nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒09‒17
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Approval voting and Shapley ranking By DEHEZ Pierre,; GINSBURGH Victor,
  2. Who Voted for Brexit? Individual and Regional Data Combined By Alabrese, Eleonora; Becker, Sascha O.; Fetzer, Thiemo; Novy, Dennis
  3. Coheisive Institutions and Political Violence By Thiemo Fetzer; Stephan Kyburz
  4. The American Nonvoter By Lyn Ragsdale
  5. Political Myopia, Public Debt, and Economic Growth By Ohad Raveh; Yacov Tsur
  6. Local News and National Politics By Martin, Gregory J.; McCrain, Josh
  7. Resource Windfalls and Publics Debt: The Role of Political Myopia By Ohad Raveh; Yacov Tsur
  9. The impacts of domestic political economic structures on sustainable trade agreements between asymmetric countries By Jisoo Son
  10. The Power Resource Theory Revisited: What Explains the Decline in Industrial Conflicts in Sweden? By Enflo, Kerstin; Karlsson, Tobias; Molinder, Jakob
  11. Who Benefited from Women’s Suffrage? By Esra Kose; Elira Kuka; Na'ama Shenhav
  12. Does Congressional experience in US governors influence state transfers? By Harry Pickard
  13. The quest for fiscal rules By Feld, Lars P.
  14. The connection between parliamentary and extra-parliamentary opposition in the EU. From ACTA to the financial crisis By Amandine Crespy; Louisa Parks

  1. By: DEHEZ Pierre, (Université catholique de Louvain, CORE, Belgium); GINSBURGH Victor, (Université libre de Bruxelles and CORE)
    Abstract: Approval voting allows voters to list any number of candidates. Their scores are obtained by summing the votes cast in their favor. Fractional voting instead follows the One-person-one-vote principle by endowing voters with a single vote that they may freely distribute among candidates. In this paper, we show that fairness requires the distribution of votes to be uniform. Uniform fractional voting corresponds to Shapley ranking that was introduced to rank wines as the Shapley value of a cooperative game with transferable utility. Here we analyze the properties of these "ranking games" and provide an axiomatic foundation to Shapley ranking. We also analyze Shapley ranking as a social welfare function and compare it to approval ranking.
    Keywords: approval voting, Shapley value
    JEL: D71 C71
    Date: 2018–04–18
  2. By: Alabrese, Eleonora; Becker, Sascha O.; Fetzer, Thiemo; Novy, Dennis
    Abstract: Previous analyses of the 2016 Brexit referendum used region-level data or small samples based on polling data. The former might be subject to ecological fallacy and the latter might suffer from small-sample bias. We use individual-level data on thousands of respondents in Understanding Society, the UK's largest household survey, which includes the EU referendum question. We find that voting Leave is associated with older age, white ethnicity, low educational attainment, infrequent use of smartphones and the internet, receiving benefits, adverse health and low life satisfaction. These results coincide with corresponding patterns at the aggregate level of voting areas. We therefore do not find evidence of ecological fallacy. In addition, we show that prediction accuracy is geographically heterogeneous across UK regions, with strongly pro-Leave and strongly pro-Remain areas easier to predict. We also show that among individuals with similar socio-economic characteristics, Labour supporters are more likely to support Remain while Conservative supporters are more likely to support Leave.
    Keywords: aggregation; Ecological Fallacy; European Union; populism; Referendum; UK
    JEL: D72 I10 N44 R20 Z13
    Date: 2018–08
  3. By: Thiemo Fetzer; Stephan Kyburz
    Abstract: Can institutionalized transfers of resource rents be a source of civil conflict? Are cohesive institutions better in managing distributive conflicts? We study these questions exploiting exogenous variation in revenue disbursements to local governments together with new data on local democratic institutions in Nigeria. We make three contributions. First, we document the existence of a strong link between rents and conflict far away from the location of the actual resource. Second, we show that distributive conflict is highly organized involving political militias and concentrated in the extent to which local governments are non-cohesive. Third, we show that democratic practice in form having elected local governments significantly weakens the causal link between rents and political violence. We document that elections (vis-a-vis appointments), by producing more cohesive institutions, vastly limit the extent to which distributional conflict between groups breaks out following shocks to the available rents. Throughout, we confirm these findings using individual level survey data.
