nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒04‒23
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Sunlight Disinfects? Free Media in Weak Democracies By Leopoldo Fergusson; Juan F. Vargas; Mauricio A. Vela
  2. Electoral Cycle Bias in the Media Coverage of Corruption News. By Marco Le Moglie; Gilberto Turati
  3. Information Gatekeeping and Media Bias By Hulya Eraslan; Saltuk Ozerturk
  4. Politics, Hospital Behavior, and Health Care Spending Effect Methods to Examine Treatment Effect Heterogeneity in Experiments for the Young and Privately Insured? By Zack Cooper; Amanda E. Kowalski; Eleanor Neff Powell; Jennifer Wu
  5. Demographic Change and Political Polarization in the United States By Boxell, Levi
  6. Age Gap in Voter Turnout and Size of Government Debt By Ryo Arawatari; Tetsuo Ono
  7. Policy Experimentation, Redistribution and Voting Rules By Anesi, Vincent; Bowen, T. Renee
  8. The Impact of Democracy Prep Public Schools on Civic Participation By Brian Gill; Charles Tilley; Emilyn Whitesell; Mariel Finucane; Liz Potamites; Sean Corcoran
  9. Voting in the Goods and Service Tax Council of India By Bhattacherjee, Sanjay; Sarkar, Palash
  10. Can Public and Private Sanctions Discipline Politicians? Evidence from the French Parliament By Benjamin Monnery; Maxime Le Bihan
  11. Liberté, Égalité Religiosité By Joan-Maria Esteban; Gilat Levy; Laura Mayoral
  12. From Finance to Extremism: The Real Effects of Germany's 1931 Banking Crisis By Doerr, Sebastian; Gissler, Stefan; Peydró, José Luis; Voth, Hans-Joachim
  13. Pre-colonial Religious Institutions and Development: Evidence through a Military Coup By Adeel Malik; Rinchan Ali Mirza
  14. An Informational Basis for Voting Rules By Alexander V. Karpov
  15. The Effect of Council Size on Municipal Expenditures: Evidence from Italian Municipalities By Marco Alberto De Benedetto

  1. By: Leopoldo Fergusson; Juan F. Vargas; Mauricio A. Vela
    Abstract: Free media may not favor political accountability when other democratic institutions are weak and may even bring undesirable unintended consequences. We propose a simple model in which candidates running for office may engage in coercion to obtain votes. A media scandal exposing these candidates entices them to increase their coercion effort to offset the negative shock on their popularity, potentially minimizing or even counteracting the effect of the scandal on their vote share. We provide empirical evidence from one recent episode in the political history of Colombia in which politicians seeking a seat in Congress colluded with illegal armed paramilitary groups to obtain votes, and this collusion was ultimately brought to light by a media scandal. We find that paramilitary-backed candidates exposed before elections get as many votes as those exposed after elections, but their electoral support is more strongly concentrated where coercion is cheaper: in areas with paramilitary presence and weak state capacity. Our results highlight the complementarity between different dimensions of democratic institutions.
    Keywords: Media, Democracy, Elections, Colombia, Civil Conflict, Coercion
    JEL: D72 D74 L82 P16
    Date: 2018–03–29
  2. By: Marco Le Moglie; Gilberto Turati (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: We investigate the existence of an `electoral cycle bias' in the timing of media coverage of news with high political value. In particular, we analyze how the electoral cycles at the regional level in uence the coverage of news about corruption scandals in the Italian Regional Health Systems by two important national newspapers having opposite ideology, La Repubblica (left-wing oriented) and Il Giornale (right-wing oriented). Our findings show that Il Giornale produces more articles about corruption scandals involving left-wing politicians in the days right before the elections, while it reduces the number of those about right episodes of corruption and without any political connection. Instead, for La Repubblica we do not find any evidence of the existence of neither an electoral cycle, nor an ideological bias in the coverage of corruption. These results are robust to different model specifications, the potential endogeneity of some elections, and different measures of the time to the elections.
    Keywords: media, media bias, electoral cycle, ideology, corruption scandals, health system, Italian regions.
