nep-pol New Economics Papers
on Positive Political Economics
Issue of 2020‒04‒06
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Impact of Electoral Competition, Swing Voters and Interest Group Lobbying on Strategic Determination of Equilibrium Policy Platforms By Deepti Kohli; Meeta Keswani Mehra
  2. Identity Politics, Clientelism, and Public Goods Provision: Theory and Evidence By Rohit Ticku; Raghul S. Venkatesh
  3. Divided They Fall. Fragmented Parliaments and Government Stability By Felipe Carozzi; Davide Cipullo; Luca Repetto
  4. Big Data and Democracy By van Gils, Freek; Müller, Wieland; Prüfer, Jens
  5. Scandals, Media Competition and Political Accountability By Giovanni Andreottola; Antoni-Italo de Moragas
  6. Political cycles and bank lending in Russia By Fungáčová, Zuzana; Schoors, Koen; Solanko, Laura; Weill, Laurent
  7. Successful Social Programs over Local Political Cycles By Pan, Yao; You, Jing
  8. The Dynamic Electoral Returns of a Large Anti-Poverty Program By Zimmermann, Laura
  9. American Exceptionalism? Differences in the Elasticity of Preferences for Redistribution between the United States and Western Europe By Christopher Hoy; Franziska Mager
  10. Determinants of corruption: can we put all countries in the same basket? By Blaise Gnimassoun; Joseph Keneck Massil
  11. Flip-opping and Electoral Concerns By Giovanni Andreottola
  12. Class Position and Political Opinion in Rich Democracies By , Stone Center; Lindh, Arvid; McCall, Leslie

  1. By: Deepti Kohli (Jawaharlal Nehru University); Meeta Keswani Mehra (Jawaharlal Nehru University)
    Abstract: We extend the probabilistic voting model of Persson and Tabellini (2002) by utilizing exoge- nous parameters to capture corruption and the e ectiveness of campaign spending expenditure incurred by purely opportunistic electoral candidates. Incorporation of ideological di erences amongst voters as well as the embezzlement of campaign funds received by the electoral can- didates from the interest groups gives rise to a dual uncertainty within the model. We derive the equilibrium policy positions of the two opportunistic candidates in the scenario where none of the above uncertainties exist (the benchmark case), where only uncertainty about voters' preferences exist (swing voter case), and where both these uncertainties exist (case where both swing voters and lobby groups exist). We also provide a detailed comparison of the policy choices across these three equilibrium specifications. Furthermore, our comparative statics findings indicate that the impact of a change in various parameters, such as, the di erence be- tween the payoff received from winning and losing an election, a political candidate's corruption parameter, the proportion of uninformed voters and the ideological density of a voter group, on an electoral candidate's equilibrium policy platform relies on two main strategic forces, apart from the inherent centripetal e ect and the influence of campaign fund embezzlement, namely, the relative swing voter e ect and the relative organizational strength of lobbies e ect. In sum, the equilibrium tax platform is found to sway in favour of the more dominant e ect and towards the economic policy preferences of the voter group corresponding to the relatively stronger effect.
  2. By: Rohit Ticku (Institute for the Study of Religion, Economics and Society, Chapman University); Raghul S. Venkatesh (University of Aix-Marseille)
    Abstract: We study how identity politics determines clientelism and provision of public goods in representative democracies. Parties cultivate vote banks—a group of voters who vote along identity lines — in exchange for clientelistic transfers, and provide public goods to nonpartisan voters. There is ex-post identity formation among non-partisans that depends on the party in power. This generates an asymmetry in ex-post conflict payoff for the majority identity. The main theoretical result proposes a new mechanism for clientelism and rent seeking that is driven by identity politics. We further show that asymmetry in identity payoffs i) increases investment in conflict when the party with the support of minorities wins; and ii) increases public goods provision by both parties when income of minorities is below a threshold. We provide empirical evidence from state level elections in India for the period from 1983 till 2000. Results show that identity conflict is more intense when the party with minority identity vote bank is in power. This effect is magnified by the income of minorities. Further, provision of public goods under the party with minority vote bank increases with asymmetry in identity payoffs.
