nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒04‒29
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political Budget Cycles: Evidence from Swiss Cantons By Baldi, Guido; Forster, Stephan
  2. Right-wing populist discourse on Chinese social media: Identity, otherness, and global imaginaries By Chenchen Zhang
  4. Executive Accountability Beyond Outcomes: Experimental Evidence on Public Evaluations of Powerful Prime Ministers By Becher, Michael; Brouard, Sylvain
  5. The Political Economy of Immigration Enforcement: Conflict and Cooperation under Federalism By Alberto Ciancio; Camilo García-Jimeno
  6. Did the 2017 Tax Reform Discriminate against Blue State Voters? By David Altig; Alan J. Auerbach; Patrick C. Higgins; Darryl R. Koehler; Laurence J. Kotlikoff; Michael Leiseca; Ellyn Terry; Yifan Ye
  7. Taxation,foreign aid and political governance in Africa By Asongu, Simplice A; Odhiambo, Nicholas M
  8. Climate Policies and Nationally Determined Contributions: Reconciling the Needed Ambition with the Political Economy By Vogt-Schilb, Adrien; Hallegatte, Stephane

  1. By: Baldi, Guido; Forster, Stephan
    Abstract: Models of political budget cycles assume that politicians use fiscal policy to increase their chances of re-election. However, empirical results for advanced economies provide ambiguous support for the existence of such electoral cycles. Also, studies focusing on the regional or local level of advanced economies have found a variety of different results. In this paper, we use data at the sub-federal level of Switzerland from 1978 through 2015 to test for the presence of political budget cycles. Swiss regions called cantons are highly autonomous with regard to budgetary policy and have established direct democratic systems with frequent referendums that often affect budgetary issues. In most cantons, there are fiscal policy rules that restrict the budgetary leeway of governments. Overall, the system of government is designed to foster consensus seeking and gradual adjustment. These features should make the short-run opportunistic or partisan use of fiscal policy less likely in Swiss cantons. Rather surprisingly, however, we find at least some evidence for an electoral cycle in government spending. For government revenue or the overall budget, our empirical results do not point to an electoral cycle.
    Keywords: Political budget cycle,fiscal policy,direct democracy
    JEL: D72 E62 H62
    Date: 2019
  2. By: Chenchen Zhang
    Abstract: The last few years have seen the emergence of a right-wing populist discourse on Chinese social media that combines the claims, vocabulary, and style of right-wing populisms in Europe and North America with previous forms of nationalism and racism in Chinese cyberspace. In other words, it provokes a similar hostility towards immigrants, Muslims, feminism, the so-called ‘liberal elites’, and progressive values in general. This article examines how, in debating global political events such as the European refugee crisis and the American presidential election, well-educated and well-informed Chinese internet users appropriate the rhetoric of ‘Western-style’ rightwing populism to paradoxically criticise Western hegemony and discursively construct China’s ethno-racial and political identities. Through qualitative analysis of 1,038 postings retrieved from a popular social media website, this research shows that by criticising Western ‘liberal elites’, the discourse constructs China’s ethno-racial identity against the ‘inferior’ non-Western other, exemplified by non-white immigrants and Muslims, with racial nationalism on one hand; and formulates China’s political identity against the ‘declining’ Western other with realist authoritarianism on the other. We conclude by conceptualising the discourse as embodying the logics of anti-Western Eurocentrism and anti-hegemonic hegemonies. This article 1) provides critical insights into the changing ways in which self/other relations are imagined in Chinese popular geopolitical discourse; 2) sheds light on the global circulation of extremist discourses facilitated by the internet; and 3) contributes to the ongoing debate on populism and the ‘crisis’ of the liberal world order.
    Keywords: China, Far-Right, Extreme-right, social networks
    Date: 2019
  3. By: Denis Stremoukhov (National Research University Higher School of Economics)
    Abstract: Unlike in the 1990s and early 2000s, nowadays scholars rarely address the issue of international activity of Russian regions (phenomenon known as paradiplomacy). Due to the successful centralization efforts, Russian governors almost lost their domestic as well as external agency. However, there is still a considerable variation in the levels of their international activity which remains unexplained. Employing an original dataset on the international activity of Russian governors from 2005 to 2015 I investigate the effect local political regime, ethnicity and other factors have on the level of gubernatorial participation in paradiplomacy. Contrary to other studies I find that ethnicity has a positive effect on the external activity. I argue that paradiplomacy of republics serves as a tool of their ethnic policy. I also find that more democratic local political regimes bolster the willingness of the governors to participate in paradiplomacy. Varyag governors with no prior connections to the region are also more active internationally.
    Keywords: paradiplomacy, subnational governance, ethnicity, Russia.