    JEL: D72 D73 H51 H75 K42 L82
    Date: 2018–04
  3. By: Hulya Eraslan (Rice University, Department of Economics); Saltuk Ozerturk (Southern Methodist University, Department of Economics)
    Abstract: We develop a model to study the political economy implications of information gatekeeping, i.e., a policy of granting access only to friendly media outlets and denying access to critical ones. While an incumbent prefers positive bias, granting access improves her re-election probability only if coverage is sufficiently credible in the eyes of the public. Information gatekeeping can induce a quid pro quo relationship: media provides coverage with positive bias in exchange of future access, thereby affecting electoral outcomes in favor of incompetent incumbents. The degree of access media enjoy increases with competence of incumbents over those issues under public focus.
    Keywords: Information gatekeeping, media outlet, electoral competition, access, media bias.
    JEL: D72 D83 L82
    Date: 2018–03
  4. By: Zack Cooper (School of Public Health, Yale University); Amanda E. Kowalski (Cowles Foundation, Yale University); Eleanor Neff Powell (University of Wisconsin-Madison); Jennifer Wu (Department of Political Science, Yale University)
    Abstract: This paper examines the link between legislative politics, hospital behavior, and health care spending. When trying to pass sweeping legislation, congressional leaders can attract votes by adding targeted provisions that steer money toward the districts of reluctant legislators. This targeted spending provides tangible local benefits that legislators can highlight when fundraising or running for reelection. We study a provision - Section 508 – that was added to the 2003 Medicare Modernization Act (MMA). Section 508 created a pathway for hospitals to apply to get their Medicare payment rates increased. We find that hospitals represented by members of the House of Representatives who voted ‘Yea’ on the MMA were significantly more likely to receive a 508 waiver than hospitals represented by members who voted ‘Nay.’ Following the payment increase generated by the 508 program, recipient hospitals treated more patients, increased payroll, hired nurses, added new technology, raised CEO pay, and ultimately increased their spending by over $100 million annually. Section 508 recipient hospitals formed the Section 508 Hospital Coalition, which spent millions of dollars lobbying Congress to extend the program. After the vote on the MMA and before the vote to reauthorize the 508 program, members of Congress with a 508 hospital in their district received a 22% increase in total campaign contributions and a 65% increase in contributions from individuals working in the health care industry in the members’ home states. Our work demonstrates a pathway through which the link between politics and Medicare policy can dramatically affect US health spending.
    JEL: I10 I18 H51 D72 P16
    Date: 2017–08
  5. By: Boxell, Levi
    Abstract: I construct an index of political polarization using seven previously proposed measures. I estimate the relative propensity for polarization across demographic groups in a regression framework and examine the extent to which demographic change can explain recent trends in polarization. Assuming fixed propensities for polarization, I estimate that 25 to 59 percent of the change in polarization between 1984 and 2016 can be attributed to demographic change in the United States.
    Keywords: political polarization, demographic change, affect polarization, ideological polarization
    JEL: D72 H89 J10 J11 Z0
    Date: 2018–03–24
  6. By: Ryo Arawatari (Graduate School of Economics, Nagoya University); Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: We consider a cross-country difference of age gap in voter turnout and its im-pact on fiscal policymaking in a multi-country, overlapping-generations model. We present con ict over fiscal policy between successive generations (i.e., the young and elderly). We show that higher turnout of the elderly in voting may have a non- monotone effect on the size of government debt, depending on voters' inter-temporal elasticity of substitution of public expenditure.
    Keywords: fiscal policy; voter turnout; public debt; probabilistic voting; small open economies.
    JEL: D70 E62 H63
    Date: 2016–10
  7. By: Anesi, Vincent; Bowen, T. Renee
    Abstract: We study conditions under which optimal policy experimentation can be implemented by a committee. We consider a dynamic bargaining game in which, each period, committee members choose to implement a risky reform or implement a policy with known returns. We first show that when no redistribution is allowed the unique equilibrium outcome is generically inefficient. When committee members are allowed to redistribute resources (even arbitrarily small amounts), there always exists an equilibrium that supports optimal experimentation for any non-collegial voting rule. With collegial voting rules, however, optimal policy experimentation is possible only with a sufficient amount of redistribution. We conclude that veto rights, not constraints on redistribution, constitute the main obstacle to optimal policy experimentation.
