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on Positive Political Economics |
| By: | Alexis Antoniades; Charles W. Calomiris |
| Abstract: | Voters punish incumbent Presidential candidates for contractions in the local (county-level) supply of mortgage credit during market-wide contractions of credit, but they do not reward them for expansions in mortgage credit supply in boom times. Our primary focus is the Presidential election of 2008, which followed an unprecedented swing from very generous mortgage underwriting standards to a severe contraction of mortgage credit. Voters responded to the credit crunch by shifting their support away from the Republican Presidential candidate in 2008. That shift was particularly pronounced in states that typically vote Republican, and in swing states. The magnitude of the effect is large. If the supply of mortgage credit had not contracted from 2004 to 2008, McCain would have received half the votes needed in nine crucial swing states to reverse the outcome of the election. The effect on voting in these swing states from local contractions in mortgage credit supply was five times as important as the increase in the unemployment rate; if unemployment had not increased from 2004 to 2008, that improvement in local labor markets would only have given McCain only 9% of the votes needed to win the nine crucial swing states. We extend our analysis to the Presidential elections from 1996 to 2012 and find that voters’ reactions are similar for Democratic and Republican incumbent parties, but different during booms and busts of mortgage credit. These asymmetric results indicate that voters react strongly and negatively to credit supply contraction; however, organized political bargaining (the “smoke-filled room channel”) rather than voting was the primary vehicle for rewarding politicians for supporting government subsidies for mortgage risk during booms. |
| JEL: | D72 E51 G01 G21 L51 N22 N42 P16 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24459&r=pol |
| By: | Dewenter, Ralf; Linder, Melissa; Thomas, Tobias |
| Abstract: | As the rise of populist and right-wing political movements is connected to extensive media coverage, the question arises whether media report more on political parties because of their success or if their success is caused by media reports. To tackle this question, we investigate how media coverage affects short- and long-term political preferences, namely party affiliation and voting intention. For our empirical analysis, we merge 14 years of human-coded data obtained from leading media in Germany with results of the comprehensive German Politbarometer survey from February 1998 through December 2012. To account for endogeneity, we employ instrumental variable estimations. In addition, we control for a multitude of (internal) personal characteristics, such as age, and gender, as well as for (external) macroeconomic variables, such as business climate, unemployment, and inflation. The results show that media coverage of a political party has a positive and significant effect on the shortterm voting intention for this party. When media outlets cover a political party more positively, the electorate has a greater tendency to vote for it. However, for long-term party affiliation, the effect vanishes. This is consistent with the economic theory. Long-term preferences are stable and, thus, contemporary events, such as media coverage, hardly affect supposedly stable preferences. However, in the long-term, party affiliation might also be affected. |
| Keywords: | political preferences,voting intention,media impact |
| JEL: | C43 D72 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:287&r=pol |
| By: | Marianne Bertrand; Matilde Bombardini; Raymond Fisman; Francesco Trebbi |
| Abstract: | We explore the role of charitable giving as a means of political influence, a channel that has been heretofore unexplored in the political economy literature. For philanthropic foundations associated with Fortune 500 and S&P500 corporations, we show that grants given to charitable organizations located in a congressional district increase when its representative obtains seats on committees that are of policy relevance to the firm associated with the foundation. This pattern parallels that of publicly disclosed Political Action Committee (PAC) spending. As further evidence on firms’ political motivations for charitable giving, we show that a member of Congress’s departure leads to a short-term decline in charitable giving to his district, and we again observe similar patterns in PAC spending. Charities directly linked to politicians through personal financial disclosure forms filed in accordance to Ethics in Government Act requirements exhibit similar patterns of political dependence. Our analysis suggests that firms deploy their charitable foundations as a form of tax-exempt influence seeking. Based on a straightforward model of political influence, our estimates imply that 7.1 percent of total U.S. corporate charitable giving is politically motivated, an amount that is economically significant: it is 280 percent larger than annual PAC contributions and about 40 percent of total federal lobbying expenditures. Given the lack of formal electoral or regulatory disclosure requirements, charitable giving may be a form of political influence that goes mostly undetected by voters and shareholders, and which is directly subsidized by taxpayers. |
