nep-pol New Economics Papers
on Positive Political Economics
Issue of 2022‒10‒31
thirteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Electoral Cycles in Macroeconomic Forecasts By Cipullo, Davide; Reslow, André
  2. Are Immigrants more Left leaning than Natives? By Simone Moriconi; Giovanni Peri; Riccardo Turati
  3. Comparative Politics with Intraparty Candidate Selection By Benoit S Y Crutzen; Nicolas Sahuguet
  4. Excess Death Rates for Republicans and Democrats During the COVID-19 Pandemic By Jacob Wallace; Paul Goldsmith-Pinkham; Jason L. Schwartz
  5. Gender or class – What determines voting? Lessons from expanding the suffrage in early 1900s Norway By Edda Torsdatter Solbakken
  6. Beyond Political Connections : A Measurement Model Approach to Estimating Firm-levelPolitical Influence in 41 Economies By Francis,David C.; Kubinec ,Robert
  7. Health Costs of a “Healthy Democracy†: The Impact of Peaceful Political Protests on Healthcare Utilization By Adnan M.S. Fakir; Tushar Bharati
  8. Money versus Kudos : The Impact of Incentivizing Local Politicians in India By Mansuri,Ghazala; Palaniswamy,Nethra; Rao,Vijayendra; Shrestha,Slesh Anand
  9. Women’s Political Representation and Intimate Partner Violence By Lnu,Anukriti; Erten,Bilge; Mukherjee,Priya
  10. "The Implication of Political Governance in Preventing Fraud of Indonesian SOEs " By Ira Geraldina
  11. Welfare Reform and Repression in an Autocracy: Bismarck and the Socialists By Felix Kersting
  12. Trapped in the Trilemma: When Security Trumps Economics By Michael D. Bordo; Harold James
  13. A dichotomy between democracy and personal freedom on the spread of COVID-19 By Ang, Joshua Ping; Guanlin, Gao; Sparks, Andrew

  1. By: Cipullo, Davide (Universit`a Cattolica del Sacro Cuore); Reslow, André (Payments Department, Central Bank of Sweden)
    Abstract: This paper documents the existence of electoral cycles in GDP growth forecasts released by governments. In a theoretical model of political selection, we show that governments release overly optimistic GDP growth forecasts ahead of elections to increase the reelection probability. The bias arises from lack of commitment if voters are rational and from manipulation of voters’ beliefs if they do not expect the incumbent to be biased. Using high-frequency forecaster-level data from the United States, the United Kingdom, and Sweden, we document that governments overestimate short-term real GDP growth by 0.1–0.3 percentage points.
    Keywords: Electoral Cycles; Political Selection; Voting; Macroeconomic Forecasting
    JEL: D72 D82 E37 H68
    Date: 2022–08–01
  2. By: Simone Moriconi; Giovanni Peri; Riccardo Turati
    Abstract: We analyze whether second-generation immigrants have different political preferences relative to observationally identical children of citizens in the host countries. Using data on individual voting behavior in 22 European countries between 2001 and 2017, we characterize each vote on a left-right scale based on the ideological and policy positions of the party receiving the vote. In the first part of the paper, we characterize the size of the "left-wing bias" in the vote of second-generation immigrants after controlling for a large set of individual characteristics and origin and destination country fixed effects. We find a significant left-wing bias of second-generation immigrants, comparable in magnitude to the left-wing bias associated with living in urban (rather than rural) areas. We then show that this left-wing bias is associated with stronger preferences for inequality-reducing government intervention, internationalism and multiculturalism. We do not find that second-generation immigrants are biased towards or away from populist political agendas.
