nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒07‒23
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. The generation gap in direct democracy By Ahlfeldt, Gabriel M.; Maennig, Wolfgang; Mueller, Steffen Q.
  2. Losing Your Dictator: Firms During Political Transition By Felipe González; Mounu Prem
  3. Government of the people, by the elite, for the rich: Unequal responsiveness in an unlikely case By Elsässer, Lea; Hense, Svenja; Schäfer, Armin
  4. Political Regimes and the Determinants of Terrorism and Counter-terrorism By Nicola, Brugali; Paolo, Buonanno; Mario, Gilli;
  5. Choked by Red Tape? The Political Economy of Wasteful Trade Barriers By Maggi, Giovanni; Mrázová, Monika; Neary, J Peter
  6. Elephants, Donkeys, and Colonel Blotto By Ivan P. Yamshchikov; Sharwin Rezagholi
  7. Electoral Institutions and Intraparty Cohesion By Matakos, Konstantinos; Savolainen, Riikka; Troumpounis, Orestis; Tukiainen, Janne; Xefteris, Dimitrios
  8. Everybody's a Victim? Global Terror, Well-Being and Political Attitudes By Akay, Alpaslan; Bargain, Olivier; Elsayed, Ahmed
  9. Women Legislators and Economic Performance By Baskaran, Thushyanthan; Bhalotra, Sonia R.; Min, Brian; Uppal, Yogesh
  10. Transitions and Political Stability in Autocracies. The Role of Public Perception By Mario, Gilli; Yuan, Li;
  11. Change of Ideas About the Political Community in the Ussr During the Cold War and Their Influence on Soviet Culture By Kukulin, Ilya
  12. Voting as a War of Attrition By Kwiek, Maksymilian; Marreiros, Helia; Vlassopoulos, Michael

  1. By: Ahlfeldt, Gabriel M.; Maennig, Wolfgang; Mueller, Steffen Q.
    Abstract: We provide the first systematic documentation and analysis of a generation gap in direct democracy outcomes across a wide range of topics using postelection survey data covering more than 300 Swiss referenda and four decades. We find that older voters are more likely to resist reform projects, particularly those that are associated with the political left. We separate age and cohort effects without imposing functional form constraints using a panel rank regression approach. The aging effect on political orientation is robust for controlling for arbitrary cohort effects and appears to be driven by expected utility maximization and not by habituation-induced status-quo bias. Our results suggest that population aging raises the hurdle for investment-like reform projects with positive net present values, long-run benefits and short-run costs in direct polls.
    Keywords: age; cohort; direct democracy; generation gap; status quo; referendum; reform; utility
    JEL: D7 H3
    Date: 2018–06–01
  2. By: Felipe González; Mounu Prem
    Abstract: Can firms transfer distortions across political regimes? To answer this question, we use a novel dataset and a network analysis to study firms during Chile’s transition to democracy. We find that firms with links to the dictatorship were relatively unproductive before the transition, increased their productive capacity, enjoyed higher profits, and obtained more loans from state-owned banks during political transition. We test for different explanations and provide suggestive evidence consistent with strategic behavior aiming to improve their market position in democracy. These results suggests that distortions can be transferred across political regimes.
    Keywords: transition, distortions, firms, networks
    Date: 2018–01–30
  3. By: Elsässer, Lea; Hense, Svenja; Schäfer, Armin
    Abstract: Empirical studies have shown that US politics is heavily tilted in favor of the better off, as political decisions tend to reflect the preferences of the rich while largely ignoring those of the poor and middle classes. These findings have prompted a lively debate about potential mechanisms that cause this pattern of unequal responsiveness. Existing studies suggest that specific characteristics of the political system are a major explanatory factor - in particular, private donations and campaign financing. We build on these studies but focus for the first time on an entirely different case. In this Discussion Paper, we ask whether similar patterns of unequal responsiveness are discernible in Germany, which not only is a more egalitarian country, but also funds election campaigns entirely differently from the US. We analyze an original dataset of more than 800 survey questions posed between 1980 and 2013. The questions deal with specific political decisions debated at the time and cover a broad range of politically relevant topics. Our results show a notable association between political decisions and the opinions of the rich, but none or even a negative association for the poor. Representational inequality in Germany thus resembles the findings for the US case, despite its different institutional setting. Against this background, we conclude by discussing potential mechanisms of unequal responsiveness.
