nep-pol New Economics Papers
on Positive Political Economics
Issue of 2020‒11‒23
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Who is the ultimate boss of legislators: Voters, special interest groups or parties? By Stadelmann, David; Torrens, Gustavo
  2. Governance and Group Conflict By Kölle, Felix
  3. Prediction for the 2020 United States Presidential Election using Machine Learning Algorithm: Lasso Regression By Sinha, Pankaj; Verma, Aniket; Shah, Purav; Singh, Jahnavi; Panwar, Utkarsh
  4. Do Expected Downturns Kill Political Budget Cycles? By Jan-Egbert Sturm; Frank Bohn
  5. Voting Behavior of Physicians and Healthcare Professionals By Solnick, Rachel Emily; Choi, Hwajung; Kocher, Keith E
  6. #EleNão: Economic crisis, the political gender gap, and the election of Bolsonaro By Santos Silva, Manuel; Diniz Penteado de Barros, Laura
  7. Legal Status and Political Representation: The 1986 IRCA and Hispanic Public Officials By Sabet, Navid
  8. Paying Them to Hate US: The Effect of U.S. Military Aid on Anti-American Terrorism, 1968-2014 By Meierrieks, Daniel; Krieger, Tim; Dimant, Eugen
  9. Prediction for the 2020 United States Presidential Election using Linear Regression Model By Sinha, Pankaj; Verma, Aniket; Shah, Purav; Singh, Jahnavi; Panwar, Utkarsh
  10. Hosting Refugees and Voting for the Far-Right: Evidence from France By Sarah Schneider-Strawczynski
  11. How Likely Are Large Elections Tied? By Lirong Xia
  12. Political Polarization and Expected Economic Outcomes By Coibion, Olivier; Gorodnichenko, Yuriy; Weber, Michael
  13. Environmental Pollution & the Political Economy of Public Debt By Kellner, Maximilian

  1. By: Stadelmann, David; Torrens, Gustavo
    Abstract: Politicians have multiple principals. We investigate the weights that politicians put on the revealed preferences of their constituents, special interest groups and party when deciding on legislative proposals. Preferences of constituents, special interest groups and parties are directly observed in our setting and they are positively correlated among each other. The empirical findings suggest that constituent preferences are assigned the lowest weight. Holding constant the preferences of other principals, constituent preferences are assigned a weight of only 10.0%. Party preferences are assigned the highest weight of all principals and special interest groups lie in between. A politician's personal ideology plays no substantial role in legislative decisions. We explore conflict among principals as well as heterogeneity among politicians. Our results cast doubt on the empirical relevance of the median voter model and suggest that more principals need to be considered to explain legislative decisions.
    Keywords: Principal-agent,multiple principals,voting,political representation,behavior of politicians
    JEL: D72 D78
    Date: 2020
  2. By: Kölle, Felix
    Abstract: Many situations in the social and economic life are characterized by rivalry and conflict between two or more competing groups. Warfare, socio-political conflicts, political elections, lobbying, and R&D competitions are all examples of inter-group conflicts in which groups spend scarce and costly resources to gain an advantage over other groups. Here, we report on an experiment that investigates the impact of political institutions within groups on the development of conflict between groups. We find that relative to the case in which group members can decide individually on their level of conflict engagement, conflict significantly intensifies when investments are determined democratically by voting or when a single group member (the dictator) can decide on behalf of the group. These results hold for both symmetric and asymmetric contests, as well as for situations in which institutions are adopted exogenously or endogenously. Our findings thus suggest that giving people the possibility to vote is not the main reason for why democracies seem to engage in less wars than autocracies. Nevertheless, when giving participants the possibility to choose which institution to adopt, we find that democracy is the by far most popular one as it combines the desirable features of autonomy and equality.
    Keywords: Conflict,competition,institutions,democracy,groups,experiment
    JEL: D72 C72 C92
    Date: 2020
  3. By: Sinha, Pankaj; Verma, Aniket; Shah, Purav; Singh, Jahnavi; Panwar, Utkarsh
    Abstract: This paper aims at determining the various economic and non-economic factors that can influence the voting behaviour in the forthcoming United States Presidential Election using Lasso regression, a Machine learning algorithm. Even though contemporary discussions on the subject of the United States Presidential Election suggest that the level of unemployment in the economy will be a significant factor in determining the result of the election, in our study, it has been found that the rate of unemployment will not be the only significant factor in forecasting the election. However, various other economic factors such as the inflation rate, rate of economic growth, and exchange rates will not have a significant influence on the election result. The June Gallup Rating, is not the only significant factor for determining the result of the forthcoming presidential election. In addition to the June Gallup Rating, various other non-economic factors such as the performance of the contesting political parties in the midterm elections, Campaign spending by the contesting parties and scandals of the Incumbent President will also play a significant role in determining the result of the forthcoming United States Presidential Election. The paper explores the influence of all the aforementioned economic and non-economic factors on the voting behaviour of the voters in the forthcoming United States Presidential Election. The proposed Lasso Regression model forecasts that the vote share for the incumbent Republican Party to be 41.63% in the 2020 US presidential election. This means that the incumbent party is most likely to lose the upcoming election.
