nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒05‒20
twenty papers chosen by
Eugene Beaulieu
University of Calgary

  1. EDITED DEMOCRACY: Media Manipulation and the News Coverage of Presidential Debates By Alexsandros Cavgias; Raphael Corbi, Luis Meloni, Lucas M. Novaes
  2. Extra Votes to Signal Loyalty: Regional Political Cycles and National Elections in Russia By Oleg Sidorkin; Dmitriy Vorobyev
  3. A false divide? Correcting beliefs about inequality aligns preferences for redistribution between right and left-wing voters By Christopher Hoy; Russell Toth
  4. Did the Egyptian protests lead to change? Evidence from Egypt's first free Presidential elections By Nelly El-Mallakh
  5. Partisanship and local fiscal policy : evidence from Brazilian cities By Raphael Gouvea; Daniele Girardi
  6. Hurricanes, Climate Change Policies and Electoral Accountability By Stefano Gagliarducci; M. Daniele Paserman; Eleonora Patacchini
  7. Spatial modelling of the two-party preferred vote in Australian federal elections: 2001-2016 By Jeremy Forbes; Dianne Cook; Rob J Hyndman
  8. Fairness Views and Political Preferences - Evidence from a representative sample By Mueller Daniel; Sander Renes
  9. Market and Network Corruption By Maria Kravtsova; Aleksey Oshchepkov
  10. The Effect of Executive Constraints on Reform Implementation: An Empirical Analysis By María Clara Arroyo
  11. Do Banking Crises Improve Democracy? By Beni Kouevi Gath; Pierre-Guillaume Méon; Laurent Weill
  12. Social Effects of the Vote of the Majority: A Field-Experiment on the Brexit-Vote By Fernanda L. Lopez de Leon; Markus Bindemann
  13. Approval voting and Shapley ranking. By Pierre Dehez; Victor Ginsburgh
  14. Sanctions and Public Opinion: The Case of the Russia-Ukraine Gas Disputes By William Seitz; Alberto Zazzaro
  15. Political-Business Cycles in BRICS Economies: Evidence from Brazil By Celso José Costa Junior; Alejandro C. García Cintado; Manuel Alejandro Hidalgo Pérez
  16. Biased Forecasts to Affect Voting Decisions? The Brexit Case By Cipullo, Davide; Reslow, André
  17. The Transition of Corruption - Institutions and dynamics By Martin Paldam
  18. The political economy of educational policies and inequality of opportunity By Vincenzo Prete; Claudio Zoli
  19. Resource allocation by frugal majority rule By Nehring, Klaus; Puppe, Clemens
  20. Referenda Under Oath By Nicolas Jacquemet; Alexander James; Stéphane Luchini; Jason Shogren

  1. By: Alexsandros Cavgias; Raphael Corbi, Luis Meloni, Lucas M. Novaes
    Abstract: Political debates provide voters with a unique opportunity to learn about which candidates best represent their interests. They are complex campaign events that are followed by intensive media analysis and commentary. Despite growing evidence about their impact on voter behavior, little is known about their interrelated role with subsequent news coverage. This paper investigates the impact of an episode of manipulated TV coverage of a major presidential debate on the 1989 Brazilian presidential election. First, we present evidence from an online experiment that the coverage affects the audience’s evaluation of candidates differently then the actual debate. We then take advantage of a unique natural experiment regarding the geographical distribution of broadcaster-specific TV signal and the timing of election events in order to disentangle the effect of the coverage from the debate itself. By exploring both survey and actual election data, we find that the left-wing candidate lost 1.9−8.6 p.p. in vote share due to unfavorable coverage by the dominant TV network in Brazil. We also provide direct evidence that the mechanism works through a change in voters’ perception of who won the debate. Together, our set of results show how dominant media groups can distort the information generated by presidential debates through its subsequent news coverage, thus hindering the role of debates in informing voters.