    Keywords: conflict, ethnicity, natural resources, political economy, commodity prices
    JEL: Q33 O13 N52 R11 L71
    Date: 2018
  4. By: Lyn Ragsdale (Rice University)
    Abstract: This paper examines the motivations of individuals who do not vote in American elections from 1968 through 2012. Existing research portrays American nonvoters as a large monolith of people who lack psychological involvement in politics, do not have adequate personal resources to participate, have insufficient social networks to be engaged, or are not sufficiently mobilized by candidates and campaigns. Instead, our paper maintains that uncertainty in the national campaign context ?the economic, mass communication, legal, and international environments--drives individual citizens? decisions about whether to vote. When there is high uncertainty in the national campaign context, people are more likely to vote. When there is low uncertainty in the national campaign context, citizens are less likely to vote. The paper further develops a theoretical distinction between the external uncertainty found in the national campaign context and the internal uncertainty citizens feel about which candidate will adequately address the external uncertainty. In considering this internal uncertainty, four types of nonvoters emerge as they respond differently to the lack of clarity. First, the politically ignorant non-voters do not follow the campaign or the candidates so avoid internal uncertainty about them. Second, the indifferent follow the campaign and the candidates, but see no differences between the candidates, leaving internal uncertainty about them. Third, the dissatisfied know a good deal about the campaign context and the candidates but see one or more candidates negatively. They too do not vote because internal uncertainty about the candidates remains unresolved. Finally, the personal hardship nonvoters pay attention to the campaign and the candidates but do not vote because of personal hardship associated with unemployment. The paper first considers broad differences between voters and nonvoters in their knowledge of politics and attitudes toward elections. It then estimates a model of nonvoting across the time period. Finally, it considers in greater detail the four different types of nonvoters, who they are, and what motivates them not to participate. The study finds that at the presidential level, there are considerable numbers of dissatisfied nonvoters who do not vote because they have negative views of one or both candidates. At the midterm level, nonvoters are more likely to be politically indifferent, not having clear-cut views of one or both candidates.
    Keywords: nonvoter, United States, negative campaigns
    Date: 2018–06
  5. By: Ohad Raveh; Yacov Tsur
    Abstract: Can economic growth increase public debt? Previous studies on the debt-growth nexus focused on the effects of debt on growth. We present an opposite perspective by showing that growth can reinforce deficit spending. A political economy model of endogenous public debt indicates that the underlying cause is political short-sightedness induced by reelection prospects. Reelection yields accountability but at the same time shortens incumbents’ time horizon, giving rise to political myopia and the ensuing budget deficit bias. Our model shows that economic growth exacerbates this undesirable effect of reelection. We test the model’s predictions using a panel of U.S. states over the period 1963-2007. Our identification strategy rests on constitutionally-entrenched differences in gubernatorial term limits that provide plausibly exogenous cross-state variation in political time horizon, and aggregate national TFP shocks that are exogenous to individual states. Our more conservative estimates indicate that overa course of five years, a one standard deviation positive TFP shock induces an increase of approximately $494 in real per capita public debt in politically myopic states.
    Keywords: Economic growth, public debt, political myopia, term limits
    JEL: H63 C61 H74
    Date: 2017
  6. By: Martin, Gregory J. (Emory University); McCrain, Josh (Emory University)
    Abstract: The level of journalistic resources dedicated to coverage of local politics is in a long term decline in the US news media, with readership shifting to national outlets. We investigate whether this trend is demand- or supply-driven, exploiting a recent wave of local television station acquisitions by a conglomerate owner. Using extensive data on local news programming and ratings, we find that the ownership change led to 1) substantial increases in coverage of national politics at the expense of local politics, 2) a significant rightward shift in the ideological slant of coverage and 3) a small decrease in viewership, all relative to the changes at other news programs airing in the same media markets. These results suggest a substantial supply-side role in the trends toward nationalization and polarization of politics news, with negative implications for accountability of local elected officials and mass polarization.
