mayors secures smoother political machinery in the most electorally significant areas of the region and thus can determine the outcome of an electoral campaign. This finding provides another confirmation of the paramount role of covert rather than open inter-elite competition for electoral autocracies maintenance.
    Keywords: electoral autocracy, Russian politics, Russian regions, regional politics, gubernatorial elections, elites
    JEL: Z
    Date: 2016
  2. By: Rosenqvist, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: Voting is a fundamental human right. Yet, individuals that are younger than 18 do typically not have this right since they are considered uninformed. However, recent evidence tentatively suggests that the political knowledge of youths is endogenous to the voting age. I test for the existence of such dynamic adjustments utilizing voting age discontinuities caused by Swedish laws. I employ a regression discontinuity strategy on Swedish register data to estimate the causal effect of early age voting right on political knowledge around age 18. The results do not support the existence of positive causal effects of early age voting right on political knowledge. Thus, we should not expect that 16-year-olds respond by acquiring more political knowledge if they are given the right to vote. This finding weakens the case for a lowering of the voting age from 18 to 16.
    Keywords: voting age; political knowledge; civic interest; tertiary education; regression discontinuity design
    JEL: D04 D72 I21 I29 P16
    Date: 2016–03–16
  3. By: Marco Battaglini; Salvatore Nunnari; Thomas R. Palfrey
    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.
    JEL: C92 H11 H41
    Date: 2016–07
  4. By: Stefano Gagliarducci; M. Daniele Paserman
    Abstract: This paper uses data on bill sponsorship and cosponsorship in the U.S. House of Representatives to estimate gender differences in cooperative behavior. We employ a number of econometric methodologies to address the potential selection of female representatives into electoral districts with distinct preferences for cooperativeness, including regression discontinuity and matching. After accounting for selection, we find that among Democrats there is no significant gender gap in the number of cosponsors recruited, but women-sponsored bills tend to have fewer cosponsors from the opposite party. On the other hand, we find robust evidence that Republican women recruit more cosponsors and attract more bipartisan support on the bills that they sponsor. This is particularly true on bills that address issues more relevant for women, over which female Republicans have possibly preferences that are closer to those of Democrats. We interpret these results as evidence that cooperation is mostly driven by a commonality of interest, rather than gender per se.
    JEL: D70 D72 H50 J16 M50
    Date: 2016–08
  5. By: Shaun Larcom (Department of Land Economy, University of Cambridge); Mare Sarr (School of Economics, University of Cape Town); Tim Willems (Nuffi eld College, and Department of Economics, University of Oxford)
    Abstract: History offers many examples of dictators who worsened their behaviour significantly over time (like Zimbabwe's Robert Mugabe) as well as dictators who displayed remarkable improvements (like Jerry Rawlings of Ghana). We show that such mutations can result from rational behaviour when the dictator's flow use of repression is complementary to his accumulated stock of wrongdoings. Interacting this complementarity with uncertainty over the dictator's degree of impunity in relation to wrongdoing (such that the dictator becomes inclined to experiment along this dimension), produces an environment in which any individual rising to power can end up as either a moderate leader, or as a dreaded tyrant. Our model shows that dictators are more likely to derail with higher levels of divertible funds available, for example stemming from fungible aid inflows or from the exploitation of natural resources. It furthermore suggests that derailment is accidental and that such leaders suffer from ex-post regret. Consequently, increasing accountability can be in the interest of both the public and the dictator.
    Keywords: Dictatorship, Repression, Political violence, Resource curse, Learning, Multiple steady states
    JEL: D72 D74 N47 O10 P16
    Date: 2016
  6. By: Eric Avis; Claudio Ferraz; Frederico Finan
    Abstract: Political corruption is considered a major impediment to economic development, and yet it remains pervasive throughout the world. This paper examines the extent to which government audits of public resources can reduce corruption by enhancing political and judiciary accountability. We do so in the context of Brazil’s anti-corruption program, which randomly audits municipalities for their use of federal funds. We find that being audited in the past reduces future corruption by 8 percent, while also increasing the likelihood of experiencing a subsequent legal action by 20 percent. We interpret these reduced-form findings through a political agency model, which we structurally estimate. Based on our estimated model, the reduction in corruption comes mostly from the audits increasing the perceived threat of the non-electoral costs of engaging in corruption.
    JEL: H41 H77 H83 K42 O1 O38 O43 O54
    Date: 2016–07
  7. By: Niko Jaakkola; Daniel Spiro; Arthur A. van Benthem
    Abstract: Natural resource taxation and investment often exhibit cyclical behavior, associated with shifts in political power. Why do finders get to keep more of their discoveries in some periods than others? We show such cycles result from the inability of governments to commit to future taxes and firms to commit to credibly exiting a country for good. In a cycle, large resource revenues induce a high tax which lowers exploration investment and thereby future findings, which in turn leads governments to reduce tax rates again. Tax oscillations are more pronounced for resources which take longer to develop, or following temporary resource price shocks. Our tractable model provides the first rational-expectations explanation of resource tax cycles under endogenous exploration investment and threat of expropriation. We document evidence of cyclical behavior in several countries with both strong and weak institutions, and provide detailed case studies of two Latin American countries.
    JEL: H25 Q35 Q38
    Date: 2016–07
  8. By: Alan Gelder (Economic Science Institute, Chapman University); Dan Kovenock (Economic Science Institute, Chapman University)
    Abstract: In a dynamic contest where it is costly to compete, a player who is behind must decide whether to surrender or to keep fighting in the face of bleak odds. We experimentally examine the game theoretic prediction of last stand behavior in a multi-battle contest with a winning prize and losing penalty, as well as the contrasting prediction of surrendering in the corresponding contest with no penalty. We find varied evidence in support of these hypotheses in the aggregated data, but more conclusive evidence when scrutinizing individual player behavior. Players’ realized strategies tend to conform to one of several “types”. We develop a taxonomy to classify player types and study how these types interact and how their incidence varies across treatments. Contrary to the theoretical prediction, escalation is the predominant behavior, but last stand and surrendering behaviors also arise at rates responsive to the importance of losing penalties.
