nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒08‒21
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. Strategic sequential voting By González-Díaz, Julio; Herold, Florian; Domínguez, Diego
  2. Turning a blind eye: a Regression Discontinuity Design Analysis of Party-Based Support for Corruption in Brazil By Louis Graham
  3. Deflecting my burden, hindering redistribution: How elites influence tax legislation in Latin America By Juan A. Bogliaccini; Juan Pablo Luna
  4. A test of the Law of 1/n for Belgium: Does “more politicians” mean “more public spending”? By Geert Jennes
  5. Electoral Stability and Rigidity By Michael Y. Levy
  6. The Influence of Political Pressure Groups on the Stability of International Environmental Agreements By Achim Hagen; Juan-Carlos Altamirano-Cabrera; Hans-Peter Weikard
  7. Politicians, bureaucrats, and tax morale: What shapes tax compliance attitudes? By Gabriel Leonardo; Jorge Martinez-Vazquez
  8. Change in Economic Policy Paradigm: Privatization and State Capture in Poland By Piotr Kozarzewski; Maciej Ba³towski
  9. Secret ballots and costly information gathering: the jury size problem revisited By Guha, Brishti

  1. By: González-Díaz, Julio; Herold, Florian; Domínguez, Diego
    Abstract: In this paper, we study the potential implications of a novel yet natural voting system: strategic sequential voting. Each voter has one vote and can choose when to cast his vote. After each voting period, the current count of votes is publicized enabling subsequent voters to use this information. Given the complexity of the general model, in this paper we study a simplified two-period setting. We find that, in elections involving three or more candidates, voters with a strong preference for one particular candidate have a strategic incentive to vote in an early period to signal that candidate's viability. Voters who are more interested in preventing a particular candidate from winning have an incentive to vote in a later period, when they will be better able to tell which other candidate will most likely beat the one they dislike. Strategic sequential voting may therefore result in voters coordinating their choices, mitigating the problem of a Condorcet loser winning an election due to mis-coordination. Furthermore, a (relatively) strong intensity of preferences for the preferred candidate can be partially expressed by voting early, possibly swaying the choice of remaining voters.
    Keywords: sequential voting,elections,endogenous timing,strategic timing
    JEL: D72 D71 C72
    Date: 2016
  2. By: Louis Graham
    Abstract: While corruption has long been conceptualised using the Principal-Agent framework, recent academic literature has proposed that in many countries, corruption is used as a political tool by 'unprincipled principals'. Using data from a corruption audit programme in Brazil and an RDD design, I study whether a state governor and municipal mayor being of the same party increases corruption linked to the mayor. I find evidence that when the governor's party wins the municipal mayoral election, corruption declines by 60-80% of the mean corruption level, and by 100-120% for larger municipalities. This is consistent with a model in which governors use corruption to gain control over mayors through potential blackmail, and in which governors want to prevent their party being associated with corruption to protect their re-election chances. I find further evidence consistent with the first argument. Much weaker evidence is found consistent with the second.
    Keywords: Corruption; Political Networks; Regression Discontinuity Design
    JEL: C31 D72 D73
    Date: 2016
  3. By: Juan A. Bogliaccini; Juan Pablo Luna
    Abstract: This paper proposes to understand a singular but salient factor that enables the wealthy to deflect their tax burden downwards: elites. political leverage to shape legislation via their capacity to influence political actors and policy outcomes. The analysis sheds light on alternative mechanisms used by economic elites over time and space. Our analysis of the political economy of taxing upper-income groups in Chile and Uruguay reveals the importance of continuous political agency on the part of organized elite interest groups. Our results show how even centre-left parties competing on a redistributive programmatic platform confront and concede to the interests of wealthy elites, especially when sustained interaction between political leaders and economic elites becomes routinized in the long run.
    Keywords: tax policy, Latin America, elites, tax avoidance, redistribution, case study
    Date: 2016
  4. By: Geert Jennes
    Abstract: We investigate if a more populous or fragmented executive or legislative increases public spending, an effect known as “the Law of 1/n”. We test this for the supra-local governments of Belgium. On the basis of our dataset –including rather few “cross-sections” as well as rather few changes in our political variables of interest over time- we find few indications that more politicians or more fragmented governments lead to an increase in overall public expenditures. We find weak evidence in favour of a positive effect of a change in the size of the executive, more in particular of the number of ministers composing the governing coalition, on public spending. Our identification is based on an IV regression approach, instrumenting the number of ministers overall with their resp. number in governments in charge of a decentralisation round. Belgian governments in charge of a decentralisation round are constitutionally obliged to rely on broad parliamentary support, and therefore tend to be larger. We also find that there is no effect of a change in the size or fragmentation of the legislative on public spending.
