nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒12‒02
sixteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Economic and Social Roots of Populist Rebellion: Support for Donald Trump in 2016 By Thomas Ferguson; Benjamin Page; Jacob Rothschild; Jie Chen; Arturo Chang
  2. Industrial Structure and Party Competition in an Age of Hunger Games:Donald Trump and the 2016 Presidential Election Donald Trump and the 2016 Presidential Election By Thomas Ferguson; Paul Jorgensen; Jie Chen
  3. The Price of a Vote: Evidence from France, 1993-2014 By Yasmine Bekkouche; Julia Cage
  4. Electoral Democracy at Work By Philippe Askenazy; Thomas Breda
  5. The Defeat of Populism in Greece By MAVROZACHARAKIS, EMMANOUIL
  6. Inequality and Political Trust in Indonesia By Eldes Natalya Hutagalung
  7. Firm-Level Political Risk: Measurement and Effects By Tarek A. Hassan; Stephan Hollander; Laurence van Lent; Ahmed Tahoun
  8. Political Activists as Free-Riders: Evidence from a Natural Field Experiment By Hager, Anselm; Hensel, Lukas; Hermle, Johannes; Roth, Christopher
  9. A Distorting Mirror: Major Media Coverage of Americans` Tax Policy Preferences By Daniel Chomsky
  10. Fiscal Discipline and Exchange Rates: Does Politics Matter? By João Tovar Jalles; Carlos Mulas-Granados; José Tavares
  11. The accuracy of FiveThirtyEight's 2018 midterm election predictions: an exploratory analysis By Smith, Jinkinson
  12. Perceived Discrimination against Black Americans and White Americans By Zigerell, Lawrence J. Jr.
  13. An empirical study on Internet-based false news stories: experiences, problem awareness, and responsibilities By Gruener, Sven
  14. The social power dynamics of post-truth politics: How the Greek youth perceives the “powerful” foreigners and constructs the image of the European partners By Persefoni Zeri; Charalambos Tsekeris; Theodore Tsekeris
  15. Globalization and Populism in Europe By Bergh, Andreas; Gustafsson, Anders
  16. Populism - What next? A first look at populist walking-stick economies By Christopher Ball; Andreas Freytag; Miriam Kautz

  1. By: Thomas Ferguson (Institute for New Economic Thinking); Benjamin Page (Northwestern University); Jacob Rothschild (Northwestern University); Jie Chen (University of Massachusetts); Arturo Chang (Northwestern University)
    Abstract: This paper critically analyzes voting patterns in the 2016 U.S. presidential election. Using survey data from the American National Election Survey and aggregate data on Congressional districts, it assesses the roles that economic and social factors played in Donald J. Trump’s `Populist` candidacy. It shows the hollowness of claims that economic issues played little or no role in the campaign and that social factors such as race or gender suffice to explain the outcome. While agreeing that racial resentment and sexism were important influences, the paper shows how various economic considerations helped Trump win the Republican primary and then led significant blocs of voters to shift from supporting Democrats or abstaining in 2012 to vote for him. It also presents striking evidence of the importance of political money and Senators` `reverse coattails` in the dramatic final result.
    Keywords: political economy, voting, 2016 presidential election, Donald Trump, Populism, political parties, political money, international economic policy, free trade
    JEL: D71 D72 G38 P16 N22 L51
    Date: 2018–10
  2. By: Thomas Ferguson (University of Massachusetts, Boston); Paul Jorgensen (University of Texas Rio Grande Valley); Jie Chen (University of Massachusetts, Boston)
    Abstract: The U.S. presidential election of 2016 featured frontal challenges to the political establishments of both parties and perhaps the most shocking election upset in American history. This paper analyzes patterns of industrial structure and party competition in both the major party primaries and the general election. It attempts to identify the genuinely new, historically specific factors that led to the upheavals, especially the steady growth of a `dual economy` that locks more and more Americans out of the middle class and into a life of unsteady, low wage employment and, all too often, steep debts. The paper draws extensively on a newly assembled, more comprehensive database of political contributions to identify the specific political forces that coalesced around each candidate. It considers in detail how different investor blocs related to the Republican Party and the Trump campaign as the campaign progressed and the role small contributors played in the various campaigns, especially that of Vermont Senator Bernie Sanders. It also critically evaluates claims about the final weeks of the election in the light of important overlooked evidence.
