nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒02‒18
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Media's Role in the Making of a Democrat: Evidence from East Germany By Tim Friehe; Helge Müller; Florian Neumeier
  2. Strict ID Laws Don't Stop Voters: Evidence from a U.S. Nationwide Panel, 2008–2016 By Enrico Cantoni; Vincent Pons
  3. Priority Roads: The Political Economy of Africa's Interior-to-Coast Roads By Roberto Bonfatti; Yuan Gu; Steven Poelhekke
  4. Storable Votes and Quadratic Voting. An Experiment on Four California Propositions By Alessandra Casella; Luis Sanchez
  5. Communal fees and election cycles: Evidence from German municipalities By Manuela Krause
  6. Agricultural Disaster Payments: Are They Still Politically Allocated? By Scott Callahan
  7. Social Acceptability of Condorcet Committees By Mostapha Diss; Muhammad Mahajne
  8. Utilitarian and Ideological Determinants of Attitudes toward Immigration: Germany before and after the “Refugee Crisis” By Heinz Welsch
  9. The role of markets and preferences on resource conflicts By Alex Dickson; Ian A MacKenzie; Petros G Sekeris
  10. Should We Care (More) About Data Aggregation? Evidence from the Democracy-Growth-Nexus. By Klaus Gründler; Tommy Krieger
  11. Foreign Influence and Domestic Policy: A Survey By Toke S. Aidt; Facundo Albornoz; Esther Hauk
  12. State-Dependent Effect on Voter Turnout: The Case of US House Elections Abstract: In models of voter participation, the effects of election margin and campaign expenditure can be shown to be state-dependent – varying with low/high turnout. We empirically assess these implications for observed turnout, employing data from US House elections from 2000 to 2008 by means of quantile regression analysis. We document that the effects of expected election margin and campaign spending on turnout are statedependent: the later is positive and decreasing, whereas the former is negative and Ushaped. Other determinants’ influence on turnout (e.g. education, population density) is also shown to vary across the conditional distribution of turnout rate. Our findings are robust to a number of extensions. By Panagiotis Th. Konstantinou; Theodore Panagiotidis; Costas Roumanias
  13. Does A Change of Government Influence Compliance with International Agreements? Empirical Evidence for the NATO Two Percent Target By Johannes Blum; Niklas Potrafke
  14. Populist Manipulation or Personal Beliefs? A Study of the Divergent Perceptions of the Social Order in Switzerland By Aurelien Abrassart; Stefan C. Wolter
  15. Political Economy, Uncertainty, and Contracting Costs: Agriculture and the Negotiation of Trade Agreements By Li, Na; Ker, Alan P.
  16. Inequality Undermines Democracy and Growth By Thorvaldur Gylfason

  1. By: Tim Friehe; Helge Müller; Florian Neumeier
    Abstract: This paper explores the causal influence of media content on voting behavior. We exploit a natural experiment involving access to West German TV within the German Democratic Republic. Focusing on federal and state election outcomes in the post-reunification decade (i.e., a time at which TV content was harmonized), we find that municipalities that had access to Western TV broadcasts before reunification have lower vote shares for left-wing and right-wing extremist parties. With regard to potential channels, we provide evidence based on survey data that GDR citizens with access to West German TV were less loyal to the socialist regime, less hostile toward foreigners, and exhibited higher levels of social capital. Our findings thus support the notion that access to free media influences political attitudes and facilitates the consolidation of democracy.
    Keywords: voting, extremism, television, media, natural experiment, Germany
    JEL: D72 L82 P30
    Date: 2019
  2. By: Enrico Cantoni; Vincent Pons
    Abstract: U.S. states increasingly require identification to vote – an ostensive attempt to deter fraud that prompts complaints of selective disenfranchisement. Using a difference-in-differences design on a 1.3-billion-observations panel, we find the laws have no negative effect on registration or turnout, overall or for any group defined by race, gender, age, or party affiliation. These results hold through a large number of specifications and cannot be attributed to mobilization against the laws, measured by campaign contributions and self-reported political engagement. ID requirements have no effect on fraud either – actual or perceived. Overall, our results suggest that efforts to reform voter ID laws may not have much impact on elections.
