nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒08‒09
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Electoral Commitment in Asymmetric Tax-competition Models By Yukihiro Nishimura; Kimiko Terai
  2. Monotone Comparative Statics in the Calvert-Wittman Model By Francisco; Eduardo Zambrano
  3. Retrospective Voting Versus Risk-Aversion Voting: A Comment on Pástor and Veronesi (2020) By Ray C. Fair
  4. The Making of Social Democracy: The Economic and Electoral Consequences of Norway’s 1936 Folk School Reform By Daron Acemoglu; Toumas Pekkarinen; Kjell Salvanes; Matti Sarvimäki
  5. A Theory of Political Participation By Isa, Berk Orkun; Yucel, Mustafa Eray
  6. Do gifts buy votes?: Evidence from sub-Saharan Africa By Jenny Guardado; Leonard Wantchekon
  7. Gender Stereotypes among Japanese Voters By ENDO Yuya; ONO Yoshikuni
  8. Reversal of Fortune for Political Incumbents : Evidence from Oil Shocks By Arezki, Rabah; Simeon Djankov, Simeon; Nguyen, Ha; Yotzov, Ivan
  9. Partisan selective exposure in news consumption By Sylvain Dejean; Marianne Lumeau; Stéphanie Peltier
  10. Democracy and fiscal-policy responses to COVID-19 By Ceyhun Elgin; Abdullah Yalaman; Sezer Yasar
  11. Transition to Democracy, Real Wages and Productivity: The Turkish Experience By Erol Taymaz; Ebru Voyvoda; Kamil Yilmaz
  12. Wither Democarcy? A Note By Marco Boccaccio
  13. Clientelistic politics and pro-poor targeting: Rules versus discretionary budgets By Dilip Mookherjee; Anusha Nath

  1. By: Yukihiro Nishimura (Corresponding author. Graduate School of Economics, Osaka University); Kimiko Terai (Faculty of Economics, Keio University)
    Abstract: This study examines the political process of tax competition among asymmetric countries, highlighting the role of the commitment to the electoral promises. The median voters deliberately elect a delegate whose preferences di?er from their own (strategic delegation), which is self-enforcing under symmetric countries. We ?rst show that the outcome of strategic delegation is replicated when the candidates do not make binding campaign promises in both countries, and the opposite scenario of the binding commitments to the platforms leads to the self-representation by the median voters. We then amplify the model by adding the pre-election stage where the citizens choose whether the credibility of election promises is critical, through subscription numbers of newspapers and social media which determine the cost of betrayal of the proposed platforms (or the lack of the proposal). We then show that, depending on the type of asymmetries under consideration, su?cient asymmetry or su?ciently equal income distribution generate the commitment to the election campaign promises as the equilibrium outcome.
    Keywords: Capital-tax competition; Election campaign promises; Asymmetric countries; Voting
    JEL: C72 D72 D78 H23 H87
    Date: 2021–07
  2. By: Francisco (Kellogg Institute for International Studies, University of Notre Dame); Eduardo Zambrano (Department of Economics, California Polytechnic State University)
    Abstract: In this paper, we show that when policy-motivated parties can commit to a particular platform during a uni-dimensional electoral contest where valence issues do not arise there must be a positive association between the policies preferred by candidates and the policies adopted in expectation in the lowest and the highest equilibria of the electoral contest. We also show that this need not be so if the parties cannot commit to a particular policy. The implication is that evidence of a negative relationship between enacted and preferred policies is suggestive of parties that hold positions from which they would like to move from yet are unable to do so.
    Keywords: Credibility and commitment, political competition
    JEL: D72 D78
    Date: 2021
  3. By: Ray C. Fair (Cowles Foundation, Yale University)
    Abstract: According to retrospective voting, a bad economy hurts the incumbent party and vice versa. According to risk-aversion voting as discussed in Pástor and Veronesi (2020), high risk aversion favors the Democrats over the Republicans and vice versa. If high risk aversion is associated with a bad economy, then risk-aversion voting implies that a bad economy favors the Democrats and vice versa. The two theories thus have different implications for the Democrats. This paper tests both theories under the assumption that high risk aversion is associated with a bad economy. The results provide no support for risk-aversion voting under this assumption.