| JEL: | G28 P16 P48 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24451&r=pol |
| By: | Andreas Bernecker; Pierre C. Boyer; Christina Gathmann |
| Abstract: | We investigate whether the decision to experiment with novel policies is influenced by electoral incentives. Our empirical setting is the U.S. welfare reform in 1996, which marked the most dramatic shift in social policy since the New Deal. We find that electoral incentives matter: governors with strong electoral support are less likely to experiment with policies than governors with little electoral support. Yet, governors who cannot be reelected experiment more than governors striving for reelection. The importance of electoral incentives is robust to controlling for governor ideology, voter preferences for redistribution, the influence of the legislature, or for learning among states. A comparison of the role of governor ideology and electoral incentives reveals that both contribute about equally to policy experimentation. |
| Keywords: | policy innovation, electoral incentives, welfare reform, spillovers |
| JEL: | D72 D78 H75 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6964&r=pol |
| By: | Sharun Mukand; Dani Rodrik |
| Abstract: | We develop a conceptual framework to highlight the role of ideas as a catalyst for policy and institutional change. We make an explicit distinction between ideas and vested interests and show how they feed into each other. In doing so the paper integrates the Keynes-Hayek perspective on the importance of ideas with the currently more fashionable Stigler-Becker (interests only) approach to political economy. We distinguish between two kinds of ideational politics – the battle among different worldviews on the efficacy of policy (worldview politics) versus the politics of victimhood, pride and identity (identity politics). Political entrepreneurs discover identity and policy ‘memes’ (narratives, cues, framing) that shift beliefs about how the world works or a person’s belief of who he is (i.e. identity). Our framework identifies a complementarity between worldview politics and identity politics and illustrates how they may reinforce each other. In particular, an increase in identity polarization may be associated with a shift in views about how the world works. Furthermore, an increase in income inequality is likely to result in a greater incidence of ideational politics. Finally, we show how ideas may not just constrain, but also ‘bite’ the interests that helped propagate them in the first instance. |
| JEL: | D72 D78 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24467&r=pol |
| By: | Marco Becht; Yuliya Kamisarenka; Anete Pajuste |
| Abstract: | French listed companies can issue shares that confer two votes per share after a holding period of at least two years (loyalty shares with tenure voting rights). In 2014 the default rule changed from one-share-one-vote to loyalty shares. The Coase theorem predicts that ceteris paribus shareholders rewrite the corporate charter to preserve the pre-reform structure. The theorem also predicts that the proportion of loyalty shares in initial public offerings is unchanged. The paper shows that most one-share-one-vote companies reverted to the prereform contract. The exception were firms with a stake held by the French state. In initial public offerings, the new default rule had an impact; the proportion of loyalty share statutes increased from about forty to fifty percent after the passage of the law. Companies that kept the same statutes have a significantly higher market to book ratio than companies forced into a different regime. The evidence is broadly consistent with the predictions of the Coase theorem, but only in the absence of conflicted parties with veto power. |
| Keywords: | Loyalty shares, tenure voting, time-phased voting, dual-class shares, one-shareone- vote, Coase theorem |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/270013&r=pol |
| By: | Sorace, Miriam |
| Abstract: | The analysis compares voters' preferences in economic policy to political parties' economic written parliamentary questions during the 2009–2014 term of the European Parliament. The corpus of over 55,000 written questions was ideologically scaled via crowdsourcing. The analysis shows that parties are unresponsive to second-order and to disengaged voters. The results also suggest that there is no upper class bias in European Parliament political representation. The data highlight a strong tendency of EP7 political parties to cluster around the position of the average European voter, at the expense of their average supporter. The democratic deficit is therefore at most a pluralism deficit in the European Parliament, since substantive representation in the European Parliament is successful as far as the majoritarian norm is concerned. |