    JEL: D72
    Date: 2019–02
  3. By: Roberto Bonfatti; Yuan Gu; Steven Poelhekke
    Abstract: Africa’s interior-to-coast roads are well suited to export natural resources, but not to support regional trade. Are they the optimal response to geography and comparative advantage, or the result of suboptimal political distortions? We investigate the political determinants of road paving in West Africa across the 1965-2012 period. Controlling for geography and the endogeneity of democratization, we show that autocracies tend to connect natural resource deposits to ports, while the networks expanded in a less interior-to-coast way in periods of democracy. This result suggests that Africa’s interior-to-coast roads are at least in part the result of suboptimal political distortions.
    Keywords: political economy, democracy, infrastructure, natural resources, development
    JEL: P16 P26 D72 H54 O18 Q32
    Date: 2019
  4. By: Alessandra Casella; Luis Sanchez
    Abstract: Storable Votes and Quadratic Voting are voting systems designed to account for voters’ intensity of preferences. We test their performance in two samples of California residents using data on four initiatives prepared for the 2016 California ballot. We bootstrap the original samples and generate two sets of 10,000 multi-elections simulations. As per design, both systems induce minority victories and result in higher expected welfare relative to majority voting. In our parametrization, quadratic voting induces more minority victories and achieves higher average welfare, but causes more frequent inefficient minority victories. The results are robust to different plausible rules-of-thumb in casting votes.
    JEL: D02 D71 D72
    Date: 2019–01
  5. By: Manuela Krause
    Abstract: The political business cycle theories describe that election-motivated politicians manipulate economic policy-making. Election cycles occur in many fiscal variables, for example tax rates. I examine whether electoral motives influence communal fees in Germany. Fees have to be paid for the use of many public services, for example waste management or sewerage provisions. Fees should be equivalent to the costs of a public service and thus correspond to the benefit principle in public finance. The German municipalities, however, have a leeway to determine fees. I use revenue data for around 7,000 West German municipalities from seven states over the period 1992–2006. The results show that municipalities increase communal fees in election years to a smaller extent than in the middle of the legislative period, while they increase fees more directly after elections. Fees increase in election years by 0.94 euro per capita less and directly after elections by 1.74 euro per capita more than in the middle of the legislative period. The results thus corroborate the predictions of the political business cycle theories.
    Keywords: Electoral cycles, political business cycles, local government, communal fees, public utilities sector
    JEL: D72 H72 A13 R50 H27
    Date: 2019
  6. By: Scott Callahan
    Abstract: This paper studies the allocation of agricultural disaster subsidies. Exploiting a regime change in agricultural disaster policy which occurred with the passage of the 2008 Farm Bill, disaster subsidy disbursement under both the 2005-2007 Crop Disaster Program and the SURE program that ran from 2008-2014 are estimated, and the effects of political factors on subsidy disbursement are compared. Results indicate that the transition from ad-hoc emergency disaster programs to a permanent agricultural disaster program did not reduce the political allocation of agricultural disaster subsidies, in contrast to results from the FEMA disaster payment literature. Key Words: Agricultural Policy, Campaign Finance, Lobbying, Rent Seeking
    JEL: Q18 D72
    Date: 2018
  7. By: Mostapha Diss (Univ Lyon, UJM Saint-Etienne, CNRS, GATE L-SE UMR 5824, F-42023 Saint-Etienne, France); Muhammad Mahajne (Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France)
    Abstract: We define and examine the concept of social acceptability of committees, in multi-winner elections context. We say that a committee is socially acceptable if each member in this committee is socially acceptable, i.e., the number of voters who rank her in their top half of the candidates is at least as large as the number of voters who rank her in the least preferred half, otherwise she is unacceptable. We focus on the social acceptability of Condorcet committees, where each committee member beats every non-member by a majority, and we show that a Condorcet committee may be completely unacceptable, i.e., all its members are unacceptable. However, if the preferences of the voters are single-peaked or single-caved and the committee size is not "too large" then a Condorcet committee must be socially acceptable, but if the preferences are single-crossing or group-separable, then a Condorcet committee may be socially acceptable but may not. Furthermore, we evaluate the probability for a Condorcet committee, when it exists, to be socially (un)acceptable under Impartial Anonymous Culture (IAC) assumption. It turns to be that, in general, Condorcet committees are significantly exposed to social unacceptability.