    Keywords: democracy,Europe,inequality,political responsiveness,representation,Demokratie,Europa,politische Responsivität,Repräsentation,Ungleichheit
    Date: 2018
  4. By: Nicola, Brugali; Paolo, Buonanno; Mario, Gilli;
    Abstract: Why do some democratic governments react weakly to terrorism, while apparently similar regimes react harshly? More generally, what are the determinants of governments' reaction to terrorism? And, what are the determinants of terrorism and of its dynamic? In this paper we focus on domestic terrorism and counter-terrorism as affected by economic development, political heterogeneity, citizens' human capital, and government accountability and responsiveness. The empirical research has not reached a consensus on the socioeconomic determinants of terrorism. A possible explanation is that observable data may depend on hidden causal links that are not simply caught by standard regressions. In this paper we argue that terrorism activities are endogenous to the governments' counter-terrorism choices, which in turn does depend on political and socioeconomic factors. Our basic point is that both causes and consequences of terror can only be understood in terms of strategic interaction among political actors, primarily government and citizens. We propose a model that considers human capital, economic development, political heterogeneity, government responsiveness and accountability as possible factors influencing terrorism and the government's response. We show that the game has three possible equilibrium outcomes, uniquely determined by our parameters: a Strong Regime characterized by no terrorism, high counter-terrorism and increasing protests, a Flexible Regime characterized by low terrorism which increase or decrease according to the random reaction of the government, and a Permissive Regime characterized by terrorism activity, no counter-terrorism and no protests. We also show that it is possible for a democratic regime to repress harshly and for an autocratic polity to be permissive.
    Keywords: Terrorism, Accountability, Repression.
    JEL: D74 P16 C72
    Date: 2018–07–13
  5. By: Maggi, Giovanni; Mrázová, Monika; Neary, J Peter
    Abstract: Red-tape barriers (RTBs) are an important source of trade costs, but have received little scholarly attention to date. Here we examine the economic-political determinants of RTBs and their effects on trade. Because of their wasteful nature, RTBs have very different implications from those of more traditional trade barriers. In particular, RTBs have important impacts on the extensive margin of trade, and respond in non-standard ways to changes in tariffs and natural trade costs. We argue that taking into account the endogenous response of RTBs is crucial for understanding the effects of tariff liberalization and globalization on trade and welfare.
    Keywords: International trade policy; Non-Tariff Measures; political economy; Red tape barriers
    JEL: D7 F13 F55
    Date: 2018–06
  6. By: Ivan P. Yamshchikov; Sharwin Rezagholi
    Abstract: This paper employs a novel method for the empirical analysis of political discourse and develops a model that demonstrates dynamics comparable with the empirical data. Applying a set of binary text classifiers based on convolutional neural networks, we label statements in the political programs of the Democratic and the Republican Party in the United States. Extending the framework of the Colonel Blotto game by a stochastic activation structure, we show that, under a simple learning rule, the simulated game exhibits dynamics that resemble the empirical data.
    Date: 2018–05
  7. By: Matakos, Konstantinos; Savolainen, Riikka; Troumpounis, Orestis; Tukiainen, Janne; Xefteris, Dimitrios
    Abstract: We study parties' optimal ideological cohesion across electoral rules, when the following trade-off is present: A more heterogenous set of candidates is electorally appealing (catch-all party), yet, it serves policy-related goals less efficiently. When the rule becomes more disproportional, thus inducing a more favorable seat allocation for the winner, the first effect is amplified, incentivizing parties to be less cohesive. We provide empirical support using a unique data-set that records candidates' ideological positions in Finnish municipal elections. Exploiting an exogenous change of electoral rule disproportionality at different population thresholds, we identify the causal effect of electoral rules on parties' cohesion.
    Keywords: electoral systems, ideological heterogeneity, party cohesion, policymotivated parties, proportional representation, regression discontinuity design, Local public finance and provision of public services, C21, C72, D02, D72,
    Date: 2018
  8. By: Akay, Alpaslan (University of Gothenburg); Bargain, Olivier (University of Bordeaux); Elsayed, Ahmed (IZA)
    Abstract: Terror has become a global issue. Terror acts perpetuated by religious, nationalist or political groups around the globe can propagate distress rapidly through different channels and possibly change political attitudes. This paper suggests the first evaluation of the impact of global terror on human welfare. We combine panel datasets for Australia, Germany, Russia, Switzerland, the UK and the US. Individual well-being information for 750,000 individual x year observations, recorded on precise dates, is matched with daily information on the 70,000 terror events that took place worldwide during 1994–2013. High-frequency data and quasi-random terror shocks of varying intensity provide the conditions for robust inference, while external validity is guaranteed by the use of large representative samples. We find a significantly negative effect of global terror on well-being, with a money-metric cost of around 6%–17% of national income. Among diffusion channels, stock markets and economic anticipations play a minimal role, while traditional media filter the most salient events. The effect is greatly modulated by the physical, genetic or cultural proximity to the terror regions/victims. For a subset of countries, we also show that global terror has significantly increased the intention to vote for conservative parties. Heterogeneity analyses point to the mediating effect of risk perception: individuals who exhibit stronger emotional responses to terror – possibly more exposed to potential threats – are also more likely to experience a conservative shift.
