nep-pol New Economics Papers
on Positive Political Economics
Issue of 2018‒11‒26
seven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Special Interest Groups Versus Voters and the Political Economics of Attention By Balles, Patrick; Matter, Ulrich; Stutzer, Alois
  2. Skill of the Immigrants and Vote of the Natives: Immigration and Nationalism in European Elections 2007-2016 By Simone Moriconi; Giovanni Peri; Riccardo Turati
  3. The Political Economy of Russian Agricultural Subsidies By Kvartiuk, V.; Herzfeld, T.; Ghukasyan, S.
  4. Voting as a signal of education By Nicholas Janetos
  5. Inferring the Ideological Affliations of Political Committees via Financial Contributions Networks By Yiran Chen; Hanming Fang
  6. The political economy of geographical indications By Deconinck, K.; Swinnen, J.; Meloni, G.
  7. Institutions and Political Party Systems: The Euro Case By Jesus Fernandez-Villaverde; Tano Santos

  1. By: Balles, Patrick; Matter, Ulrich; Stutzer, Alois
    Abstract: Asymmetric information between voters and legislative representatives poses a major challenge to the functioning of representative democracy. We examine whether representatives are more likely to serve long-term campaign donors instead of constituents during times of low media attention to politics. Combining data on campaign finance donations made by individuals and special interest groups with information on their preferences for particular bills, we construct novel measures of electoral and organized interests pressure that representatives face with regard to specific legislative votes. In our analysis based on 490 roll calls between 2005 and 2014 in the US House of Representatives, we find strong evidence that representatives are more likely to vote with special interests and against constituency interests when the two are in conflict. Importantly, the latter effect is significantly larger when there is less attention on politics. Thereby, we draw on exogenous newsworthy shock events that crowd out news on the legislative process, but are themselves not related to it. The opportunistic behavior seems not to be mediated by short-term scheduling of sensitive votes right after distracting events.
    Keywords: Attention, campaign finance, interest groups, legislative voting, mass media, media attention, roll call voting, US House of Representatives
    JEL: D72 L82 L86
    Date: 2018–11
  2. By: Simone Moriconi (IÉSEG School of Management and LEM); Giovanni Peri (University of California, Davis); Riccardo Turati (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: In this paper we document the impact of immigration at the regional level on Europeans’ political preferences as expressed by voting behavior in parliamentary or presidential elections between 2007 and 2016. We combine individual data on party voting with a classification of each party’s political agenda on a scale of their "nationalistic" attitudes over 28 elections across 126 parties in 12 countries. To reduce immigrant selection and omitted variable bias, we use immigrant settlements in 2005 and the skill composition of recent immigrant flows as instruments. OLS and IV estimates show that larger inflows of highly educated immigrants were associated with a change in the vote of citizens away from nationalism. However the inflow of less educated immigrants was positively associated with a vote shift towards nationalist positions. These effects were stronger for non-tertiary educated voters and in response to non-European immigrants. We also show that they are consistent with the impact of immigration on individual political preferences, which we estimate using longitudinal data, and on opinions about immigrants. Conversely, immigration did not affect electoral turnout. Simulations based on the estimated coefficients show that immigration policies balancing the number of high-skilled and low-skilled immigrants from outside the EU would be associated with a shift in votes away from nationalist parties in almost all European regions.
