nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒03‒01
eight papers chosen by
Eugene Beaulieu
University of Calgary

  1. Pre-Electoral Coalitions: Insights into the Creation of Political Parties By Rafael Hortala-Vallve; Jaakko Meriläinen; Janne Tukiaianen
  2. The Political Economics of Non-democracy By Georgy Egorov; Konstantin Sonin
  3. Politician-Citizen Interactions and Dynamic Representation: Evidence from Twitter By Aina Gallego; Gaël Le Mens; Nikolas Schöll
  4. The long road to democracy: Does the demand for democracy affect its actual level? By Fedotenkov, Igor
  5. Elections, Political Polarization, and Economic Uncertainty By Scott R. Baker; Aniket Baksy; Nicholas Bloom; Steven J. Davis; Jonathan Rodden
  6. Political Cleavages, Class Structures, and the Politics of Old and New Minorities in Australia, Canada, and New Zealand, 1963-2019 By Amory Gethin
  7. Political Polarization and Expected Economic Outcomes By Olivier Coibion; Yuriy Gorodnichenko; Michael Weber
  8. The political economy of law enforcement By Dewey, Matías; Woll, Cornelia; Ronconi, Lucas

  1. By: Rafael Hortala-Vallve (Department of Government, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, United Kingdom.); Jaakko Meriläinen (Center for Economic Research and Department of Economics, ITAM, Av. Camino Santa Teresa 930, Col. Héroes de Padierna, Del. Magdalena Contreras, C.P. 10700 México, D.F., Mexico); Janne Tukiaianen (Department of Economics, Turku School of Economics, Rehtorinpellonkatu 3, FI-20014 University of Turku, Finland; VATT Institute for Economic Research, Arkadiankatu 7, FI-00101, Helsinki, Finland)
    Abstract: We evaluate the causes and consequences of pre-electoral coalitions (PECs). In Finland, local elections use a proportional representation system with open lists, and parties may form joint lists. We document that PECs are more common between parties of equal size and similar ideology, and when elections are more disproportional or involve more parties. Using both difference-in-differences and density discontinuity designs we document that voters punish coalescing parties, especially if they are ideologically diverse, and also respond to PECs by targeting personal votes strategically within the PECs. Moreover, small parties become more likely to acquire political leadership positions. Finally, PECs seem to be formed also with the particular purpose of influencing the overall distribution of political power: they lead to more dispersed seat distributions and prevent absolute majorities in close elections. Thus, voter ideology and electoral rules create natural boundaries for the parties, but the party formateurs also consider wider impacts.
    Keywords: bargaining power, local elections, multi - party systems, open - list PR system, pre - electoral coalitions, strategic voting
    JEL: C23 D23 D72
    Date: 2021–02
  2. By: Georgy Egorov (Northwestern University - Kellogg School of Management); Konstantin Sonin (University of Chicago - Harris School of Public Policy)
    Abstract: We survey recent theoretical and empirical literature on political economy 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.
    Keywords: Nondemocratic politics, authoritarianism, dictatorship, bureaucracy, electoral fraud, protests, revolutions, coup d’etat, media freedom, propaganda, censorship, repressions, institutionalized ruling party
    JEL: P16 D74 D72 D82 C73 D83
    Date: 2020
  3. By: Aina Gallego; Gaël Le Mens; Nikolas Schöll
    Abstract: We study how politicians learn about public opinion through their regular interactions with citizens and how they respond to perceived changes. We model this process within a reinforcement learning framework: politicians talk about different policy issues, listen to feedback, and increase attention to better received issues. Because politicians are exposed to different feedback depending on their social identities, being responsive leads to divergence in issue attention over time. We apply these ideas to study the rise of gender issues. We collected 1.5 million tweets written by Spanish MPs, classified them using a deep learning algorithm, and measured feedback using retweets and likes. We find that politicians are responsive to feedback and that female politicians receive relatively more positive feedback for writing on gender issues. An analysis of mechanisms sheds light on why this happens. In the conclusion, we discuss how reinforcement learning can create unequal responsiveness, misperceptions, and polarization.
    Keywords: political responsiveness, representation, social media, gender
    Date: 2021–02
  4. By: Fedotenkov, Igor
    Abstract: In this paper, we evaluate if the demand for democracy affects the actual level of democracy. The analysis is based on the World Values Survey and Worldwide Governance Indicators data and is applied to a sample of 70 countries. We focus on the dynamics of the level of democracy within the individual countries, and not on cross-country differences. We find that in the short run, agents’ attitudes towards democracy are negatively correlated with the actual level of democracy. This finding may be explained by crackdowns initiated by authoritarian governments for their self-preservation. Future levels of democracy can be predicted by the agents’ demand for an authoritarian leader unhindered by a parliament or elections. Transformations, however, are far from immediate. Our estimations suggest that the time-lag between a decline in the demand for an authoritarian leader and an increase in the level of democracy is around six years. An additional finding is that a greater dependence on oil revenues is associated with a lower democracy level.
    Keywords: Democracy; political leaders; panel data analysis; World Values Survey.
    JEL: D70 D72 P48 Y8
    Date: 2021–01–29
  5. By: Scott R. Baker (Northwestern University - Kellogg School of Management; NBER); Aniket Baksy (Stanford University); Nicholas Bloom (Stanford University - Department of Economics; NBER); Steven J. Davis (University of Chicago - Booth School of Business; NBER); Jonathan Rodden (Stanford University - Department of Political Science)
    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.
    Keywords: Uncertainty, policy uncertainty, elections, polarization
    JEL: D72 D8 E6
    Date: 2020
  6. By: Amory Gethin (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab)
    Abstract: This paper studies the long-run transformation of the structure of political cleavages in Australia, Canada, and New Zealand. Regional, linguistic, and religious identities inherited from nation-building processes have differentially shaped the representation of social inequalities in the former dominions. I discuss how the politics of "old minorities" – Catholics of Irish descent in Australia, French speakers of Québec in Canada, and the Māori in New Zealand – have interacted with the politics of class and the formation of electoral divides. In all three countries, higher-educated voters have become increasingly supportive of labor, social democratic, liberal, and green parties, while high-income voters have remained more likely to vote for conservative forces, leading to the emergence of "multi-elite party systems" comparable to that found in other Western democracies. Nonetheless, nativist cleavages remain more limited in these democracies than in Western Europe, as illustrated by the only moderate support of immigrants and new minorities for left-wing and liberal parties.
    Date: 2021–02
  7. By: Olivier Coibion (University of Texas at Austin - Department of Economics; NBER); Yuriy Gorodnichenko (University of California, Berkeley - Department of Economics; NBER); Michael Weber (University of Chicago - Booth School of Business; NBER)
    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
  8. By: Dewey, Matías; Woll, Cornelia; Ronconi, Lucas
    Abstract: The legal order is the legitimate foundation of liberal democracy. Its incomplete enforcement of the law can therefore appear dysfunctional, reflecting weak institutions, state capture, and corrupt practices. This paper casts doubt on such categorical assessments by systematically examining the reasons for and intentions behind incomplete enforcement. It argues that law enforcement is part of the political process that is deeply affected by the constellation of actors concerned. Choices over law enforcement produce social order that is analytically distinct from the production of legal norms and their formal implementation. By analyzing different types of partial enforcement, its rationales, and intended effects, we propose an approach that studies law enforcement as an integral part of public policy analysis and of the study of socioeconomic orders.
    Keywords: corruption,economic development,forbearance,informal institutions,law enforcement,policy implementation,state capacity
    Date: 2021

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