nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒11‒27
eighteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Strategic Voting in Multi-Winner Elections with Approval Balloting: A Theory for Large Electorates By Jean-François Laslier; Karine Van Der Straeten
  2. Organized Crime, Violence, and Politics By Alesina, Alberto; Piccolo, Salvatore; Pinotti, Paolo
  3. Does electoral violence affect voting choice and willingness to vote? Evidence from a vignette experiment By Roxana Gutiérrez-Romero; Adrienne LeBas
  4. Party Discipline and Government Spending: Theory and Evidence By Curto-Grau, Marta; Zudenkova, Galina
  5. Voter turnout in Italian municipal elections, 2002-2013. By Revelli, Federico
  6. Media and Political Participation in North Africa By Mathilde Maurel; Charlemagne Nikiema
  7. Does Election of an Additional Female Councilor Increase Women's Candidacy in the Future? By Jekaterina Kuliomina
  8. The Mayor Effect: Female Municipal Employment Under Islamist Political Rule By Gozde Corekcioglu
  9. Politically Feasible Public Bailouts By Octavia Foarta
  10. Building connections: Political corruption and road construction in India By Jonathan Lehne; Jacob N. Shapiro; Oliver Vanden Eynde
  11. The political economy of non-tariff measures for sustainable and inclusive world development By Cristina Herghelegiu
  12. Political Connections, Government Procurement Contracts, and the Cost of Debt By Reza Houston; David A. Maslar; Kuntara Pukthuanthong
  13. Political Borders and Bank Lending in Post-Crisis America By Matthieu Chavaz; Andrew K. Rose
  14. Durable Coalitions and Communication: Public versus Private Negotiations By Baron, David; Bowen, T. Renee; Nunnari, Salvatore
  15. Crony Capitalism and the Targeting of Violence: Labor Repression During Argentina's Last Dictatorship By Klor, Esteban F; Saiegh, Sebastian; Satyanath, Shanker
  16. Bugs, tariffs and colonies: the political economy of the wine trade 1860-1970 By Giulia Meloni; Jo Swinnen
  17. Media Coverage and ECB Policy-Making: Evidence from a New Index By Hamza Bennani
  18. Taxation, social protection, and governance decentralization By Gil S. Epstein; Ira N. Gang

  1. By: Jean-François Laslier (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Karine Van Der Straeten (TSE - Toulouse School of Economics - Toulouse School of Economics, Institute advanced for advanced studies in Toulouse - Institute advanced for advanced studies in Toulouse)
    Abstract: We propose a theory of strategic voting in multi-winner elections with approval balloting: A fixed number M of candidates are to be elected; each voter votes for as many candidates as she wants; the M candidates with the most votes are elected. We assume that voter preferences are separable and that there exists a tiny probability that any vote might be misrecorded. Best responses involve voting by pairwise comparisons. Two candidates play a critical role: the weakest expected winner and the strongest expected loser. Expected winners are approved if and only if they are preferred to the strongest expected loser and expected losers are approved if and only if they are preferred to the weakest expected winner. At equilibrium, if any, a candidate is elected if and only if he is approved by at least half of the voters. With single-peaked preferences, an equilibrium always exists, in which the first M candidates according to the majority tournament relation are elected. The theory is tested on individual data from the 2011 Regional Government election in Zurich.
    Keywords: Approval Voting,Elections,Voting behavior
    Date: 2016–04
  2. By: Alesina, Alberto; Piccolo, Salvatore; Pinotti, Paolo
    Abstract: We show that in Sicily Mafia killings of politicians increase before elections and have negative effects on the vote received by parties not captured by the Mafia. Then, using a very large data set of electoral speeches, we find strong evidence that anti-mafia activities by politicians elected in Sicily are, in fact, negatively correlated with the levels of pre-electoral violence. Using data on homicides in all regions of Italy starting from the end of the nineteenth century, we identify a political cycle of homicides only in regions with organized crime. We also show how this electoral cycle changes as a function of different electoral rules and the relative strength of captured and non-captured parties. All these empirical findings are rationalized by a simple signaling model in which criminal organizations exert pre-electoral violence to inform adverse politicians about their military strength.
