nep-pol New Economics Papers
on Positive Political Economics
Issue of 2016‒12‒04
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Party alignment, political budget cycles and vote within a federal country By Pablo Garofalo; Daniel Lema; Jorge M. Streb
  2. Voter Motivation and the Quality of Democratic Choice By Mechtenberg, Lydia; Tyran, Jean-Robert
  3. Beliefs, politics, and environmental policy By Antony Millner; Helene Olivier
  4. “On the Campaign Trail: The Electoral Effects of Leader Visits” By Davis, Brent
  5. Republicans, Democrats and Budget Deficits: Fiscal Dynamics in Political Perspective By Pereira, Jaime; Tavares, José
  6. Voting and Popularity By Kirchgässner, Gebhard
  7. Transforming Cities: Does Urbanization Promote Democratic Change? By Edward L. Glaeser; Bryce Millett Steinberg
  8. Collective Action and Representation in Autocracies: Evidence from Russia's Great Reforms By Paul C. Dower; Evgeny Finkel; Scott Gehlbach; Steven Nafziger
  9. Political Connections and Insider Trading By Thomas Bourveau; Renaud Coulomb; Marc Sangnier
  10. Partisan and Bipartisan Gerrymandering By Hideo Konishi; Chen-Yu Pan
  11. Russia’S Electoral Space: Change and Continuity in Post-Soviet Perspective By Rostislav Turovsky
  12. Another perspective on Borda’s paradox By Mostapha Diss; Abdelmonaim Tlidi
  13. The political economy of carbon pricing: a panel analysis By Dolphin, G. G.; Pollitt, M. G.; Newbery, D. G.
  14. Democracy and income inequality: revisiting the long and short-term relationship By Zlatko Nikoloski

  1. By: Pablo Garofalo; Daniel Lema; Jorge M. Streb
    Abstract: To understand how intergovernmental relations affect political budget cycles (PBCs) within federal countries, we model the credibility problems of discretionary fiscal policy in combination with a national incumbent that favors aligned districts. Analyzing Argentina’s provinces during the 1985–2001 period, unsurprisingly, provincial budget balances worsen in electoral years, and aligned provinces (where the governor belongs to the president’s party) receive larger federal transfers and have larger public expenditures during the governor’s entire term. The main interaction effect in electoral years is that provincial budget balances only deteriorate in unaligned provinces, which receive less federal transfers. Furthermore, average federal transfers boost the vote for aligned governors. Two broad implications are that studies of subnational PBCs are biased by an omitted factor (discretional federal transfers), and that governors unaffiliated with the president suffer a “Cinderella” effect at the polls which helps the president dominate national politics.
    Keywords: federal countries, discretional transfers, party alignment, distributive politics, subnational political budget cycles
    JEL: D72 E62
    Date: 2016–10
  2. By: Mechtenberg, Lydia; Tyran, Jean-Robert
    Abstract: The quality of democratic choice critically depends on voter motivation, i.e. on voters' willingness to cast an informed vote. If voters are motivated, voting may result in smart choices because of information aggregation but if voters remain ignorant, delegating decision making to an expert may yield better outcomes. We experimentally study a common interest situation in which we vary voters' information cost and the competence of the expert. We find that voters are more motivated to collect information than predicted by standard theory and that voter motivation is higher when subjects demand to make choices by voting than when voting is imposed on subjects.
    Keywords: Experiment; Information Acquisition; information aggregation; voting
    JEL: C91 D71 D72
    Date: 2016–11
  3. By: Antony Millner; Helene Olivier
    Abstract: Experts and the general public often perceive environmental problems differently. Moreover, regulatory responses to environmental issues often do not coincide with consensus expert recommendations. These two facts are mutually consistent – it is unlikely that regulations based on factual claims that are substantially different from voters’ opinions would be politically feasible. Given that the public’s beliefs constrain policy choices, it is vital to understand how beliefs are formed, whether they will be biased, and how the inevitable heterogeneity in people’s beliefs filters through the political system to affect policy. We review recent theoretical and empirical work on individual inference, social learning, and the supply of information by the media, and identify the potential for biased beliefs to arise. We then examine the interaction between beliefs and politics: can national elections and legislative votes be expected to result in unbiased collective decisions, do heterogeneous beliefs induce strategic political actors to alter their policy choices, and how do experts and lobby groups affect the information available to policy-makers? We conclude by suggesting that the relationship between beliefs and policy choices is a relatively neglected aspect of the theory of environmental regulation, and a fruitful area for further research.