    Keywords: banking and financial regulation, political economy, presidential elections, Donald Trump, America First, political parties, political money, international economic policy
    JEL: D71 D72 G38 P16 N22 L51
    Date: 2018–01
  3. By: Yasmine Bekkouche (Paris School of Economics); Julia Cage (Sciences Po Paris)
    Abstract: What is the price of a vote? This paper investigates this consequential controversy by analyzing a new comprehensive dataset of all French municipal and legislative elections over the 1993-2014 period. We begin by documenting the evolution of campaign finance in France, and show that both the amount and sources of campaign contributions vary widely from one candidate to another, in particular depending on their political party. We then turn to the empirical analysis and tackle a number of empirical challenges. First, we rely on recent methodological innovations to handle the special characteristics of multiparty data. Second, to overcome the endogenous nature of campaign spending, we propose a new instrument based on a change in legislation. We find that an increase in spending per voter consistently increases a candidate`s vote share both for municipal and legislative elections, and that the effect is heterogeneous depending on the parties and on the sources of campaign funding. According to our estimations, the price of a vote is about 6 euros for the legislative elections, and 32 euros for the municipal ones. Simulations show that small changes in spending patterns and caps can have a large impact on electoral outcomes and seats. Our results suggest that political finance needs to be tightly regulated.
    Keywords: Elections, Campaign financing, Campaign expenditures, Campaign finance reform, Multiparty electoral data
    JEL: D72 P48 H7
    Date: 2018–01
  4. By: Philippe Askenazy (CMH - Centre Maurice Halbwachs - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique); Thomas Breda (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We evaluate the short- to medium-run effects on unionization and employers' and workers' trust in unions, of an important reform of French employment relations in 2008. This reform made the conditions for union recognition more liberal and democratic after 2008 in private firms with 11 employees or more. The law gave equal chances to all unions to be recognized for bargaining, putting an end to the quasi-monopoly given to five historical unions until then. The law also introduced votes and minimal electoral requirements to obtain union recognition. These new regulations only became fully effective at the first firms' work councils elections happening after January 1st, 2009. Those elections occur within each firm according to a pre-defined frequency - usually every four years -, so that election dates only depend on former election dates, and can be considered as quasi-random with respect to the application date of the new law, at least in firms that are old enough. The identification thus relies on a regression discontinuity design in which the running variable is the firms' work councils election date: we compare in early 2011 firms that had those elections just before or just after January 1st, 2009. We find that the democratic rules introduced in 2008 quickly improved employers' satisfaction and trust towards unions by around 45% of a standard deviation. Union coverage and membership at the establishment level also increased strongly due to the reform and work stoppages became more likely. Together, these results suggest that the introduction of electoral democracy in French firms managed to improve workers' participation in unions and their ability to voice concerns while also improving employers' opinions of unions.
    Keywords: Union Representativeness,Democracy,Unionization,Social Capital
    Date: 2019–07
    Abstract: The recent elections in Greece reflects an enormous change in the political behavior of the electorate. The citizens have not chosen a simple switch on the power, but contributed with their votes to a strategic defeat of populism and in same time they paved the way for the search of a new type of leadership, which is close to realism in handling with social problems that can't be implemented with calculated financial costs. The vote of 7 th Juli is a vote against the over-promising and under-delivery experienced under Syriza’s rule. The voting for conservative ND is not an ideological choice. It's a choice that runs counter to the logic of falsely or hypocritical negotiating austerity measures opposed to Greece buy his Lenders (memorandum) and the consequent tax-tornado as a result of negotiating failure with the partners in the EEC and the IMF. The positive vote for ND also reflects the contradiction with the misguided manipulations of public opinion regarding the Skopje-Question and finally the strategy of micro concessions and micro- allowances as a means of concluding a “political-social alliance” with an undefined hostile establishment.