    Keywords: electoral violence; organized crime; political discourse; voting
    JEL: D72 K42
    Date: 2016–11
  3. By: Roxana Gutiérrez-Romero; Adrienne LeBas
    Abstract: Many new democracies experience electoral violence. Though this form of political violence is common, there is little understanding of how violence affects vote choice and turnout. This article draws on a vignette experiment that is embedded in a nationally representative survey in Kenya, where electoral violence has occurred several times since the 1990s. We show that voters strongly sanction candidates who are rumored to have used violence, even if the candidate is a coethnic, a copartisan, or has performed well in office in the past. This sanctioning effect, however, is not consistent across voters. Victims of past electoral violence and those in poverty are less likely to sanction candidates that use violence. Rumored use of violence also depresses turnout, even among a violent candidate’s core constituents, when voters do not possess countervailing information about the violent candidate’s past performance in office.
    Keywords: Experimental Vignette; Violence; Voting; Turnout; Corruption; Ethnicity; Kenya
    Date: 2016
  4. By: Curto-Grau, Marta; Zudenkova, Galina
    Abstract: This paper studies the relationship between party discipline and discretionary spending with theory and data. We propose a theoretical model in which a politician faces a conflict between her constituents' interests and the party line. Party loyalty is electorally costly for the politician and is therefore rewarded by the party leader with greater amounts of discretionary spending allocated to the politician's constituency. The more intense the conflict between the voters' and the party's interests, the more grants the district receives. Using panel data on party discipline in the U.S. House of Representatives and federal grants to congressional districts between 1984 and 2010, we provide evidence that districts represented by loyal legislators receive greater amounts of discretionary spending. This effect holds only for legislators in the majority party, who may enjoy a legislative advantage. Districts represented by loyal legislators who face a greater conflict of interest between following the party and serving their constituents (e.g., Republican legislators representing liberal-leaning districts) are rewarded to a larger extent.
    Keywords: Party discipline; discretionary spending; party line.
    Date: 2016–11–24
  5. By: Revelli, Federico (University of Turin)
    Abstract: This paper investigates the determinants of voter turnout in a panel dataset of over 15,000 Italian municipal elections through more than a decade. The estimation results show a significant negative effect of the size of the electorate on voter turnout, and an effect of its demographic structure that is compatible with the political life-cycle hypothesis. Moreover, turnout is systematically higher when municipal elections are held at the same time as more salient, higher stakes contests, and all ex post indicators of election closeness are estimated to influence voter turnout in the expected direction.
    Date: 2016–11
  6. By: Mathilde Maurel (FERDI - Fondation pour les Etudes et Recherches sur le Développement International - FERDI, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Charlemagne Nikiema (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We examine the role of new decentralized media (the internet) vs old media (television) on individuals’ political engagement in North Africa. Drawing our data from the Afrobarometer round 5 survey, we tackle issues of endogeneity by resorting first to a propensity score matching method to identify the effect of media on political participation. We then address endogeneity by relying to a bivariate probit model while using lightening activity as an instrument for media. The analysis evidences the political power of the internet and TV. Getting news from internet reduces voting but increases protests, while TV watching induces more vote and less protest. This effect is channeled through the impact of media on the perception about political institutions, which differs across the different media.
    Keywords: Media, Political Participation, North Africa
    Date: 2016–11–13
  7. By: Jekaterina Kuliomina
    Abstract: I study the changes in female political participation that occur when an additional female candidate is elected to the local council. To address the endogeneity related to non-random election outcomes I employ a Regression Discontinuity Design. I focus on close competition for the last seat in the Czech municipal (local) elections between a male and a female candidate. I find that the election of an additional female candidate leads to fewer newly participating female candidates in the following elections. The effect is stronger in the municipalities where the marginally elected female candidate was successful.
    Keywords: political participation, women and politics; regression discontinuity; gender; female representation; Czech Republic;
    JEL: J16 H11
    Date: 2016–03
  8. By: Gozde Corekcioglu (European University Institute)
    Abstract: Do religiously conservative governments enact policies that limit opportunities for women? This study addresses this general question in a specific context: whether pro-Islamist politicians’ preferences for traditional gender roles translate into discriminatory employment practices in Turkish municipalities. I combine data from 2009 municipal elections with a unique dataset of municipal personnel. Comparing close races for the mayor, who appoints municipal personnel, I find no evidence of gender bias with mayors from the pro-Islamist party. Conditioning on the type of incumbent, I find that the share of females among white-collars decreases in municipalities where a pro-Islamist mayor replaced a secular mayor.
    Keywords: Political Islam, Regression Discontinuity, Female Employment, Discrimination, Turkey.
