nep-pol New Economics Papers
on Positive Political Economics
Issue of 2020‒11‒09
nine papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Political Economics of Non-democracy By Georgy Egorov; Konstantin Sonin
  2. How Likely Is It that Courts Will Select the US President? The Probability of Narrow, Reversible Election Results in the Electoral College versus a National Popular Vote By Michael Geruso; Dean Spears
  4. Resource Discoveries and the Political Survival of Dictators By Alexandra Brausmann; Elise Grieg
  5. Voting with their Sandals: Partisan Residential Sorting on Climate Change Risk By Asaf Bernstein; Stephen B. Billings; Matthew Gustafson; Ryan Lewis
  6. Elections, Political Polarization, and Economic Uncertainty By Scott R. Baker; Aniket Baksy; Nicholas Bloom; Steven J. Davis; Jonathan A. Rodden
  8. Dynamics of wilful blindness: an introduction By Bovensiepen, Judith; Pelkmans, Mathijs
  9. How inequality shapes political participation: The role of spatial patterns of political competition. By Francesc Amat; Pablo Beramendi; Miriam Hortas-Rico; Vicente Rios

  1. By: Georgy Egorov; Konstantin Sonin
    Abstract: We survey recent theoretical and empirical literature on political economics of non-democracies. Dictators face many challenges to their rule: internal, such as palace coups or breakdown of their support coalition, or external, such as mass protests or revolutions. We analyze strategic decisions made by dictators — hiring political loyalists to positions that require competence, restricting media freedom at the cost of sacrificing bureaucratic efficiency, running a propaganda campaign, organizing electoral fraud, purging associates and opponents, and repressing citizens — as driven by the desire to maximize the regime's chances of staying in power. We argue that the key to understanding the functioning and ultimately the fate of a nondemocratic regime is the information flows within the regime, and the institutions that govern these information flows.
    JEL: C73 D72 D74 D82 D83 P16
    Date: 2020–10
  2. By: Michael Geruso; Dean Spears
    Abstract: Extremely narrow election outcomes—such as could be reversed by rejecting a few thousand ballots—are likely to trigger dispute over the results. Narrow vote tallies may generate recounts and litigation; they may be resolved by courts or elections administrators (e.g., Secretaries of State disqualifying ballots) rather than by voters; and they may reduce the peacefulness, perceived legitimacy, or predictability of the transfer of political power. In this paper we evaluate the probability of such disputable US presidential elections under a hypothetical National Popular Vote versus the current Electoral College system. Starting from probabilistic simulations of likely presidential election outcomes that are similar to the output from election forecasting models, we calculate the likelihood of disputable, narrow outcomes under the Electoral College. The probability that the Electoral College is decided by 20,000 ballots or fewer in a single, pivotal state is greater than 1-in-10. Although it is possible in principle for either system to generate more risk of a disputable election outcome, in practice the Electoral College today is about 40 times as likely as a National Popular Vote to generate scenarios in which a small number of ballots in a pivotal voting unit determines the Presidency. This disputed-election risk is asymmetric across political parties. It is about twice as likely that a Democrat's (rather than Republican's) Electoral College victory in a close election could be overturned by a judicial decision affecting less than 1,000, 5,000, or 10,000 ballots in a single, pivotal state.
    JEL: H8 J1 J18
    Date: 2020–10
  3. By: Ilya A. Vaskin (National Research University Higher School of Economics)
    Abstract: The paper investigates the impact of an electoral support for president for short- and long-term transfers between national and provincial governments in tutelary regimes. The research uses the case of Iran; the database covers 330 observations for 30/31 provinces for 2005-2015. The results show that Iranian presidents target short-term transfers for disloyal provincial elites, while long-term transfers do not show political connection with voting patterns. The results also allow for assuming that the key factor for the logic of distribution is a political competition
    Keywords: voting alignment, intergovernmental transfers, tutelary regime, regional elites, Iran
    JEL: D72 H77 R50
    Date: 2020
  4. By: Alexandra Brausmann (Center of Economic Research, CER-ETH, Zurich, Switzerland); Elise Grieg (Center of Economic Research, CER-ETH, Zurich, Switzerland)
    Abstract: Empirical literature remains largely inconclusive as to whether resource abundance has significant political effects. In this paper we revisit the "political resource curse" by studying the effect of natural resource discoveries on the duration of autocratic leadership. We first present a dynamic stochastic model of a resource-driven coup. We extend the existing conflict models by considering both the timing of attack on the regime and the probability of its success. Both the incumbent and opposition invest in military arsenal which determines the probability of winning, while the opposition also strategically chooses when to stage a coup. We show that a random resource discovery allows the incumbent to stay in power longer by delaying the attack but also by reducing the probability of coup success under specific conditions. We test these hypotheses with a novel empirical analysis based on duration models and data on discoveries of giant oil and gas fields going back to as far as 1868. Our results show that a large hydrocarbon discovery lowers the hazard faced by an autocrat by 30 - 50%. The delay of the coup is the main driving force behind the stabilizing effect of discoveries in autocratic regimes.