    Keywords: Identity Politics; Clientalism; Inter-group Conflict; Public Goods
    JEL: D0 H0 H4
    Date: 2020
  3. By: Felipe Carozzi (London School of Economics); Davide Cipullo (Uppsala University); Luca Repetto (Uppsala University)
    Abstract: This paper studies how political fragmentation affects government stability. Exploiting variation in the number of parties induced by a 5% vote share entry threshold in Spanish local councils, we show that the entry of an additional party in Parliament increases the probability of unseating the incumbent by 4 percentage points. We also document that mayors with more resources at their disposal for legislative bargaining are half as likely to be unseated. Challengers are younger, better educated, and more likely to win the following elections, suggesting that instability may induce positive selection on politicians. We interpret our results in light of a two-period bargaining model of coalition formation featuring government instability.
    Keywords: Government stability, fragmentation, no-confidence votes, policy uncertainty, alignment effect.
    JEL: H1 H7 R50
    Date: 2019–05
  4. By: van Gils, Freek (Tilburg University, Center For Economic Research); Müller, Wieland (Tilburg University, Center For Economic Research); Prüfer, Jens (Tilburg University, Center For Economic Research)
    Abstract: Recent technological developments have raised concerns about threats to democracy because of their potential to distort election outcomes: (a) data-driven voter research enabling political microtargeting, and (b) growing news consumption via social me- dia and news aggregators that obfuscate the origin of news items, leading to voters’ unawareness about a news sender’s identity. We provide a theoretical framework in which we can analyze the effects that microtargeting by political interest groups and unawareness have on election outcomes in comparison to “conventional” news report- ing. We show which voter groups suffer from which technological development, (a) or (b). While both microtargeting and unawareness have negative effects on voter welfare, we show that only unawareness can flip an election. Our model framework allows the theory-based discussion of policy proposals, such as to ban microtargeting or to require news platforms to signal the political orientation of a news item’s originator.
    Keywords: disinformation; interest groups; news platforms; microtargeting; voter awarness
    JEL: C72 D72 D82 D83
    Date: 2020
  5. By: Giovanni Andreottola (Università di Napoli Federico II and CSEF); Antoni-Italo de Moragas (Colegio Universitario de Estudios Financieros (CUNEF))
    Abstract: We present a model of a media market in which a set of news outlets compete to break news. In our model, each media receives some information on whether a politician in office is corrupt. Media outlets can decide whether to break the story immediately or wait and fact-check, taking into account that if another media breaks the news, the profit opportunity disappears. We show that as the number of competitors increases, each outlet becomes more likely to break the news without fact-checking. Therefore, as the number of media increases, the incumbent politician is more likely to be accused of corruption by the media: this makes the re-election of incumbents more difficult and increases political turnover. In particular, we show that if voters consult with higher priority the media outlets that report about a scandal, increasing the number of competitors decreases the probability of having an honest politician in office.
    Date: 2020–03–10
  6. By: Fungáčová, Zuzana; Schoors, Koen; Solanko, Laura; Weill, Laurent
    Abstract: State-owned banks tend to increase lending before elections for the purpose of boosting the reelection odds of incumbent politicians. We employ monthly data on individual banks to study whether Russian banks increased their lending before presidential elections during 2004–2019, a period covering four presidential elections. In contrast to the literature, we find that both state-owned and private banks increased their lending before presidential elections. This result stands for all loans, as well as separately for firm and household loans. The pre-election lending surge is followed by a deterioration of loan quality the following year, indicating the lending increase was not driven by higher growth prospects or some positive economic shock. The effect is substantially greater for large banks and banks more involved in lending activities. Our main finding that all types of banks in Russia increase their lending before presidential elections supports the view that the authorities in an electoral autocracy like Russia can influence lending of both private and state-owned banks for political reasons.
    JEL: G21 P34
    Date: 2020–03–25
  7. By: Pan, Yao; You, Jing
    Abstract: We identify the effect of the relative timing of program introduction to local elections on service delivery. Exploring randomized provision of a credit program in China and variations in local political cycles, we find villages introducing the program before elections experience higher take-up rates, better targeting of the poor, and improved welfare, all of which are achieved without compromising the program’s financial sustainability. Examining implementation phase-by-phase shows better-designed program practices and greater efforts made by local politicians are plausible contributors to enhanced program impacts. These findings are consistent with incentives to implement well rather than buying votes under election pressure.