    Keywords: global terror, subjective well-being, media, political attitudes
    JEL: C99 D60 D72 D74 I31
    Date: 2018–06
  9. By: Baskaran, Thushyanthan (University of Siegen); Bhalotra, Sonia R. (University of Essex); Min, Brian (University of Michigan); Uppal, Yogesh (Youngstown State University)
    Abstract: There has been a phenomenal global increase in the proportion of women in politics in the last two decades, but there is no evidence of how this influences economic performance. We investigate this using data on competitive elections to India's state assemblies, leveraging close elections to isolate causal effects. We find significantly higher growth in economic activity in constituencies that elect women and no evidence of negative spillovers to neighbouring male-led constituencies, consistent with net growth. Probing mechanisms, we find that women legislators are less likely to be criminal and corrupt, more efficacious, and less vulnerable to political opportunism.
    Keywords: political representation, identity, India, gender, women legislators, economic growth, luminosity, corruption, roads, close elections
    JEL: D72 D78 H44 H73
    Date: 2018–06
  10. By: Mario, Gilli; Yuan, Li;
    Abstract: The literature on the functioning of autocracies has not analyzed the consequences of the fact that policies have multiple dimensions and that these dimensions are perceived with di¤erent bias by people. This fact is obviously more striking in autocracies where the public perception of policies' effects might be partially manipulated. We try to fill the gap. This paper makes three contributions to the literature on the functioning of autocratic regimes. First, we show that, may be counter-intuitively, both the probability of full e¢ cient and full inefficient policies decrease as opacity increases, while the probability of partially efficient policies has the opposite behavior. This implies that the probability of efficient policies on different policy dimensions diverges as opacity increases, and this provides an explanation for the observed heterogeneity of policies within an autocracy. Second, the expected probability of a coup has a non monotone behavior w.r.t. opacity, so that at intermediate level an increment in opacity might actually increase the likelihood of a selectorate coup. Finally, also the expected probability of a citizens' revolt might have a non monotone behavior w.r.t. opacity, so that the likelihood of a revolt might actually increase as opacity increases. We conclude that the e¤ect of bias in public perception of some policy dimension is non monotone on authoritarian regime stability. These results provide a reason to explain why transition periods are dangerous for a dictator.
    Keywords: Multidimensional policies, public perception, political stability.
    JEL: D02 H11 D74
    Date: 2018–07–13
  11. By: Kukulin, Ilya (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: History of the Cold War is obviously connected with tendencies of isolationism, especially if speaking of the USSR. However, one may suppose that there is an important but underresearched aspect of the Soviet isolationism: namely, how it influenced cultural dynamics in the USSR and what were its mental foundations taken for granted; particularly, one needs to discuss what were the main similarities and differences between “cold war” isolationism and policy of a “besieged fortress” that was realized in the USSR starting with the late 1920s. This paper is focused on the traits and historical evolution of the Soviet isolationism basing on the two methodological approaches: studies of governmentality and study of imagined community’s discursive borders, in other words, the Soviet isolationism is studied here as a specific type of social and political imagination. If revisiting the Soviet practices of isolationism on this level, one can see that mental structures caused by the Cold War considerably informed Soviet social imagination and remain to be influential in the post-Soviet culture. This conclusion is founded with a short discussion on Sergey Lukianenko’s series of fantasy novels on “Watches” (1998--2004), one of the most successful projects in the post-Soviet mass culture.
    Date: 2018–06
  12. By: Kwiek, Maksymilian (University of Southampton); Marreiros, Helia (Universidade Catolica Portuguesa, Porto); Vlassopoulos, Michael (University of Southampton)
    Abstract: We study communication in committees selecting one of two alternatives when consensus is required and agents have private information about their preferences. Delaying the decision is costly, so a form of multiplayer war of attrition emerges. Waiting allows voters to express the intensity of their preferences and may help to select the alternative correctly more often than simple majority. In a series of laboratory experiments, we investigate how various rules affect the outcome reached. We vary the amount of feedback and the communication protocol available to voters: complete secrecy about the pattern of support; feedback about this support; public communication; and within-group communication. The feedback no-communication mechanism is worse than no feedback benchmark in all measures of welfare - the efficient alternative is chosen less often, waiting cost is higher, and thus net welfare is lower. Our headline result is that adding communication restores net efficiency, but in different ways. Public communication does poorly in terms of selecting the correct alternative, but limits the cost of delay, while group communication improves allocative efficiency, but has at best a moderate effect on delay.
    Keywords: voting, intensity of preferences, supermajority, conclave, war of attrition, communication
    JEL: C78 C92 D72 D74
    Date: 2018–06

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