    Keywords: political debates; media bias; elections
    JEL: D72 L82 O12
    Date: 2019–05–15
  2. By: Oleg Sidorkin (Leibniz-Institute for East and Southeast European Studies, CERGE-EI); Dmitriy Vorobyev
    Abstract: Under the system of appointing regional governors by the president, which existed in Russia between 2005–2012, governors’ loyalty to the central government and particularly their ability to deliver satisfactory results to the ruling party in national-level elections were crucial to their likelihood of being re-appointed for the next term. In this paper, we show that governors, anticipating the relationship between loyalty and re-appointments, attempted to increase their likelihood of being re-appointed by delivering additional votes to the ruling party, and that these attempts were subject to regional political cycles. We argue that delivering satisfactory results may have different importance to a governor depending on the stage of his term at which elections are held. If elections are held close to the expiration of a governor’s current term, the results are likely to be pivotal to his further political career. Exploiting variation in the starting and expiry dates of Russian regional governors’ terms of office, we find that the winning margins for a pro-government party across Russian regions in national-level elections held between 2007–2012 were substantially higher when elections were closer to the expiration of a regional governor’s term. However, for elections held between 1999–2004, when governors were subject to a direct vote by the regional population, no similar effect is found. We then implement several exercises to identify the source of the additional votes for the ruling party and demonstrate that governors, while unlikely using the means of electoral fraud, exerted efforts to stimulate turnout among ruling party supporters.
    Keywords: political cycle, elections, electoral fraud, Russia
    JEL: D72 D73 P26
    Date: 2018–10
  3. By: Christopher Hoy (Australian National University); Russell Toth (University of Sydney, Australia)
    Abstract: Are differences in preferences for redistribution between right- and left-wing voters amplified because of misperceptions of inequality? To address this question, we conduct a nationally representative, randomized survey experiment of 3,402 Australians, in which respondents are informed about either the level of national inequality and economic mobility, their position in the national income distribution, their household income per capita, or given no information. We show that correcting misperceptions of inequality reduces the gap between right- and left-wing voters‘ level of support for redistribution by at least 24 percent. This is predominantly due to right-wing voters becoming more supportive of redistribution.
    Keywords: Inequality, social mobility, redistribution, political economy.
    JEL: D31 D63 D72 D83 O50 P16 H23
    Date: 2019–04
  4. By: Nelly El-Mallakh (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)
    Abstract: Did the Egyptian protests lead to political change? I examine the effects of the first and second waves of Egyptian protests that started in 2011, on voting outcomes during Egypt's first free Presidential elections that took place between May and June 2012. I geocoded the "martyrs" - demonstrators who died during the protests - using unique information from the Statistical Database of the Egyptian Revolution and exploited the variation in districts' exposure to the Egyptian protests. Using official elections' results collected from the Supreme Presidential Electoral Commission (SPEC) and controlling for districts' characteristics using Census data, I find suggestive evidence that higher exposure to protests' intensity leads to a higher share of votes for former regime candidates, both during the first and second rounds of Egypt's first presidential elections after the uprisings. From the period of euphoria following the toppling of Mubarak to the sobering realities of the political transition process, I find that protests led to a conservative backlash, alongside negative economic expectations, general dissatisfaction with government performance, decreasing levels of trust towards public institutions, and increasing recognition of limitations on civil and political liberties.
    Keywords: Egyptian protests,Presidential elections,voting outcomes,martyrs
    Date: 2017–10
  5. By: Raphael Gouvea (Institute for Applied Economic Research and Department of Economics, University of Massachusetts Amherst); Daniele Girardi (Department of Economics, University of Massachusetts Amherst)
    Abstract: We study the role of political parties in shaping local fiscal policy in the context of Brazilian cities in the 2004-2016 period. Using a regression-discontinuity design, we find no effect of left-wing mayors on the size of the city government nor on the allocation of spending across main budget categories (current spending, investment and personnel). We do find a modest, significant and robust positive effect on the share of social expenditures. The (close) election of a left-wing mayor tends to raise the share of social expenditures by around 0.6 percentage points in our preferred RD specification. We then explore possible mechanisms which could bring about substantial fiscal policy convergence between political parties in Brazilian cities. We exploit oil-related revenue windfalls to explore the role of institutional constraints, and build an index of Tiebout competition to measure the role of the latter. We find support for the institutional constraints hypothesis in explaining the limited extent of spending allocation effects, and little support for the Tiebout-competition hypothesis.