    Date: 2018–04
  7. By: Ohad Raveh; Yacov Tsur
    Abstract: We identify an adverse consequence of natural resource windfalls, which is particularly detrimental in advanced democracies. We construct a political economy model with endogenous public debt under exogenous resource windfall shocks, in which political myopia results from reelection prospects. Reelection-seeking politicians, while more accountable toward their electorate, are also more myopic. The latter effect gives rise to a budget defficit bias, with the ensuing debt build up that is exacerbated by resource windfalls. We find that the positive effect of resource windfalls on debt increases as the restrictions on reelection get laxer. We test the model's predictions using a panel of U.S. states over the period 1963-2007. Our identification strategy rests on constitutionally-entrenched differences in gubernatorial term limits that provide plausibly exogenous cross-sectional and time variation in political time horizon, and geographically-based cross-stated differences in natural endowments interacted with the international prices of oil and gas. The empirical findings corroborate the model's predictions. In particular, our baseline estimates indicate that a resource windfall of $1 induces an increase of approximately g14:7 in the public debt of states with no gubernatorial term limits.
    Keywords: Infrastructure; Resource windfalls, public debt, political myopia, reelection
    JEL: Q32 H74
    Date: 2018
  8. By: Jaghdani, Tinoush Jamali; Kvartiuk, Vasyl
    Abstract: The depletion of groundwater resources due to irrigation water pumping in Iran has become a serious problem which threatens both rural life and sustainable development in the country. The latest estimates show that 70% of groundwater resources have been overexploited in the last 15 years. Intensive and ever-increasing use has become one of the primary reasons behind the devastation of groundwater resources, both quantitatively and qualitatively. For many years, huge energy consumption subsidies (electricity or gasoline) have been provided for pumping irrigation water from aquifers. The resulting cheap energy makes deep water pumping possible and huge investment in deepening and relocating wells feasible. Since the reforms appear to be very difficult to implement on the political level, we focus on the political economy of subsidy provision for irrigation water and energy for pumping in Iran. We analyse how the interests of rural inhabitants are represented in Iranian parliament and examine the decision-making process of the parliamentarians in voting for eliminating the subsidies. Results show that Iranian leaders follow the logic of regime maintenance and may have incentives to strategically overrepresent rural interests in the parliament. Importantly, we found that the decision to support subsidies for irrigation water is motivated by economic factors rather than by ideological incentives. Political economy appears to be a useful framework to understand the obstacles of phasing out subsidies depleting not only ground water resources but the state budget as well.
    Date: 2018–09–01
  9. By: Jisoo Son (Sungkyunkwan University)
    Abstract: This paper examines how the domestic political economic structures influence the bargaining power of small economies facing market dominant large trade partner. Through the analysis of the incentive compatibility conditions of small economies and large economies facing different political stances of domestic interest groups, we demonstrate that when the politically influential interest groups of large economies take the political stance supporting free trade regime, small economies? bargaining power can be improved. This result stems from the reduced equilibrium transfer from small economies to keep the trade equilibrium as a stable equilibrium due to the pro-free trade political pressures imposed by the interest groups of large economies. This result provides good theoretical insights on why most small economies are so eager to keep close connection with the interest groups in large economies
    Keywords: Stable trade agreement, Domestic political interest groups, Bargaining power of small economies, equilibrium transfer to satisfy incentive compatibility conditions
    JEL: F51 F53
    Date: 2018–07
  10. By: Enflo, Kerstin; Karlsson, Tobias; Molinder, Jakob
    Abstract: This paper revisits the Power Resource Theory by testing one of its more influential claims: the relation between the strength of the labor movement and the reduction of industrial conflicts. Using panel data techniques to analyze more than 2,000 strikes in 103 Swedish towns we test whether a shift in the balance of power towards Social Democratic rule was associated with fewer strikes. The focus is on the formative years between the first general election in 1919 and the famous Saltsjöbaden Agreement in 1938, the period when Sweden went from a country of fierce labor conflicts to a state of industrial peace. The spatial dimension provides new possibilities to test the theory. We find that Social Democratic power reduced strike activity, but only in towns where union presence was strong. Powerful unions in themselves did not reduce local strike activity. On the contrary, we find that the rise of the Social Democratic Party in municipal governments offset about 45 percent of the estimated effect of growing union presence on industrial conflicts. We do not see any significant tangible concessions in terms of increased social spending by local governments after a left-wing victory as predicted by Power Resource Theory. Instead the mechanism leading to fewer strikes appears to be related to corporatist explanations.
