nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒09‒13
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Voting for compromises: alternative voting methods in polarized societies By Carlos Alós-Ferrer; Johannes Buckenmaier
  2. Beyond Samuragwa’s sweet and sour succession: a closer look at Burundi’s 2020 elections By Vandeginste, Stef
  3. Social Mobility And Preferences For Open Access Societies By Alexandra Pripadcheva; Dmitriy Veselov
  4. Socialbot representations on cross media platforms during 2020 Taiwanese Presidential Election By Lin, Trisha T. C.
  5. New Housing Constructions: Not in my Constituency! The Politics of Building New (Affordable) Homes in Greater London, 2007-2018 By Alexander von Kulessa
  6. Fairness, Flexibility and the Far Right: Understanding the Relationship between Populism, Social Spending and Labor Markets By Bergh, Andreas; Kärnä, Anders
  7. Deliberative Democracy with Costly Voting Power Portfolios By Dimitrios Karoukis
  8. Are Latin American business groups different? An exploratory international political economy perspective By Carney, Michael; Estrin, Saul; Liang, Zhixiang; Shapiro, Daniel
  9. Did Trump's Trade War Impact the 2018 Election? By Emily J. Blanchard; Chad P. Bown; Davin Chor
  10. (Successful) Democracies Breed Their Own Support By Acemoglu, Daron; Ajzenman, Nicolas; Aksoy, Cevat Giray; Fiszbein, Martin; Molina, Carlos
  11. Local government fiscal policy, social capital and electoral payoff: evidence across Italian municipalities By Batinti, Alberto; Andriani, Luca; Filippetti, Andrea
  12. The Effects of Firms’ Lobbying on Resource Misallocation By Federico Huneeus; In Song Kim

  1. By: Carlos Alós-Ferrer; Johannes Buckenmaier
    Abstract: Democratic societies have been increasingly confronted with extreme, knife-edge election outcomes that affect everybody’s lives and contribute to social instability. Even if political compromises based on social conventions as equity or economic arguments as efficiency are available, polarized societies might fail to select them. We demonstrate that part of the problem might be purely technical and, hence, potentially solvable. We study different voting methods in three experiments (total N = 5, 820), including small, medium-sized, and large electorates, and find that currently-used methods (Plurality Voting and Rank-Order systems) can lead voters to overwhelmingly support egoistic options. In contrast, alternative, more nuanced methods (Approval Voting and Borda Count) reduce the support for egoistic options and favor equity and efficiency, avoiding extreme outcomes. Those methods differ in whether they favor equity or efficiency when the latter benefits a majority. Our evidence suggests that targeted changes in the electoral system could favor socially-desirable compromises and increase social stability.
    Keywords: Polarization, social compromises, equity, efficiency, voting methods
    JEL: C91 C92 D63 D70 D71
    Date: 2021–07
  2. By: Vandeginste, Stef
    Abstract: Unlike the 2015 elections, Burundi’s 2020 general elections did not plunge the country into chaos. They rather illustrate how elections can be used for authoritarian consolidation. As expected, they enhanced the ruling party’s control on the state, thus consolidating a decade of gradual return towards a de facto single-party regime. A closer look at the elections sheds light on some important political governance developments and challenges. Despite the sudden death of outgoing president Nkurunziza, the elections allowed for an orderly succession at the level of the presidency. The ruling party leadership, a group of generals with a shared maquis experience, left the shadows and is now at the front scene of the state institutions. Both the electoral commission and the constitutional court, the main institutions in charge of organizing the elections and of electoral dispute settlement, were perceived as serving the interests of the ruling party. Opposition party CNL has been able to mobilize large crowds of supporters from diverse backgrounds. It contested the electoral results through the institutional channels and now faces the challenge of taking up its role as parliamentary opposition.
