nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒01‒01
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Can More Information Lead to More Voter Polarization? Experimental Evidence from Turkey By Ceren Baysan
  2. Global Racist Contagion following Donald Trump’s Election By Marco Giani; Pierre-Guillaume Méon
  3. Learning to constrain: Political competition and randomized controlled trials in development By Cristina Corduneanu-Huci; Michael T. Dorsch; Paul Maarek
  4. A Fine Collection: The Political Budget Cycle of Traffic Enforcement By Emanuele Bracco
  5. Winners and Losers of the Greek Crisis as a Result of a Double Fragmentation and Exclusion: a Discourse Analysis of Greek Civil Society By Maria Zafiropoulou; Alejandro Pérez; Archontia Christodoulopoulou; Radina Peeva; Ioanna Marini
  6. Why Do Military Dictatorships Become Presidential Democracies? Mapping the Democratic Interests of Autocratic Regimes By Bjørnskov, Christian
  7. Negative returns: U.S. military policy and anti-american terrorism By Dimant, Eugen; Krieger, Tim; Meierrieks, Daniel
  8. Nudging the electorate: what works and why? By Felix Koelle; Tom Lane; Daniele Nosenzo; Chris Starmer
  9. Measuring the Strength of the Theories of Government Size By Andros Kourtellos; Alex Lenkoski; Kyriakos Petrou
  10. East versus West on the European Populism Scale By Raicho Bojilov; Jonas A. Gunnarsson; Gylfi Zoega
  11. Democracy and taxation By Balamatsias, Pavlos
  12. Corruption and Economic Development By Sule Akkoyunlu; Debora Ramella
  13. Political Connections and Non-Traditional Investment: Evidence from Public-Private Partnerships in Vocational Education By Israel Marques II
  14. From "state control" to "business lobbying": The institutional origin of private entrepreneurs' policy influence in China By Huang, Dongya; Chen, Minglu; Heberer, Thomas
  15. The digital turn in political representation in China By Heberer, Thomas; Shpakovskaya, Anna

  1. By: Ceren Baysan
    Abstract: Many claim that increased availability of information via both old and new media drives political polarization, possibly undermining democratic institutions. However, rigorous evidence on this topic remains limited. I address this gap by conducting two experiments during a recent Turkish referendum that was on an important institutional change to weaken constraints on the executive. First, I designed a randomized door-to-door campaign. In this campaign, the opposition party gave uniform information on poor economic performance and increased terrorist activity under the incumbent's leadership to more than 130,000 voters. I show that voters, despite receiving the same information, diverged further in their vote choice on aggregate, leading to a significant increase in ideological polarization. The result is consistent with a model where polarization in vote choice is driven by differences in reaction to the same information and not self-segregation to different information sources, as others have assumed. The opposition failed to increase its vote share in this campaign, on aggregate, because it lacked the necessary data to target the subset of constituents that interpreted the information in their favor. In a second experiment with politicians, I confirm that the opposition had inadequate data on voters relative to the incumbent based on an analysis of roughly one million of their tweets. The evidence from both experiments, taken together, suggests that the incumbent party can exploit its access to higher quality data on voters to maintain its grip on power and advance an agenda that weakens democratic checks and balances.
    JEL: D80 D83 D72 P26
    Date: 2017–12–06
  2. By: Marco Giani; Pierre-Guillaume Méon
    Abstract: Using a causal inference in a cross-country regression design made possible by the coincidence that the 2016 US Presidential election occurred during the fieldwork period of the European Social Survey (ESS8), we test whether Donald Trump’s unexpected win increased the willingness to report racist attitudes. The election significantly increased the gap between the opposition to different-race immigration, which did not change, vs. same-race immigration, which significantly decreased. The finding, robust to a large set of checks, is shown to be substantially shaped by socioeconomic and partisan identities. In particular, the causal effect of Donald Trump’s unexpected win on the willingness to report racist attitudes is stronger among old men living in urban areas. Moreover, the aggregate effect is driven by extreme right-wing units with high level of political interest.
