nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒06‒20
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. The 'Invisible Hand' of Vote Markets By Dimitrios Xefteris; Nicholas Ziros
  2. The Grass Is Not Greener on the Other Side: The Role of Attention in Voting Behaviour By Lucie Coufalová; Štěpán Mikula
  3. It's Always Sunny in Politics By Carolina Concha-Arriagada; J.J. Naddeo
  4. Labor unions and the electoral consequences of trade liberalization By Pedro Molina Ogeda; Emanuel Ornelas; Rodrigo R. Soares
  5. Electoral Politics in Pakistan: Law, Parties, and the Need for Innovation By Abbas Moosvi
  6. The backlash of globalization By Italo Colantone; Gianmarco I. P. Ottaviano; Piero Stanig
  7. The Political Economy of the Oil and Gas Sector in Emerging and Developing Countries By Simplice A. Asongu; Gerald Emmanuel Arhin; Abdul-Gafaru Abdulai; Justice Bawole
  8. Online Political Debates By Leonardo D'Amico; Guido Tabellini
  9. Turkey's presidential system after two and a half years: An overview of institutions and politics By Adar, Sinem; Seufert, Günter
  10. The Origins of Elite Persistence: Evidence from Political Purges in post-World War II France By Aidt, T.; Lacroix, J.; Meonx, P-E.
  11. The Unintended Consequences of Post-Disaster Policies for Spatial Sorting By Marcel Henkel, Eunjee Kwon, Pierre Magontier
  12. Does Foreign Direct Investment Promote Political Stability ? Evidence from Developing Economies By Assi Okara
  13. The Impact of Political Institutions on Human Development: An Empirical Analysis By Van, Germinal
  14. When Criminality Begets Crime: The Role of Elected Politicians in India By Prakash, Nishith; Sahoo, Soham; Saraswat, Deepak; Sindhi, Reetika

  1. By: Dimitrios Xefteris; Nicholas Ziros
    Abstract: This paper studies electoral competition between two non-ideological parties when voters are free to trade votes for money. We find that allowing for vote trading has significant policy consequences, even if trade does not actually take place in equilibrium. In particular, the parties' equilibrium platforms are found to converge (hence, there is no reason for vote trading) to the ideal policy of the mid-range voter, instead of converging to the peak of the median voter (as they do when vote trading is forbidden). That is, a market for votes may not change the outcome only by redistributing the political power among voters when the parties' policy proposals are fixed (e.g., Casella, Llorente-Saguer, and Palfrey, 2012, etc.), but also by acting as an invisible hand - modifying parties' incentives when platform choice is endogenous.
    Keywords: Electoral competition; invisible hand; vote markets; mid-range voter; Downsian model
    JEL: D72
    Date: 2022–05–27
  2. By: Lucie Coufalová (Masaryk University, Brno, Czech Republic); Štěpán Mikula (Masaryk University, Brno, Czech Republic)
    Abstract: The effect of ranking and the effect of attention both increase the chances that candidates running in the top positions of electoral lists will win voters’ support. We exploit a variation in ballot layout (the location of the break between the first and second sides of the ballot) in the 2006–2017 Czech parliamentary elections to disentangle these effects and identify the effect of attention. We show that being listed on the reverse side of the ballot paper decreases electoral support by at least 50 %.
    Keywords: voting behavior; attention; preferential voting; Czech parliamentary elections
    JEL: D72 D91 P16
    Date: 2022–06
  3. By: Carolina Concha-Arriagada (Department of Economics, Georgetown University); J.J. Naddeo (Department of Economics, Georgetown University)
    Abstract: The extant literature suggests that precipitation—mainly in the form of rainfall—has a significant impact on electoral outcomes. This paper adds to this literature by investigating an understudied dimension of weather—sunshine. Using novel daily weather measurements from satellites, linked to county-level U.S. Presidential electoral returns from 1948-2016, we document how sunshine affects the decision-making of voters. We find that election-day exposure to sunshine increases support for the Democratic party on average. Additionally, we show that, contrary to prior findings that do not control for sunshine, precipitation has no detectable impact on partisan support, but universally depresses turnout. To rationalize our results we propose a mechanism whereby sunshine modulates voter mood which causes a change in voter choice, while precipitation only impacts turnout by increasing the cost of voting. We then build a theoretical model, which features this mechanism, and generates additional tests that we take to our data. Our results suggest that uninformative weather on election day, specifically sunshine, have detectable electoral impacts that teach us about voter choice. Classification- D7, D9, P1
    Keywords: U.S. presidential elections, rainfall, weather, electoral outcomes, turnout, mood, voter choice, risk aversion, sunshine
    Date: 2022–03–07
  4. By: Pedro Molina Ogeda; Emanuel Ornelas; Rodrigo R. Soares
    Abstract: We show that the Brazilian trade liberalization in the early 1990s led to a permanent relative decline in the vote share of left-wing presidential candidates in the regions more affected by the tariff cuts. This happened even though the shock, implemented by a right-wing party, induced a contraction in manufacturing and formal employment in the more affected regions, and despite the left's identification with protectionist policies. To rationalize this response, we consider a new institutional channel for the political effects of trade shocks: the weakening of labor unions. We provide support for this mechanism in two steps. First, we show that union presence-proxied by the number of workers directly employed by unions, by union density, and by the number of union establishments-declined in regions that became more exposed to foreign competition. Second, we show that the negative effect of tariff reductions on the votes for the left was driven exclusively by political parties with historical links to unions. Furthermore, the impact of the trade liberalization on the vote share of these parties was significant only in regions that had unions operating before the reform. These findings are consistent with the hypothesis that tariff cuts reduced the vote share of the left partly through the weakening of labor unions. This institutional channel is fundamentally different from the individual-level responses, motivated by economic or identity concerns, that have been considered in the literature.