    JEL: D72 H75 J71
    Date: 2016–11
  9. By: Octavia Foarta (Stanford Graduate School of Business)
    Abstract: Two key features of the government bailout programs implemented in the 2008-2009 Â…financial crisis were: fiÂ…rst, the general opposition of voters to these programs and second, the implementation of a variety of interventions, ranging from targeted transfers meant to inject capital in particular institutions to untargeted transfers aimed at helping entire sectors. This paper argues that the observed shift in the balance between targeted and untargeted transfers emerges in a political economy environment, when voters posses less information than the government about the shocks hitting the economy, and when Â…firms can lobby the government for socially inefficient transfers. The model shows that the optimal incentives voters can give to an elected politician can lead to persistent effects of government interventions, which triggers a shift towards more untargeted interventions following a crisis.
    Date: 2016
  10. By: Jonathan Lehne (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Jacob N. Shapiro (WWSPIL - Woodrow Wilson School of Public and International Affairs - Princeton University [Pinceton]); Oliver Vanden Eynde (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: Politically-driven corruption is a pervasive challenge for development, but evidence of its welfare effects is scarce. Using data from a major rural road construction programme in India we document political influence in a setting where politicians have no official role in contracting decisions. Exploiting close elections to identify the causal effect of coming to power, we show that the share of contractors whose name matches that of the winning politician increases by 63% (from 4% to 6.4%). Regression discontinuity estimates at the road level show that political interference raises costs, lowers quality, and increases the likelihood that roads go missing.
    Keywords: Elections,Corruption
    Date: 2016–07
  11. By: Cristina Herghelegiu (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Over the last decades, non-tariff measures (NTMs) have seen an important upsurge. However, little research has focused on the political economy of non-tariff protection, and the existing studies are mainly based on a single country or a specific type of measures. This paper seeks to fill the gap by empirically evaluating the determinants of NTMs in several countries, both developed and developing. Overall results show certain protectionist purposes behind the adoption of NTMs. This conclusion is reinforced for restrictive measures (i.e. subject to trade concerns), but does not hold for non-restrictive measures, suggesting the legitimate goal of several NTMs. Furthermore, transnational lobbying, defined as the influence exerted by national business groups during the Ministerial Conferences - the highest authority of the World Trade Organization (WTO) - increases the probability of adopting NTMs in both developed and developing countries.
    Keywords: Non-tariff Measures,Political Economy,International Trade,Lobbying
    Date: 2016–10–21
  12. By: Reza Houston; David A. Maslar; Kuntara Pukthuanthong
    Abstract: In this paper we show that while firms that have a greater percent of sales to the government tend to have a higher cost of debt, firms are able to offset this higher cost through political connections. We find that politically connected government contractors have, on average, lower costs of debt than non-connected contractors. Our results indicate that some of the documented benefits that accrue to shareholders of connected firms transfer to bondholders as well. Our results contribute to a better understanding of the costs and benefits of political connections as well as the determinants of the costs of debt.
    Date: 2016–11
  13. By: Matthieu Chavaz; Andrew K. Rose
    Abstract: We use spatial discontinuities associated with congressional district borders to identify the effect of political influences on American banks’ lending. We show that recipients of the 2008 public capital injection program (TARP) increased mortgage and small business lending by 23% to 60% more in areas located inside their home-representative’s district than elsewhere. The impact is stronger if the representative supported the TARP in Congress, was subsequently re-elected, and received more political contributions from the financial industry. Together, these results suggest that political considerations influence credit allocation in a politically mature system like the United States without the formal possibility of political interference in lending decisions, and that this influence is larger if the flows between banks and politicians are reciprocal.
    JEL: F36 G28
    Date: 2016–11
  14. By: Baron, David; Bowen, T. Renee; Nunnari, Salvatore
    Abstract: We present a laboratory experiment to study the effect of communication on durable coalitions - coalitions that support the same allocation from one period to the next. We study a bargaining setting where the status quo policy is determined by the policy implemented in the previous period. Our main experimental treatment is the opportunity for subjects to negotiate with one another through unrestricted cheap-talk communication before a proposal is made and comes to a vote. We compare committees with no communication, committees where communication is public and messages are observed by all committee members, and committees where communication is private and any committee member can send private messages to any other committee member. We find that the opportunity to communicate has a significant impact on outcomes and coalitions. When communication is public, there are more universal coalitions and fewer majoritarian coalitions. With private communication, there are more majoritarian coalitions and fewer universal coalitions. With either type of communication coalitions occur more frequently and last longer than with no communication. The content of communication is correlated with coalition type and with the formation and dissolution of durable coalitions. These findings suggest a coordination role for communication that varies with the mode of communication.