| Keywords: | crowdsourcing; democratic deficits; European Parliament; European Union; political representation |
| JEL: | J1 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87625&r=pol |
| By: | Matthew T. Cole; James Lake; Benjamin Zissimos |
| Abstract: | We develop a new theoretical framework of trade agreement (TA) formation, called a ‘parallel contest’, that emphasizes the political fight over TA ratification within countries. TA ratification is inherently uncertain in each country, where anti- and pro-trade interest groups contest each other to influence their own governments’ ratification decision. Unlike prior literature, the protection embodied in negotiated TA tariffs reflects a balance between the liberalizing force of lobbying and inherently protectionist government preferences. Moreover, new international political externalities emerge that are not internalized by governments that just internalize terms of trade externalities. |
| Keywords: | contests, international integration, trade agreement |
| JEL: | F02 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6956&r=pol |
| By: | Alessandro Sola |
| Abstract: | This paper investigates the effect of the refugee crisis, and the related government’s asylum policy, on concerns about immigration of the German population. Exploiting exogenous variation in survey interview timing of the German Socio-Economic Panel (SOEP), I employ a difference-in-differences strategy to estimate the short-term causal effect of the refugee crisis on concerns about immigration. The estimated effect is substantial, representing an increase in concerns of around 22%, compared to the pre-refugee crisis baseline level. Interestingly, I find that this increase was twice as large for East Germans, compared to West Germans. In a second section, I show concerns about immigration are positively correlated with political support for the relatively new, right-wing populist party Alternative für Deutschland (AfD). However, using the variability in concerns generated by the refugee crisis, I find no evidence of a causal effect of concerns on political preferences in the short term. |
| Keywords: | Concerns about immigration, refugee crisis, Germany, AfD, populism, political preferences |
| JEL: | F22 J61 D72 H12 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp966&r=pol |
| By: | Maxime Le Bihan (Univ Lyon, Université Lyon 2, GATE UMR 5824, F-69130 Ecully, France); Benjamin Monnery (EconomiX-CNRS, University Paris Nanterre) |
| 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 accountability, sanctions, reputation |
| JEL: | D72 D78 K42 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1808&r=pol |
| By: | Allen, D.E.; McAleer, M.J.; McHardy Reid, D. |
| Abstract: | State of the Union Addresses (SOUA) by two recent US Presidents, President Obama (2016) and President Trump (2018), and a series of recent of tweets by President Trump, are analysed by means of the data mining technique, sentiment analysis. The intention is to explore the contents and sentiments of the messages contained, the degree to which they dier, and their potential implications for the national mood and state of the economy. President Trump's 2018 SOUA and his sample tweets are identied as being more positive in sentiment than President Obama's 2016 SOUA. This is conrmed by bootstrapped t tests and non-parametric sign tests on components of the respective sentiment scores. The issue of whether overly positive pronouncements amount to self-promotion, rather than intrinsic merit or sentiment, is a topic for future research. |
| Keywords: | Sentiment Analysis, Polarity, Bootstrapped t tests, Sign tests |
| JEL: | A1 C88 C44 Z0 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ems:eureir:105873&r=pol |
| By: | Koetter, Michael; Popov, Alexander |
| Abstract: | We exploit election-driven turnover in State and local governments in Germany to study how banks adjust their securities portfolios in response to the loss of political connections. We find that local savings banks, which are owned by their host county and supervised by local politicians, increase significantly their holdings of home-State sovereign bonds when the local government and the State government are dominated by different political parties. Banks’ holdings of other securities, like federal bonds, bonds issued by other States, or stocks, are not affected by election outcomes. We argue that banks use sub-sovereign bond purchases to gain access to politically distant government authorities. JEL Classification: G21, H63, P16 |
| Keywords: | government-owned banks, political connections, sub-sovereign debt |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20182146&r=pol |
| By: | Luís Aguiar-Conraria (Department of Economics/NIPE, University of Minho); Pedro C. Magalhães (Institute of Social Sciences, University of Lisbon) |