    Keywords: US Presidential Election, Machine Learning, Lasso Regression, Economic Factors, None Economic Factor, Forecasting, Prediction
    JEL: C10 C13 C15 C6 C61 C63 C8
    Date: 2020–10–13
  4. By: Jan-Egbert Sturm (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Frank Bohn (Radboud University, Nijmegen, Netherlands)
    Abstract: The political budget cycle (PBC) literature argues that governments expand de cits in election years. However, what happens when an economic downturn is expected? Will the government allow the de cit to expand even further, or will it resort to spending cuts and tax increases? When voters expect less than full automatic stabilization, our model shows that opportunistic government behavior leads to smaller de cits, thereby responding procyclically to expected downturns. Panel data evidence for 74 democracies covering the period 2000-2016 robustly supports the theoretical procyclicality prediction. Moreover, expected downturns remain signi cant when other context-conditional PBC e ects are included in the empirical analysis.
    Keywords: political budget cycles; elections; growth expectations; economic downturns; precautionary voters; automatic stabilization; fiscal deficits
    JEL: D72 E32 E62
    Date: 2020–06
  5. By: Solnick, Rachel Emily; Choi, Hwajung; Kocher, Keith E (University of Michigan)
    Abstract: Introduction: Physicians and other healthcare professionals have critical expertise and important experiences to help shape public policy, yet, historically, have been less likely to engage in the political process as measured by their propensity to vote. We examine whether previous trends in low physician voter turnout persist, contrasting to similar occupational groups and the general population. Methods: Data were from the 2004-2018 Current Population Survey (CPS) November Voter Supplement, a biennial nationally representative household survey that collects self-reported or reports by proxy (household member) voting rates and behavior from congressional and presidential elections. We identified five representative healthcare professionals (physicians, dentists, pharmacists, registered nurses, physician assistants) and five other comparison professions (postsecondary teachers, chief executives, civil engineers, social workers, lawyers) selected by similarities in income or educational backgrounds. Adjusted risk ratios (aRR) were estimated from multivariable logistic regressions comparing voting rates and behavior across occupations controlling for the year and sociodemographic characteristics associated with voting. Results: The pooled sample of US citizens age 18 and older (N=750,236) included 3,009 physicians, mean age 47.6 (SD, 14.9) years, 33.5% women. Household-level response rates ranged from 84%-92%. Physicians and other healthcare providers were significantly less likely to vote than comparison professions or the public after controlling for characteristics associated with voting. Compared to the public, adjusted physician voting rates were 12% lower than expected: aRR of 0.88 (95% confidence interval [CI], 0.83- 0.92) whereas comparison professions all demonstrated significantly higher voting rates, with postsecondary teachers showing the highest rates, aRR 1.18 (1.14-1.21). Physicians were 30% more likely to vote by mail, aRR 1.32 (1.12-1.42), and 15% more likely to vote before election day, aRR 1.15 (1.06- 1.25). Physicians who did not vote or register were 70% more likely to report this was due to being “Too busy, conflicting work or school,” compared to the public, aRR 1.7 (1.36 -1.96). Conclusion: Over 2004-2018, adjusted analysis find physicians and other healthcare professionals were significantly less likely to vote, whereas comparative professions were more likely to vote than the general public. Physicians were more likely to vote using alternatives to poll-based voting (voting early, vote by mail) and more likely to miss voting and registration due to work conflicts.
    Date: 2020–11–03
  6. By: Santos Silva, Manuel; Diniz Penteado de Barros, Laura
    Abstract: After more than one decade of sustained economic growth, accompanied by falling poverty and inequality, Brazil has been hit by an economic recession starting in 2014. This paper investigates the consequences of this labor market shock for the victory of far-right Jair Bolsonaro in the 2018 presidential election. Using a shiftshare approach and exploring the differential effects of the recession by gender and race, we show that heterogeneity in exposure to the labor demand shock by the different groups is a key factor explaining the victory of Bolsonaro. Our results show that male-specific labor market shocks increase support for Bolsonaro, while female-specific shocks have the opposite effect. Interestingly, we do not find any effect by race. We hypothesize that, once facing economic insecurities, men feel more compelled to vote for a figure that exacerbates masculine stereotypes, as a way of compensating for the loss in economic status. Women, on the other hand, when confronted with economic shocks and the prospect of Bolsonaro's election, respond by rejecting his political agenda in favor of a more pro-social platform.