    Keywords: political economy; environmental policy; media; beliefs; social learning
    JEL: D72 D78 D83 P48 Q50
    Date: 2016–08–23
  4. By: Davis, Brent
    Abstract: The campaign trail is an integral part of most elections. In an Australian federal election, it means the Prime Minister and the Opposition Leader engage in a strategic program of visits, both to ‘our seats’ (the one’s we want to hold on to) and ‘their seats’ (the one’s we want to take from the other party). This article is the first to examine visits by multiple, competing political leaders in an election, in a Westminster system. Using a unique data set from the 2013 Australian federal election, there appears to be a non-random, strategic approach to the selection of seats visited by political leaders. However, using a counterfactual analysis, leader visits do not appear to have a major impact in determining the broader outcome of the election, although the absence of leader visits could have changed the outcome in a number of ALP Government-held seats.
    Keywords: election campaigns; permanent campaign; vote behaviour; Australian elections
    JEL: D72
    Date: 2016–12
  5. By: Pereira, Jaime; Tavares, José
    Abstract: We use an asymmetric cointegration framework to explore politically motivated fiscal asymmetries in the US, from Eisenhower to Obama. We analyze fiscal dynamics in response to deficits as an asymmetric process, sensitive to partisan and electoral motivations, characterizing the response of Republican and Democratic administrations to budget disequilibria. In a novel approach to empirical fiscal policy, we incorporate narrative data in our partisan framework, in order to to distinguish between responses to automatic and discretionary fiscal changes. We conclude that partisanship is a key factor in the fiscal response to budget disequlibria, with Democrats and Republicans exhibiting distinct corrective behavior. On the other hand, the timing of elections does not seem to be a key determinant of the fiscal response to unsustainable budget deviations.
    Keywords: Asymmetric cointegration approach; Democrats; Fiscal Dynamics; Republicans
    JEL: H30 H62 H68
    Date: 2016–11
  6. By: Kirchgässner, Gebhard
    Abstract: For about 45 years, vote and popularity functions have been estimated for many countries indicating that voting intentions as well as actual votes are influenced by economic development. The economy is, of course, not the only and probably not always the most important factor, but there is no doubt anymore that it is an important factor. The most relevant variables are still unemployment, and/or real growth, and inflation. The estimated coefficients vary considerably between countries and time periods. In papers, retrospective sociotropic voting dominates. However, the evidence is not so univocal; it rather tells that voting has egotropic as well as sociotropic aspects, and it is prospective as well as retrospective. It is still open what roles self-interest and altruism play in voting.
    Keywords: Vote and Popularity Function, Egotropic and Sociotropic Voting, Retrospective and Prospective Voting, Rational Voters’ Behavior
    JEL: H19 H89
    Date: 2016–11
  7. By: Edward L. Glaeser; Bryce Millett Steinberg
    Abstract: Could urbanization lead to more democracy and better government for the mega-cities of the developing world? This paper reviews three channels through which urbanization may generate political change. First, cities facilitate coordinated public action and enhance the effectiveness of uprisings. Second, cities may increase the demand for democracy relative to dictatorship. Third, cities may engender the development of “civic capital” which enables citizens to improve their own institutions. History and empirics provide significant support for the first channel, but less evidence exists for the others. Urbanization may improve the quality of poor-world governments, but more research is needed to draw that conclusion.
    JEL: N90 O18 R00
    Date: 2016–11
  8. By: Paul C. Dower (Florida International University); Evgeny Finkel (George Washington University); Scott Gehlbach (University of Wisconsin-Madison); Steven Nafziger (Williams College)
    Abstract: We explore the relationship between capacity for collective action and representation in autocracies with data from Imperial Russia. Our primary empirical exercise relates peasant representation in new institutions of local self-government to the frequency of peasant unrest in the decade prior to reform. To correct for measurement error in the unrest data and other sources of endogeneity, we exploit idiosyncratic variation in two determinants of peasant unrest: the historical incidence of serfdom and religious polarization. We find that peasants were granted less representation in districts with more frequent unrest in preceding years—a relationship consistent with the AcemogluRobinson model of political transitions and inconsistent with numerous other theories of institutional change. At the same time, we observe patterns of redistribution in subsequent years that are inconsistent with the commitment mechanism central to the Acemoglu-Robinson model. Building on these results, we discuss possible directions for future theoretical work.
    Date: 2016–10
  9. By: Thomas Bourveau (Hong-Kong University of Science and Technology); Renaud Coulomb (University of Melbourne); Marc Sangnier (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales)
    Abstract: This paper investigates whether political connections affect individuals’ propensity to engage in illegal activities in financial markets. We use the 2007 French presidential election as marker of change in the value of political connections, in a difference-in-differences research design. We examine the behavior of directors of publicly listed companies who are connected to the future president through campaign donations or direct friendships, relative to that of other non-connected directors, before and after the election. We uncover indirect evidence that connected directors do more illegal insider trading after the election. More precisely, we find that purchases by connected directors trigger larger abnormal returns, and that connected directors are more likely not to comply with trading disclosure requirements and to trade closer to major corporate events.