    Keywords: Dynamic Contest, Multi-Battle Contest, Player Type, Experiment, All-Pay Auction, Escalation, Last Stand, Maximin
    JEL: C73 C92 D44 D72 D74
    Date: 2016
  9. By: Deuchert, Eva; Huber, Martin; Schelker, Mark
    Abstract: This study empirically evaluates the impact of the war in eastern Ukraine on the political attitudes aThis paper proposes a difference-in-differences approach for disentangling a total treatment effect on some outcome into a direct impact as well as an indirect effect operating through a binary intermediate variable – or mediator – within strata defined upon how the mediator reacts to the treatment. We show under which assumptions the direct effects on the always and never takers, whose mediator is not affected by the treatment, as well as the direct and indirect effects on the compliers, whose mediator reacts to the treatment, are identified. We provide an empirical application based on the Vietnam draft lottery. The results suggest that a high draft risk due to the lottery leads to a relative increase in the support for the Republican Party and that this increase is mostly driven by those complying with the lottery outcome.
    Keywords: treatment effects; causal mechanisms; direct and indirect effects; Vietnam War lottery; political preferences; difference-indifferences
    JEL: C21 C22 D70 D72
    Date: 2016–08–04
  10. By: De Marco, Filippo; Macchiavelli, Marco
    Abstract: We show that politics is at the root of the banks-sovereign nexus that exacerbated the Eurozone crisis. First, government-owned banks or banks with politicians in the board of directors display higher home bias in sovereign debt compared to privately-owned banks throughout the 2010-2013 period. Second, only government-owned banks increased the home bias during the sovereign crisis (moral suasion). We exploit the fact that equity injections (bail-outs) by domestic governments were not directly targeted to politically connected banks to show that, upon receiving such assistance, only government-owned banks purchase domestic debt. Moral suasion is stronger in countries under stress.
    Keywords: Banks-sovereign nexus ; Home bias ; Government-owned banks ; Banks' recapitalization ; Board of directors
    JEL: G01 G11 D72
    Date: 2016–07–08
  11. By: Matthew Gentzkow; Jesse M. Shapiro; Matt Taddy
    Abstract: We study trends in the partisanship of Congressional speech from 1873 to 2009. We define partisanship to be the ease with which an observer could infer a congressperson’s party from a fixed amount of speech, and we estimate it using a structural choice model and methods from machine learning. The estimates reveal that partisanship is far greater today than at any point in the past. Partisanship was low and roughly constant from 1873 to the early 1990s, then increased dramatically in subsequent years. Evidence suggests innovation in political persuasion beginning with the Contract with America, possibly reinforced by changes in the media environment, as a likely cause. Naive estimates of partisanship are subject to a severe finite-sample bias and imply substantially different conclusions.
    JEL: D72
    Date: 2016–07
  12. By: Julia Debski; Michael Jetter; Saskia Mösle; David Stadelmann
    Abstract: Empirical findings of a negative association between female participation in politics and the labor market, and levels of corruption have received great attention. We reproduce this correlation for 177 countries from 1998 to 2014. Once taking account of country-specific heterogeneity by fixed effects, the negative association disappears entirely in terms of statistical significance and magnitude. This suggests that female participation in politics and the labor market is not directly linked to lower corruption. Exploiting different dimensions of culture as country-specific characteristics, our analysis shows that power distance and masculinity systematically affect corruption. These two cultural characteristics are sufficient to fully mitigate any association between gender and corruption. Our findings point out the importance of culture and suggest that its omission causes a spurious correlation, leading to the erroneous claim that increased female participation in public life alone reduces corruption.
    Keywords: Gender; corruption; female participation; power distance; culture; development
    JEL: J16 D73 Z10
    Date: 2016–08
  13. By: Jo Reynaerts; Jakob Vanschoonbeek
    Abstract: Reynaerts and Vanschoonbeek (2016) propose a semi-parametric procedure to estimate the economic impact of secession, finding empirical evidence that declaring independence significantly lowered per capita GDP in newly formed states. To demonstrate that these findings appear to hold irrespective of the estimation procedure employed, this addendum formulates a parametric approach to estimate the independence dividend. Our preferred parametric specifications comprise a dynamic, quasi-myopic model of per capita GDP dynamics that controls for country and year fixed effects, the rich dynamics of GDP, finite anticipation effects and a vector of alternative growth determinants. The results indicate that declaring independence reduces per capita GDP by around 15-20% in the long run. These results are qualitatively confirmed when we use non-regional secession waves to instrument for local incentives to secede.
    Keywords: Independence dividend, panel data, dynamic model, generalized method of moments, bootstrap-based bias correction, instrumental variable regression
    Date: 2016
  14. By: Michael Jetter; Alejandro Mesa Osorio
    Abstract: Is racial hate reflected in the degree of judicial corruption? Using US state-level data, we find racial hate to be a positive and statistically powerful predictor of judicial corruption. This relationship prevails after the inclusion of the conventional control variables and regional fixed effects. In terms of magnitude, one standard deviation increase of racial hate relates to an increase of 70 percent of one standard deviation in corruption. Interestingly, no such relationship can be found for corruption in the executive or legislative branch.
    Keywords: corruption, racism
    JEL: D63 D73 H73 J15 J78
    Date: 2016–02–02

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