    Date: 2019–07–17
  6. By: Eldes Natalya Hutagalung (Master of Applied Economics, Padjadjaran University)
    Abstract: Inequality persists across the world. Numerous social and political consequences emerge due to the wide gap between the rich and the poor. For politics, previous empirical studies confirm that higher inequality is associated with a decline of political trust, which may hurt a country’s democratic legitimacy. In a highly unequal society, poor citizens feel worse off and are likely to blame the government for their situation. They judge the government as unfair for giving special treatment to the rich, as its policies mostly reflect the preferences of upper-income groups. This pattern should be particularly accentuated in Indonesia. Given the country’s large income inequality, the issue of political trust has been attracting public concern. This study therefore aims to verify the negative effect of inequality on political trust at the district level. We look at five different governmental entities–the presidency, the house of representatives, governors, police, and the court system–to analyze political trust. Unexpectedly, our results do not agree with previous studies. They show that there is no evidence that inequality dampens political trust in Indonesia. The coefficients of inequality measurements are positive, implying that households in unequal districts on average exhibit more trust in government. The change in inequality shows, however, the negative effect on political trust because as inequality decreases or increases, households’ level of trust in government will increase or decrease in turn.
    Keywords: Political Trust, Inequality, Change of Inequality
    JEL: I3
    Date: 2019–11
  7. By: Tarek A. Hassan (Boston University); Stephan Hollander (Tilburg University); Laurence van Lent (Frankfurt School of Finance and Management); Ahmed Tahoun (London Business School)
    Abstract: We adapt simple tools from computational linguistics to construct a new measure of political risk faced by individual US firms: the share of their quarterly earnings conference calls that they devote to political risks. We validate our measure by showing it correctly identifies calls containing extensive conversations on risks that are political in nature, that it varies intuitively over time and across sectors, and that it correlates with the firm`s actions and stock market volatility in a manner that is highly indicative of political risk. Firms exposed to political risk retrench hiring and investment and actively lobby and donate to politicians. These results continue to hold after controlling for news about the mean (as opposed to the variance) of political shocks. Interestingly, the vast majority of the variation in our measure is at the firm level rather than at the aggregate or sector level, in the sense that it is neither captured by the interaction of sector and time fixed effects, nor by heterogeneous exposure of individual firms to aggregate political risk. The dispersion of this firm level political risk increases significantly at times with high aggregate political risk. Decomposing our measure of political risk by topic, we find that firms that devote more time to discussing risks associated with a given political topic tend to increase lobbying on that topic, but not on other topics, in the following quarter.
    Keywords: Political uncertainty, quantification, firm-level, lobbying
    JEL: D8 E22 E24 E32 E6 G18 G32 G38 H32
    Date: 2019–06
  8. By: Hager, Anselm (University of Konstanz); Hensel, Lukas (University of Oxford); Hermle, Johannes (University of California, Berkeley); Roth, Christopher (University of Warwick)
    Abstract: How does a citizen's decision to participate in political activism depend on the participation of others? We examine this core question of collective action in a nation-wide natural field experiment in collaboration with a major European party during a recent national election. In a seemingly unrelated party survey, we randomly assign canvassers to true information about the canvassing intentions of their peers. Using survey evidence and behavioral data from the party's smartphone canvassing application, we find that treated canvassers significantly reduce both their canvassing intentions and behavior when learning that their peers participate more in canvassing than previously believed. These treatment effects are particularly large for supporters who have weaker social ties to the party, and for supporters with higher career concerns within the party. The evidence implies that effort choices of political activists are, on average, strategic substitutes. However, social ties to other activists can act as a force for strategic complementarity.