    Keywords: economic shocks,populism,gender,voter participation
    JEL: D72 J16 J23 P16 R23
    Date: 2020
  7. By: Sabet, Navid
    Abstract: What factors lead underrepresented groups to gain more political representation? I digitize a novel source of data that contains records of Hispanics elected to public office from the local to the federal level from 1984 to 1994 and exploit variation in legal status arising from the 1986 Immigration Reform and Control Act (IRCA), which legalized three million Hispanic migrants in the United States, to shed light on this question. I find that counties with more per capita legalized migrants experience significant increases in the number of Hispanics in public office around 1992 when the migrants first gained the right to vote. The result is driven almost entirely by increases at the local level, in particular school board members and mayors of small towns, and is stronger in counties with larger Hispanic populations, pointing to network effects. Individuals in IRCA-affected counties are more politically active, lending credence to the view that the political engagement of the newly legalized helps drive the results. I find no evidence for increased Hispanic candidate entry. Finally, I provide indirect evidence that demand for representation, rather than candidate competence, drives Hispanic selection to public office. Together, the results open a new dimension to the economics of legal status: its effects on political representation.
    Keywords: immigrant legalization,identity politics,political representation,franchise extension
    JEL: J15 H72 P16
    Date: 2020
  8. By: Meierrieks, Daniel; Krieger, Tim; Dimant, Eugen
    Abstract: Does U.S. military aid make the United States safer? To answer this question, we collect data for 173 countries between 1968 and 2014. Exploiting quasi-random variation in the global patterns of U.S. military aid, we provide causal estimates of U.S. military aid on anti-American terrorism. We find that higher levels of military aid lead to an increased likelihood of the recipient country producing anti-American terrorism. This finding also holds when subjected to a battery of robustness checks (e.g., alternative instrumental variables, sub-sample analyses, examination of heterogeneous effects, placebo tests). For our preferred specification, at the sample mean doubling U.S. military aid increases the risk of anti-American terrorism by 4.4 percentage points, which in turn is approximately 30% of the sample mean. Examining potential transmission channels, we find that more U.S. military aid leads to more corruption and exclusionary policies in recipient countries. Consistent with a theoretical argument developed in this paper, these results indicate that the inflow of military aid induces rent-seeking behavior, which in turn encourages terrorism by groups that suffer from reduced economic and political participation as a consequence of rent-seeking. These groups in particular direct their dissatisfaction against the United States as the perceived linchpin of an unfavorable status quo in the recipient country.
    Keywords: U.S. military aid,anti-American terrorism,transnational terrorism,instrumental variable estimation
    JEL: D74 F35
    Date: 2020
  9. By: Sinha, Pankaj; Verma, Aniket; Shah, Purav; Singh, Jahnavi; Panwar, Utkarsh
    Abstract: The paper identifies various crucial factors, economic and non-economic, essential for predicting the 2020 United States presidential election results. Although it has been suggested by the contemporary discussions on the subject of United States presidential election that inflation rate, unemployment rate, and other such economic factors will play an important role in determining who will win the forthcoming United States Presidential Elections in November, it has been found in this study that, non-economic variables have a significant influence on the voting behaviour. Various non-economic factors like the performance of the contesting political parties in the midterm elections, the June Gallup Rating for the incumbent President, Average Gallup rating during the tenure of the incumbent President, Gallup Index, and Scandals of the Incumbent President were found to have a massive impact on the election outcomes. In the research conducted by Lewis-Beck and Rice (1982) , it was proposed that the Gallup rating for the Incumbent President, obtained in the month of June of the election year, is a significant factor in determining the results of the Presidential Elections. The major reason behind obtaining the Gallup Rating in June of the election year, post-primaries and pre-conventions, is that it is a relative political calm period. However, it has been found in this study that despite the existence of a relationship between the vote share of the incumbent President and his Gallup rating for June, the said Gallup rating cannot be used as the only factor for forecasting the results of the Presidential Election. The influence of all the aforementioned economic and non-economic factors and some other factors on the voter's voting behavior in the forthcoming United States Presidential Election is analyzed in this paper. The proposed regression model in the paper forecasts that Republican party candidate Donald Trump would receive a vote share of 46.74 ± 2.638%.