    Keywords: Immigration, Nationalism, Elections, Europe
    JEL: D72 I28 J61
    Date: 2018–09
  3. By: Kvartiuk, V.; Herzfeld, T.; Ghukasyan, S.
    Abstract: Agricultural policy s support to farmers, measured in real terms, differs considerably across Russian regions. What explains these large differences in regional agricultural support? We argue that traditional approaches of agricultural economics cannot fully explain this variation and we draw upon the political eocnomy literature. In particular, we explain allocation and distribution of agricultural subsidies studying the incentives of federal and regional politicians. Electoral pressures arising from competing with other political parties may push federal politicians to target either loyal or easily swayed voters and regional ones to strategically target special interst groups. Vertical organization of the Russian dominant party may generate perverse accountability links between local governors and regional agricultural interest groups. We utlize a unique dataset on the agricultural subsidies in 2008-2015 in order to test the hypotheses. The evidence suggests that federal government targets swing regions in distributing agricultural subsidies and local governments are more likely to allocate larger co-funding shares facing higher political competition in the region. In addition, regions with better organized large-scale agricultural producers and elected governors are more successful in maximizing obtained agricultural subsidies from the federal level. Acknowledgement :
    Keywords: Political Economy
    Date: 2018–07
  4. By: Nicholas Janetos (Penn Wharton Budget Model)
    Abstract: Since the chance of swaying the outcome of an election by voting is usually very small, it cannot be that voters vote solely for that purpose. So why do we vote? One explanation is that smarter or more educated voters have access to better information about the candidates, and are concerned with appearing to have better information about the candidates through their choice of whether to vote or not. If voting behavior is publicly observed then more educated voters may vote to signal their education, even if the election itself is inconsequential and the cost of voting is the same across voters. I explore this explanation with a model of voting where players are unsure about the importance of swaying the election and high type players receive more precise signals. I introduce a new information ordering, a weakening of Blackwell's order, to formalize the notion of information precision. Once voting has occurred, players visit a labor market and are paid the expected value of their type, conditioning only on their voting behavior. I find that in very large games, voter turnout and the signaling return to voting remains high even though the chance of swaying the election disappears and the cost of voting is the same for all types. I explore generalizations of this model, and close by comparing the stylized features of voter turnout to the features of the model.
    Keywords: Voting, signaling
    JEL: D72 D80
    Date: 2017–05–01
  5. By: Yiran Chen (Department of Economics, University of Pennsylvania); Hanming Fang (Department of Economics, University of Pennsylvania)
    Abstract: About two thirds of the political committees registered with the Federal Election Commission do not self identify their party affiliations. In this paper we propose and implement a novel Bayesian approach to infer about the ideological affiliations of political committees based on the network of the financial contributions among them. In Monte Carlo simulations, we demonstrate that our estimation algorithm achieves very high accuracy in recovering their latent ideological affiliations when the pairwise difference in ideology groups' connection patterns satisfy a condition known as the Chernoff-Hellinger divergence criterion. We illustrate our approach using the campaign finance record in 2003-2004 election cycle. Using the posterior mode to categorize the ideological affiliations of the political committees, our estimates match the self reported ideology for 94.36% of those committees who self reported to be Democratic and 89.49% of those committees who self reported to be Republican.
    Keywords: Ideology; Network Analysis; Stochastic Block Models
    JEL: D85 D72 P16
    Date: 2017–12–10
  6. By: Deconinck, K.; Swinnen, J.; Meloni, G.
    Abstract: Despite a burgeoning literature on the economics of Geographical Indications (GIs), few analyses have explored the question of the optimal size of GIs and the role of lobbying in setting the boundaries of a GI. By contrast, historical evidence demonstrates that the emergence and expansion of GI areas has been accompanied by intense lobbying efforts. In this paper, we develop a political economy model to explore the size of GIs. Our model builds on four key aspects of a GI expansion: first, a larger GI area would increase production, thereby depressing prices. Second, a larger GI area potentially leads to a lower average (perceived) quality, which reduces consumer utility and prices. Third, a larger GI area allows producers to engage in better sharing of fixed costs such as marketing expenses. And fourth, the introduction or expansion of a GI area is a political decision, potentially influenced by lobbying. We show that a clear ranking exists of potential outcomes depending on whether governments maximize the welfare of all producers, "insiders" only, or "outsiders" only. However, the relationship between the political equilibrium and the social optimum is ambiguous, as it depends on how consumers' utility is affected by a change in quality. Acknowledgement : The authors wish to thank Martijn Huysmans, Paola Corsinovi, Davide Gaeta, Julian Alston, Stephen T. Ziliak, Erik Schokkaert, Frank Verboven, and Thijs Vandemoortele for stimulating discussions.
    Keywords: Political Economy
    Date: 2018–07
  7. By: Jesus Fernandez-Villaverde (Department of Economics, University of Pennsylvania); Tano Santos (Department of Economics, Columbia University)
    Abstract: This paper argues that institutions and political party systems are simultaneously determined. A large change to the institutional framework, such as the creation of the euro by a group of European countries, will realign -after a transition period- the party system as well. The new political landscape may not be compatible with the institutions that triggered it. To illustrate this point, we study the case of the euro and how the party system has evolved in Southern and Northern European countries in response to it.
    Keywords: Federalism, Political Institutions, Party Systems, Euro
    JEL: D72 F30 F40
    Date: 2017–07–03

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