    Keywords: Committees; Endogenous Status Quo; Experimentation; redistribution; reforms; Voting rules
    JEL: C73 C78 D61 D71 H23
    Date: 2018–03
  8. By: Brian Gill; Charles Tilley; Emilyn Whitesell; Mariel Finucane; Liz Potamites; Sean Corcoran
    Abstract: Using randomized admissions lotteries to conduct an experimental analysis, we find that the Democracy Prep charter-school network produces substantial positive impacts on rates of voter registration and election participation after students become old enough to vote.
    Keywords: school choice, charter schools, voter participation, voter registration, civic education
    JEL: I
  9. By: Bhattacherjee, Sanjay; Sarkar, Palash
    Abstract: In 2017, India enacted a new taxation law called the Goods and Services Tax (GST). This law created a GST Council with representatives of the Union government and the Provincial governments. The decision making procedure in the GST Council is specified to be by weighted voting. This work performs a detailed study of such a mechanism using the framework of formal voting games. On a theoretical note, we introduce several new notions regarding blocking dynamics of voting games. These are then applied to the study of voting in the GST context. We identify a set of basic desiderata and propose some modifications to the voting rule in the GST Act.
    Keywords: Goods and Services Tax (GST); GST Council; Weighted majority voting games; Winning and blocking coalition; Blocking power; Efficiency; Influence
    JEL: C71 D7 D72 D73 G28 H1 H2 H71 H77 Y10 Z18
    Date: 2018–04–16
  10. By: Benjamin Monnery; Maxime Le Bihan
    Abstract: This paper investigates the effects of sanctions on the behavior of deputies in the French National Assembly. In 2009, the Assembly introduced small monetary sanctions to prevent absenteeism in weekly standing committee meetings (held on wednesday mornings). Using a rich monthly panel dataset of parliamentary activity for the full 2007-2012 legislature, we study the reactions of deputies to (i) the mere eligibility to new sanctions, (ii) the actual experience of a salary cut, and (iii) the public exposure of sanctioned deputies in the media. First, our diff-in-diff estimates show very large disciplining effects of the policy in terms of committee attendance, and positive or null effects on other dimensions of parliamentary work. Second, exploiting the timing of exposure to actual sanctions (monthly salary cuts versus staggered media exposure), we find that deputies strongly increase their committee attendance both after the private experience of sanctions and after their public exposure. These results suggest that monetary and reputational incentives can effectively discipline politicians without crowding out intrinsic motivation.
    Keywords: political economy; political accoutability; sanctions; reputation; motivation
    JEL: D72 D78 J45 K42
    Date: 2018
  11. By: Joan-Maria Esteban; Gilat Levy; Laura Mayoral
    Abstract: In this paper we study the effect of religiosity on the political choices over redistribution and over the legal restrictions on personal liberties. Religious teachings generally restrict individual behavior on issues such as consumption of some goods, sexual orientation, divorce, abortion, gay marriage, contraception and so on. We assume that the more religious an individual is, (i) the less he enjoys the use of liberties prohibited by his religion; and (ii) the higher the negative externality experienced when others in society practice those liberties beyond what he deems adequate. The first assumption implies that, when the law allows for the use of liberties, secular individuals have a higher incentive to work than religious ones. As a result, the political choice of legal restrictions on liberties has an impact on income inequality. The second implies that religious individuals may prefer to repress liberties in society. As repression of liberties reduces income inequality, poor religious individuals may still prefer low taxes compared with richer and less religious ones. We also analyze the choice of redistribution and the legal cap on liberties as the majoritarian outcome in a citizen-candidate model. We obtain that when the majority of the population is religious and the religious cleavage in society is large, high intolerance due to negative externalities leads to a political outcome consisting of repression of liberties and relatively low income taxes.