    Keywords: political activism, natural field experiment, strategic behavior, beliefs
    JEL: D8 P16
    Date: 2019–11
  9. By: Daniel Chomsky (University of Texas Rio Grande Valley)
    Abstract: Over the last four decades, Americans have consistently told pollsters that they favor higher taxes on business and the wealthy, even as tax policy has moved sharply in the other direction. Political scientists and political commentators regularly assume that elected officials respond to the preferences of citizens, despite recent findings that the correlations between public preferences and policy outcomes disappear when accounting for the preferences of the wealthy. This paper quantitatively assesses the failure of democratic responsiveness on this issue. It examines coverage of American’s tax policy preferences in two major national newspapers, the New York Times and USA Today. Both newspapers exhibit nearly identical behavior: they privilege elite sources, ignore the voices of ordinary citizens, and misrepresent public preferences. They also highlight expressions of public opposition to taxes and suppress evidence of persistent public support for higher taxes on business and the wealthy.
    Keywords: Tax Policy, Democratic Theory, Mass Media, Public Opinion, New York Times, USA Today
    JEL: D72 H20 H30 L82 M38 P16 Z1
    Date: 2018–04
  10. By: João Tovar Jalles; Carlos Mulas-Granados; José Tavares
    Abstract: We look at the effect of exchange rate regimes on fiscal discipline, taking into account the effect of underlying political conditions. We present a model where strong politics(defined as policymakers facing longer political horizon and higher cohesion) are associated with better fiscal performance, but fixed exchange rates may revert this result and lead to less fiscal discipline. We confirm these hypotheses through regression analysis performed on a panel sample covering 79 countries from 1975 to 2012.Our empirical results also show that the positive effect of strong politics on fiscal discipline is not enough to counter the negative impact of being at/moving to fixed exchange rates. Our results are robust to a number of important sensitivity checks, including different estimators, alternative proxies for fiscal discipline, and sub-sample analysis.
    Keywords: Fiscal discipline, Deficit, Political Economy, Exchange Rates
    JEL: H11 H62 H63
    Date: 2019–11
  11. By: Smith, Jinkinson
    Abstract: This study compares the predictions made by FiveThirtyEight's "Deluxe" forecasts in the 2018 United States midterm elections to the elections' actual results. It does so using two measures of polling error: difference between actual and predicted percent of the vote received by the Democratic candidate, and difference between actual and predicted margin of victory, in each race. Results indicate that the predictions were generally accurate, and that to the extent that they were not, this inaccuracy showed moderate evidence of being systematically skewed towards the Democratic candidate, overestimating their actual performance.
    Date: 2018–12–20
  12. By: Zigerell, Lawrence J. Jr.
    Abstract: A widely-cited study reported evidence that White Americans perceive there to be more discrimination in the United States today against Whites than against Blacks. However, the opposite of this pattern was detected in preregistered analyses of data from the American National Election Studies 2016 Time Series Study and from a 2017 national nonprobability survey. The relatively small percentages of White Americans in these surveys who rated anti-White discrimination to be more extreme or more frequent than anti-Black discrimination in the United States today suggest that White Americans' political and social attitudes have more potential than previously estimated to become more conservative due to increased perceived discrimination against Whites.
    Date: 2019–04–16
  13. By: Gruener, Sven
    Abstract: The Internet significantly reduced the marginal costs of generating and disseminating information. With false news stories in mind, scholars are increasingly interested in redesigning our information ecosystem because well-informed individuals are essential for a functioning democracy. This paper addresses the problem awareness of university students about false news stories. With the help of a questionnaire we seek for interesting correlations to generate hypotheses that can be analyzed in further studies with new data (i.e. exploratory study). They read as follows: (i) Facebook users are more likely to be suspicious of false news stories if they are interested in political topics. People are less likely to detect false news stories the stronger they trust in others and the more emphasis they put on the opinions of others, (ii) False news stories are perceived as a problem at the societal level, but not at the individual level, (iii) Men more often than women believe to be in touch with false news stories; men overestimate their ability to spot false news stories. People who fear false news stories are likely to believe that they could detect such infor-mation better than the average, and (iv) People see operators of platforms to be in charge against false news stories; people seem to trust less in government.