    Keywords: Voting, Multiwinner Elections, Committee, Condorcet, Social Acceptability
    JEL: D71 D72
    Date: 2019
  8. By: Heinz Welsch (University of Oldenburg, Department of Economics)
    Abstract: Previous studies on the determinants of attitudes toward immigration can be classified into those that take a utilitarian perspective, focusing on individuals’ perceptions of real-world impacts of immigration, and those that look at immigration attitudes from the point of view of ideological orientation, focusing on broad political norms and values. While utilitarian and ideological determinants have largely been studied separately, the present paper sets out to disentangle their role, placing an emphasis on possible interconnections between them. Specifically, the paper studies whether and to what extent individuals’ perception of the impacts of immigration is related to their ideological orientation, implying an indirect channel through which ideology may shape attitudes toward immigration policies. Focusing on Germany before and after the so-called refugee crisis of 2015, it is found that while perceptions of economic and cultural impacts are more important than ideological position, perceptions of impacts increasingly depend on ideology. Ideology-dependence of perceptions is stronger with respect to cultural than with respect to economic impacts. While the importance of perceived economic impacts has decreased, cultural impacts have become the dominant concern after the crisis. Ideological position is more important with respect to immigrants of a different race or ethnic group than the majority and immigrants from poorer countries outside Europe than with respect to immigrants of the same race or ethnic group. The relationship between ideology and immigration attitudes rests mainly on the identity/homogeneity domain of ideological position rather than the equity/solidarity domain.
    Keywords: immigration, attidude, utilitarianism, left right scale, equity, identity
    Date: 2019–02
  9. By: Alex Dickson (Department of Ecoomics, University of Strathclyde); Ian A MacKenzie (School of Econimics, University of Queensland, Brisbane); Petros G Sekeris (Montpellier Business School, France)
    Abstract: This article investigates a generalized resource curse. The existing empirical and theoretical literature on the resources-conflict nexus argues that higher resource rents (or a lower opportunity cost of appropriation) exacerbates conflict. We demonstrate that these widely accepted results rely on two fundamental elements relating to market conditions and agents’ preferences. When resource prices are treated as exogenous, we obtain the conventional result, where an increase in the profitability of either the appropriative or productive activity incentivizes agents to reorient efforts accordingly. However, when the price of the contestable resource is endogeneously set (i.e., locally determined), we find the opposite result may hold depending on the nature of agents’ preferences: conflict can increase when the contestable resource becomes scarcer. Intuitively, if the contestable resource is abundant, players’ relative marginal utility of the resource will be low, thereby resulting in low relative prices. Increases in the size of the contestable resource will lead to a reduction in appropriation effort, whereas scarcities will be conducive to conflict. We show an identical result is obtained if markets are absent for the contestable resource, such as when considering civil liberties and political rights.
    Keywords: Resource curse, conflict
    JEL: C72 D72
    Date: 2018–12
  10. By: Klaus Gründler; Tommy Krieger
    Abstract: We compile data for 186 countries (1919 - 2016) and apply different aggregation methods to create new democracy indices. We observe that most of the available aggregation techniques produce indices that are often too favorable for autocratic regimes and too unfavorable for democratic regimes. The sole exception is a machine learning technique. Using a stylized model, we show that applying an index with implausibly low (high) scores for democracies (autocracies) in a regression analysis produces upward-biased OLS and 2SLS estimates. The results of an analysis of the effect of democracy on economic growth show that the distortions in the OLS and 2SLS estimates are substantial. Our findings imply that commonly used indices are not well suited for empirical purposes.
    Keywords: data aggregation, democracy, economic growth, indices, institutions, machine learning, measurement of democracy, non-random measurement error
    JEL: C26 C43 O10 P16 P48
    Date: 2019
  11. By: Toke S. Aidt; Facundo Albornoz; Esther Hauk
    Abstract: In an interconnected world, economic and political interests inevitably reach beyond national borders. Since policy choices generate external economic and political costs, foreign state and non-state actors have an interest in influencing policy actions in other sovereign countries to their advantage. Foreign influence is a strategic choice aimed at internalizing these externalities and takes many forms. We distinguish three broad types of intervention strategies, (i) voluntary agreement interventions between the intervening foreign power and the target country, (ii) policy interventions based on rewarding or sanctioning the target country to obtain a specific change in policy and (iii) institution interventions aimed at influencing the policy choice by changing the political institutions in the target country (with or without a civil war). We propose a unifying theoretical framework to understand when and which form of foreign influence is chosen and use it to organize and evaluate the new political economics literature on foreign influence along with work in cognate disciplines. Foreign intervention plays a more important role for a proper understanding of domestic policy choices, for institutional dynamics and for internal conflict than is commonly acknowledged in both empirical and theoretical research.
