|
on Positive Political Economics |
| By: | Fidel Perez-Sebastian; Ohad Raveh |
| Abstract: | What determines legislatorsvoting behavior over federal tax policies? Conventional wisdom points primarily at party a¢ liation. This paper presents a novel mechanism of voting patterns across state-levels of scal advantage. We construct a political economy model of scal federalism with state scal asymmetries that originate in heterogeneity in natural resource abundance, representing a non-mobile source of income that provides a scal advantage in the inter-state scal competition. The model shows that representatives of natural resource rich states are more willing to vote in favor of federal tax increases, despite the lower net scal bene ts their states receive. This occurs because these states can reduce their tax rates as a response to an increase in the federal tax rate, and hence attract capital from the rest of the nation to the extent of increasing their pre-shock tax base. Data on roll-call votes in the U.S. Congress over major changes in federal tax bills in the post WW-II period support the predicted voting patterns. Speci cally, we nd that elected o¢ cials of resource rich states are more (less) supportive of capital-related federal tax increases (decreases), controlling for their party a¢ liation, ideology, federal transfers, and economic conditions. Our results indicate that the scal advantage channel is as dominant as party a¢ liation in driving legislatorsvoting decisions over federal tax policies. |
| Keywords: | Federal tax changes, voting behaviour, federalism, natural resources |
| JEL: | D72 H77 Q32 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:182&r=pol |
| By: | Caroline Freund (Peterson Institute for International Economics); Dario Sidhu (Peterson Institute for International Economics) |
| Abstract: | Much of the public discourse and media analysis of the surprise outcome of the 2016 US presidential election has emphasized the role of manufacturing workers. This paper examines the importance of manufacturing jobs and job loss as determinants of voting patterns using county-level voting data from recent presidential elections. The share of employment in the manufacturing sector and long-run manufacturing job loss at the county level are not statistically significant in explaining the change in Republican vote shares from 2012 to 2016, when controlling for standard voting determinants. However, the change in the Republican vote share is positively correlated with manufacturing in predominantly white counties and negatively correlated with manufacturing in ethnically diverse counties, with these effects roughly offsetting each other. The paper further shows that this polarization between white and nonwhite manufacturing counties is more closely associated with polarizing candidates than a polarized electorate. |
| Keywords: | identity politics, job loss, voting |
| JEL: | D72 P16 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp17-7&r=pol |
| By: | Ignacio Lago; André Blais |
| Abstract: | We explore how the uniformity of electoral swings in the district vote within countries is affected by the level of economic and political decentralization. We rely on district-level data from OECD countries in two consecutive elections before and after the Great Recession to show that as regional governments exert more influence over the central government districts deviate less from the overall pattern of change in the support of the national incumbent party. The causal mechanism accounting for the effect of decentralization on dynamic nationalization is examined with individual panel data from national elections in Canada and Spain. |
| Keywords: | Decentralization, dynamic nationalization, electoral swing, Great Recession. |
| JEL: | R1 R12 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:gov:wpregi:1702&r=pol |
| By: | Leonardo Bursztyn; Davide Cantoni; Patricia Funk; Noam Yuchtman |
| Abstract: | We exploit naturally occurring variation in the existence, closeness, and dissemination of pre-election polls to identify a causal effect of anticipated election closeness on voter turnout in Swiss referenda. Closer elections are associated with greater turnout only when polls exist. Examining within-election variation in newspaper reporting on polls across cantons, we find that close polls increase turnout significantly more where newspapers report on them most. This holds examining only "incidental" exposure to coverage by periodicals whose largest audience is elsewhere. The introduction of polls had larger effects in politically unrepresentative municipalities, where locally available information differs most from national polls. |
| JEL: | D72 P16 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23490&r=pol |
| By: | Eric Avis; Claudio Ferraz; Frederico Finan; Carlos Varjão |
| Abstract: | This paper examines the effects of campaign spending limits on political competition and incumbency advantage. We study a reform in Brazil that imposed limits on campaign spending for mayoral elections. These limits were implemented with a discontinuous kink which we exploit for causal identification. We find that stricter limits increase political competition by creating a larger pool of candidates that is on average less wealthy. Moreover, we find that stricter spending limits reduce the incumbency advantage, causing mayors to be less likely to be reelected. These findings are consistent with a contest model with spending caps and endogenous candidate entry. |
| JEL: | H0 O0 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23508&r=pol |
| By: | Eric Avis (UC Berkeley); Claudio Ferraz (Department of Economics, PUC-Rio); Frederico Finan (UC Berkeley); Carlos Varjão (Stanford) |
| Abstract: | This paper examines the effects of campaign spending limits on political competition and incumbency advantage. We study a reform in Brazil that imposed limits on campaign spending for mayoral elections. These limits were implemented with a discontinuous kink which we exploit for causal identification. We find that stricter limits increase political competition by creating a larger pool of candidates that is on average less wealthy. Moreover, we find that stricter spending limits reduce the incumbency advantage, causing mayors to be less likely to be reelected. These findings are consistent with a contest model with spending caps and endogenous candidate entry.Creation-Date: 2017-06 |
| URL: | http://d.repec.org/n?u=RePEc:rio:texdis:656&r=pol |
| By: | Carlos Viana de Carvalho (Central Bank of Brazil and Department of Economics, PUC-Rio); Eduardo Zilberman (Department of Economics, PUC-Rio) |