    Keywords: United States Presidential Election, Economic Factor, Regression Model, Forecasting, Prediction
    JEL: C10 C13 C51 C53
    Date: 2020–09–15
  10. By: Sarah Schneider-Strawczynski (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Does exposure to refugees change the political preferences of natives towards far-right parties, and how does this change in preferences occur? This paper examines the political economy of refugee-hosting. Using the opening of refugee centers in France between 1995 and 2017, I show that voting for far-right parties in cities with such opening between two presidential elections has fallen by about 2 percent. The drop in far-right voting is higher in municipalities with a small population, working in the primary and secondary sectors, with low educational levels and few migrants. I show that this negative effect can not be explained by an economic channel , but rather by a composition channel, through natives' avoidance, and a contact channel, through natives' exposure to refugees. I provide suggestive evidence that too-disruptive exposure to refugees, as measured by the magnitude of the inflows, the cultural distance and the media salience of refugees, can mitigate the beneficial effects of contact on reducing far-right support.
    Keywords: Migration,Refugees,Political Economy,Preferences Keywords: Migration,Preferences
    Date: 2020–10
  11. By: Lirong Xia
    Abstract: Understanding the likelihood for an election to be tied is a classical topic in many disciplines including social choice, game theory, political science, and public choice. The problem is important not only as a fundamental problem in probability theory and statistics, but also because of its critical roles in many other important issues such as indecisiveness of voting, strategic voting, privacy of voting, voting power, voter turn out, etc. Despite a large body of literature and the common belief that ties are rare, little is known about how rare ties are in large elections except for a few simple positional scoring rules under the i.i.d. uniform distribution over the votes, known as the Impartial Culture (IC) in social choice. In particular, little progress was made after Marchant [Mar01] explicitly posed the likelihood of k-way ties under IC as an open question in 2001. We give an asymptotic answer to the open question for a wide range of commonly-studied voting rules under a model that is much more general and realistic than i.i.d. models including IC--the smoothed social choice framework [Xia20], which was inspired by the celebrated smoothed complexity analysis [ST09]. We prove dichotomy theorems on the smoothed likelihood of ties under a large class of voting rules. Our main technical tool is an improved dichotomous characterization on the smoothed likelihood for a Poisson multinomial variable to be in a polyhedron, which is proved by exploring the interplay between the V-representation and the matrix representation of polyhedra and might be of independent interest.
    Date: 2020–11
  12. By: Coibion, Olivier (University of Texas at Austin); Gorodnichenko, Yuriy (University of California, Berkeley); Weber, Michael (University of Chicago)
    Abstract: We use a large-scale representative survey of households from October 19-21 that elicits respondents' expectations about the presidential election's outcome as well as their economic expectations to document several new facts. First, people disagree strongly about the likely outcome of the election, despite widespread publicly available polling information. Most Democrats are very confident in a Biden win while most Republicans are very confident in a Trump win. Second, respondents predict a fairly rosy economic scenario if their preferred candidate wins but a dire one if the other candidate wins. Since most respondents are confident in their favored outcome, unconditional forecasts are similar across parties despite the fact that underlying probability distributions and conditional forecasts are very different. Third, when presented with recent polling data, most voters change their views by little unless they are independent and/or have relatively weak priors about the outcome. Information that emphasizes the uncertainty in polling data has larger effects in terms of reducing polarization in expected probabilities over different electoral outcomes. Fourth, exogenous information that changes individuals' probability distribution over electoral outcomes also changes their unconditional forecasts in a corresponding manner. These changes in economic expectations in turn are likely to affect household economic decisions.
    Keywords: elections, political views, COVID-19, expectations, randomized controlled trial, Bayesian learning
    JEL: E31 C83 D84 J21 J26
    Date: 2020–10
  13. By: Kellner, Maximilian
    Abstract: This paper analyzes the political economy of government debt when elected politicians decide about the distribution of public funds between a clean and a polluting public good. When provision of the polluting good creates a stock of climate externalities, strategic incentives for the incumbent government arise from both a budget and emission interaction. In this framework, reelection uncertainty leads to inefficiently low public savings (or even debt) which are attenuated by the emission interaction, while first period pollution decreases regardless of the future government's identity. If the incumbent government competes for office against an environmentalists' party, the total welfare loss from emissions also decreases as a direct result of reelection uncertainty.
    Keywords: emission externality,public debt,political economy
    JEL: H23 H41 H63 Q54 Q58
    Date: 2020

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