    JEL: J61 P16 Z1
    Date: 2022–09
  3. By: Benoit S Y Crutzen (Erasmus University Rotterdam); Nicolas Sahuguet (HEC Montréal)
    Abstract: Politicians respond to incentives when they decide how to allocate their campaigning time and effort. The literature suggests electoral rules impact politicians’ incentives. We argue that the candidate selection process is an equally important source of incentives. We develop a two-stage model in which parties select candidates before the election. Elections are under first past the post (FPTP) or closed list proportional representation (PR). Selection is competitive or non-competitive. When selection is not competitive, effort is higher under FPTP. With competitive selection, effort is higher under PR as, under PR, competition motivates candidates to exert effort to be selected(as under FPTP) and to be ranked higher on the list. The results point to a causal relationship between electoral rules and how parties porganize. They suggest empirical studies comparing electoral rules should consider how parties organize.
    Keywords: electoral rule, candidate selection process, moral hazard
    Date: 2022–10–10
  4. By: Jacob Wallace; Paul Goldsmith-Pinkham; Jason L. Schwartz
    Abstract: Political affiliation has emerged as a potential risk factor for COVID-19, amid evidence that Republican-leaning counties have had higher COVID-19 death rates than Democrat- leaning counties and evidence of a link between political party affiliation and vaccination views. This study constructs an individual-level dataset with political affiliation and excess death rates during the COVID-19 pandemic via a linkage of 2017 voter registration in Ohio and Florida to mortality data from 2018 to 2021. We estimate substantially higher excess death rates for registered Republicans when compared to registered Democrats, with almost all of the difference concentrated in the period after vaccines were widely available in our study states. Overall, the excess death rate for Republicans was 5.4 percentage points (pp), or 76%, higher than the excess death rate for Democrats. Post- vaccines, the excess death rate gap between Republicans and Democrats widened from 1.6 pp (22% of the Democrat excess death rate) to 10.4 pp (153% of the Democrat excess death rate). The gap in excess death rates between Republicans and Democrats is concentrated in counties with low vaccination rates and only materializes after vaccines became widely available.
    JEL: I0
    Date: 2022–09
  5. By: Edda Torsdatter Solbakken (Statistics Norway)
    Abstract: Previous literature has found that extending the suffrage to both females and poorer voters increases the supply of public goods. This paper investigates whether the difference in voting between men and women can be explained by differences in income alone, or if there exist gender specific differences in preferences. I exploit two key features of the expansion of suffrage in municipality elections in early 20th century Norway. First, the time at which people gained the right to vote depended on both their gender and their household income. Second, the income threshold for suffrage was set nationally, creating variation across municipalities in the share of new voters following each extension of the suffrage. This variation allows me to estimate separate effects for the change in supply of health personnel following the extension of suffrage to poor men, rich women, and poor women, respectively. I find that the enfranchisement of both poor men and rich women increases the supply of doctors relative to when only rich men had the right to vote. These results are consistent with gender specific preferences for health services to the community.
    Keywords: Enfranchisement; women’s suffrage; public goods; welfare state
    JEL: P16 H42 D72 J16 N24 N44
    Date: 2022–09
  6. By: Francis,David C.; Kubinec ,Robert
    Abstract: This paper considers the political influence of private firms. While such influence isfrequently discussed, there is limited analysis of how firms combine political interactions, and under what conditions,to gain influence. The exception is the large literature on firms with political connections, with findings generallyshowing large gains to firms with those direct relationships. This paper extends the discussion ofinfluence beyond political connections alone and uses a rich firm-level data set from 41 economies, which includesinformation on several interactions with political actors. Using a Bayesian item response theory (IRT) measurementmodel, an index of Political Influence is estimated, with the prior assumption that political connections yield moreinfluence. Membership in a business association is found to enhance influence, while such influence is offset by bribes,state ownership, firm size, and a reliance on collective lobbying. Political Influence is found to be broadly higherin economies with poorer governance but more dispersed in those with better governance. Within economies, higherinfluence is associated with a higher likelihood of reporting a small number of competitors, higher sales, andlower labor inputs relative to sales. These findings are robust across several models that incorporatehigh-dimensional fixed effects, incorporating measurement error in the index, and varying these relationships overseveral governance measures.
