nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒03‒14
four papers chosen by
Eugene Beaulieu
University of Calgary

  1. The Political Economy of Propaganda: Evidence from US Newspapers By Ottinger, Sebastian; Winkler, Max
  2. The Rise of a Network: Spillover of Political Patronage and Cronyism to the Private Sector By Terry Moon; David Schoenherr
  3. Voter conformism and inefficient policies By Aubert, Cécile; Ding, Huihui
  4. How much does environment pay for politicians? By Mohamed Boly; Jean-Louis Combes; Pascale Combes Motel

  1. By: Ottinger, Sebastian (Northwestern University); Winkler, Max (Harvard University)
    Abstract: We study the impact of the first American party committed to redistribution from rich to poor on anti-Black media content in the 1890s. The Populist Party sought support among poor farmers, regardless of race, providing the segregationist Democratic establishment in the South with an incentive to fan racial outrage to alienate white voters from the Populists. Using text data from local newspapers and a difference-in-differences strategy, we find that stories of sexual assaults by Black men on white women became more prevalent in counties where the Populists threatened the Democratic dominance, and in Democratic newspapers only.
    Keywords: propaganda, divide and rule, political threat, media
    JEL: D72 J15 L82 N91 Z1
    Date: 2022–02
  2. By: Terry Moon (University of British Columbia); David Schoenherr (Princeton University)
    Abstract: The misallocation of government resources to the politically connected is considered to impose substantial economic costs. We document that resource misallocation to the politically connected extends to resources allocated by private sector firms. Following the presidential election in 2007, private banks in Korea appoint executives from the new president’s alumni network in an effort to establish links to the new administration. In turn, private banks that appoint executives from the president’s alumni network allocate more credit to firms with links to the same network through their CEOs. Additionally, in-network firms pay lower interest rates and are protected from default through debt restructurings. Exploiting variation for the same firm across different lenders over time allows us to control for firm-time fixed effects, sharpening the identification of the results. We estimate that private banks incur aggregate losses equivalent to 4.5 basis points of GDP due to preferential treatment of in-network firms.
    Keywords: allocative efficiency, banks, networks, patronage, rent-seeking
    JEL: D61 D72 G21 L14 P16
    Date: 2020–12
  3. By: Aubert, Cécile; Ding, Huihui
    Abstract: A reelection-seeking politician makes a policy decision that can reveal her private information on whether her political orientation and capabilities will be a good fit to future circumstances. We study how she may choose inappropriate policies to hide her information, even in the absence of specific conflicts of interests, and how voters’ conformism affects her incentives to do so. Conformism is independent from policies and from voters’ perceptions; yet we identify a ‘conformism advantage’ for the incumbent that exists only when there is also an incumbency advantage. Conformism changes the incentives of the incumbent and favors the emergence of an efficient, separating equilibrium. It may even eliminate the pooling equi-librium (that can consist in inefficient persistence). Conformism has a mixed impact on social welfare however: it improves policy choices and the information available to independent vot-ers, but fosters inefficient reelection in the face of a stronger opponent. When the incumbent is ‘altruistic’ and values social welfare even when not in power, she partly internalizes this latter effect. The impact of conformism is then non monotonous.
    JEL: D72 D82
    Date: 2022–02–15
  4. By: Mohamed Boly (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique); Jean-Louis Combes (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique); Pascale Combes Motel (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We empirically explore how elections impact climate change policy and environmental degradation, using a sample of 76 democratic countries over the period 1990‐2014. Three key results emerge from our system‐GMM estimations. First, election years are characterized by an increase in C02 emissions, even though the effect weakens over the recent years. Second, this effect is present only in established democracies, where incumbents engage in fiscal manipulation through the composition of public spending rather than its level. Third, higher freedom of the press and high environmental preferences from citizens reduce the size of this trade‐off between pork barrel spending and the public good, namely environment quality.
    Keywords: CO2 emissions,Elections,Environmental policy,Panel data
    Date: 2020–10–05

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