| Abstract: | A vast literature in social and organizational psychology suggests that support for authorities is driven both by the outcomes they deliver and by the extent to which they employ fair decision-making processes. Furthermore, that literature describes a processoutcome interaction, through which the effects of outcome favorability are reduced as process fairness increases. However, very few studies have been conducted to determine whether such interaction is also present in the explanation of support for political authorities. Here, we start by analyzing whether individual perceptions of the political system’s procedural fairness moderate the well-known relationship between perceived economic performance and government approval. Then, we explore the implications of such process-outcome interaction to the phenomenon of “economic voting,” testing whether impartiality in governance moderates the effect of objective economic performance on incumbent support. In both cases, we show that the interaction between processes and outcomes indeed extends beyond the organizational contexts where it has been previously observed, with important implications for the study of political support. |
| Keywords: | procedural fairness; process-outcome interaction; political support; executive approval; economic voting |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:05/2018&r=pol |
| By: | Jean-Benoît Eymeoud; Paul Vertier (Département d'économie) |
| Abstract: | Women are under-represented in politics. In this paper, we test one of the potential explanations for this situation: gender-bias from voters. We use a natural experiment during French local elections in 2015: for the first time in this country, candidates had to run by pairs, which had to be gender-balanced. We argue that this reform confused some voters, who mighthave assumedthat the firstname on theballot representedthe "main" candidate. Since the order of the candidates on the ballot was determined by alphabetical order, the order of appearance of male and female candidates is as-good-as-random, and this setting allows us to isolate gender biases from selection effects. Our main result is that there exists a negative gender bias affecting right-wing candidates, who receive about 1.5 points lower shares of vote when the female candidate appears first on the ballot. The missing votes prevented some pairs of candidates from being elected. Using the fact that the candidates can (but do not have to) report additional information about themselves on the ballot, we show that this discrimination is likely to be statistical, since the most affected women are those running in pairs which do not report any information. |
| Keywords: | Political Economy; Gender Discrimination; Voting Behavior |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/3k0m7r593p8gs9njjtpupmlknu&r=pol |
| By: | Hisahiro Naito and Mizuho Asai |
| Abstract: | This paper examines the effect of the presence of immigrants on the voters' behavior using the data set of the UK popular referendum on exit from the European Union and the survey data on individual tolerance toward immigrants. We apply two stage least square(2SLS) estimation to control the endogeneity of the ratio of immigrants by using the information on past industrial composition to construct the instrumental variable while including the current industry composition and the current demographic characteristics as a control variable. Contrary to popular media content, we do not find a statistically significant evidence that the ratio of immigrants in each electoral area does affect the vote count on Brexit after controlling endogeneity of the ratio of immigrants in each electoral area and other observable characteristics. We also show that the survey result on the tolerance to immigrants is consistent with the estimation result of voters' behavior. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2018-003&r=pol |
| By: | Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser |
| Abstract: | Since Mancur Olson’s “Logic of collective action” it is common conviction in social sciences that in large groups the prospects of a successful organization of collective actions are rather bad. Following Olson’s logic, the impact of an individual’s costly contribution becomes smaller if the group gets larger and, consequently, the incentive to cooperate decreases with group size. Conducting a series of laboratory experiments with large groups of up to 100 subjects, we demonstrate that Olson’s logic does not generally account for observed behavior. Large groups in which the impact of an individual contribution is almost negligible are still able to provide a public good in the same way as small groups in which the impact of an individual contribution is much higher. Nevertheless, we find that small variations of the MPCR in large groups have a strong effect on contributions. We develop a hypothesis concerning the interplay of MPCR and group size, which is based on the assumption that the salience of the advantages of mutual cooperation plays a decisive role. This hypothesis is successfully tested in a second series of experiments. Our result raises hopes that the chance to organize collective action of large groups is much higher than expected so far. |
| Keywords: | public goods, large groups |
| JEL: | C90 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_6962&r=pol |