    Keywords: political connections,white-collar crime,insider trading
    Date: 2016–10
  10. By: Hideo Konishi (Boston College); Chen-Yu Pan (Wuhan University)
    Abstract: This paper analyzes the optimal partisan and bipartisan gerrymandering policies in a model with electoral competitions in policy positions and transfer promises. With complete freedom in redistricting, partisan gerrymandering policy generates the most one-sidedly biased district profile, while bipartisan gerrymandering generates the most polarized district profile. In contrast, with limited freedom in gerrymandering, both partisan and bipartisan gerrymandering tend to prescribe the same policy. Friedman and Holden (2009) find no significant empirical difference between bipartisan and partisan gerrymandering in explaining incumbent reelection rates. Our result suggests that gerrymanderers may not be as free in redistricting as popularly thought.
    Keywords: electoral competition, partisan gerrymandering, bipartisan gerrymandering, policy convergence/divergence, pork-barrel politics
    JEL: C72 D72
    Date: 2016–11–01
  11. By: Rostislav Turovsky (National Research University Higher School of Economics)
    Abstract: This paper tests the methods of electoral analysis elaborated by the author previously and based on the concept of nationalization that is used to measure the spatial homogeneity of voting patterns. The study of nationalization scores leads to the conclusion about rather high degree of nationalization of the post-Soviet party system from its very beginning while short and small-scale upsurges of regionalization were coming along with anti-government protests of 1995-1995 and 2011. To deepen the analysis of the electoral space the author has analyzed the phenomenon of deviant and typical regions where ethnic cleavage has appeared to produce the main deviations. Finally, the analysis of dynamic nationalization brings about the better understanding of nationalization revealing the changing territorial patterns of voting for the same actors masked by the same overall national scores
    Keywords: nationalization of party systems, regionalization, electoral volatility, electoral geography
    JEL: D72
    Date: 2016
  12. By: Mostapha Diss (Univ Lyon, UJM Saint-Etienne, CNRS, GATE L-SE UMR 5824, F-42023 Saint- Etienne, France); Abdelmonaim Tlidi (University of Marrakech, National School of Applied Science - Safi, Route Sidi Bouzid, B.P. 63, 46000 Safi, Morocco)
    Abstract: This paper presents the conditions required for a profile in order to never exhibit either the strong or the strict Borda paradoxes under all weighted scoring rules in three-candidate elections. The main particularity of our paper is that all the conclusions are extracted from the differences of votes between candidates in pairwise majority elections. This way allows us to answer new questions and provide an organized knowledge of the conditions under which a given profile never shows one of the two paradoxes.
    Keywords: Voting, Geometry, Borda’s Paradox, Condorcet Pairwise Procedure, Borda, Plurality, Negative Plurality, Weighted Scoring Rules
    JEL: D71 D72
    Date: 2016
  13. By: Dolphin, G. G.; Pollitt, M. G.; Newbery, D. G.
    Abstract: In virtually all countries that explicitly price carbon, its effective price, i.e. the emissions-weighted price, remains low. Our analysis focuses on the political economy of this effective price, using data on an international panel of jurisdictions over the period 1990-2012. First, we examine the decision to introduce a carbon pricing policy. Second, we shed light on its stringency. Results show that both the odds of the implementation and the stringency of the carbon pricing policy are negatively affected by the share of electricity coming from coal and the relative share of industry in the economy. The results also broadly support an environmental Kuznets curve hypothesis as gross domestic product increases both the odds of the implementation and the policy stringency. Institutional and political factors are found to influence the implementation but not the stringency of carbon pricing schemes.
    Keywords: carbon pricing, panel analysis, political economy, electricity sector
    JEL: H23 Q58
    Date: 2016–12–14
  14. By: Zlatko Nikoloski
    Abstract: This paper studies the relationship between democracy andincome inequality in long- and short/medium-run. Using appropriate econometrictechniques on both, averaged and panel data for the period 1962-2006, we findno evidence that democracy is associated with tighter income distribution. Ourresults are robust to different specification techniques, to exclusion ofdeveloped as well as the transition countries. We speculate that the different(and opposing) transmission mechanisms, as well as the nature and thedefinition of the democracy variables (both Polity IV and Freedom House)influence our results. Improvement of conceptualization and measurement of democracycould shed further light onto the democracy-inequality nexus.
    Keywords: democracy; income inequality; political economy; economic development; developing countries; World
    JEL: F54 O15 O47
    Date: 2015

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