    Keywords: foreign influence, international agreements, institutions, aid, sanctions, conflict
    JEL: D7 D72 D74 F13 F23 F51 F53
    Date: 2019–02
  12. By: Panagiotis Th. Konstantinou (Athens University of Economics and Business); Theodore Panagiotidis (Department of Economics, University of Macedonia); Costas Roumanias (Athens University of Economics and Business)
    Keywords: Voter Turnout, Election Margin, Campaign Expenditure, Quantile Regression.
    JEL: C21 D72
    Date: 2019–01
  13. By: Johannes Blum; Niklas Potrafke
    Abstract: We examine whether changes of government influence compliance with international agreements. We investigate compliance with the NATO two percent target to which all NATO countries committed themselves during the NATO summit in Wales in 2014. The dataset includes the military expenditure by NATO countries over the period 2010-2018. The results suggest that countries that do not (yet) comply with the two percent target have smaller growth rates in military expenditure relative to GDP when they experienced a large change of government, e.g. a change from a rightwing to a leftwing government, than countries that did not experience such a large change of government since the NATO summit in 2014. Countries that experienced a large change of government are, thus, less likely to comply with the two percent target. Future research should examine the credibility problem of national governments in other international agreements too.
    Keywords: international agreements, compliance, credibility, time inconsistency, change of government, military expenditure, two percent target, NATO, burden sharing
    JEL: D72 D74 H41 H56 P16
    Date: 2019
  14. By: Aurelien Abrassart (University of Bern); Stefan C. Wolter (University of Bern, Swiss Coordination Centre for Research in Education, CESifo & IZA)
    Abstract: Because of an important consistency in the prestige ratings of occupations from respondents across various social groups, countries and over time, the roots of divergent perceptions of the social order have attracted little attention. Yet structural changes in modern economies, brought by rapid globalization and technological change, and the rise of populism might have triggered a growing contestation of the foundations of the social order. We contribute to this important question by analyzing a unique data set in Switzerland based on a survey of adults' perception of the social prestige of occupations. As our results indicate, identification with major or minor right-wing populist parties does not significantly influence one's view of the social world. Rather, a radicalization of individual belief systems is the cause of the lower impact of the educational requirements and salience in autonomy of occupations on their perceived social prestige.
    Keywords: Autonomy, educational requirements, occupational prestige ranking, political radicalization, populism, social order
    Date: 2019–02
  15. By: Li, Na; Ker, Alan P.
    Abstract: Recent negotiations of the United States Mexico Canada Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) highlight the impact of contracting costs, uncertainty, and the importance of political welfare. Agriculture exhibits these traits perhaps more than any other sector and subsequently tends to be pivotal in many trade negotiations. Moreover, these traits are -- to some extent -- responsible for the large increase in Regional Trade Agreements (RTAs). In this manuscript we extend the political economy model of trade agreements to include both contracting costs and uncertainty. Uncertainty is incorporated through trade and policy shocks while contracting costs are incorporated as a function of the number of policy instruments. The optimal conditions on domestic support differ considerably if governments maximize social surplus only versus some linear combination of both social surplus and private political welfare. We also show that the politically optimal structure of trade agreements allows for countervailing duties. Our model helps explain: (a) why tariffs rather than production subsidies are more common in agriculture; (b) differential treatment of agricultural producers in developed versus developing countries; (c) continued presence of agricultural subsidies in many RTAs even under significant trade volume growth; and (d) the trend toward harmonization of Sanitary and Phytosanitary Standards (SPS) measures.
    Keywords: Agricultural and Food Policy
    Date: 2019–01–31
  16. By: Thorvaldur Gylfason
    Abstract: Income equality and trust seem to go along with several other ingredients of social capital as determinants of economic growth across the globe. In a large sample of countries, equality in the distribution of income as measured by the World Bank and by The Standardized World Income Inequality Database are seen to be correlated with economic diversification, the rule of law, transparency as measured by the corruption perceptions index from Transparency International, trust as measured in the World Values Survey, and democracy, all of which are good for growth as reflected in the purchasing power of per capita national income.
    Keywords: inequality, social capital, democracy, growth
    JEL: O43 O15
    Date: 2019

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