    Keywords: religiosity, redistribution, individual liberties, political economy
    Date: 2018–03
  12. By: Doerr, Sebastian; Gissler, Stefan; Peydró, José Luis; Voth, Hans-Joachim
    Abstract: Do financial crises radicalize voters? For identification, we analyze the canonical case of Germany in the 1930s exploiting a large bank failure in 1931 caused by fraud, foreign shocks and political inaction. We use detailed bank-firm connections on banks that (unlike the US) served the whole country. We provide causal evidence from banking crisis to economic distress and extreme radical voting, while the literature in general has found no clear effect of economic distress on Nazi Party support. We show that, first, the failure of Jewish-led Danatbank induced a strong reduction in the wage bill for connected firms. This led to increasing city-level unemployment in cities with more Danat-connected firms. The effects are notably stronger in cities with a higher share of non-exporting firms, where local demand spillovers are higher. Second, Danat exposure significantly increased Nazi Party support between 1930 and 1933 elections, but not between 1928 and 1930 -before the banking crisis but after the start of the Great Depression and high unemployment. The financial crisis increased support for the Nazi party the most in areas with both deep-seated historical anti-Semitism, and more net savers than borrowers. Not only did the banking crisis help the Nazis rise to power, but cities with higher Danat exposure saw fewer marriages between Jews and gentiles after the banking crisis. Also, after 1933, there were more attacks on Jews and their property in Danat-exposed cites, and deportation rates were higher.
    Keywords: extremism; Financial crises; Germany; Great Depression; Nazi Party; Polarisation; Real effects
    Date: 2018–03
  13. By: Adeel Malik; Rinchan Ali Mirza
    Abstract: This paper offers a novel illustration of the political economy of religion and development by empirically examining the impact of religious shrines on development. Compiling a unique database covering the universe of holy Muslim shrines across Pakistani Punjab, we show that historically embedded religious power shapes persistent differences in literacy. Using the 1977 military take-over as a universal shock, our difference-in-differences analysis suggests that areas with a greater concentration of shrines recognized by the British colonial administration experienced a substantially retarded growth in literacy. We argue that this literacy disadvantage in shrine-dominated regions is largely attributable to a growingly prominent role of shrine elites in electoral politics and their direct control over allocation of public goods since the 1977 military coup. Our analysis suggests that shrines in these regions represent the confluence of three forces—religion, land and politics —that together constitute a powerful structural inequality with potentially adverse consequences for development.
    JEL: I25 N55 Z12 O15
    Date: 2018
  14. By: Alexander V. Karpov (National Research University Higher School of Economics)
    Abstract: This paper presents a novel combinatorial approach for voting rule analysis. Applying reversal symmetry, we introduce a new class of preference profiles and a new representation (bracelet representation). By applying an impartial, anonymous, and neutral culture model for the case of three alternatives, we obtain precise theoretical values for the number of voting situations for the plurality rule, the run-off rule, the Kemeny rule, the Borda rule, and the scoring rules in the extreme case. From enumerative combinatorics, we obtain an information utilization index for these rules. The main results are obtained for the case of three alternative
    Keywords: ANEC, IANC, plurality, run-off, Kemeny, Borda, scoring rules, reversal symmetry
    JEL: D70
    Date: 2018
  15. By: Marco Alberto De Benedetto (Birkbeck, University of London; Università degli Studi di Messina)
    Abstract: I study the effect of council size on municipal expenditures by using a rich data set providing information on Italian municipal budgets over the period 2001-2007. By implementing a Sharp Regression Discontinuity Design, I find a negative relationship between local government size, as measured by total expenditures per capita, and the council size. Similar results are found when I consider expenditures that are more directly under the control of bureaucrats, such as current expenditures per capita. Finally, I test the "law of 1/n" on pork barrel policies, finding again a negative effect of council size on capital expenditures per capita.
    Keywords: Government Size, Legislature Size, Law of 1/n, Natural Experiment, Sharp RDD.
    JEL: D72 D78 H11 H70
    Date: 2018–03

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