    Keywords: Retrospective voting, Risk-aversion voting
    JEL: E00
    Date: 2021–03
  4. By: Daron Acemoglu (Massachusetts Institute of Technology); Toumas Pekkarinen (Aalto University School of Business); Kjell Salvanes (Norges Handelshøyskole); Matti Sarvimäki (Aalto University School of Business)
    Abstract: Upon assuming power for the first time in 1935, the Norwegian Labour Party delivered on its promise for a major schooling reform. The reform raised minimum instruction time in less developed rural areas and boosted the resources available to rural schools, reducing class size and increasing teacher salaries. We document that cohorts more intensively affected by the reform significantly increased their education and experienced higher labor income. Our main result is that the schooling reform also substantially increased support for the Norwegian Labour Party in subsequent elections. This additional support persisted for several decades and was pivotal in maintaining support for the social democratic coalition in Norway. These results are not driven by the direct impact of education and are not explained by higher turnout, or greater attention or resources from the Labour Party targeted towards the municipalities most affected by the reform. Rather, our evidence suggests that cohorts that benefited from the schooling reform, and their parents, rewarded the party for delivering a major reform that was beneficial to them.
    Keywords: education, human capital, labor, schooling reforms, social democracy, voting
    JEL: P16 I28 J26
    Date: 2021–07
  5. By: Isa, Berk Orkun; Yucel, Mustafa Eray
    Abstract: This paper lays down a mathematical model of political participation where participatory behavior functions as insurance against redistribution of resources. Abstracting a broad notion of political participation to its tangible bene�fits and costs, we elaborate the participatory behavior from the perspectives of Expected Utility and Cumulative Prospect Theory. Our elaboration reveals that the relative degrees of risk aversion and loss aversion yield a multiplicity of equilibria, sheds light on the recently observed absenteeism in political participation and suggest that participation would not increase unless the material domain of politics itself is altered.
    Keywords: Political Participation; Cumulative Prospect Theory; Risk Aversion; Insurance; Lobbying
    JEL: D72 P16
    Date: 2020–07–05
  6. By: Jenny Guardado; Leonard Wantchekon
    Abstract: Vote-buying?or the pre-electoral distribution of private goods in exchange for support at the ballot box?is often blamed for the poor economic performance of many sub-Saharan countries. For instance, vote-buying may undermine accountability and the implementation of sound development policies by pressuring individuals to vote against their own interests. Yet, these effects depend on vote-buying leading to electoral outcomes that would not have occurred otherwise.
    Keywords: Elections, vote-buying, Sub-Saharan Africa
    Date: 2021
  7. By: ENDO Yuya; ONO Yoshikuni
    Abstract: What stereotypes do Japanese voters have regarding men and women politicians? Women are extremely underrepresented in Japanese politics, and one possible reason for the underrepresentation is that voters have gender-based stereotypes that put women candidates at a disadvantage. Numerous studies have revealed the gender stereotypes of voters in the United States, but little is known whether Japanese voters have similar stereotypes as those found in the United Sates. In order to clarify gender stereotypes in the context of Japanese politics, we conducted a survey of approximately 3,000 Japanese voters in March 2020, employing the same questions and question format as used in a study conducted in the United States. Our results revealed similar stereotypes for men and women politicians regarding policy areas of expertise and salient personal characteristics as those found in the United States. We also found that gender stereotypes were shared among women voters as well as men voters, and that they varied by age and party support. These results are important because if gender stereotypes have any influence on voter decisions, then candidates and politicians may try to achieve the best results by acting in line with the stereotypes of their target constituencies to maximize their electoral support.
    Date: 2021–07
  8. By: Arezki, Rabah (African Development Bank & Harvard’s Kennedy School of Government); Simeon Djankov, Simeon (London School of Economics & Peterson Institute for International Economics); Nguyen, Ha (Middle East and North Africa at the World Bank); Yotzov, Ivan (University of Warwick)
    Abstract: Using a new dataset of 198 national elections across 48 democracies, this paper is the first to systematically examine the effects of oil price shocks on incumbents’ political fortunes in developed oil-importing countries. We find that oil price increases systematically lower the odds of reelection for incumbents and increase the likelihood of changes in the ideology of the incoming government. These shocks are found to operate through lowering consumption growth
    Keywords: Elections ; Incumbent ; Oil Prices ; Economic Shocks JEL Classification: D72 ; E21 ; P16 ; Q43
    Date: 2021
  9. By: Sylvain Dejean (CEREGE - CEntre de REcherche en GEstion - EA 1722 - Université de Poitiers - ULR - Université de La Rochelle - IAE Poitiers - Institut d'Administration des Entreprises (IAE) - Poitiers - Université de Poitiers); Marianne Lumeau (GRANEM - Groupe de Recherche Angevin en Economie et Management - Institut National de l'Horticulture et du Paysage - AGROCAMPUS OUEST - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UA - Université d'Angers); Stéphanie Peltier (CRHIA - Centre de recherches en histoire internationale et Atlantique - EA 1163 - ULR - Université de La Rochelle - UFR HHAA - Université de Nantes - UFR Histoire, Histoire de l'Art et Archéologie - UN - Université de Nantes)
    Abstract: The development of online social media has raised concerns about how individuals are overexposed to partisan news. However, social media are only a part of the daily media diet of an average consumer (Allcott and Gentzkow, 2017; Allen et al., 2020, Guess et al., 2019). The aim of this paper is therefore to examine partisan news exposure with respect to the entire media diet. We develop a partisan selective exposure index that indicates the over-representation of partisan political opinions in individual daily news consumption. Our analysis of data from a survey of 4000 representative individuals in France regarding their news consumption and political stance shows that on average, partisan exposure is low when social media are excluded. Among traditional media, online versions of newspapers and radio contribute most to partisan selective exposure. The introduction of social media increases the index, especially for the youngest consumers. Another striking result is that the index is higher for far-left and far-right news consumers, and increases to between 55% and 78% for far-left groups, and between 40% and 58% for far-right groups when social media consumption is included.