    Keywords: trade shocks, elections, unions, Brazil
    Date: 2021–11–17
  5. By: Abbas Moosvi (Pakistan Institute of Development Economics)
    Abstract: With three long dictatorial regimes, frequent allegations of electoral rigging, dynastic parties, and an ever-expanding state with limited class mobility, Pakistan’s political landscape has consistently failed to meet the desires of ordinary people. This paper intends to outline the pitfalls of the electoral system through a three-tiered analysis of law, party behaviour, and potential technical interventions that may reshape the incentive structures guiding contestations for political power—thus leading to enhanced levels of political representation for citizens.
    Keywords: Electoral, Politics, Pakistan, Law, Parties, Innovation
    Date: 2021
  6. By: Italo Colantone; Gianmarco I. P. Ottaviano; Piero Stanig
    Abstract: We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted policies. Using newly assembled data for 23 advanced democracies, we document a protectionist and isolationist shift in electorates, legislatures, and executives from the mid-1990s onwards. This is associated with a noticeable protectionist shift in trade policy - although with some notable nuances - especially since the financial crisis of 2008. We discuss the economics of the backlash. From a theoretical perspective, we highlight how the backlash may arise within standard trade models when taking into ac-count the 'social footprint' of globalization. Then, we review the empirical literature on the drivers of the backlash. Two main messages emerge from our analysis: (1) globalization is a significant driver of the backlash, by means of the distributional consequences entailed by rising trade exposure; yet (2) the backlash is only partly determined by trade. Technological change, crisis-driven fiscal austerity, immigration, and cultural concerns are found to play an important role in creating politically consequential cleavages. Looking ahead, we discuss possible future developments, with specific focus on the issue of social mobility.
    Keywords: Globalisation, protectionist and isolationist direction
    Date: 2021–09–13
  7. By: Simplice A. Asongu (Yaounde, Cameroon); Gerald Emmanuel Arhin (University of Manchester, UK); Abdul-Gafaru Abdulai (University of Ghana Business School, Legon.); Justice Bawole (University of Ghana Business School, Legon.)
    Abstract: This chapter surveys the literature on the political-economy of oil and gas governance by focusing on the exploration, production and revenue sharing in the hydrocarbon sector. Emphasis is placed on the extent to which oil and gas governance is shaped by geopolitics and interparty-party politics. We argue that the interests and ideas relative to the power of key stakeholders, such as political actors, multinational companies, the citizens and the state are relevant to the understanding of the form and shape of the emergence and performance of the institutions governing the oil and gas sectors of emerging and developing countries.
    Keywords: Political economy, oil and gas; development economies; inter-party politics; geopolitics; institutions; interests; ideas; power
    JEL: D72 H23 H77 P16 P48
    Date: 2022–01
  8. By: Leonardo D'Amico; Guido Tabellini
    Abstract: We study how individuals comment on political news posted on Reddit’s main political forum during the 2016 US Presidential Election. We present two main findings. First, opposite partisan users comment on the same news sources, but on different news. Second, partisan users behave very differently from independents if the news is bad for a candidate. Compared to independents, partisan comments on bad news are less frequent on the own candidate, and more frequent on the opponent. The content of the comments also suggests that partisan users are less likely to accept bad news on their candidate, and more likely on the opponent. This behavior is consistent with motivated reasoning, and with the predictions of a model of rational inattention where the cost of attention depends on whether the news is pleasant or unpleasant.
    Date: 2022
  9. By: Adar, Sinem; Seufert, Günter
    Abstract: Turkey's new Presidential System has failed to realise the goals that it was said to achieve with its introduction despite the disapproval of half the population. Contrary to the ruling party's claims in favour of the new governance system, two and a half years after its introduction, parliament is weaker, separation of powers is undermined, the judiciary is politicised, institutions are crippled, economic woes are mounting and authoritarian practices prevail. Despite the almost unlimited and unchecked power that the new system grants to the President over institutions, his space for political manoeuvre is, surprisingly, narrower than it was in the parliamentary system. Providing the otherwise divided opposition a joint anchor of resistance, the Presidential System unintentionally breathed life into the inertia of Turkey's political party setting. The formation of splinter parties from the ruling party, primarily addressing the same conservative electorate, alongside the changing electoral logic with the need to form alliances to win an election, poses a serious challenge to the ruling party and its leader - the President. Despite the oppositional alliance's electoral victory in 2019 local elections, it is at the moment unclear whether the forming parties share a common vision for steps towards democratic repair. Together with the institutional havoc caused by the Presidential System, the blurry outlook of the opposition requires caution about an easy and rapid positive transformation. While the European Union should be realistic in regard to expectations towards democratic reform, it should also strike a balance between cooperation in areas of mutual benefit and confronting Ankara when necessary to protect the interests of the European Union and its member states.