    Keywords: Burundi; elections; governance; political parties; CNDD-FDD; CNL
    Date: 2021–08
  3. By: Alexandra Pripadcheva (National Research University Higher School of Economics); Dmitriy Veselov (National Research University Higher School of Economics)
    Abstract: This study investigates a dynamic political economy model that provides a link between the intensity of social mobility in society and the barriers to entry on markets in modern democracies. We use overlapping generation model in which all agents are divided by three groups: unskilled workers, skilled workers and capitalists. Social mobility is determined by the parental endogenous education decision and by the level of barriers to entry on markets, which is a political outcome. We show that a majority of voters may support high barriers to entry if perspectives of upward mobility for high-skilled workers is sufficiently low for every institutional set-up and there are direct payments from incumbent capitalists to a group of unskilled workers. This outcome also leads to persistently lower social mobility for every social group and to a lower level of education in the society. The model provides a theoretical justification of the empirical evidence, suggesting that a higher level of economic inequality is associated with a lower quality of economic institutions in democracies.
    Keywords: social mobility, economic barriers, economic institutions, democracy
    JEL: J62 O15 O43 P16
    Date: 2021
  4. By: Lin, Trisha T. C.
    Abstract: This big data research uses CORPRO, sentiment analysis and inter-media agenda setting approach to investigate cross-platform representation of socialbots and disinformation during 2020 Taiwanese presidential election. The results show key terms associated with socialbots emphasize Internet armies, election candidates, Facebook and China/Taiwan relations. Sentiment analysis of socialbot-related cross-platform contents tend to be negative, regardless of media types. Forums contents encompassed more diverse topics and negativity than news media and Facebook. Polarized sentiments and political slants were found in three media types. The time-series analysis of the salient socialbot event regarding Facebook's deleting illegal account showed inter-media agenda-setting from news to Facebook and forms. Even though news media set the initial agenda, journalists and social media users alter story angels and extend narratives to fit political inclinations and reflect polarized views.
    Keywords: Socialbots,disinformation,Taiwanese Presidential Election,big data,sentiment analysis,inter media agenda setting
    Date: 2021
  5. By: Alexander von Kulessa
    Abstract: The public and academic discourses have prominently pointed to local oppositions, often qualified as “Not in My Back Yard-attitudes” (NIMBYism), to explain why housing is increasingly difficult to build and unaffordable to many, especially dense urban areas. This claim relies on the assumption that “Not in My Back Yard” does translate to “Not in My Constituency” on the political level. Yet research on the politics of planning policies and decisions is rather scant. The paper replaces residents’ preferences in the political and institutional context, relying on the example of Greater London. Using detailed data from the London Development Database (2007-2017), the paper finds solid evidence that the number of housing approvals per ward as well as the share of affordable units are strongly linked to median voter preferences in the constituency, which are estimated using micro-data from the British Social Attitudes Survey (2010, 2014, 2016). While these results support the “NIMBY-Hypothesis”, they are only one part of the story. Regression analysis indicates that party politics and regional planning targets matter as well and may counterbalance local oppositions to new housing constructions.
    Keywords: housing; Housing Affordability; New Residential Construction; Urban Planning
    JEL: R3
    Date: 2021–01–01
  6. By: Bergh, Andreas (Lund University); Kärnä, Anders (Örebro University)
    Abstract: The large increase in economic inequality and the dismantling of the welfare state in Western democracies has been connected to the rise of populist parties. If populist voting is explained by fear and labor market insecurity and if people care more about procedural fairness than inequality of economic outcomes, national income inequality should be less important than other factors in explaining vote shares of populist parties. Using election results from 33 European countries over the 1980-2018 period, two different classifications of populist parties and three different measures of government/welfare state size, we find no relationship between country-level economic inequality, as measured by the disposable income Gini, and either right-wing or left-wing populism. An alternative hypothesis that right-wing populism is dampened by labor market flexibility and social spending is developed and shown to have empirical support.
    Keywords: Inequality; Populism; The welfare state; Social spending; Employment protection
    JEL: D31 D63 P16
    Date: 2021–09–01
  7. By: Dimitrios Karoukis
    Abstract: We present a collective decision-making model where one or more individuals propose a status quo change that is iteratively updated by a dynamic committee of experts until a point when a referendum is held to decide its finality. Suppose that everyone in the society has some initial voting power. In each iteration there are three stages. In the first stage, each individual decides what percentage of their voting power they want to keep for themselves and how to distribute the rest of it to other individuals in the society. With every change in distribution there is a voting power penalty. In the second stage, the deliberative committee consists of the most powerful individuals, whose role is to bring forward corrections to the proposal. In the third stage, if an individual outside of the committee has kept some voting power for herself and disagrees with a correction, she can vote against it. If more than half of the voting power outside the committee is against a correction then it is discarded. If the committee or the proposal remain unchanged for two consecutive time periods, the deliberation stops and a referendum is held. The sum of the voting power penalties from past redistributions is added to the final negative vote, while the voting power of those who abstain is counted as positive. We show that this process will stop in finite time.