    Keywords: communication; Endogenous Status Quo; Laboratory experiments; legislative bargaining
    JEL: C73 C78 C92 D71 D72 D78
    Date: 2016–11
  15. By: Klor, Esteban F; Saiegh, Sebastian; Satyanath, Shanker
    Abstract: Well-known dictatorships have justified massive human rights violations on the grounds that they were aimed at attacking crony capitalism (governance based on favoring firms that are connected to the regime). So far, however, there is no systematic study examining whether this justification should be believed. We address this gap in the literature in the context of one of the best-known episodes of human rights violations in modern history, the repression following the coup in Argentina on March 24, 1976. Specifically, we examine the logic driving the choice of firm level union representatives who were subjected to violence following the coup. Using an original dataset assembled and digitized by us, we find that political, business and social connections to the regime are associated with an increase of 2 to 3 times in the number of firm level union representatives arrested and/or disappeared. This is the case even after controlling for a battery of firms' characteristics that capture alternative explanations for the targeting of violence. The effect is particularly pronounced in privately owned (as opposed to state-owned) firms, suggesting that the correlation is driven by cronyism for financial gain rather than ideology or information transmission. We also show that connected firms benefited from violence against union representatives by subsequently having less strikes and a higher market valuation. Our findings highlight the pervasiveness of ties to the government, even in cases where one of the main stated goals of the regime is to curb cronyism.
    Keywords: Argentina; Human Rights Violations; Labor Repression; Political Connections
    JEL: D73 D74 J52
    Date: 2016–11
  16. By: Giulia Meloni; Jo Swinnen
    Abstract: The 1860–1970 period is a particularly interesting period to study wine trade because of dramatic changes in the wine markets and trade over the course of a century. The dramatic changes in trade flows were caused by both “nature” and “men”. Mediterranean wine trade represented around 90% of global wine trade and France was the world’s leading exporter. The arrival of Phylloxera devastated French vineyards and stimulated Spanish and Italian wine exports. When French wine production recovered, French winegrowers pressured their government to intervene, resulting in high tariffs on Spanish and Italian wines and Greek raisins. The protectionist trade regime contributed to the bankruptcy of Greece and to the substitution of wine trade from Spain and Italy to France’s North African colonies. When Algeria, Morocco and Tunisia became independent, France imposed high wine tariffs, effectively killing their wine exports. The decline of the wine industry in North Africa coincided with the trade and policy integration of the South European wine exporters in the EEC—the predecessor of the EU.
    Date: 2016–10
  17. By: Hamza Bennani
    Abstract: Using a novel index measuring media's uncertainty regarding the effectiveness of European Central Bank's (ECB) policy actions, this paper estimates the interest rate policy of the ECB with respect to media coverage of its monetary policy decisions. Our results suggest that the monetary institution implements a restrictive (accommodative) monetary policy, through its repo rate, in response to an increase (decrease) of the uncertainty expressed by the media concerning the effectiveness of its past policy actions, in particular since the global financial crisis. These results are robust when considering an alternative proxy of central bank's perceived effectiveness and ECB's unconventional policy measures in the estimation procedure. Our findings thus shed some light on the decision-making procedure of the ECB when the latter has to deal with the uncertain impact of its policy decisions as expressed by media coverage, and thus, address a critical issue related to the political economy of central banking.
    Keywords: Monetary Policy, ECB, Public Media, Taylor Rule.
    JEL: E43 E52 E58
    Date: 2016
  18. By: Gil S. Epstein; Ira N. Gang
    Abstract: Governments do not have perfect information regarding constituent priorities and needs. This lack of knowledge opens the door for groups to lobby in order to affect the government’s taxation levels. We examine the political economy of decentralized revenue-raising authority in light of social protection expenditures by constructing a theoretical model of hierarchical contests and comparing the implications of centralized with decentralized governance. Increasing information available to the government may generate additional expenditures by interest groups trying to affect government taxation decisions. We show the potential existence of a poverty trap as a result of decentralization in taxation decisions.
    Keywords: governance, decentralization, economic-models-of-political-processes, contests, rent-seeking, intergovernmental-relation Number: UNU-WIDER Research Paper wp2016-101

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