    Date: 2022–07–05
  7. By: Adnan M.S. Fakir (Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom); Tushar Bharati (University of Western Australia)
    Abstract: Peaceful protests are one of the most common and effective forms of political action worldwide. But they may have negative spillovers on health-seeking behavior. Using an instrumental variable approach that leverage variations in national sporting events and combining data on politically dis-ruptive events from the Armed Conflict Location & Event Data (ACLED) project with information on healthcare utilization from the Bangladesh Demographic and Health Surveys (DHS), we show that peaceful protests reduce healthcare utilization among mothers with young children. Prenatal and postnatal care, vaccination rates, the likelihood of visiting a hospital facility if a child is unwell, and hospital deliveries all decrease in response to protests, while home deliveries increase. The effect is stronger for more elastic demands, like facility visits for minor illnesses and timely vacci-nations. Security concerns and traffic congestion, which increases the time and costs of accessing health facilities, appear to be two potential mechanisms. The findings are not a criticism of peaceful protests, which we consider both an essential tenet and a by-product of a strong democracy, but instead seek to draw attention to an often ignored cost associated with it.
    Keywords: health-seeking; political violence; protests; non-violence; cricket; Bangladesh
    JEL: D74 H11 I12 I18 I31 P16
    Date: 2022–08
  8. By: Mansuri,Ghazala; Palaniswamy,Nethra; Rao,Vijayendra; Shrestha,Slesh Anand
    Abstract: Despite growing awareness of the various limitations of electoral democracy, there is arelative lack of evidence on effective policy interventions to improve the performance of elected officials and motivatethem to act more equitably. This paper reports the results from an experiment in which elected presidents of villagegovernments in Tamil Nadu, India, were randomly assigned to one of two incentive schemes (or a control group): afinancial incentive that rewarded better performing presidents with a higher public budget, and a nonfinancialincentive that awarded them a certificate demonstrating their achievement with an information campaign todisseminate it. The findings show that both incentives improved access to public investments and private transfersin the villages of incentivized presidents. The nonfinancial incentive also led to a more equitable between-hamletallocation of resources within the village, and this effect was more acute with officials who faced potentially morecompetitive elections. The paper shows that the results are consistent with a theoretical model where imperfect voterinformation drives inequities in resource allocation, and interventions that provide credible information onpolitician quality motivate elected representatives to act more equitably.
    Date: 2022–09–19
  9. By: Lnu,Anukriti; Erten,Bilge; Mukherjee,Priya
    Abstract: Recent studies demonstrate that female leaders can improve gender-specific outcomes alongmultiple dimensions through better provision of public goods and legislative changes that benefit women. Usingquasi-random exposure to female leaders elected to state legislatures in India, this paper shows that there may alsobe an unintended effect: an increase in rural women’s reported experience of physical spousal abuse. We find thata plausible channel underlying this effect is an increase in women’s modern contraceptive use—potentially resulting fromimprovements in public provision of health services—which leads to marital conflict, especially when the husband’s sonpreference is stronger than the wife’s.
    Date: 2022–06–29
  10. By: Ira Geraldina (Universitas Terbuka, Indonesia Author-2-Name: Javier Rasyadputra Walad Author-2-Workplace-Name: Department of Accounting, Indonesia Banking School, Indonesia Author-3-Name: Rafly Raditya Syahputra Author-3-Workplace-Name: Department of Accounting, Indonesia Banking School, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Purpose - This study examines one of the political governance pillars, namely the Party's cadre management system, on fraud in Indonesian SOEs. In the context of Indonesia, SOEs' executives are not officially the cadre of the Party, but some of them have a political connection to the ruling Party. We use BOC's Duality and BOCs political connection as proxies of the Party's cadre management system due to their potential affiliation to the ruling Party. Methodology - This study used 86 observations of SOEs listed on the Indonesia Stock Exchange during 2015-2019. Using panel data estimation, this study surprisingly finds that BOC's Duality has a negative effect on fraudulent financial statements. Findings - The political connection positively affects the fraudulent financial statement. These findings suggest that independent boards with dual positions are incentivized to maintain their reputation, thereby decreasing fraudulent financial statements. Novelty - However, independent boards with political connections cannot overcome their conflicts of interest, so they cannot properly carry out their supervisory functions. These findings become the main contribution of this study that explains the implication of political governance in preventing fraud in Indonesian SOEs. Type of Paper - Empirical"
    Keywords: BOC's duality; fraudulent financial statement; political connection; corporate governance.