    Keywords: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Political Processes: Rent-Seeking; Lobbying; Elections; Legislatures and Voting Behavior; Political Economy; Cultural Economics; Economic Sociology
    JEL: C21 D72 P16 Z10
    Date: 2017–12–15
  3. By: Cristina Corduneanu-Huci; Michael T. Dorsch; Paul Maarek (Université de Cergy-Pontoise, THEMA)
    Abstract: This paper provides a political economic analysis of impact evaluation experiments con- ducted in international development. We argue that in more politically competitive environments, where incumbents face a higher probability of losing power, govern- ments have stronger incentive to run Randomized Controlled Trial (RCT) experiments to constrain successors' margin of policy discretion. Moreover, the effect of compe- tition on the probability to host RCTs is stronger in more polarized societies since the incumbent's cost of losing power is higher. We first propose a formal model and then empirically examine its theoretical predictions using a unique data set on RCTs that we have compiled. Over a panel of Indian states and a cross-national panel, we nd that certain RCTs are more likely to occur in electorally competitive jurisdictions, and that the effect is amplified by political polarization. We demonstrate that politics matter for when, where, and with which partners RCTs in development happen.
    Keywords: Program evaluation, RCT, External validity, Political accountability, Political competition, Development policy.
    Date: 2017
  4. By: Emanuele Bracco
    Abstract: With data from 1998 to 2015, we find evidence that before elections Italian mayors issue fewer tickets and collect a lower proportion of issued fines. This provides evidence that mayors strategically use both tax setting and collection to affect elections.
    Keywords: Political Budget Cycle, parking tickets, tax collection
    JEL: D72 H26 H71
    Date: 2017
  5. By: Maria Zafiropoulou; Alejandro Pérez; Archontia Christodoulopoulou; Radina Peeva; Ioanna Marini
    Abstract: This article aims to explore, through the civil society’s opinion, the polarisation between ‘winners’ and ‘losers’ and the group of the ‘new excluded’, or ‘new poor’, that has emerged as a result of the European economic crisis and the social transformations that followed in the Greek society. Based on the Theory of Justice introduced by John Rawls (1971), and using the approach of Critical Discourse Analysis, this study focuses on the discourse analysis of the perception of 97 representatives of local and national NGOs, both formal and informal. The main results focus on different self and others’ presentations, especially during the economic crisis, and on the creation of an unbalanced, fragmented and exclusion-cantered society. However, the definition of rich and poor appears ambiguous through the analysis of various linguistic strategies of Greek NGOs revealing a hidden face of the society.
    Keywords: fragmentation, exclusion, civil society, discourse analysis, poverty
    Date: 2017–12
  6. By: Bjørnskov, Christian (Aarhus University)
    Abstract: This paper starts with the observation that almost all military dictatorships that democratize become presidential democracies. I hypothesize that military interests are able to coordinate on status-preserving institutional change prior to democratization and therefore prefer political institutions with strong veto players. Parallel civilian interests conversely suffer from coordination failure by being more diverse and les cohesive. The hypothesis therefore implies that most military democratizations are partially planned while most democratization events from civilian autocracy are either unforeseen or poorly planned. Exploring the characteristics of 111 democratization episodes between 1950 and 2015, I find a number of features broadly consistent with further theoretical predictions.
    Keywords: Dictatorship; Democracy; Political institutions
    JEL: D72 D74 P16
    Date: 2017–12–14
  7. By: Dimant, Eugen; Krieger, Tim; Meierrieks, Daniel
    Abstract: We investigate the effect of U.S. military aid and U.S. troop deployments on anti-American terrorism, using a sample of 106 countries between 1986 and 2011. We find that greater military commitment leads to more anti-American terrorism. We study the underlying mechanisms using a mediation analysis and show that both U.S. military aid and troop deployments in foreign countries do not improve local state capacity. Rather, we find that more military aid (but not troop deployments) is linked to poorer political-institutional outcomes in aid-receiving countries, explaining the positive association between U.S. military aid and anti-American terrorism. Our findings suggest that U.S. military policy does not make the United States safer from transnational terrorism.
    Keywords: oil rents,inequality,VAR,ARDL,sanctions,Iran
    JEL: D74 F35 F50
    Date: 2017
  8. By: Felix Koelle (Department of Economics, University of Cologne); Tom Lane (Department of Economics, University of Nottingham); Daniele Nosenzo (School of Economics, University of Nottingham); Chris Starmer (School of Economics, University of Nottingham)
    Abstract: We report two studies investigating whether, and if so how, different interventions affect voter registration rates. In a natural field experiment conducted before the 2015 UK General Election, we varied messages on a postcard sent by Oxford City Council to unregistered student voters encouraging them to register to vote. Relative to a baseline, emphasising negative monetary incentives (the possibility of being fined) significantly increased registration rates, while positive monetary incentives (chances of winning a lottery) had no significant effects. In the second study, we show that the success of the negative monetary incentive intervention and failure of the positive monetary incentive intervention can be partly explained by social norms.
