nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒04‒05
seven papers chosen by
Eugene Beaulieu
University of Calgary

  1. Taxes and Turnout: When the Decisive Voter Stays at Home By Felix Bierbrauer; Aleh Tsyvinski; Nicolas Werquin
  2. Public Debt and the Political Economy of Reforms By Pierre C. Boyer; Christoph Esslinger; Brian Roberson
  3. Voting for environmental policy with green consumers: the impact of income inequality By Lesly Cassin; Paolo Melindi-Ghidi; Fabien Prieur
  4. The Pink Tide and Inequality in Latin America By German Feierherd; Patricio Larroulet; Wei Long,; Nora Lustig
  5. To vote, or not to vote: on the epidemiological impact of electoral campaigns at the time of COVID-19 By Davide Cipullo; Marco Le Moglie
  6. The Wise, the Politician and the Strongman: National Leaders' Type and Quality of Governance By Julieta Peveri
  7. The Political Economy of Responses to COVID-19 in the U.S.A. By Zhihan Cui; Geoffrey Heal; Howard Kunreuther; Lu Liu

  1. By: Felix Bierbrauer; Aleh Tsyvinski; Nicolas Werquin
    Abstract: We develop a model of political competition with endogenous turnout and endogenous platforms. Parties trade off incentivizing their supporters to vote and discouraging the supporters of the competing party from voting. We show that the latter objective is particularly pronounced for a party with an edge in the political race. Thus, an increase in political support for a party may lead to the adoption of policies favoring its opponents so as to asymmetrically demobilize them. We study the implications for the political economy of redistributive taxation. Equilibrium tax policy is typically aligned with the interest of voters who are demobilized.
    Date: 2021
  2. By: Pierre C. Boyer; Christoph Esslinger; Brian Roberson
    Abstract: We develop a two-period model of redistributive politics in which two politicians compete in an election in each period. In the first period, the politicians propose both whether to experiment with an efficient reform with uncertain benefits and choose the amount of public debt. Politicians also allocate pork-barrel spending to voters in each period. We show that allowing politicians to raise debt ensures that the reform is always implemented when the reform’s ratio of private good to public good gains exceeds a threshold, i.e. the reform generates enough private good benefits. This is not the case when the reform’s ratio of private good to public good gains is below this threshold. We also examine hard and a soft debt limits, and find that both limits reduce the political success of the reform. However, at moderate debt levels soft limits dominate hard limits with respect to equilibrium efficiency of reform provision.
    Keywords: political competition, public debt, reforms, redistributive politics, debt and spending limits
    JEL: C72 D72 D78 H60
    Date: 2021
  3. By: Lesly Cassin (UP1 - Université Paris 1 Panthéon-Sorbonne); Paolo Melindi-Ghidi (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Fabien Prieur (CEE-M - Centre d'Economie de l'Environnement - Montpellier - UMR 5211 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This article analyzes the impact of income inequality on environmental policy in the presence of green consumers. We develop a theory with three main ingredients: first, citizens have different income capacities; second they have access to two different commodities whose consumption differs in terms of price and environmental impact, and third, they have to vote on the environmental policy. In this setting, there exists a unique political equilibrium such that the population is split in two groups, depending on whether there is positive consumption of the green good. The analysis shows that higher income inequality is generally associated with lower public spending in environmental protection. We then test this prediction in a fixed-effect model with robust standard errors using a panel of European countries over the period 1996-2019. We indeed find that income inequality negatively affects both public expenditures in environmental protection.
    Keywords: income distribution,inequality,green consumption,environmental policy,probabilistic voting,political equilibrium
    Date: 2021–02–19
  4. By: German Feierherd (Universidad de San Andres); Patricio Larroulet (CEQ Institute); Wei Long, (Tulane University); Nora Lustig (Tulane University)
    Abstract: Latin American countries experienced a significant reduction in income inequality at the turn of the 21st century. From the early 2000s to around 2012, the average Gini coefficient fell from 0.514 to 0.476. The period of falling inequality coincided with leftist presidential candidates achieving electoral victories across the region: by 2009, ten of the seventeen countries had a leftist president – the so-called Pink Tide. We investigate whether there was a “leftist premium” on the decline in inequality and, if there was one, through which mechanisms. Using a range of econometric models, inequality measurements, and samples, we find evidence that leftist governments lowered income inequality faster than non-leftist regimes, increasing the income share captured by the first seven deciles at the expense of the top ten percent. Our analysis suggests that this reduction was achieved by increasing social pensions, minimum wages, and tax revenue.
    Keywords: Income Inequality, Political process, Latin America, Minimum wages, Pensions, Taxes
    JEL: D63 D72 H20 I38 N36 O1
    Date: 2021–03
  5. By: Davide Cipullo; Marco Le Moglie
    Abstract: Elections are crucial for legitimating modern democracies, and giving all candidates the possibility to run a proper electoral campaign is necessary for elections' success in providing such legitimization. Yet, during a pandemic, the risk that electoral campaigns would enhance the spread of the disease exists and is substantive. In this work, we estimate the causal impact of electoral campaigns on the spread of COVID-19. Exploiting plausibly exogenous variation in the schedule of local elections across Italy, we show that the electoral campaign preceding this latter led to a significant worsening of the epidemiological situation related to the disease. Our results strongly highlight the importance of undertaking stringent measures along the entire electoral process to minimize its epidemiological consequences.
    Date: 2021–03
  6. By: Julieta Peveri (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université)
    Abstract: There is strong evidence that national leaders matter for the performance of their nations, but little is known about what drives the direction of their effects. I assess how national leaders' quality of governance, measured by five indicators, varies with their career and education. Using text analysis and a sample of one thousand national leaders between 1932 and 2010, I identify five types of rulers: military leaders, academics, high-level politicians, low-level politicians and lawyers. Military leaders tend to be associated with a decrease in the quality of governance, whereas politicians who have held visible offices before taking power perform better. National leaders with a law background, as well as academics, can have negative effects depending on the political regime they run and on the choice of performance indicator. This highlights the heterogeneity behind the positive effect of holding a university degree, often used as a proxy for politicians' quality.
    Keywords: national leaders,politicians' quality,leaders' characteristics
    Date: 2021–02
  7. By: Zhihan Cui; Geoffrey Heal; Howard Kunreuther; Lu Liu
    Abstract: Social distancing via shelter-in-place strategies, and wearing masks, have emerged as the most effective non-pharmaceutical ways of combatting COVID-19. In the United States, choices about these policies are made by individual states. We develop a game-theoretic model and then test it econometrically, showing that the policy choices made by one state are strongly influenced by the choices made by others. If enough states engage in social distancing or mask wearing, they will tip others that have not yet done so to follow suit and thus shift the Nash equilibrium. If interactions are strongest amongst states of similar political orientations there can be equilibria where states with different political leanings adopt different strategies. In this case a group of states of one political orientation may by changing their choices tip others of the same orientation, but not those whose orientations differ. We test these ideas empirically using probit and logit regressions and find strong confirmation that inter-state social reinforcement is important and that equilibria can be tipped. Policy choices are influenced mainly by the choices of other states, especially those of similar political orientation, and to a much lesser degree by the number of new COVID-19 cases. The choice of mask-wearing policy shows more sensitivity to the actions of other states than the choice of SIP policies, and republican states are much less likely to introduce mask-wearing policies. The choices of both types of policies are influenced more by political than public health considerations.
    JEL: H7 I1
    Date: 2021–03

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