nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒09‒19
ten papers chosen by
Eugene Beaulieu
University of Calgary

  1. Pandora's Ballot Box: Electoral Politics of Direct Democracy By Peter Buisseret; Richard Van Weelden
  2. Gender political inclusion and democracy in Africa: some empirical evidence By Tii N. Nchofoung; Simplice A. Asongu; Vanessa S. Tchamyou; Ofeh M. Edoh
  3. Corporate Political Spending and State Tax Policy: Evidence from Citizens United By Cailin R. Slattery; Alisa Tazhitdinova; Sarah Robinson
  4. Democracy and the quality of economic institutions: Theory and evidence By Krieger, Tommy
  5. National elections, sub-national growth: the politics of Turkey's provincial economic dynamics under AKP rule By Luca, Davide
  6. Democratic Climate Policies with Overlapping Generations By Arnaud Goussebaïle
  7. An Event Based Analysis of Stock Return and Political Uncertainty in Pakistan: Revisited By Audi, Marc; Sulehri, Fiaz Ahmad; Ali, Amjad; Al-Masri, Razan
  8. Do STEM Students Vote? By Bell, D’Wayne; Feng, Jing; Holbein, John B.; Smith, Jonathan
  9. From a better understanding of the drivers of populism to a new political agenda By Robert Gold
  10. Political stability, investement and economic growth:Empirical study on Africa By Hamza El Baraka; Abdelali Fadlallah