    Keywords: Resource discoveries, Dictatorship, Leadership duration
    JEL: Q33 Q34 D74
    Date: 2020–10
  5. By: Asaf Bernstein; Stephen B. Billings; Matthew Gustafson; Ryan Lewis
    Abstract: Climate change partisanship is reflected in residential choice. Comparing individual occupants at properties in the same zip code with similar elevation and proximity to the coast, registered republicans (democrats) are more (less) likely than independents to own houses exposed to sea level rise (SLR). Findings are unchanged controlling flexibly for other individual demographics and a variety of granular property characteristics, including the value of the home. This sorting is driven by differential perceptions of long-run SLR risks across the political spectrum not tolerance for current flood risk or preferences for correlated coastal amenities. Observed residential sorting manifests among owners regardless of occupancy, but not among renters. We also find no residential sorting in relation to storm surge exposure, which is a primary driver of current flood risk. Anticipatory sorting on climate change informs models of migration in the face of long-run risks and suggests households that are most likely to vote against climate friendly policies and least likely to adapt may ultimately bear the burden of climate change.
    JEL: D10 D72 G1 Q5 Q54 R2 R21 R23 R31
    Date: 2020–10
  6. By: Scott R. Baker; Aniket Baksy; Nicholas Bloom; Steven J. Davis; Jonathan A. Rodden
    Abstract: We examine patterns of economic policy uncertainty (EPU) around national elections in 23 countries. Uncertainty shows a clear tendency to rise in the months leading up to elections. Average EPU values are 13% higher in the month of and the month prior to an election than in other months of the same national election cycle, conditional on country effects, time effects, and country-specific time trends. In a closer examination of U.S. data, EPU rises by 28% in the month of presidential elections that are close and polarized, as compared to elections that are neither. This pattern suggests that the 2020 US Presidential Election could see a large rise in economic policy uncertainty. It also suggests larger spikes in uncertainty around future elections in other countries that have experienced rising polarization in recent years.
    JEL: E0
    Date: 2020–10
  7. By: Pavel S. Pronin (National Research University Higher School of Economics)
    Abstract: This paper explores how international trade flows contribute to democracy and shows that countries' trade partners define the nature of this relationship: higher volumes of trade with democracies are conducive to democracy, while higher trade levels with autocracies undermine it. Moreover, the effects of trade are uneven and are pronounced only for 49 states (34% of the sample). Results also indicate that trade with democracies does not sufficiently influence democratic transitions but rather helps already established democracies to endure. The "autocratic trade", on the opposite, undermines democratic survival, and it also reduces the probability of transition from partial democracies. Therefore, trade only partially supports democratic promotion when it is, indeed, a source of authoritarian promotion and consolidation. These findings are robust to accounting for autocorrelation, checking sensitivity of model specifications and acknowledging that democracy is measured with error. Finally, Instrumental Variable estimation, using predicted trade volumes from the Gravity Equation, shows that these effects are also causal.
    Keywords: Democracy, Regime Transitions, International Trade, Economic Globalization, Bayesian Modeling
    JEL: D72 F68
    Date: 2020
  8. By: Bovensiepen, Judith; Pelkmans, Mathijs
    Abstract: What are the politics of ignorance in an age of misinformation? How can the concept of ‘wilful blindness’ help us to understand the logics involved? We start the introduction to this special issue by arguing that the intrinsic instability of wilful blindness draws valuable attention to the graded nature of intentionality and perception, and the tensions between them. These features are an essential part of the workings of ignorance, as we illustrate with reference to the shifting intentions of drug couriers, the fleeting moments in which the humanity of victims is recognised in the midst of violent acts, and the affects that channel economic behaviour, such as in the subprime mortgage crisis. When approaching perception and intentionality as complexly entangled in institutionalised fields of power, ‘wilful blindness’ emerges as a powerful and critical diagnostic of the epistemic instabilities of our time.
    Keywords: affect; agnotology; denial; intentionality; political economy of non-knowledge; recognition; strategic ignorance; transparency; SAGE
    JEL: N0
    Date: 2020–10–12
  9. By: Francesc Amat; Pablo Beramendi; Miriam Hortas-Rico; Vicente Rios
    Abstract: This study investigates how economic inequality shapes political participation and to what extent this relationship is moderated by political competition. In the case of Spain, the link between income inequality and turnout is negative, as expected, but rather weak, suggesting that local turnout rates do not depend exclusively on income inequality levels. We develop a theoretical model linking inequality, political competition and turnout. To test the validity of the theoretical model we derive a novel data set of inequality metrics for a sample of municipalities over the four local elections that took place between 2003 and 2015 and specify a spatial dynamic panel data model that allows us to account for serial dependence, unobserved spatial heterogeneity and spatial dependence. Our paper reveals two Spains: one in which high inequality and high levels of political competition yield relatively lower turnout rates, and one in which high levels of inequality and low levels of political competition yield relatively higher turnout rates. In addition, our _ndings suggest that this last result might be driven by a higher budgetary use of policies targeted to low income voters.
    Keywords: Dynamic Spatial Panels, Turnout, Income Inequality, Spanish Municipalities
    JEL: C1 H7
    Date: 2020–10

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