    Keywords: Partisanship, Local Fiscal Policy, Brazil, Regression-Discontinuity, Elections, Oil Windfalls, Tiebout Competition
    JEL: H7 L38 D72 P16
    Date: 2019
  6. By: Stefano Gagliarducci; M. Daniele Paserman; Eleonora Patacchini
    Abstract: This paper studies how politicians and voters respond to new information on the threats of climate change. Using data on the universe of federal disaster declarations between 1989 and 2014, we document that congress members from districts hit by a hurricane are more likely to support bills promoting more environmental regulation and control in the year after the disaster. The response to hurricanes does not seem to be driven by logrolling behavior or lobbysts' pressure. The change in legislative agenda is persistent over time, and it is associated with an electoral penalty in the following elections. The response is mainly promoted by representatives in safe districts, those with more experience, and those with strong pro-environment records. Our evidence thus reveals that natural disasters may trigger a permanent change in politicians' beliefs, but only those with a sufficient electoral strength or with strong ideologies are willing to engage in promoting policies with short-run costs and long-run benefits.
    JEL: D70 D72 H50 Q54
    Date: 2019–05
  7. By: Jeremy Forbes; Dianne Cook; Rob J Hyndman
    Abstract: We examine the relationships between electoral socio-demographic characteristics and two-party preference in the six Australian federal elections held between 2001 to 2016. Socio-demographic information is derived from the Australian Census, which occurs every five years. Since a Census is not directly available for each election, spatio-temporal imputation is employed to estimate Census data for the electorates at the time of each election. This accounts for both spatial and temporal changes in electoral characteristics between Censuses. To capture any spatial heterogeneity, a spatial error model is estimated for each election, which incorporates a spatially structured random effect vector that can be thought of as the unobserved political climate in each electorate. Over time, the impact of most socio-demographic characteristics that affect electoral two-party preference do not vary, with industry of work, incomes, household mobility and de facto relationships having strong effects in each of the six elections. Education and unemployment are amongst those that have varying effects. It is also found that between 2004 and 2013, the spatial effect was insignificant, meaning that electorates voted effectively independently. All data featured in this study has been contributed to the eechidna R package (available on CRAN).
    Keywords: Federal election, census, Australia, spatial modelling, imputation, data science, socio-demographics, electorates, R, eechidna.
    JEL: C31 C33 D72
    Date: 2019
  8. By: Mueller Daniel; Sander Renes
    Abstract: We elicit distributional fairness ideals of impartial spectators using an incentivized elici- tation in a large and heterogeneous sample of the German population. We document several empirical facts: i) egalitarianism is the predominant ideal; ii) females are more egalitarian than men; iii) men are relatively more efficiency minded; iv) left-leaning voters are more likely to be egalitarians whereas right-leaning voters are more likely to be efficiency minded; and v) young and highly-educated participants hold different fairness ideals than the rest of the population. Moreover, we show that the fairness ideals predict preferences for redistribution and interven- tion by the government, as well as actual charitable giving, even after controlling for a range of covariates. Hence, our paper contributes to our understanding of the underpinnings of voting behavior and ideological preferences, as well the literature that links lab and field behavior.