    Keywords: distributive politics;, public expenditures, fiscal federalism, politicians, political institutions
    Date: 2015
  5. By: Michael Y. Levy
    Abstract: Some argue that political stability is best served through a two-party system. This study refutes this. The author mathematically defines the stability and rigidity of electoral systems comprised of any quantity of electors and parties. In fact, stability is a function of the quantity of electors - i.e., the number of occupied seats at the table. As the number of electors increases, the properties of an electorate are increasingly well resolved, and well described by those of an electorate that is least excessive -- that is to say an electorate that is closest to equilibrium. Further, electoral rigidity is a function of the quantity of parties and their probabilities of representation. An absolutely rigid system admits no fluctuations -- whatever happens to one elector will happen to all electors. As the quantity of parties increases so does the number of party lines, and with it the quantity of alternatives with which to respond to an external stimulus. Rigidity is significant in a social system that places high value on party loyalty. In conclusion, (i) electoral stability is best served by increasing the quantity of electors; (ii) electoral rigidity is best served by decreasing the quantity of parties, and by increasing the representation of some parties at the expense of others; and (iii) the less stable a branch of government, the more concern is placed on those who would hold those offices for the people.
    Date: 2016–08
  6. By: Achim Hagen (Carl von Ossietzky University, Department of Economics); Juan-Carlos Altamirano-Cabrera (Economics Center, World Resources Institute, Washington DC); Hans-Peter Weikard (Wageningen University, The Netherlands)
    Abstract: This paper examines the effects of political pressure groups (lobbies) on the emissions abatement decisions of countries and on the stability of international environmental agreements. We consider two types of lobbies, industry and environmentalists. We determine the influence of lobby-groups on the abatement decisions of countries. This influence affects members of an international environmental agreement as well as outsiders. However, in the case of agreement members, the effects of lobbying are not restricted to the lobby’s host-country but spill over to other member countries and have ambiguous effects on the agreement stability.
    Keywords: interest groups, coalition theory, environmental policy making, international environmental agreements
    JEL: C72 D72 D78 H41 Q28 Q54
    Date: 2016–08
  7. By: Gabriel Leonardo (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University); Jorge Martinez-Vazquez (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University)
    Abstract: What actions do governments take that may affect individual trust? Although the literature on tax morale has reported a positive relationship between trust in government and tax morale, it is less known what is that government does to elicit trust among taxpayers. Which government organizations are most likely to produce those actions? This paper examines how governments elicit tax morale by testing the proposition that trust in government is built by the way citizens are treated when receiving their share of public goods and services from government institutions charged with the delivery of those goods and services, known as the output side (Rothstein, 2005). We use data from close to forty countries in the 2005-2007 wave of the World Values Survey (WVS) and after controlling for the level of political rights and civil liberties, we find that trust in administrative (output) government institutions positively influences tax morale, especially in the case of people living in democratic countries.
    Date: 2016–08
  8. By: Piotr Kozarzewski; Maciej Ba³towski
    Abstract: Kozarzewski and Ba³towski analyse the causes and manifestations of this trend in economic policy in Poland. They use privatization policy as an example. The authors examine the effects of the privatization policy and point to a large unfinished agenda in ownership transformation that has had an adverse impact on the institutional setup of the Polish state, creating grounds for rent seeking and cronyism, which, in turn, impede the pace of privatization. They find out that it is the increasing capture of the state by rent-seeking groups, and not, contrary to popular opinion, the global financial crisis, that most contributes to the growing statist trends of Poland’s economic policy.
    Keywords: Poland, privatization, economic policy, post-communist transition, crony capitalism, rent seeking, role of the state
    JEL: D72 L33 P16 P31
    Date: 2016
  9. By: Guha, Brishti
    Abstract: Suppose paying attention during jury trials is costly, but that jurors do not pool information (as in contemporary Brazil, or ancient Athens). If inattentive jurors are as likely to be wrong as right, I find that small jury panels work better as long as identical jurors behave symmetrically. If not paying attention makes error more likely than not, jurors may co-ordinate on two different symmetric outcomes: a “high-attention” one or a “low attention” one. If social norms stigmatize shirking, jurors co-ordinate on the high-attention equilibrium, and a smaller jury yields better outcomes. However, increasing the jury up to a finite bound works better if norms are tolerant of shirking, in which case co-ordination on the low-attention outcome results. If the cost of attention is high, a bare majority of jurors pay attention, and efficiency increases in jury size up to a bound. The model also applies to elections and referendums.
    Keywords: Jury size, pivotal voters, secret ballots, multiple equilibria, costly information.
    JEL: D72 D82 K40
    Date: 2016–08–12

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