  1. By: Peter Buisseret; Richard Van Weelden
    Abstract: We study how office-seeking parties use direct democracy to shape elections. A party with a strong electoral base can benefit from using a binding referendum to resolve issues that divide its core supporters. When referendums do not bind, however, an electorally disadvantaged party may initiate a referendum to elevate new issues in order to divide the supporters of its stronger opponent. We identify conditions under which direct democracy improves congruence between policy outcomes and voter preferences, but also show that it can lead to greater misalignment both on issues subject to direct democracy and those that are not.
    Date: 2022–08
  2. By: Tii N. Nchofoung (University of Dschang, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon); Vanessa S. Tchamyou (Yaoundé, Cameroon); Ofeh M. Edoh (Yaoundé, Cameroon)
    Abstract: The objective of this study is to examine the effect of political inclusion on democracy in Africa. The results of the analyses through the OLS, system GMM, IV-Tobit and IV-2SLS show that gender political inclusion enhances democracy in Africa. This result is robust across alternative specifications of political inclusion and democracy. Besides, the results equally stood when controlled for colonisation and internal conflicts. In terms of policy implications, policymakers in Africa should enhance their fight for political inclusion as one of the gateways to promoting democracy. In this respect, national laws could be put in place, which impose gender quotas in political positions in every country. Equally, the African Union could sign a convention on these quotas for respective countries to ratify.
    Keywords: Political inclusion; democracy; Africa
    JEL: I32 O55 P16 P43 P50
    Date: 2022–01
  3. By: Cailin R. Slattery; Alisa Tazhitdinova; Sarah Robinson
    Abstract: To what extent is U.S. state tax policy affected by corporate political contributions? The 2010 Supreme Court Citizens United v. Federal Election Commission ruling provides an exogenous shock to corporate campaign spending, allowing corporations to spend on elections in 23 states which previously had spending bans. Ten years after the ruling and for a wide range of outcomes, we are not able to identify economically or statistically significant effects of corporate independent expenditures on state tax policy, including tax rates, discretionary tax breaks, and tax revenues.
    JEL: D72 H20 H71
    Date: 2022–08
  4. By: Krieger, Tommy
    Abstract: We present a simple model, illustrating how democracy may improve the quality of the economic institutions. The model further suggests that institutional quality varies more across autocracies than across democracy and that the positive effect of democracies on economic institutional quality increases in people's human capital. Using a panel data set that covers 150 countries and the period from 1920 to 2019, and different measures of economic institutional quality, we show results from fixed effect and instrumental variable regressions that are in line with the predictions of our model.
    Keywords: Democracy,Development,Economic Institutions,Human Capital,Political Economy,Political Transitions
    JEL: D73 H11 O43 P14 P48
    Date: 2022
  5. By: Luca, Davide
    Abstract: Despite a large body of work on the impacts of institutions on subnational growth and development, economic geographers have, in the last decades, frequently overlooked the role of politics and, in particular, that of national political economies. Drawing on the political science literature, the article argues that studying national political dynamics is still key to understand the cumulative process of uneven regional development. Using data from Turkey over the period 2004-2016, the article shows how national electoral politics and government actions have significantly affected provincial growth patterns. The impact is substantive and increases in election years. Results also suggest that the central government may have influenced sub-national growth trajectories in different ways, including boosting the construction sector and expanding public employment.
    Keywords: distributive politics; electoral politics; politics of development; regional economic growth; Turkey
    JEL: D72 H73 O18 R11
    Date: 2022–07–01
  6. By: Arnaud Goussebaïle (CER-ETH – Center of Economic Research at ETH Zurich, Zuerichbergstrasse 18 8092 Zurich, Switzerland)
    Abstract: An extensive climate policy literature provides various recommendations, but they are not supported democratically since the models employed consider either infinitely-lived individuals or normative social objectives (or both). In contrast, the present paper provides policy recommendations that are able to go through democratic processes. I develop an overlapping generation model with political process micro-foundations. I analyze how democratic policies, which are directly and indirectly related to climate change, differ from standard recommended policies. The novel politico-economic formula derived for the interest rate highlights that individual pure time preference, individual altruism toward descendants, and young generation political power are key determinants of democratic climate policy ambition.
    Keywords: Climate change; Discounting; Externality; Overlapping generations; Political economy
    JEL: D6 D7 E6 Q5
    Date: 2022–08
  7. By: Audi, Marc; Sulehri, Fiaz Ahmad; Ali, Amjad; Al-Masri, Razan
    Abstract: This study examines the impact of political events on the Pakistan Stock Exchange with the help of larger data set, the stock market of Pakistan which is considered the top-performing market in the region has suffered as well as foreign investors are reluctant to invest in Pakistan stock markets due to uncertainty caused by political instability. Pakistan is struggling against many problems; political instability is a significant problem due to which the economic growth of the country is being hindered and the confidence of the investors has been shaken. A total of 66 political events were considered in the study out of which 33 events were coded as positive and the other 33 were deemed negative. The first-day abnormal return, five-day cumulative abnormal return, and ten-day cumulative return were calculated for all of the events. The political events were analyzed by segregating these into Pre-Musharraf, Musharraf, and Post-Musharraf eras and also on the bases of their category. This study finds evidence that political events affect the Pakistan Stock Exchange, but their impact is different considering the economic and political implications of these events. Certain events had a stronger impact on the stock market like the takeover of Musharraf, suspension of the chief justice, and assassination of Benazir Bhutto. Political events provided more consistent results where elections yield positive stock returns and the selection of prime minister yields negative stock returns after elections. Overall, this study lays the foundation to make further explorations into the phenomenon of uncertainty caused by political events in relevance to stock markets in Pakistan.
    Keywords: Stock Return, Political instability
    JEL: G24 P16
    Date: 2022
  8. By: Bell, D’Wayne (Harvard University); Feng, Jing; Holbein, John B. (University of Virginia); Smith, Jonathan (Georgia State University)
    Abstract: For decades, pundits, politicians, college administrators, and academics have lamented the dismal rates of civic engagement among students who enroll in courses and eventually major in science, technology, engineering, and mathematics (i.e., STEM) fields. However, the research supporting this conclusion has faced distinct challenges in terms of data quality. Does STEM actually decrease the odds that young people will be actively involved in democracy? This paper assesses the relationship between studying STEM and voting. To do so, we create a dataset of over 23 million students in the U.S. matched to national validated voting records. The novel dataset is the largest known individual-level dataset in the U.S. connecting high school and college students to voting outcomes. It also contains a rich set of demographic and academic variables, to account for many of the common issues related to students' selection into STEM coursework. We consider two measures of STEM participation—Advanced Placement (AP) Exam taking in high school and college major. Using both measures, we find that, unconditionally, STEM students are slightly more likely to vote than their non-STEM peers. After including the rich set of controls, the sign reverses and STEM students are slightly less likely to vote than their non-STEM peers. However, these estimated relationships between STEM and voting are small in magnitude—about the same effect size as a single get-out-the-vote mailer—and we can rule out even very modest causal effects of marginally more STEM coursework on voting for the typical STEM student. We cannot rule out modest effects for a few subfields. Our analyses demonstrate that, on average, marginally more STEM coursework in high school and college does not contribute to the dismally low participation rates among young people in the U.S.
    Keywords: youth voting, education, college, STEM, large-scale administrative data
    JEL: I21 I23 D72
    Date: 2022–08
  9. By: Robert Gold (IfW Kiel)
    Abstract: This paper explores how economic policies can tackle populism. Creating development perspectives for regions and individuals left behind in structural change is the main policy challenge derived from the related literature. While welfare policies are important, redistribution alone will not cure the dissatisfaction with globalization and technological change, that is one major reason for increasing populist support. It must be accompanied by labor market policies and regional policies that enable disadvantaged regions and individuals to participate in the successes of international economic development. Simultaneously, political communication has to adjust, reaching out to the supporters of populist parties and politicians.
    Keywords: populism, globalization, technological change, redistribution policies, regional development
    JEL: F6 F62 F63 F68
    Date: 2022–02
  10. By: Hamza El Baraka (UM5 - Université Mohammed V de Rabat [Agdal]); Abdelali Fadlallah (INSEA - Institut National de Statistique et d’Economie Appliquée [Rabat])
    Abstract: Political stability has a very significant role in the economic development process of a country. The study of the effect of politicalstability on economic growth is one of the structural priorities whether it be at the academic, political or societal level. The interest of this work is to determine the impact of political stability on economic growth using the system-GMM estimator for dynamic panel data models on a sample of 48 African countries, for a 20-year period between 2000 and 2020. The main results of this paper are that political stability is a key variable determining growth, that the effect of political stability on growth isstatistically significant, and that investment in a politically stable environment has a positive impact on growth.Keywords: Africa, political stability, economic growth, political stability index, Hausman test, panel data econometrics.
    Abstract: La stabilité politique a un rôle très important dans le processus de développement économique d'un pays. L'étude de l'effet de la stabilité politique sur la croissance économique est une des priorités structurelles que ce soit au niveau académique, politique ou sociétale. L'intérêt de ce travail est de déterminer l'impact de la stabilité politique sur la croissance économique. En utilisant l'estimateur système-GMM pour les modèles de données de panel dynamiques sur un échantillon de 48 pays africains, pour une période de 20 ans entre 2000 et 2020. Ce document débouche sur les principaux résultats suivants : la stabilité politique est une variable essentielle qui détermine la croissance, l'effet de la stabilité politique sur la croissance est statistiquement significatif, et enfin, l'investissement dans un environnement politiquement stable a un impact positif sur la croissance. Mots clés: Afrique, stabilité politique, croissance économique, Indice de stabilité politique, Test d'Hausman, Econométrie des données de Panel.
    Keywords: political stability,economic growth,political stability index,Hausman test,panel data econometrics,Africa,Afrique,stabilité politique,croissance économique,Indice de stabilité politique,Test d'Hausman,Econométrie des données de Panel
    Date: 2022

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