    Keywords: Distributional fairness, impartial spectator, representative sample, po- litical attitudes, voting behavior, lab to field
    JEL: C90 D31 D63
    Date: 2019–08
  9. By: Maria Kravtsova (National Research University Higher School of Economics); Aleksey Oshchepkov
    Abstract: Economists tend to reduce all corruption to impersonal market-like transactions, ignoring the role of social ties in shaping corruption. In this paper, we show that this simplification substantially limits the understanding of corruption. We distinguish between market corruption (impersonal bribery), and network (or parochial) corruption which is conditional on the social connections between bureaucrats and private agents. We argue, both theoretically and empirically, that these types of corruption have different qualities. Using data from the Life in Transition Survey (LiTS) which covers all post-socialist countries we show, first, that the correlation between market and network corruption is weak, which implies that ignoring network corruption leads not only to an underestimation of the overall scale of corruption but also biases national corruption rankings. Secondly, in line with theoretical expectations, we find that network corruption is more persistent over time, less related to contemporary national socio-economic and institutional characteristics and has stronger historical roots than market corruption. Yet, network corruption, unlike bribery, is not able to ‘grease the wheels’ and is not associated with political instability. Lastly, we show that the decline in bribery which was observed in almost all post-socialist countries in the period from 2010 to 2016 was accompanied by rising network corruption in many of them, which has important policy implications.
    Keywords: market corruption, parochial corruption, network corruption, blat, bribery, postsocialist countries
    JEL: D73 Z13 L26
    Date: 2019–02
  10. By: María Clara Arroyo
    Abstract: In the political economy literature there is a widely accepted view that checks on the executive can block policy implementation. Dueto lack of sufficient data, there have not been any attempts to find empirical evidence to support this theory. This thesis studies the effect of executive constraints on reform implementation using a new dataset on economic reforms introduced by Giulianoet al. (2013) and Polity IV's measure of constraints on the executive. The database used by Giuliano et al. (2013) describes the degree of regulation in six different sectors of the economy: agriculture, product markets (electricity and telecommunication), trade, capital account, current account and the domestic financial sector in 156 countries for the period 1960-2005. I use two approaches to study the relationship between executive constraints and reform implementation. The first replicates the methodology used by Giuliano et al. (2013) using executive constraints instead of democracy as the variable of interest. The second studies the persistence of the deregulation index to see whether it is affected by executive constraints. If the theory presented before is supported by the evidence, I should observe that high executive constraints are associated with a higher persistence of the deregulation index. Both approaches result in the inability to find statistically significant evidence that constraints on the executive have any effect on reform implementation, as measured by the deregulation index from Giuliano et al. (2013)
    Keywords: Political Economy, Checks and Balances, Economic Reforms
    JEL: H11 P16 P48 E02
    Date: 2018–08
  11. By: Beni Kouevi Gath; Pierre-Guillaume Méon; Laurent Weill
    Abstract: We study the impact of banking crises on the level of democracy. We use an event-study method on a sample of up to 129 countries over the period 1975-2010 accounting for 94 systemic banking crises. We find that banking crises are followed by an improvement in democracy and report evidence suggesting that the relation is causal. The bulk of the improvement takes place between 3 and 10 year after the banking crisis. The impact of a banking crisis is greater in non-democratic countries and when the banking crisis is severe. We explain this finding by the fact that banking crises create windows of opportunity to contest autocratic regimes.
    Keywords: Banking crisis; Democracy; Regime change; Transitions
    JEL: D72 H11
    Date: 2019–05–10
  12. By: Fernanda L. Lopez de Leon; Markus Bindemann
    Abstract: The 2016 EU referendum result -the so-called Brexit vote-was widely perceived as a statement against immigration. We conducted a field-experiment to test whether the Brexit vote triggered anti-social attitudes. In a computerized quiz, our (non-deceptive) intervention randomized the information of whether the local majority voted to Leave or to Remain in the EU. We find that such information in support of Brexit increased negative attitudes towards immigrants. Moreover, the impactful treatments inhibited (rather than reinforced) individuals' pre-existing views to conform to the vote of the majority. Our findings provide insight into the effects of referenda results in changing individuals' attitudes.
