nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒02‒01
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Approval Voting & Majority Judgment in Weighted Representative Democracy By Arnold Cédrick SOH VOUTSA
  2. Negative votes to depolarize politics By Karthik H. Shankar
  3. Some regrettable grading scale effects under different versions of evaluative voting By Antoinette Baujard; Herrade Igersheim; Isabelle Lebon
  4. Elections, Political Connections and Cash Holdings: Evidence from Local Assemblies By David Adeabah; Charles Andoh; Simplice A. Asongu; Isaac Akomea-Frimpong
  5. Italy: immigration and the evolution of populism. By Luca Pieroni; Melcior Rossello Roig; Luca Salmasi
  6. Selective sharing of news items and the political position of news outlets By Julian Freitag; Anna Kerkhof; Johannes Münster
  7. Development and Decay: Political Organization, Economic Conditions, and Municipal Corruption in Puerto Rico, 1952-2015 By Gustavo J. Bobonis; Luis Raúl Cámara Fuertes; Harold J. Toro; Julie Wilson
  8. Voting after a major flood: Is there a link between democratic experience and retrospective voting? By Neugart, Michael; Rode, Johannes
  9. Impact of Political Uncertainty on Pakistan Stock Exchange (1990-1999): An Event Study Approach By Sulehri, Fiaz Ahmad; Ali, Amjad
  10. Not all that glitters is gold: political stability and trade in Sub-Saharan Africa By Simplice A. Asongu; Thales P. Yapatake Kossele; Joseph Nnanna
  11. Does aid support democracy?: A systematic review of the literature By Rachel M. Gisselquist; Miguel Niño-Zarazúa; Melissa Samarin
  12. Political stability and economic growth: the role of exchange rate regime By Hadj Fraj, Salma; bouchoucha, Najeh; Maktouf, Samir
  13. Democracy and COVID-19 Outcomes By Karabulut, Gokhan; Zimmermann, Klaus F.; Bilgin, Mehmet Huseyin; Doker, Asli Cansin

  1. By: Arnold Cédrick SOH VOUTSA (Université de Cergy-Pontoise, THEMA)
    Abstract: Pivato and Soh [Pivato, M., Soh, A., 2020.Weighted representative democracy. Journal of Mathematical Economics 88 (2020) 52-63] proposed a new system of democratic representation whereby any individual can choose any legislator as her representative and different legislators can represent different numbers of individuals, concomitantly determining their weights in the legislature. For such legislatures, we consider other voting rules, namely, the Weighted Approval Voting rule and Weighted Majority Judgment rule. We show that if the size of the electorate is large, then with very high probability, the decisions made by the legislature will be the same as the decisions that would have been reached by a direct democracy, as decided by the corresponding simple (unweighted) voting rules.
    Keywords: Social Choice, Ideal direct democracy, Representative democracy, Multioption decisions, Weighted Approval Voting, Weighted Majority Judgment
    JEL: D71 D72
    Date: 2020
  2. By: Karthik H. Shankar
    Abstract: The controversies around the 2020 US presidential elections certainly casts serious concerns on the efficiency of the current voting system in representing the people's will. Is the naive Plurality voting suitable in an extremely polarized political environment? Alternate voting schemes are gradually gaining public support, wherein the voters rank their choices instead of just voting for their first preference. However they do not capture certain crucial aspects of voter preferences like disapprovals and negativities against candidates. I argue that these unexpressed negativities are the predominant source of polarization in politics. I propose a voting scheme with an explicit expression of these negative preferences, so that we can simultaneously decipher the popularity as well as the polarity of each candidate. The winner is picked by an optimal tradeoff between the most popular and the least polarizing candidate. By penalizing the candidates for their polarization, we can discourage the divisive campaign rhetorics and pave way for potential third party candidates.
    Date: 2020–12
  3. By: Antoinette Baujard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Herrade Igersheim (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Isabelle Lebon (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Many voters seem to appreciate the greater freedom of expression afforded by alternative voting rules; in evaluative voting, for example, longer grading scales and/or negative grades seem desirable in so far as, all other things being equal, they allow greater expressivity. The paper studies to what extent the behavior of voters, and the outcomes of elections, are sensitive to the grading scale employed in evaluative (or "range") voting. To this end, we use voting data from an experiment conducted in parallel with the 2017 French presidential election,which aimed to scrutinize the negative grade effect and the length effect in grading scales. First, this paper confirms that the introduction of a negative grade disfavors "polarizing" candidates, those whose political discourse provokes divisive debate, but more generally we establish that it disfavors major candidates and favors minor candidates. Second, under non-negative scales, polarizing candidates may be relatively disfavored by longer scales, especially compared with candidates who attract only infrequent media coverage and who are little known among voters. Third, longer scales assign different weights to the votes of otherwise equal voters, depending on their propensity to vote strategically. Overall, we observe that the benefits of the expressivity provided by longer scales or negative grades need to be balanced against the controversial advantage these give to minor candidates, and their tendency to undermine the principle that each vote should count equally in the outcome of the election.