    JEL: Z
    Date: 2019
  4. By: Becher, Michael; Brouard, Sylvain
    Abstract: While executives in many democracies have constitutional powers to circumvent the majoritarian legislative process to make policy, political scientists know relatively little about whether and when ordinary people hold executives accountable for the process they use. To study this issue beyond the American presidency, we conduct three large survey experiments in France, where the institution of the confidence procedure puts the government in a strong position relative to parliament. Our experiments highlight that public evaluations of the executive reflect a fundamental trade-off between policy and process. If they face significant opposition in the legislative process, executives either have to accept policy failure or risk punishment for the use of procedural force. People dislike both results, and the average popularity gain of using the confidence procedure over not delivering the policy is modest. Moreover, in some contexts executives are strictly better off not legislating rather than applying force.
    Date: 2019–04
  5. By: Alberto Ciancio; Camilo García-Jimeno
    Abstract: We study how the shared responsibilities over immigration enforcement by local and federal levels in the US shape immigration enforcement outcomes, using detailed data on the Secure Communities program (2008-2014). Tracking the movement of arrested unlawfully present immigrants along the several steps of the immigration enforcement pipeline, and exploiting a large shift in federal enforcement priorities in mid 2011, we disentangle the three key components of the variation in deportation rates: federal enforcement efforts, local enforcement efforts, and the composition of the pool of arrestees. This decomposition allows us to recover the local (county) level response to changes in federal enforcement intensity. Among urban counties, 80 percent, mostly Democratic but with small shares of Hispanics, exhibit strategic substitutabilities. The inverse relationship between federal and local efforts allowed most counties to reduce opposition to the policy, and was accompanied by an increased alignment of local and federal preferences. The federal level was very effective in directing its enforcement efforts towards counties where it expected local collaboration, but conflict was mostly driven by a change in the types of unlawfully present immigrants it prioritized for removal.
    JEL: D73 D78 H73 H77 J15 J61
    Date: 2019–04
  6. By: David Altig; Alan J. Auerbach; Patrick C. Higgins; Darryl R. Koehler; Laurence J. Kotlikoff; Michael Leiseca; Ellyn Terry; Yifan Ye
    Abstract: The Tax Cut and Jobs Act of 2017 (TCJA) made significant changes to corporate and personal federal income taxation, including limiting the SALT (state and local property, income and sales taxes) deductibility to $10,000. States with high SALT tend to vote Democratic. This paper estimates the differential effect of the TCJA on red- and blue-state taxpayers and investigates the importance of the SALT limitation to this differential. We calculate the effect of permanent implementation of the TCJA on households using The Fiscal Analyzer: a life-cycle, consumption-smoothing program incorporating all major federal and state fiscal policies. We find that the average percentage increase in remaining lifetime spending under the TCJA is 1.6 percent in red states versus 1.3 percent in blue states. Among the richest 10 percent of households, this differential is larger. Rich households in red states enjoyed a 2.0 percent increase compared to a 1.2 percent increase among the rich in blue-state households. This gap is driven almost entirely by the limitation on the SALT deduction. Excluding the SALT limitation from the TCJA results in a spending gain of 2.6 percent for rich red-state households compared to 2.7 percent for rich blue-state households.
    JEL: D31 D72 E62 H20 H22 H71
    Date: 2019–04
  7. By: Asongu, Simplice A; Odhiambo, Nicholas M
    Abstract: This study examines the hypothesis that foreign aid dilutes the positive role of taxation on political governance. The empirical evidence is based on the Generalised Method of Moments and 53 African countries for the period 1996-2010. For more policy options, the dataset is disaggregated into fundamental characteristics of African development based on income levels, legal origins, natural resources and landlockedness. While the hypothesis is invalid in baseline Africa, low income and English common law countries of the continent, the research cannot conclude on its validity for other fundamental characteristics of development. Policy implications, caveats and directions for future research are discussed.
    Keywords: Foreign Aid; Political Economy; Development; Africa
    Date: 2019–04
  8. By: Vogt-Schilb, Adrien; Hallegatte, Stephane
    Abstract: Countries have pledged to stabilize global warming at a 1.5 to 2°C increase. Either target requires reaching net zero emissions before the end of the century, which implies a major transformation of the economic system. This paper reviews the literature on how policymakers can design climate policies and their Nationally Determined Contributions (NDCs) to reach zero-net emissions before the end of the century in a socially and politically-acceptable manner. To get the ambition right, policymakers can use sectoral roadmaps with targets and indicators that track progress towards zero emissions (e.g. regarding renewable power or reforestation). Indeed, monitoring economy-wide emissions reductions alone would not ensure that short-term action contributes meaningfully to the long-term decarbonization goal. To get the political economy right, climate policies can be designed so that they contribute to non-climate objectives and create coalitions of supporters. For instance, revenues from carbon taxes can fund social assistance and infrastructure investment, while reducing tax evasion and informality. To minimize social and economic disruptions and avoid stranded assets, policymakers can start with a low carbon price level and use complementary policies. Designed at the sector level, complementary policies such as performance standards or feebates for cars, building norms, or moratoriums on new coal power plants can be negotiated in partnership with local stakeholders and trigger a transition to zero carbon without creating disruptive stranded assets.
    Date: 2017–06

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