    Date: 2019–01–26
  14. By: Persefoni Zeri; Charalambos Tsekeris; Theodore Tsekeris
    Abstract: The present study starts from the premise that, for human communities, it is difficult to penetrate each other, so that even the globally diffused communication infrastructure is not enough to create an effective common life. This grounds our assumptions about the way the Greek young interviewees, aged between 18 and 32, belonging to main political orientations (centre right, centre left, radical left, and extreme right), are perceiving themselves and their transnational sociopolitical environment, especially Europe and the powerful foreign institutions in the era of financial crisis. We first focus on the question of collective identity, on how the sense of we-ness (the self-perception of the Greek citizens as a human group) is represented in the consciousness and attitudes of the young interviewees of different ideological orientations. A theoretical starting point pertains to the assumption that the collective identity does involve imagining or representing things;but the imaginary it involves is an insti ting social imaginary in the sense of an implicit cognitive infrastructure of the Greek society, which originates in the past and shapes the image Greeks have about the world, their values, their common reality. The main research objective is to make intelligible how the young interviewees perceive the diverse facets of their collective identity, how the Greek instituting social imaginary and the imaginary significations it produces (values, ideas, habits, and so on) are expressed in their individual imaginary, what it means for them as responsible citizens, how they frame religion and the ancient Greek past, whether they feel represented by the representatives they have supported, how they perceive the powerful foreign institutions, the European Union and their relationship to the Greek society.
    Keywords: Greek Crisis, Youth, Social Media, Collective Identity, Social Imaginary
    Date: 2019–11
  15. By: Bergh, Andreas (Lund University); Gustafsson, Anders (Örebro University)
    Abstract: Recent micro-level studies have suggested that globalization – in particular, economic globalization – breeds political polarization and populism. This study examines if those results generalize by examining the country-level association between vote shares for European populist parties and economic globalization. Using data on vote share for 267 right-wing and left-wing populist parties in 33 European countries 1980–2016, and globalization data from the KOF-institute, we find no evidence of a positive association between economic globalization and populism. In many cases, the partial correlation is significantly negative. EU-membership is associated with 5 to 10 percentage units larger vote shares for right-wing populism in both random and fixed effects models.
    Keywords: Globalization; Populism; Trade
    JEL: P16
    Date: 2019–11–19
  16. By: Christopher Ball (Quinnipiac University); Andreas Freytag (Friedrich-Schiller-University Jena, University of Stellenbosch, CESifo Research Network); Miriam Kautz (Friedrich-Schiller-University Jena)
    Abstract: The recent rise in populist governments has led to much work on the question "why now?". Our work takes the next logical step by asking "what next?". That is, given populists in power, what should we expect to be the economic consequences of populist regimes. To answer this, we characterize populist economic policies and argue that they generate an inverted J-curve effect, which we term a "walking stick" effect, in macro-level data, specifically GDP and inflation. To test this claim, we construct a unique data set on 13 Latin American countries from 1976 to 2012 and incorporate more modern and nuanced definitions of populism. Our contribution is both to test the walking stick claim and to present a novel dataset for studying the economic effects of populism. We find compelling evidence for our walking stick hypothesis in both GDP per capita and inflation, suggesting that the answer to "what next" is that we will see on average short-run booms followed by declines under populist regimes.
    Keywords: Populism, Latin America, Business Cycle, Political Economy
    JEL: E39 E60 H11 N16
    Date: 2019–11–22

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