    Keywords: Evaluative Voting,Approval Voting,In Situ Experiment,Voting Scale Design,Behavioral Bias
    Date: 2020–11
  4. By: David Adeabah (Department of Finance, Legon, Ghana); Charles Andoh (Department of Finance, Legon, Ghana); Simplice A. Asongu (Yaoundé, Cameroon); Isaac Akomea-Frimpong (Western Sydney University, Australia)
    Abstract: We examine the relationship between elections, political connections, and cash holdings in Ghanaian local assemblies. Using a panel dataset of 179local assemblies over a period 2012 to 2017, a panel regression and the generalized method of moments estimation techniques was employed for the analysis. We find that local assemblies hold less cash during election years, which suggests that election may be one of the potential factors to mitigate agency conflict in weak governance environment. Further, we demonstrate that local assemblies that have political connections hold less cash; however, political uncertainty makes these entities conducive to agency problems than their non-connected peers because they hold more cash. Additional analysis indicates that one year prior to elections, managerial conservatism kicks-in and leads managers to hold more cash in local assemblies that have political connections, which continues and becomes more pronounced in election years. Our results have implications for regulations on the cash management practices of local assemblies.
    Keywords: agency problem; cash holdings; generalized method of moments;panel regression; political connections
    Date: 2021–01
  5. By: Luca Pieroni; Melcior Rossello Roig; Luca Salmasi (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: We estimate the impact of immigration on the upsurge of populism in Italy. Our data considers electoral results at municipality level of the Senate of the Italian Republic and the Chamber of Deputies over the period 2006-2018. Findings in our research point toward a positive impact of the share of migrants on the rise of right-wing populist parties. According to our estimates the size of the average increase of the share of immigrants between our first and last electoral years (3.33 percentage points) corresponds to an increase of 2.08 percentage points for the Centre-right coalition. Lega is the party that capitalizes the most out of the anti-immigration. The size of the effect for Lega raises to 6.41 percentage points. We explore the heterogenous e ect of how the antiimmigration rhetoric is the main mechanism that exacerbates out of fear and insecurity the gap between Lega and its most direct rivals. Our paper o ers a fresh view by looking at plausible mechanisms behind our results by inspecting the European Social Survey.
    Keywords: Immigration, Populism, Italy, Instrumental Variables.
    JEL: P16 D72 J15
    Date: 2021–01
  6. By: Julian Freitag; Anna Kerkhof (ifo Institute for Economic Research & LMU Munich); Johannes Münster (University of Cologne, Germany)
    Abstract: We present an easy to implement measure for the political position of news outlets based on politicians' selective sharing of news items. Politicians predominantly share news items that are in line with their political position, hence, one can infer the political position of news outlets from the politicians' revealed preferences over news items. We apply our measure to twelve major German media outlets by analyzing tweets of German Members of Parliament (MPs) on Twitter. For each news outlet under consideration, we compute the correlation between the political position of the seven parties in the 19th German Bundestag and their MPs' relative number of Twitter referrals to that outlet. We finnd that three outlets are positioned on the left, and two of them are positioned on the right. Several robustness checks support our results.
    Keywords: political media bias; political position; selective sharing; social media; Twitter
    JEL: H41 L82 L86 P16
    Date: 2021–01
  7. By: Gustavo J. Bobonis; Luis Raúl Cámara Fuertes; Harold J. Toro; Julie Wilson
    Abstract: Corruption has been a salient feature of Puerto Rico (PR)’s modern history. However, systematic empirical research on this subject has been generally lacking. In this paper, we examine trends and patterns in municipal government malfeasance and corruption during a period spanning over six decades. Using data from all municipal audit reports conducted by the PR Office of the Comptroller between 1952 through 2015, we characterize patterns of corruption across three periods of change that altered governance practices in the territory: the time of hegemonic dominance of the Partido Popular Democrático (PPD), the era of intense political competition between the PPD and the pro-statehood Partido Nuevo Progresista (PNP), and the final collapse of the territory’s institutional model. We show that institutions and political practices, as opposed to economic determinants, play a key role in explaining corruption patterns. We argue that corruption patterns can be explained through the lens of politics in divided and polarized societies.
    Keywords: corruption; clientelist politics; anti-corruption audits; accountability; political polarization; divided societies
    JEL: D72 D74 J15 O17
    Date: 2021–01–22
  8. By: Neugart, Michael; Rode, Johannes
    Abstract: We explore whether retrospective voting is related to voters' democratic experience. To this end, we compare the voting behavior in West Germany to the voting behavior in the formerly non-democratic East Germany after a disaster relief program addressing a flood in 2013. Our analysis reveals a 2.2 (or 0.9 percentage points) increase in the vote share for the incumbent party in the flooded municipalities in the East compared to the West. Analyzing an earlier flood, variation of democratic experience within East Germany, and a panel survey provides further evidence that less democratically experienced voters are easier prey to pre-election policies.