    JEL: M41 M48
    Date: 2022–09–30
  11. By: Felix Kersting (HU Berlin)
    Abstract: Can autocratic governments gain support by implementing a welfare reform and a repressive law? This paper studies a famous case – Bismarck’s policies of social insurance and the antisocialist law in late 19th century Germany. The socialist party, I find, increases its vote share in constituencies more affected by Bismarck’s policies. For identification, I exploit local and industry-specific variation in treatment intensity due to ex-ante existing local healthcare and detailed lists on forbidden socialist organizations. This variation allows me to use a flexible difference-in-differences as well as a shift-share approach. As mechanisms, I highlight that the socialist party evaded the repression by reallocating their activity and gained from the social insurance by claiming the credits for the welfare reform and providing a local cooperative alternative.
    Keywords: welfare reform, repression, social democracy, opposition, voting, autocracy
    JEL: D74 N44 P16
    Date: 2022–09
  12. By: Michael D. Bordo; Harold James
    Abstract: This paper describes the challenges of globalization in terms of the logic underpinning four distinct policy constraints or “trilemmas” and their interrelationship; in particular the disturbances that arise from capital flows and the difficulties of adjusting monetary policies to a global monetary environment. These trilemmas intersect and interlock. The trilemmas are: 1. The traditional Macroeconomic trilemma between capital mobility, fixed exchange rates and monetary autonomy; 2. The International relations trilemma between capital mobility, sovereignty and international order; 3. The Political economy trilemma between capital mobility, democracy and sovereignty; 4. The Financial stability trilemma between capital mobility, financial stability and independent national policies. The four trilemmas offer a way to analyze how domestic monetary, financial, economic and political systems are interconnected within the international system that opens up vulnerabilities. They can be described as the impossible policy choices at the heart of globalization.
    JEL: E52 E60 F30 F40 G28 N1
    Date: 2022–09
  13. By: Ang, Joshua Ping; Guanlin, Gao; Sparks, Andrew
    Abstract: Purpose The authors analyze the effects of political freedom and personal freedom on the spread of COVID-19 in a cross-country study. The authors also investigate how income inequality, urbanization and previous experience with a similar respiratory epidemic/pandemic, such as SARS and MERS, affect the spread of COVID-19. Design/methodology/approach The authors employ data from 102 countries to examine the relationship of countries' economic and sociopolitical factors, such as political freedom and personal freedom and their COVID-19 infection cases per million population at 120 days, 150 days and 180 days after the reported 10th infection case. The authors also include the log term of real GDP per capita to control for counties' economic development and regional dummies to control for regional-specific effects. Findings Results of this study show that personal freedom, rather than democracy, has a significant positive effect on countries' COVID-19 infection cases. On the contrary, democracy has a negative impact on the infection rate. The authors also find that socioeconomic factors such as higher income inequality and urbanization rate adversely affect the COVID-19 infection cases. A larger older population is associated with fewer infection cases, holding everything else equal. Previous experiences with the coronavirus crisis affect countries only at the 120 days mark. Real GDP per capita has no significant effect. Originality/value The main contribution of this paper is to jointly explore personal freedom, which implies a social framework with more emphasis on self-value and self-realization and political freedom, that is, democracy. The authors show that it is personal freedom, rather than democracy, that contributes to higher COVID-19 infection cases. Democracy, on the other hand, reduces the number of infection cases.
    Keywords: democracy, social economics, COVID-19, COVID, personal freedom, income inequality, urbanization rate, political freedom
    JEL: F02 F63 F68 I12 I14 I15 I18 O15 P16 P47 P48 Z18
    Date: 2022–10–05

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