nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒01‒28
seven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Lending cycles and real outcomes : Costs of political misalignment By Bircan, Çağatay; Saka, Orkun
  2. Politics, banks, and sub-sovereign debt: Unholy trinity or divine coincidence? By Koetter, Michael; Popov, Alexander
  3. Political Competition: How to Measure Party Strategy in Direct Voter Communication using Social Media Data? By Sturm, Silke
  4. Manipulated Electorates and Information Aggregation By Mehmet Ekmekci; Stephan Lauermann
  5. The Dimensions of Consensus By Benny Moldovanu; Alex Gershkov; Xianwen Shi
  6. Women in Politics - Portugal as Case Study By Maria Sousa Galito
  7. The relationship between trust, cognitive skills, and democracy - evidence from 30 countries around the world By Schnitzlein, Daniel D

  1. By: Bircan, Çağatay; Saka, Orkun
    Abstract: We use data on the universe of credit in Turkey to document a strong political lending cycle. State-owned banks systematically adjust their lending around local elections compared with private banks in the same province. There is considerable tactical redistribution: state-owned banks increase credit in politically competitive provinces which have an incumbent mayor aligned with the ruling party, but reduce it in similar provinces with an incumbent mayor from the opposition parties. This effect only exists in corporate lending as opposed to consumer loans, suggesting that tactical redistribution targets job creation to increase electoral success. Political lending influences real outcomes as credit-constrained opposition areas suffer drops in employment and firm sales. There is substantial misallocation of financial resources as credit constraints most affect provinces and industries with high initial efficiency.
    JEL: G21 D72 D73 P16
    Date: 2019–01–21
  2. 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.
    Keywords: political connections,government-owned banks,sub-sovereign debt
    JEL: G21 H63 P16
    Date: 2018
  3. By: Sturm, Silke
    Abstract: Political competition, party strategy and communication in the era of social media are growing issues. Due to the increasing social media presence of parties and voters alike, direct communication is more important for party competition. This paper aims to improve the methodological approach used to analyze political competition and communication. The dataset includes over 30,000 Facebook status messages posted by seven German parties from January 2014 until February 2018. Topic modeling, which is commonly used in other fields, allows for evaluating party communication on a daily basis. The results show the high accuracy of calculating party-relevant issues. To determine the tone of the debate, a sentiment analysis was conducted. The prevalence of topics and sentiments over time allows for precise monitoring of the political debate.
    Keywords: Political competition,Party strategy,Decision making,Social media,Topic models,Sentiment analysis
    JEL: C81 D72 D83 D91
    Date: 2019
  4. By: Mehmet Ekmekci; Stephan Lauermann
    Abstract: We study the aggregation of dispersed information in elections in which turnout may depend on the state. State-dependent turnout may arise from the actions of a biased and informed "election organizer." Voters are symmetric ex ante and prefer policy a in state α and policy b in state β, but the organizer prefers policy a regardless of the state. Each recruited voter observes a private signal about the unknown state but does not learn the turnout. First, we characterize how the outcomes of large elections depend on the turnout pattern across states. In contrast to existing results for large elections, there are equilibria in which information aggregation fails whenever there is an asymmetry in turnout; information aggregation is only guaranteed in all equilibria if turnout is state independent. Second, when the turnout is the result of costly voter recruitment by a biased organizer, the organizer can ensure that its favorite policy a is implemented with high probability independent of the state as the voter recruitment cost vanishes. Moreover, information aggregation will fail in all equilibria. The critical observation is that a vote is more likely to be pivotal for the decision if turnout is smaller, leading to a systematic bias of the decision toward the low-turnout state.
    Keywords: Voting, Information Aggregation
    JEL: C70 D80
    Date: 2019–01
  5. By: Benny Moldovanu; Alex Gershkov; Xianwen Shi
    Abstract: We study a multi-dimensional collective decision under incomplete information. Agents have Euclidean preferences and vote by simple majority on each issue (dimension), yielding the coordinate-wise median. Judicious rotations of the orthogonal axes - the issues that are voted upon - lead to welfare improvements. If the agents' types are drawn from a distribution with independent marginals then, under weak conditions, voting on the original issues is not optimal. If, in addition, the marginals are identical, then voting first on the total sum and next on the differences is often welfare superior to voting on the original issues. We also provide various lower bounds on incentive efficiency: in particular, if agents' types are drawn from a log-concave density with symmetric marginals, a second-best voting mechanism attains at least 88% of the first-best efficiency.
    Keywords: multi-dimensional voting , welfare , bundling
    JEL: D82 D71
    Date: 2018–07
  6. By: Maria Sousa Galito
    Abstract: Democracy is about the power of people and women are majoritarian in society, therefore, they have been claiming for more rights and more representativeness in politics for a long time. After running for office, some have become political representatives only by merit and constant struggle. Others got their chance after the legalization of female quotas and targets. The system has gone a long way since ladies were recognized the right to vote. The evolution of women’s empowerment is the focus of this paper that tries to analyze the main characteristics, causes and effects of this process, based on theory and world references or statistics. Portugal was chosen as a case study for not being much researched or not sufficiently so far.
    Date: 2018–12
  7. By: Schnitzlein, Daniel D
    Abstract: Based on highly comparable data from the OECD PIAAC Programme, this note analyzes the relationship between generalized trust and cognitive skills among 30 countries around the world. The results show that the strength and direction of the relationship is not a universal characteristic but varies substantially among countries worldwide. A detailed descriptive analysis of this variation provides evidence that the relationship strengthens with the level of democracy in a country. In a second step, German separation and reunification is used as external variation in the level of democracy in the German PIAAC subsample. The results support the evidence from the cross-country analysis. Thus, the institutional framework in a country not only shapes an individual's level of trust but also amplifies the relationship between individual characteristics such as cognitive skills and generalized trust.
    Keywords: Generalized trust; political institutions; cognitive skills; PIAAC
    JEL: P51 Z13
    Date: 2019–01

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