    Keywords: Echo Chamber,Partisan news,Internet and Social Media,Selective Exposure,Media
    Date: 2021–07–22
  10. By: Ceyhun Elgin; Abdullah Yalaman; Sezer Yasar
    Abstract: In this paper, we investigate the relationship between the level of democracy and fiscal-policy response to the economic crisis induced by the COVID-19 pandemic. We use a novel cross-country dataset of fiscal-policy responses with time variation. Our results suggest that more democratic countries adopted substantially larger fiscal-policy packages (in % GDP) and the gap regarding the size of packages between more democratic and less democratic countries widened over time. Moreover, our regressions with different measures of democracy as well as instrumental variable estimations support a robust and causal relationship between a higher level of democracy and a larger fiscal-package size.
    Keywords: COVID-19, Democracy, Fiscal Policy, Pandemic
    JEL: D72 H12 H30 H59
    Date: 2021–07
  11. By: Erol Taymaz (Department of Economics, METU); Ebru Voyvoda (Department of Economics, METU); Kamil Yilmaz (Department of Economics, Koç University)
    Abstract: We analyze the behavior of plant-level real wages and productivity in Turkish manufacturing after the transition to democracy in 1987 and test whether wages under democracy causes productivity. The Turkish experience provides almost an experimental case: real wages in manufacturing increased by 120% in the 1987-93 period due to (exogenous) political changes, together with unprecedented total factor productivity and labor productivity growth. While these observations provide support for the “democracies pay higher wages” hypothesis, they also stimulate further evaluation of the consequences of such politically-motivated ‘exogenous’ wage hikes on economic performance. Our analysis shows that real wage hikes during the democratic transition forced firms to increase productivity to stay competitive. The findings also help explain why countries that undergo an orderly transition from autocracy to democracy may achieve rapid productivity gains.
    Keywords: Democratic transition, Real wages, Total factor productivity, Labor productivity, Labor unions, Efficiency wages, Long-run growth.
    JEL: D24 E24 J24 P16
    Date: 2021–07
  12. By: Marco Boccaccio (Università Sapienza di Roma - Dipartimento di Studi Giuridici, Filosofici ed Economici)
    Abstract: Globalization provokes a split between the economic dimension (dynamic) and the legal dimension (static). The first one is increasingly mobile across different jurisdictions while the latter lags behind as far as it is still produced at domestic level, or is delegated to supranational administrative bodies. This creates problems of political accounting of public decisions through the weakening of nation state sovereignty. As a consequence, it nourishes the feeling that democratic control itself is undermined. In this setting democracy seems to become controversial, swinging between a technocratic model and a demagogic one. Are these the only alternative possible?
    Keywords: Democracy, Sovereignty, Globalization, Collective choices, Legal rules and economic factors
    JEL: A13 D70 F60 H11
    Date: 2021–07
  13. By: Dilip Mookherjee; Anusha Nath
    Abstract: Past research has provided evidence of clientelistic politics in delivery of programme benefits by local governments, or gram panchayats (GPs), and manipulation of GP programme budgets by legislators and elected officials at upper tiers in West Bengal, India. Using household panel survey data spanning 1998-2008, we examine the consequences of clientelism for distributive equity. We find that targeting of anti-poverty programmes was progressive both within and across GPs and is explained by greater 'vote responsiveness' of poor households to receipt of welfare benefits.
    Keywords: Clientelism, Governance, Targeting, Budget
    Date: 2021

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