    Keywords: Voter Registration; Voting; Field Experiment; Nudging; Social Norms; Fines; Rewards
    Date: 2017
  9. By: Andros Kourtellos; Alex Lenkoski; Kyriakos Petrou
    Abstract: Existing theoretical and empirical evidence on the determinants of government expenditure is inconclusive. We posit that the main cause of this problem is theory uncertainty, which arises due to the fact that the different theories imply different mutually compatible and interrelated mechanisms. This paper proposes a novel model averaging method to perform model averaging in linear regression systems that allows for endogeneity. Using data for more than 90 countries we assess the evidentiary support for nine different theories. Our results suggest that the government size and its components are explained by multiple mechanisms that work simultaneously but differ in their impact and importance. In particular, for general government total expenditure we find decisive evidence for the demography theory and a strong evidence for the globalization and political institution theory. In the case of central government total expenditure, we find that income inequality and macroeconomic policy play a decisive role in addition to demography.
    Keywords: Bayesian Model Averaging; Conditional Bayes Factors; Endogeneity; Government Expenditure; Gibbs Sampling
    JEL: C4 C11 C59 H10 H50
    Date: 2017–12
  10. By: Raicho Bojilov (Ecole Polytechnique); Jonas A. Gunnarsson (University of Iceland); Gylfi Zoega (University of Iceland; Birkbeck, University of London; CESifo)
    Abstract: We study a sample of individuals in 20 European countries that includes eight East European countries in order to identify whether these eight countries differ from the Western countries in the popularity of right-wing populist parties once we have controlled for personal attributes. The results show variation among the East European countries while as a whole they are not distinct from Western Europe. In particular, in Hungary and Poland populist right-wing parties enjoy greater support once account is taken of personal attributes. We discuss the reasons for this finding. When it comes to the personal identities, we find that a right-wing identity, a negative view of immigrants, not being satisfied with democracy, being negative on homosexuality, and mistrust in both the national and the European parliament seem to be the factors heavily correlated with voting for a right-wing populist party in Europe. Men are more likely to vote for a right-wing populist party as are the old and the less educated. Having experienced unemployed also increased the probability of voting for these parties.
    Keywords: Populist right-wing parties, survey evidence.
    JEL: P16 Z18
    Date: 2017–11
  11. By: Balamatsias, Pavlos
    Abstract: In this paper, the author argues that democracies tend to positively affect the size and composition of tax revenues. His argument is based on the hypothesis that democracies can increase direct taxation, such as income taxes and capital taxes, due to increased compliance of taxpayers and also because there is a diffusion of tax measures between neighboring democratic/autocratic countries. The main theoretical hypothesis is then tested on a dataset that consists of 74 countries over the period 1993-2012. His main explanatory variable will be a dichotomous measure of democracy; but he alters his analysis from previous research by assuming that democracy or autocracy is not an exogenous variable. Instead the author follows the theory of Huntington (The third wave: Democratization in the late twentieth century (Vol. 4), 1991) and the methodology of Acemoglu et al. (Democracy does cause growth, 2014) about regional democratization waves. According to this theory, democratizations occur in regional waves; consequently diffusion of demand or discontent for a political system is easier to happen in neighboring countries due to socio-political and historical similarities. This measure shows him that demand or discontent for a given political system in a geographical area, can in turn influence the power of a country's political regime and subsequently that regime's effect on taxation. The author then uses a two stage least square (2SLS) fixed effects to test our hypothesis. The empirical findings suggest that regional waves of democratization have a positive and statistically significant correlation with democracy, and in turn democracy also has a positive effect on direct taxation as well as the ratio of direct to indirect taxation in the countries of his sample. This result remains the same when several robustness tests are used. Finally when examining the long-run effect of regional waves, the author does not find any evidence of a significant relationship between regional waves of democratization and a country's own regime; however democracy still has a positive effect on direct taxes and tax ratio.