| Abstract: | We document that a huge frustration shock, clearly unrelated to government’s actions, was perceived to lead to substantial punishment at the polls months later. In particular, we provide evidence that Brazil’s 7-1 humiliating defeat to Germany in the 2014 World Cup was perceived by financial market participants as a political shock against the incumbent president. To do so, we explore an empirical strategy that allows us to extract daily political news content from stock market data. Among the many events that affected the convoluted 2014 presidential election, the 7-1 defeat to Germany was among those perceived to have high political impact. We propose an explanation whereby this huge frustration shock triggered a transfer of domains that led Brazilians to update their beliefs regarding government’s poor performance.Creation-Date: 2017-04 |
| URL: | http://d.repec.org/n?u=RePEc:rio:texdis:655&r=pol |
| By: | Gratton, Gabriele; Guiso, Luigi; Michelacci, Claudio; Morelli, Massimo |
| Abstract: | A well functioning bureaucracy can promote prosperity, as Max Weber maintained. But when bureaucracy gets jammed - a Kafkian situation - it causes stagnation. We propose a dynamic theory of the interaction between legislation and the efficiency of bureaucracy. When bureaucracy is inefficient, the effects of politicians' legislative acts are hard to assess. Incompetent politicians thus have strong incentives of passing laws to acquire the reputation of skillful reformers. But a plethora of often contradictory laws can itself lead to a collapse in bureaucratic efficiency. This interaction can spawn both Weberian and Kafkian steady states. A temporary surge in political instability, which increases the likelihood of a premature end of the legislature, exerts pressure for reforms, or results in the appointment of short-lived technocratic governments can determine a permanent shift towards the nightmare Kafkian steady state. The aggregate experience of Italy in its transition from the so-called First to the Second Republic fits the narrative of the model quite well. Using micro-data for Italian MPs, we also provide evidence consistent with the claim that when political instability is high, politicians signal their competence through legislative activism, which leads to the overproduction of laws and norms. |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12081&r=pol |
| By: | Daniel L. Bennett (Patrick Henry College); Hugo J. Faria (University of Miami); James D. Gwartney (Florida State University); Hugo M. Montesinos-Yufa (Florida State University & IESA); Daniel R. Morales (IDEICE & Florida State University); Carlos E. Navarro (IESA & Monteavila University) |
| Abstract: | A growing body of evidence suggests that institutions are an important causal determinant of economic development, yet there remains considerable debate over which institutions are most important. In this paper, we employ an identification strategy that allows us to simultaneously examine the potential causal impact of economic and political institutions. The results of different instrumental variable estimators strongly suggest that economic institutions, gauged by the Index of Social Infrastructure and by the Economic Freedom of the World Index, are economically and statistically significant determinants of income per capita. However, political institutions, measured by Constraints on the Executive, exert smaller and less discernible statistical impact on development. These findings are robust to the inclusion of confounding factors that potentially influence development such as geography, ethnolinguistic fractionalization, human capital, as well as robust to a number of alternative sets of covariates, data sources, sample sizes, instrumental variables, and to tests that provide for valid inferences under near exogeneity. |
| Keywords: | Comparative Economic Development, Institutions, Out of Africa Hypothesis, IV Estimators, Cognitive Skills. Publication Status: In Submission |
| JEL: | I25 O10 O43 P10 |
| Date: | 2017–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:mia:wpaper:2017-04&r=pol |
| By: | Hatton, Timothy J. |
| Abstract: | There is growing interest among economists in public opinion towards immigration, something that is often seen as the foundation for restrictive immigration policies. Existing studies have focused on the responses to survey questions on whether the individual would prefer more or less immigration but not on his or her assessment of its importance as a policy issue. Here I distinguish between preference and salience. Analysis of data from the European Social Survey and Eurobarometer indicates that these are associated with different individual-level characteristics. At the national level these two dimensions of public opinion move differently over time and in response to different macro-level variables. The results suggest that both dimensions need to be taken into account when assessing the overall climate of public opinion towards immigration. Finally, there is some evidence that both preference and salience are important influences on immigration policy. |
| Keywords: | Attitudes to Immigration; Public Opinion; salience |
| JEL: | D72 F22 J61 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12084&r=pol |
| By: | Paul Hallwood (University of Connecticut) |
| Abstract: | Abstract: This paper argues that falling slave prices in the earliest months of the American Civil War in April 1861 indicates lack of confidence in the durability of the Confederacy. The key to this understanding is use of an asset pricing model that distinguishes between the expected outcomes of the war, whether the war was thought to be over quickly or otherwise, and whether any compensation for emancipation would be paid. This view concurs with other investigators who have examined falling gold bond and cotton bond prices and, in the very early months, rising Confederate dollar prices of gold, as well as difficulties in selling Confederate bonds to finance its war effort. |
| Keywords: | Confederacy, default risk, secession, slavery, US Civil War |
| JEL: | D72 D74 D83 G14 H77 N31 N41 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2017-07&r=pol |
| By: | Hugo J. Faria (University of Miami); Hugo M. Montesinos-Yufa (Florida State University & IESA) |
| Abstract: | Cervellati, Jung, Sunde and Vischer (2014) find heterogeneous effects of income on democracy: negative for colonies and positive for non-colonies. They report different effects of income on democracy within colonies, depending on the quality of early institutions. In this paper, using the same data set as Cervellati et al. (2014) but applying the System GMM estimator, we find a strong, positive, significant and robust effect of income on democracy, both in the full sample of countries and the subsamples of colonies and non-colonies. |
| Keywords: | Democracy, Income, Weak Identification, System GMM Estimation Publication Status: Under Review |
| JEL: | D72 E21 O10 |
| Date: | 2017–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:mia:wpaper:2017-05&r=pol |