    Keywords: Microfinance; Political Cycle; Heterogeneous Impact; Randomized Controlled Trial
    JEL: D14 D72 G21 I38 O13 O14 O16
    Date: 2020–03–05
  8. By: Zimmermann, Laura
    Abstract: Short-term re-election strategies are widely used by governments around the world. This is problematic if governments can maximize their re-election chances by prioritizing short-term spending before an election over long-term reforms. This paper tests whether longer program exposure has a causal effect on election outcomes in the context of a large anti-poverty program in India. Using a regression-discontinuity framework, the results show that length of program exposure lowers electoral support for the government. The paper discusses a couple of potential explanations, finding that the most plausible mechanism is that voters hold the government accountable for the program's implementation quality.
    Keywords: election outcomes,voting behavior,accountability,India,anti-poverty programs
    JEL: D72 H53 I38
    Date: 2020
  9. By: Christopher Hoy (Australian National University); Franziska Mager (Oxfam Great Britain)
    Abstract: The study was registered with the American Economic Association RCT registry (ID number AEARCTR-0002534). This paper presents independent analysis and was funded by Oxfam International. The content of the paper is solely the responsibility of the authors and does not necessary reflect the official views of the funder. The authors are very grateful for comments provided by Julian Jager, Russell Toth, Ben Goldsmith, Deborah Hardoon, David Hope, Alice Krozer, David McArthur and seminar participants at the London School of Economics, Uni- versity College London and the Australian National University
    Keywords: Inequality; Redistribution; Social Mobility; Political Economy.
    JEL: D31 D63 D72 D83 P16
    Date: 2020–03
  10. By: Blaise Gnimassoun (BETA - Bureau d'Économie Théorique et Appliquée - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Joseph Keneck Massil (Cemotev - Centre d'études sur la mondialisation, les conflits, les territoires et les vulnérabilités - UVSQ - Université de Versailles Saint-Quentin-en-Yvelines)
    Abstract: This paper aims to study the determinants of corruption by examining specificities relating to the region and the level of economic development. Starting from a cross-sectional study on 130 countries, we rely on the Bayesian Model Averaging (BMA) approach to address the issue of model uncertainty and identify the key determinants of corruption according to the level of development and the region. Our results highlight the need for specific remedies in the fight against corruption given the regional, sociocultural, economic and institutional specificities. Indeed, the key determinants of corruption in sub-Saharan Africa are not the most relevant in the East Asia and Pacific region. Similarly, the most important determinants in developed countries are not the most worrying in developing countries.
    Keywords: Corruption,Political economy,Public economics,Bayesian model averaging,Cross- sectional models
    Date: 2019
  11. By: Giovanni Andreottola (Università di Napoli Federico II and CSEF)
    Abstract: Politicians who change their mind on a policy issue are often confronted with the accusation of being flip-oppers. However, a changing environment sometimes makes policy revisions necessary. The model developed in this paper suggests that flip-opping signals that politicians are poorly informed and is therefore detrimental to their reputation. As a result, electorally concerned politicians can have an incentive to stick to an inefficient policy choice in order to avoid the stigma of flip-opping. This behaviour damages both the quality of policies and the ability of voters to select competent politicians through elections. The paper also provides an in-depth discussion of how institutional features of the policy-making environment interact with the problem of insufficient flip-opping: these include term limits, the presence of media and the partial delegation of actions to independent agents and can be found in the Online Appendix.
    Keywords: flip-opping; elections; political agency; accountability; reputation; media; transparency; delegation
    Date: 2020–03–15
  12. By: , Stone Center (The Graduate Center/CUNY); Lindh, Arvid; McCall, Leslie (The Graduate Center, City University of New York (CUNY))
    Abstract: In many high-income countries today, scholarly interest in the politics of class has coincided with growing economic inequality, rising support for non-mainstream political parties and candidates, and increasing flows of immigration. We review social science research on the views of different class segments vis-à-vis economic, political, and sociocultural issues, finding greater scholarly attention to the interdependence of economic, social, and political concerns and preferences than arguably was the case even a few years ago. Our main aim is to synthesize and critically evaluate this rapidly expanding literature, but we also provide empirical data on class differences and similarities in political opinion across eighteen countries, and we pinpoint several areas of research that are in need of further empirical, methodological, and theoretical inquiry. (Stone Center on Socio-Economic Inequality Working Paper)
    Date: 2020–03–09

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