    Date: 2019–04
  13. By: Pierre Dehez; Victor Ginsburgh
    Abstract: Approval voting allows electors to list any number of candidates and their scores are obtained by summing the votes cast in their favor. Equal-and-even cumulative voting instead follows the One-person-one-vote principle by endowing electors with a single vote that they may evenly distribute among several candidates. It corresponds to satisfaction approval voting introduced by Brams and Kilgour (2014) as an extension of approval voting to a multiwinner election. It also corresponds to the concept of Shapley ranking introduced by Ginsburgh and Zang (2012) as the Shapley value of a cooperative game with transferable utility. In the present paper, we provide an axiomatic foundation of Shapley ranking and analyze the properties of the resulting social welfare function.
    Keywords: Search and matching models, Collective bargaining, Experience rating, Employment protection.
    JEL: D71 C71
    Date: 2019
  14. By: William Seitz (Independent Researcher); Alberto Zazzaro (University of Naples Federico II, CSEF and MoFiR.)
    Abstract: Economic sanctions usually fail, sometimes even provoking the opposite of the intended outcome. Why are sanctions so often ineffective? One prominent view is that sanctions generate popular support for the targeted government and its policies; an outcome referred to as the rally-around-the-flag effect. We quantify this effect in the context of a major trade dispute between Ukraine and the Russian Federation, which led to a cut in gas exports to Ukraine and a sharp increase of gas prices. Using individual data on political and economic preferences before and after the trade dispute and exploiting the cross section heterogeneity in the individual exposure to the price shock—measured by the connection to a centralized gas/heating system—we find that people more directly affected by the increase of gas prices were significantly more likely to change their opinions in support of Western-style political and economic systems preferred by the incumbent government, consistent with a rally-around-the-flag effect.
    Keywords: Sanctions, Gas Dispute, Russia, Ukraine, Rally-Around-the-Flag
    JEL: F13 F51
    Date: 2019–05–09
  15. By: Celso José Costa Junior (Ministerio de Economía, Universidad Estadual de Ponta Grossa (UEPG) & Fundação Getúlio Vargas (FGV), Brasil); Alejandro C. García Cintado (Universidad Pablo de Olavide (UPO) & UEPG); Manuel Alejandro Hidalgo Pérez (UPO & Secretaría General de Economía – Junta de Andalucía)
    Abstract: This paper uses a DSGE model with political-regime-dependent fiscal and monetary policies so as to examine political-business cycles in an emerging market such as Brazil under three different regimes – an "opportunistic regime" and "two partisan ones". The former regime seeks to identify whether within the period of seven quarters prior to the elections, the government manipulated the economy to increase the chances of getting reelected (or securing a successor). As for the latter two, they try to verify whether the macroeconomic strategies pursued by the "more leftist" governments differed from their "more right-wing" predecessors’ monetary and fiscal policies. Our results show that there exists an opportunistic behavior by all the governments studied as regards fiscal policy, and that from a macroeconomic viewpoint, President Rouseff’s administration fared differently than previous governments. However, monetary policy turns out to be independent of the regimes considered.
    Keywords: political cycles, monetary policy, fiscal policy, Oaxaca model, Dynamic Stochastic General Equilibrium (DSGE) model.
    JEL: E32 E52 E62
    Date: 2019–05
  16. By: Cipullo, Davide (Uppsala University); Reslow, André (Uppsala University)
    Abstract: This paper introduces macroeconomic forecasters as political agents and suggests that they use their forecasts to influence voting outcomes. We develop a probabilistic voting model in which voters do not have complete information about the future states of the economy and have to rely on macroeconomic forecasters. The model predicts that it is optimal for forecasters with economic interest (stakes) and influence to publish biased forecasts prior to a referendum. We test our theory using high-frequency data at the forecaster level surrounding the Brexit referendum. The results show that forecasters with stakes and in uence released much more pessimistic estimates for GDP growth in the following year than other forecasters. Actual GDP growth rate in 2017 shows that forecasters with stakes and in uence were also more incorrect than other institutions and the propaganda bias explains up to 50 percent of their forecast error.