    Keywords: democracy,political development,regional democratization waves,taxation
    JEL: P16 H2
    Date: 2017
  12. By: Sule Akkoyunlu (İktisadi ve İdari Bilimler Fakültesi, ODTU, Turkey; The Rimini Centre for Economic Analysis; Department of Economics, Wilfrid Laurier University, Canada); Debora Ramella (Università degli Studi di Torino, Italy)
    Abstract: This study investigates the impact of openness to trade and corruption on economic development for a cross-section of 143 countries for the year 2000 by analysing the effects of trade openness and corruption on income, productivity, innovation, and income inequality. Institutional, cultural and geographical factors, and country size are controlled for in the analysis. An instrumental variable approach has been adopted in order to address the endogeneity of corruption and openness to trade. The age of democracy and gravity-based predictors are chosen as the instruments for corruption and openness to trade, respectively. The estimates show that corruption negatively affects income per capita, productivity, and innovation, while it does not significantly impact income inequality (Gini). The control of corruption and the openness to trade affect output per worker through the total factor productivity. Both the control of corruption and openness to trade are statistically significant determinants of the 90/10 income gap. Landlockedness affects Gini Index directly, even after controlling for trade and corruption. These findings have important policy implications. For example, on the basis of the estimates, if Botswana improved its control of corruption to reach the level of Finland, its per capita income would rise by 2.7 times.
    Keywords: Trade, Corruption, Economic Development, Productivity, Innovation and Inequality
    JEL: D73 F00 F10 O11 O40
    Date: 2017–12
  13. By: Israel Marques II
    Abstract: How do political connections shape the propensity of firms to make investments in weakly institutionalized settings? Traditionally, absent ways to hold the state accountable, firms should withhold investment for fear of predation. An emerging body of work on the political economy of investment has highlighted the competitive advantages that direct political connections with officials can bring to firms in institutionally weak environments with low accountability. These advantages, particularly privileged protection of property rights, can decrease uncertainty and promote investment even absent traditional accountability mechanisms. This paper applies these insights to a particularly risky form of investment for firms: public-private partnerships (PPP) with the state to develop skill. Skill development investments are riskier than average, since they require firms to reveal trade secrets about their production, engage in long-term interactions, and can be poached by free-riding rival firms. This paper argues that these risks canbe overcome by a strong state partner (i.e. PPP), albeit this creates new risks in weakly institutionalized environments if the lower-level officials responsible for implementing agreements cannot be held accountable for agreements and can shirk. This paper argues that political connections provide the means for states to create credible commitment, as they give firms access to power that can enable them to monitor lower-level officials, call attention to misbehavior, and thus punish deviations from PPP agreements. It outlines the ways in which various types of political connections state ownership, direct officeholding, employing former officials, via formal consultative organs , and acquaintanceship can enable firms to hold lower-level officials accountable and engender credible commitment. These arguments are then tested using data from an original survey of 690 firms in 12 Russian regions.
    Keywords: Skill Development, Public-Private Partnerships, Political Connections, Institutional Quality, Credible Commitment, Firms, Russia
    JEL: D22 J24 I25 L21 L23 O12 P48
    Date: 2017
  14. By: Huang, Dongya; Chen, Minglu; Heberer, Thomas
    Abstract: Existing scholarship regards the collusion between the Chinese government and the private sector as 'informal' and a series of 'economic alliances', without considering the private sector's institutionalized participation in the process of government policy formulation. This article takes an alternative perspective and examines such institutionalized efforts in interest expression and policy promotion. In the authoritarian regime, state institutions that previously functioned to co-opt and corporatize the private sector have also become forums in which private entrepreneurs can have an impact on policy-making. This change results from the state's initiative in developing formal channels of participation based on the united front work remnant and interaction between 'state control' and the 'business lobby'. The shift from 'state control' to the 'business lobby' reveals a unique pathway for private interest to have an impact on public policy formulation.
    Keywords: business lobbying,All-China Federation of Industry and Commerce,business associations,Chinese Political Consultative Conference
    Date: 2017
  15. By: Heberer, Thomas; Shpakovskaya, Anna
    Abstract: This paper provides a literature review and preliminary field observations on the topic of political representation in the Chinese cyberspace. The authors demonstrate that multiple new communication platforms are being established in the Chinese cyberspace. These new platforms not only transform conventional forms of political representation but also create new representative patterns, such as in cases of interactive and connective e-representations. They conclude that the proliferation of new communication technologies has been transforming the relationships between representatives and represented as well as between the state and society. Furthermore, in this paper the authors take their analysis beyond the description of the Chinese case and argue that the Chinese case also contributes to the Western theory of political representation. More specifically, they question the performative nature of claim-making and the role of "performer" and the "audience". They propose two concepts of interactive and connective e-representations and further claim that the current developments in the Chinese cyberspace may signal a new digital turn in the theory of political representation.
    Keywords: political representation,e-representation,cyberspace,representative claim-making,interactive andconnective e-representations,opinion leaders,entrepreneurs
    Date: 2017

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