    Keywords: Bilateral international relations
    Date: 2021
  10. By: Aidt, T.; Lacroix, J.; Meonx, P-E.
    Abstract: This paper studies a new mechanism that allows political elites from a non-democratic regime to survive a democratic transition: connections. We document this mechanism in the transition from the Vichy regime to democracy in post-World War II France. The parliamentarians who had supported the Vichy regime were purged in a two-stage process where each case was judged twice by two different courts. Using a difference-in-differences strategy, we show that Law graduates, a powerful social group in French politics with strong connections to one of the two courts, had a clearance rate that was 10 percentage points higher than others. This facilitated the persistence of that elite group. A systematic analysis of 17,589 documents from the defendants' dossiers is consistent with the hypothesis that the connections of Law graduates to one of the two courts were a major driver of their ability to avoid the purge. We consider and rule out alternative mechanisms.
    Keywords: Purges, Political transitions, Elite persistence, Connections
    JEL: D73 K40 N44 P48
    Date: 2022–05–18
  11. By: Marcel Henkel, Eunjee Kwon, Pierre Magontier
    Abstract: Post-disaster aid aims to relieve affected communities, but excessive bailouts may Encourage economic activity to remain in exposed areas. We provide new empirical and theoretical evidence on the spatial consequences of post-disaster policies related to political motives. Using the exogenous variation in the timing of natural disasters, we show that hurricanes close to Election Day lead to increased post-disaster efforts at the local level and result in increased population sorting into the impacted areas. To quantify and comprehend the implications of this new sorting pattern for the aggregate economy, we introduce the relationship between electoral cycles and post-disaster policies as a new feature in a dynamic spatial general equilibrium model. We show that households respond to current post-disaster policies by sorting in hazard-prone coastal areas. Under the assumption of no climate change, current post-disaster policies improve aggregate welfare at the expense of overall GDP and productivity losses.
    Keywords: Natural Disasters, Political Budget Cycles, Spatial Sorting
    JEL: Q54 D72 H53 H84
    Date: 2022–06
  12. By: Assi Okara (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: This paper investigates the potential of Foreign Direct Investment (FDI) to counter socio-political instability, one of the most pressing challenges faced by developing countries. Socio-political (in)stability is approached from an institutional perspective and linked to one particular type of FDI, greenfield FDI, for its more direct socio-economic externalities and their influences on greed and grievance. The issue of causality is primarily addressed using a gravity-based instrumental variable for FDI, taking advantage of bilateral greenfield projects data. The empirical results using data over the period 2003-2017 for a large sample of developing countries show that FDI favors institutional development not only in terms of overall socio-political stability but also human rights compliant socio-political stability. The results are robust to a range of specifications and alternative identification strategies, as well as to a series of sensitivity tests. Overall, this study highlights the promotion of political stability as another channel through which FDI can contribute to development.
    Keywords: Greenfield FDI,institutions,political stability,developing countries
    Date: 2022–02
  13. By: Van, Germinal
    Abstract: The purpose of this paper is to investigate the relationship between political institutions and human development. How do political institutions affect human development in civil societies? This paper argues that political institutions play a fundamental role in the process of human development. This paper hypothesized that political institutions play a positive role in human development and the quality of life of people in general because the role of political institutions is to establish a legal framework designed to protect the rights and liberties of individuals in a civil society. The more effective are political institutions, the better quality of life of people improves. After testing our hypothesis, the empirical results confirmed that our theory is supported by the data. We found the relationship between political institutions and human development to be statistically very significant with a positive correlation of moderate magnitude. Hence, we conclude that political institutions do exert a positive impact on human development, but this impact is only moderately effective.
    Keywords: Econometrics, Multiple Regression, Regression Analysis, Quantitative Economics, Development Economics, Political Science
    JEL: C10 C50 H11 O10 P1
    Date: 2022–05–15
  14. By: Prakash, Nishith (University of Connecticut); Sahoo, Soham (Indian Institute of Management Bangalore); Saraswat, Deepak (University of Connecticut); Sindhi, Reetika (University of California, Santa Barbara)
    Abstract: This paper estimates the causal impact of electing criminally accused politicians and their nature of criminality on crime in India. We exploit the quasi-random variation in the outcome of close elections between candidates with and without criminal accusations to instrument the share of constituencies in the district won by criminally accused leaders. We find that a standard deviation increase in the share of criminally accused leaders in institutionally weaker states leads to a 4.3 percent increase in crime in districts, including crimes against women. The effect is more pronounced when the leaders are accused of serious crimes, indicating that seriously accused leaders have a detrimental impact on society.
    Keywords: close elections, elected leaders, criminal accusations, crime, India
    JEL: D72 D73 K42 O17
    Date: 2022–04

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