    Keywords: Brexit; Interest Groups; Forecasters Behavior; Voting
    JEL: D72 D82 E27 H30
    Date: 2019–03–01
  17. By: Martin Paldam (Department of Economics and Business Economics, University of Aarhus)
    Abstract: The cross-country data for honesty/corruption and income has a correlation of about 0.75, and the data have a typical transition path; but the correlation of the growth rate and honesty is negative. Thus, the short and long-run findings are contradictory, and it is shown that the contradiction lasts a dozen years. The transition of corruption happens relatively late and works through changes in institutions. To catch all institutions the Polity-index is used for the political dimension and the Fraser-index of economic freedom for the economic one. The two indices explain as much as income, but they both have a transition, so the relations are partly spurious. To identify the non-spurious part of the relation and sort out causality, the D-index is defined as the difference between the corruption index and the transition path. Institutional instability increases corruption, but when institutions stabilize, both democracy and economic freedom increase honesty.
    Keywords: Corruption, cross-country, income vs institutions
    JEL: D73 K42 P48
    Date: 2019–05–15
  18. By: Vincenzo Prete (Department of Economics, University Of Verona); Claudio Zoli (Department of Economics, University Of Verona)
    Abstract: We propose a political economy model to explain cross-country differences observed in educational policies and to show how such heterogeneity is associated with the level of a country’s development and inequality. Parents, heterogeneous in terms of income and their child’s ability, vote over the educational policy, by deciding the allocation of a given public budget between basic and higher education. Parents can invest in supplemental private education to increase the probability of their children of being admitted to higher education. When the level of development is low and inequality between social classes is sufficiently large, there is low exchange social mobility in the access to higher education, and educational policies are characterized by a large relative per-student expenditure in higher education.
    Keywords: Education, Voting, Development, Inequality, Mobility
    JEL: D31 H52 I24 I25
    Date: 2019
  19. By: Nehring, Klaus; Puppe, Clemens
    Abstract: We propose a model of "frugal aggregation" in which the evaluation of social welfare must be based on information about agents' top choices plus general qualitative background conditions on preferences. The former is elicited individually, while the latter is not. We apply this model to problems of public budget allocation, relying on the specific assumption of separable and convex preferences. We propose and analyze a particularly aggregation rule called "Frugal Majority Rule." It is defined in terms of a suitably localized net majority relation. This relation is shown to be consistent, i.e. acyclic and decisive; its maxima minimize the sum of the natural resource distances to the individual tops. As a consequence of this result, we argue that the Condorcet and Borda perspectives - which con ict in the standard, ordinal setting - converge here. The second main result provides a crisp algorithmic characterization that renders the Frugal Majority Rule analytically tractable and efficiently computable.
    Date: 2019
  20. By: Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Alexander James (University of Oxford [Oxford]); Stéphane Luchini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales); Jason Shogren (Departement of Economics and Finance, University of Wyoming - UW - University of Wyoming)
    Abstract: Herein we explore whether a solemn oath can eliminate hypothetical bias in a voting referenda, a popular elicitation mechanism promoted in non-market valuation exercises for its incentive compatibility properties. First, we reject the null hypothesis that a hypothetical bias does not exist. Second, we observe that people who sign an oath are significantly less likely to vote for the public good in a hypothetical referenda. We complement this evidence with a self-reported measure of honesty which confirms that the oath increases truthfulness in answers. This result opens interesting avenues for improving the elicitation of preferences in the lab and beyond.
    Keywords: Hypothetical bias,Oath,Dichotomous Choice Mechanism,Preference revelation
    Date: 2017–07

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