    Keywords: industrial conflicts; Local Labor Markets; Power Resource Theory; strikes
    JEL: H53 J51 N34 N44
    Date: 2018–08
  11. By: Esra Kose; Elira Kuka; Na'ama Shenhav
    Abstract: While a growing literature has shown that women prefer investments in child welfare and increased redistribution, little is known about the long-term effect of empowering women. Exploiting plausibly exogenous variation in U.S. suffrage laws, we show that children from economically disadvantaged backgrounds who were exposed to women’s political empowerment during childhood experienced large increases in educational attainment, especially blacks and Southern whites. We also find improvements in earnings among whites and blacks that experienced educational gains. We employ newly digitized data to map these long-term effects to contemporaneous increases in local education spending and childhood health, showing that educational gains were linked to improvements in the policy environment.
    JEL: I0 N30
    Date: 2018–08
  12. By: Harry Pickard (Department of Economics, University of Sheffield)
    Abstract: This paper examines the relationship between US governors who have previously served as a member of Congress and the federal transfers to their state. I assemble a novel dataset of governors political background and match this to federal transfer data from 1950 to 2008. Governors with Congressional experience have 0.8 percentage points more transfers to their state. I find no evidence of problematic trends or selection issues. Moreover, the result is robust to outliers in the data and many robustness checks.
    Keywords: Career experience; Personal characteristics; Transfers; Congress; Leaders
    JEL: D78 H30 H71
    Date: 2018–09
  13. By: Feld, Lars P.
    Abstract: James Buchanan pioneered the political economics of public debt 60 years ago. In this paper, we contrast his thinking of the burden of debt, the public choice mechanisms that lead to excessive debt and the demand for constitutional restraints on public debt with its development, its sustainability, the evidence on the political economy of debt and on the effects of institutions. It turns out that Buchanan farsightedly anticipated the problems that would emerge from excessive indebtedness in the developed world. The introduction of fiscal rules appear as a late triumph of Buchanan's thinking. However, socialism is dead, but Leviathan lives on. Opposition to sound fiscal policies has increasingly dominated the public debates since the Great Recession.
    Keywords: James Buchanan,Public Debt,Fiscal Commons Problems,Fiscal Rules
    JEL: H6 E6 D72 K39
    Date: 2018
  14. By: Amandine Crespy; Louisa Parks
    Abstract: With no formal division between majority and opposition in the parliamentary arena, the European Union (EU) calls for an approach to political opposition which considers the role of civil society. This article explores the case of opposition to the Anti-Counterfeiting Trade Agreement (ACTA) within and without the European Parliament (EP) through a political opportunity approach, using the case to reflect on conditions for effective opposition in the EU. The ACTA campaign saw opposed actors within the EP and digital rights groups work together to build coalitions against the agreement. Protests then opened the way for these groups to broker a change of position among other actors, allowing a majority rejection. The ACTA case suggests the need for advocacy by organised groups both within and without the Parliament to construct majorities. Comparisons to similarly successful campaigns bolster this view, as do examples of less effective opposition.
    Keywords: European Parliament; Anti-Counterfeiting Trade Agreement; Parliamentary opposition; Extra-parliamentary opposition; Political opportunity; Civil society
    Date: 2017–04–05

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