    Date: 2021–09
  8. By: Carney, Michael; Estrin, Saul; Liang, Zhixiang; Shapiro, Daniel
    Abstract: We advance an international political economy (IPE) perspective that geo-political events can have long-lasting imprint effects on countries and their firms. We explore the idea that shared political history and geography combine to create specific structural conditions that shape the international competitiveness of all firms in the region. In particular, we consider whether the Monroe Doctrine of 1823, which asserted American influence in the Western Hemisphere, contributed to the creation of institutional structures across Latin America (LA) affecting the strategies of all firms to this day. We illustrate the IPE perspective using the example of the contemporary international competitiveness of LA business groups.
    Keywords: International political economy; business groups; international competitiveness; Latin America; imprint
    JEL: R14 J01
    Date: 2021–08–16
  9. By: Emily J. Blanchard (Dartmouth College); Chad P. Bown (Peterson Institute for International Economics); Davin Chor (Dartmouth College)
    Abstract: We find that Republican candidates lost support in the 2018 congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests that the trade war (respectively, health care) can account for five (eight) of Republicans' lost House seats.
    Keywords: Trade War, Trade Policy, Retaliatory Tariffs, Agricultural Subsidies, Health Insurance Coverage, Voting
    JEL: F13 F14
    Date: 2019–12
  10. By: Acemoglu, Daron (MIT); Ajzenman, Nicolas (São Paulo School of Economics-FGV); Aksoy, Cevat Giray (European Bank for Reconstruction and Development); Fiszbein, Martin (Boston University); Molina, Carlos (Massachusetts Institute of Technology)
    Abstract: Using large-scale survey data covering more than 110 countries and exploiting within-country variation across cohorts and surveys, we show that individuals with longer exposure to democracy display stronger support for democratic institutions. We bolster these baseline findings using an instrumental-variables strategy exploiting regional democratization waves and focusing on immigrants' exposure to democracy before migration. In all cases, the timing and nature of the effects are consistent with a causal interpretation. We also establish that democracies breed their own support only when they are successful: all of the effects we estimate work through exposure to democracies that are successful in providing economic growth, peace and political stability, and public goods.
    Keywords: democracy, economic growth, institutions, support for democracy, values
    JEL: P16
    Date: 2021–08
  11. By: Batinti, Alberto; Andriani, Luca; Filippetti, Andrea
    Abstract: Citizens’ attitudes and reactions to policymakers’ decisions depend on several factors, including informal institutions. The novelty of this paper is to use social capital as a moderator factor to shed light on the relationship between fiscal policies and electoral outcomes. We investigate this relationship using a sample of 6,000 Italian municipalities over the period 2003-2012 and use a Conditional Logit Matching model comparing incumbents to challengers’ characteristics within each election. We find that social capital increases the odds of the re-election of incumbent mayors who adopted a local fiscal policy more oriented towards capital investment (versus current expenditure) and towards property tax (versus income surcharge). This suggests that social capital encourages governmental functions and public policies improving long-term economic commitments, institutional transparency, and accountability. It also shows that decentralization works relatively better with social capital.
    Keywords: social capital; municipal elections; local government fiscal policies
    JEL: E6
    Date: 2019–11–01
  12. By: Federico Huneeus; In Song Kim
    Abstract: We study the effect of firms’ lobbying activities on the misallocation of resources in the U.S. through the distortion of firm size. To quantify the macroeconomic consequences of corporate political influence, we develop a multi-sector heterogeneous firm model with endogenous lobbying. We estimate our model using a novel firm-level lobbying dataset, while leveraging the variation in the returns to lobbying expenditures through changes in the value of firms’ connections to politicians. Finally, we structurally estimate the model and show that eliminating lobbying increases aggregate productivity in the U.S. by 6 percent.
    Date: 2021–08

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