    Date: 2021
  9. By: Sulehri, Fiaz Ahmad; Ali, Amjad
    Abstract: Pakistan is struggling against many problems; out of which political instability and terrorism are crucial problems. These issues hindered the economic growth of the country as well as the confidence of investors. This study has investigated the impact of political events on Pakistan Stock Exchange. This paper uses a standard event study methodology. Data relating to the stock market index has been collected from the website of Pakistan Stock Exchange and relating to political events has been collected from the newspapers of Business Recorder and DAWN. A total of 18 political events was considered in the study out of which 08 events were coded as positive and other 10 were deemed negative. The first day abnormal return, a five-day cumulative abnormal return and ten day cumulative return was calculated for all of the events. This study found evidence that political events affected the stock market in Pakistan, but their impact is different considering the economic and political implications of these events. Certain events had the strongest impact on the stock market like Nuclear tests for effective defense, the Supreme Court had revoked the Presidential order and Nawaz Sharif had been reinstated, General elections held in the country and the 14th amendment because 14th amendment was related to the elimination of corruption in political parties. Overall, this study laid the foundation to make further explorations into the phenomenon of uncertainty caused by political events in relevance to the stock market in Pakistan.
    Keywords: Political instability, Stock Markets, Abnormal returns
    JEL: G24 P16
    Date: 2020
  10. By: Simplice A. Asongu (CEREDEC, Bangui, CAR); Thales P. Yapatake Kossele (CEREDEC, Bangui, CAR); Joseph Nnanna (Abuja, Nigeria)
    Abstract: This study examines linkages between political stability and trade openness dynamics in a panel of 44 countries in SSA from 1996 to 2016. The empirical evidence is based on the generalized method of moments. From the findings, the negative relationship between political stability and merchandise trade is not significant while the negative relationship between political stability and trade openness (exports plus imports) is significant. Hence, the findings do not validate the tested hypothesis that political stability/no violence increases trade in the sub-region. The perspective that some forms of political stability can slow down and prevent international trade is consistent with Oslon in Rise and Decline of Nations (RADON) and recent contributions to the economic development literature which have shown that not all forms of political stability are development friendly because much depends on the extent to which stability translates into, inter alia, good governance. The principal policy implication is that standards of political governance need to be boosted in order to improve the anticipated effects of political stability on trade, especially in the light of the ambitious African Continental Free Trade Area (AfCFTA). Other policy implications are discussed.
    Keywords: Political Stability; Trade; Sub-Saharan Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2021–01
  11. By: Rachel M. Gisselquist; Miguel Niño-Zarazúa; Melissa Samarin
    Abstract: This study draws on a rigorous systematic review?to our knowledge the first in this area?to take stock of the literature on aid and democracy. It asks: Does aid?especially democracy aid?have positive impact on democracy? How? What factors most influence its impact? In so doing, it considers studies that explicitly focus on 'democracy aid' as an aggregate category, its subcomponents (e.g. aid to elections), and 'developmental aid'.
    Keywords: Foreign aid, Democracy, Systematic review, democracy aid, Democratization
    Date: 2021
  12. By: Hadj Fraj, Salma; bouchoucha, Najeh; Maktouf, Samir
    Abstract: This paper aims to explore the relationship between political stability and economic growth with a focus on the role of exchange rate regime. We carried out ordinary least squares (OLS), Generalized least squares (GLS) and system generalized method of moments (GMM). We are based on a panel of 50 countries of which 21 are developed and 29 emerging over the period 1996-2013. We found that political stability is not very important in explaining economic growth, while exchange rate flexibility disrupts the economies of emerging countries and stimulates economic growth in developed countries. The results also show that political stability requires the choice of a flexible exchange rate regime and that exchange rate flexibility leads to political stability in order to stimulate economic growth in emerging countries. However, for developed countries, political stability accelerates economic growth if the exchange rate regime is not too flexible and exchange rate flexibility increases economic activity if the level of political stability is low. Our results show that the nature of exchange rate regime plays a crucial role in the decision to strengthen political and economic stability. The interaction term between political stability and the degree of exchange flexibility is statistically significant, confirming the importance of the theoretical and empirical foundations raised in this research.
    Keywords: Exchange rate regime; political stability; Economic growth; GMM system; Panel data Viaene, J. and Vries, C. (1992).International trade and exchange rate volatility, European Economic Review, Elsevier, vol. 36(6), pages 1311-1321.
    JEL: F0
    Date: 2020–12–08
  13. By: Karabulut, Gokhan; Zimmermann, Klaus F.; Bilgin, Mehmet Huseyin; Doker, Asli Cansin
    Abstract: More democratic countries are often expected to fail at providing a fast, strong, and effective response when facing a crisis such as COVID-19. This could result in higher infections and more negative health effects, but hard evidence to prove this claim is missing for the new disease. Studying the association with five different democracy measures, this study shows that while the infection rates of the disease do indeed appear to be higher for more democratic countries so far, their observed case fatality rates are lower. There is also a negative association between case fatality rates and government attempts to censormedia. However, such censorship relates positively to the infection rate.
    Keywords: Democracy,COVID-19,Coronavirus,Pandemic,Lockdown,Media Censoring
    JEL: D72 C30 P16 I19
    Date: 2021

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